Category: Home Prices

How’s The Weather/Market?

It’s that time of year where one day feels like summer and the next winter. Last week I put away my outdoor furniture, only to want to haul it out just a few days later to enjoy the warm sunshine! And today the forecast was for over an inch of rain and it’s looking like we won’t even get half that. It’s tough to plan with such wild weather swings!

The real estate market is similar at the moment. After an encouraging September where home sales surprisingly increased year-over-year in most parts of the state, October showed disappointing figures. With such inconsistent trends, identifying the vibe of the market is harder than ever. The government shutdown, high cost of living, and unpredictable mortgage rates are all impacting the real estate market in unpredictable ways.

You can read the signs

and still get it wrong!

I have a number of clients hoping to sell their homes in the coming months, and many of them are trying to time the market. They ask me questions like,

“Should I list for sale now before the holidays?”

“Should I wait till Spring?”

“How much more will my home be worth in 2026?”

Just ask me if it’s going to rain on Christmas while you’re at it! In all honesty, timing the market is a lot like timing the weather. You can read the signs, but ultimately its impossible to pull off every time. Here’s a throwback video I shot discussing this analogy.

Even though I’m an expert and live & breath market statistics and trends, I can’t predict the real estate future with any certainty. That’s not what you should expect of me or any real estate professional. What you should expect is help identifying what is most important in your next real estate transaction and navigating through it without losing sight of your priorities. Sellers often get caught up in timing the market that they forget why they are selling in the first place.

I have a client who lives in a home that no longer suits her and the property is bleeding her money in repairs. There are 2 homes that sit on 10 acres and require a lot of upkeep, so this widower recognizes she needs to live in a simpler, low-maintenance home. That is the priority; to change her lifestyle that will improve her health and finances.

But sadly, the quest of maximizing her sales price based on market timing has taken over. And during this quest, she has changed her mind several times, questioned herself, and ultimately is shackled in indecision. All the while, the property expenses are piling up and she loses sleep worrying about what to do. She keeps asking herself “when,” while the most important question she needs to ask herself is “WHY.” Why am I selling my home?

Does this sound familiar to anyone you know? Perhaps your own situation? When toiling over an upcoming home sale, ask me these questions instead:

“What is my home worth right now?”

“Where should I put my focus on improving my home for a sale?”

“Who can help me make this process as easy as possible?”

In short, control your controllables, and most importantly…FIND YOUR WHY. Why are you selling your home? Allow me to help you never lose sight of that.

It’s Over! Now What?

How will the real estate market change post-election?

It’s been 2 weeks since the presidential election, and things are coming into focus. Cabinet appointments, Republican Congressional control, and local election results have led to an abundance of prognosticators & instigators proclaiming with near-certainty how everything from our global alliances to our drinking water will change.

Some see the end of days approaching, while others foresee brighter days ahead.

Time will tell if any of these professed changes actually come to be.

But will our local real estate market change? Is there any truth to the predictable nature of home buyers and sellers pre and post presidential elections? As always, let’s look at the data to find out!

In recent days, statisticians at both the national and local levels have shared their insights on how elections have historically influenced the real estate market. Both revealed some interesting trends on the surface.

First up, the national numbers. Zillow writer Jordan Teicher shared insightful data last week from the last 25 years that shows the number of transactions tend to decrease from October to November (just before the election) in election years (-3.7% on average) while in non-election years there is a +.6% increase. Furthermore, the change from November to December (just after the election) saw a bigger increase in election years (+2.4%) compared to non-election years (+.9%).

As a result, one could conclude that market activity tends to slow down before and pick up after presidential elections. But keep in mind that these are national statistics, and it’s always a good idea to look at more local numbers when assessing real estate markets. For that, we turn to local appraiser Ryan Lundquist.

Ryan astutely shared on his latest blog post that while Sacramento home prices and mortgage rates have no correlation to election cycles, the number of transactions does appear to be influenced. In most months we see above-average sales in the year after an election.

But, he quickly points out that the trend is only due to outlier sale figures from the market boom year of 2005 & market bust year of 2009. If you exclude those two years from consideration, you lose any statistical trend showing a post-election “pop” in the market.

It’s common to stare at historical data long enough in order to find a favorable story about the future.

It is wise to refrain from doing so.

Many people, including yours truly, are hoping for an increase in market activity in the coming months. Any changes, however, will have nothing to do with the election. Instead, it will depend on buyer affordability.

