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Hi Everyone. Frank Verni here and welcome to another edition of Real Estate Help by
Frank. Sacramento's housing market is starting to
slow down and catch its breath because of higher interest rates and increased inventory.
I've been saying for a few months that this was probably going to happen since prices
shot up over the last 15 months faster than anyone predicted. This was caused by a tight
supply of homes and heavy competition from investors and homebuyers.
As interest rates also quickly spiked up from 3.4% to currently about 4.6%, there are now
more houses that are on the market and price increases have slowed down,
With the rising prices, many people smartly put their homes on the market. As of August,
more than 2,500 homes were listed for sale in Sacramento County, up from a low of less
than 1,000 at the beginning of this year. Wild price increases, meanwhile, have slowed
down since it peaked in the spring. For several months this year, the median home price in
Sacramento County rose by around 8 percent a month, an incredible figure. In June and
July it only went up by about 2.5 percent each month and appears to be about 1% for
August. The flattening prices are happening somewhat
because buyers can afford less and some who were lured to the market mainly by the ultra-low
interest rates have left. Lately cash buyers & investors have also been
leaving as prices rise. They once dominated the market but have declined as a percentage
of all buyers from February through August. And just this week, the National Association
of Realtors announced that pending sales of existing homes dropped last month by 1.3%.
Only a few months ago homes hitting the market had multiple offers within a matter of days
or even hours. The current average is approximately 25 days on the market.
Buyers with traditional financing expressed frustration at seeing their offers rejected
time and time again. But now it's become easier for them because of less competition
and they stand a better chance of getting their offers accepted.
Now, part of the change is the typical slowdown that happens in the fall as children return
to school and the spring and summer buying season comes to an end.
At the end of August, the market had about a 7 week supply of inventory. At its low point,
inventory dropped to a little less than a 3 week supply. Anything less than a three
months' supply is considered a seller's market and 6 months of inventory is a good balance
point between sellers and buyers. But, even with all the recent changes sellers
still have the advantage and might want to consider selling now