Elevated mortgage rates and record-high home prices have made home-buying more expensive than ever. Any increase in market activity will require mortgage rates to fall or rent rates to increase where buyers feel better about taking the financial plunge into homeownership.

Are Home Prices At All-Time Highs?

The answer depends on where you look

Recent headlines have touted “All-Time” Highs for home prices. Despite higher mortgage rates, the real estate market has marched upward, with most areas seeing price increases over the past year.

In fact, the median home price in California topped $900,000 for the first time ever in April and climbed even further in May! But while these state-wide numbers are indeed at all-time highs, many markets across the United States, including most here in Northern California, are still trying to claw back the 15-25% losses realized in 2022.

Here are some charts that show while home prices are increasing, they are still lower than the 2022 peaks.

Sacramento County – Median Home Price

Sacramento County home prices peaked in May 2022, with the median home price topping out at $575,000. Things dropped considerably in the following 6 months, giving back 16%. Since early 2023, home prices have risen steadily, but still are under the 2022 peak.

Folsom – Median Home Price

Folsom experienced a similar pattern, but the fall was more pronounced. After peaking at $850,000, Folsom home prices dropped 20% in the second half of 2022. The current median home price is $775,000, much higher than the low in late 2022 but still not at all-time highs.

El Dorado Hills – Median Home Price

El Dorado Hills had one of the biggest pullbacks in 2022. EDH home prices peaked a bit earlier in 2022, and spent the entire year sliding down from nearly 1.12M to $800,000 (28%). Things have mostly recovered as the median home price sits at nearly 1.08M, but not an all-time high.

United States – Median Home Price

This trend is common not just in Northern California, but all around the country. Nationwide, home prices hit their all-time highs in 2022 and have attempted to climb back to those levels ever since.

Don’t see your city on this post? I have stats on most areas of California. Send me a message and I can put together a custom presentation of your market.

It’s May Madness. Bring on…EVERYTHING!

May seems to always be the most hectic month of the year.  Graduations, picnics, school parties, sports, boating…commitments and fun keep us busy all month long, and I’m sure the same is true for you.

The real estate market has a way of hitting its full stride in May as well.  For the last few years, May has signaled the time when many homeowners decide to put their homes on the market.  This year appears to be similar as I’ve already listed two homes for sale in recent days. This is a good sign for the market at large since the single greatest issue we have in our market is too few homes for sale. Yes, that’s a bigger issue than high mortgage rates (although one could argue these issues are linked together)!

At the time of this writing, there are fewer than 100 single-family homes for sale in Folsom. 

May is often when new listings hit their annual peak

This is an incredibly low amount, considering we are a town of over 80,000 people and 28,000 housing units. Over the last few years, beginning in May, we start to see this figure increase through the summer months, but since interest rates began rising two years ago we have seen the number of homes for sale in the summertime decrease dramatically.

What will this summer bring?  Unfortunately, much of the same.  Unless I get more calls from clients interested in selling their homes this summer, I expect the number of homes for sale to be similar to last summer.  For current homeowners not looking to move, this is great news.  For those looking to buy their first home, this is truly discouraging, at least for now. 

I am anticipating mortgage rates to improve in the second half of the year, which will likely do two things: #1) more buyers will re-enter the market due to improved affordability; and #2) more “move-up” and relocating sellers will choose to put their home on the market as they feel less committed to remaining in their current home to hold on to an ultra-low mortgage rate. This increase in both demand and supply should keep prices level while increasing options for buyers.

Much like May’s relentless calendar, the real estate market keeps chugging right along despite challenging conditions. Either way…Bring. It. On.

GET REAL – Buyer Always Pays

Let’s Get Real about Buyers Paying Real Estate Commissions. Much of the recent news coverage of the real estate industry has focused on the shift that buyers now may be the one paying their REALTOR commission. Well, this shouldn’t be a newsflash, but the truth is the buyer ALWAYS pays.

Let me break this down for you. Say a homeowner sells their home for $500,000. Before the seller sees a dime of that $500,000, the transaction costs, including real estate commissions, are paid out through closing using the funds the buyer brought to the closing table. So who’s money actually paid those commissions? Oh yeah, the buyer’s money! It doesn’t matter if that money was from the buyer’s down payment or from the buyer’s loan…it was the buyer’s side of the transaction that made paying those commissions possible.

The actual thing that’s changing is a seller can no longer advertise a pre-determined commission amount to the buyer’s agent as a part of the MLS marketing. But rest assured a buyer’s REALTOR commission will still be negotiable and paid at closing. Maybe from time to time its paid by the buyer directly or, more likely, worked into the price of the home as it more commonly is now.

But make no mistake about it, either way the buyers always pay.

Winter Is For Home SELLING

You read that right! If you’ve considered selling your home, you better get a move on!

I’ve insatiably tracked statistical trends in the real estate market over my 20-year career. It’s one of my favorite, and most under-appreciated, parts of the job. Back in September, I wrote about how Fall has been the best season for home buyers over the past decade. Is it perhaps a coincidence that I had more clients buy homes this past Fall season than any other time of 2023? Or perhaps my readers are listening to my insights!

Mining from that same data I used last year, its clear to see that the Winter season (what I consider Jan 1st-March 31st) has consistently seen the largest seasonal median price appreciation for Sacramento County homes than any other time of year.  From 2013-2023, home prices have appreciated on average $24,000 during the Winter season, outpacing even the assumed “prime” Spring selling season.

Its often believed that the real estate market “hibernates” during winter. Its true that fewer transactions take place during the winter, but this is the very reason why winter is a seller’s market! There are fewer homes for sale to compete with, but buyers have consistently shown up in our mild California winter seasons prepared to buy, driving up prices.

Presently, there are fewer than 900 homes for sale in Sacramento County, a historically low number by normal comparisons. In my hometown of Folsom, with a growing population of over 80,000 people, there are only 64 homes currently for sale. Overall, this is very unhealthy for our market, but for would-be sellers, it doesn’t get any better than this!

The statistics are again in your favor if you are contemplating selling your home. Maybe health concerns are prompting a sale, or a relocation for work or family. Whatever the reason, if you’ve been thinking about selling your home in the greater Sacramento area, give me a call so we can do some localized analysis on your market, competition, and ultimately potential selling power of your home. With mortgage rates dropping it is sparking renewed interest for buyers to re-enter the market as we head into winter. Don’t think waiting till spring is your best bet. As I hope I just showed you, history would suggest otherwise.

GET REAL…Slowing Real Estate Market

Let’s GET REAL about a slower real estate market. A REALTOR shows their true value when a home doesn’t sell right away. Should they just tell a seller to have patience or say “just trust me?” 🤦‍♂️

NO WAY!!! A good REALTOR should systematically track the vital signs of their listings regularly to gauge marketing activity levels. Not many do it, but for me it’s a critical way to keep sellers informed and to counsel them when considering price reductions.

Got Debt?  You Are Not Alone

If your credit card balances are creeping up on you, it may be time for a cash-out refinance

Total US household debt continues to climb even as borrowing costs rise with higher interest rates, particularly on credit cards. The total debt level recently hit a NEW record amount of $17.29 trillion…with a T!!! 

$1.08 TRILLION is attributed to credit card debt! Many of us are facing harder times with the on-going economic slow down, lingering inflation, and the resumption of federal student loan repayments. With credit card balances & their interest rates at all-time highs, it may be time to consider a cash-out refinance to consolidate high-rate loans. 

Home values remain reasonably resilient & most homeowners have record levels of home equity. Even with elevated mortgage rates, it may be better to roll higher rate credit card debt into a new mortgage balance.

Has the economic slowdown forced you to borrow more against credit cards, cars, and education? Borrowing from your equity at a low rate to pay off higher rate debt will lower your overall monthly payments and lower your interest costs over the long-run. I can help you determine the “blended rate” of your various debts, the effective interest rate you’re paying across all of your loans (including your mortgage). If your blended rate is over 7%, then its time to consider a cash-out refinance.

Consider the following graph…according to CreditCards.com the national average credit card interest rate is over 20%!. With The Fed suggesting they don’t plan to reduce the Federal Funds Rate any time soon, this will lead to high credit card rates for some time.

Let us help alleviate the financial stress of carrying high credit card balances at astronomically high interest rates by refinancing them into a lower fixed rate mortgage.

Are High Mortgage Rates Friend or Foe?

More like a frenemy!

Mortgage rates have officially shot up to their highest levels of the 21st century (that sounds a tad sensational, but its true).  Some 30-yr fixed rates are flirting with 8%, over five-percent higher than the all-time lows seen two short years ago.  You have to go back to the late 70s & early 80s to see a steeper increase in mortgage rates.  Yikes!

These higher rates are making homeownership unaffordable for many.  For others, the sticker shock of the monthly payment is too painful to look at, so they continue to rent instead of buy.  We covered how this is a poor decision for building long-term wealth at our home-buying seminar last month, but no time to hash that out again in this post.

For the brave buyers who can persevere in this market, they may be facing very favorable conditions in the short months ahead and wonderful appreciation opportunities in the long run. As others turn and run, buyers in today’s market are experiencing much less competition from other buyers, and negotiating with sellers who are beginning to panic as we approach the slower winter months.  While no one loves to pay truckloads of interest to the bank, it is worth noting that these higher rates are currently creating a more mellow, favorable market for buyers.

During the 2020-2021 market craze, it was common to have 5-10 competing offers on a listing.  In Folsom, for example, the typical listing fetched a price 5% OVER the asking price. Buying a home in that sort of market is frustrating & disappointing, as you have very little control over the outcome of any offer you may write on a home.  I believe that type of market craze will return when interest rates drop, but for the moment persistent buyers have the competitive advantage over motivated sellers. Buyers are in the driver’s seat for the next few months!

While its obvious to say higher rates are everyone’s enemy, for some home buyers they should consider them a friend…or at the very least a frenemy!

Here’s a bold game plan to consider if you are a would-be homebuyer…buy now to lock in your home price and then hope to refinance to a better interest rate once rates come down.  When rates do eventually settle down, it will likely push home prices up again as more buyers return to the market.  Get in front of that wave if you can afford today’s rates & monthly payment!

If you have considered buying a home, then you should read some of my recent posts.  There’s one about the benefits of buying a home in the Fall.  Another speaks to how mortgage rates will likely drop in the near future.  Again, the masses are waiting to buy until rates drop. Consider going against the herd by buying now and refinancing later. Doing so will have far greater long-term benefits, even if the sting of today’s higher rates hurts for the moment.

Fall is for Home Buying!

The best time of year for buyers is now

Today is the Autumnal Equinox! What’s the big deal?

Astronomically, it means the sun is exactly above the equator (any other astronomy lovers in the house??!!).
Practically, it signifies the first day of fall as we begin to experience more nighttime hours than daytime hours.
Economically, it means its the start of the best home buying season in Sacramento!

Don’t believe me? Hear me out…in researching market statistics from the last decade, I’ve debunked the notion that spring & summer are the ideal “buying seasons.” While more people do indeed buy homes during those seasons than any other time of year, the conditions are not as favorable for buyers when compared to fall.

For buyers to have a competitive advantage when buying any product, they need three things:

1.) more buying options relative to the number of competing buyers;
2.) time to consider their options;
3.) stable prices to avoid a market frenzy or buyer’s remorse.

Below are three graphical illustrations that reveal how these factors evolve with the changing seasons, and how fall has consistently been the best season for Sacramento home buyers.

The first compares homes for sale (representing the number of sellers) to the homes that actually sold (representing the number of buyers). From these two figures, our industry calculates a metric known as “months of inventory.” In other words, how many sellers do we have compared to buyers? As a buyer, you want this number to be as high as possible, because it signifies more options for you and less competition against you.

I plotted the last 10 years of Sacramento County home stats, and you can see how in every year (except 2020 when Covid turned everything on its head) the fall season (represented by the dark orange line) has been higher than all of the other seasons. Every. Single Year. And 2023 is shaping up to be the same; as of the time of this post the months of inventory stands at 1.7 months, higher than any other season so far this year.

Fall has given buyers more homes to choose from relative to competing buyers

The next factor to favor buyers is time on the market. It is frustrating as a buyer to have homes sell at a feverish pace. Again, fall has shown to be the slowest season in nearly every year, as the average number of days a home sits on the market before selling is the most in fall.

Fall has given buyers more time to consider their buying options

Lastly, prices have remained stable in fall compared to other times of year. In the winter and spring, Sacramento home prices have been significant seasonal price increases nearly every year. Oddly, summer typically sees price decreases of nearly $10,000. Fall, however, has generally experienced stable home prices, illustrated by the dark orange line hovering right around the 0 line in the chart below (except for the odd fall we had last year).

Fall has given buyers a stable market to feel confident in their home buying decision

If my graphs above aren’t convincing enough, consider this…REALTOR.com conducted market research and is predicting that the first week in October will be the most favorable week of the year for home buyers to get a great deal on a home!

While its important to understand market trends, buyers and sellers of real estate should avoid the tempting game of attempting to “time the market.” Rather, if you presently find yourself at a point in your life where buying a home makes sense for financial or familial reasons, then don’t wait until spring; act now. Give me a call to help you first secure your financing options, and then let’s get out there and find you a deal on a home this fall!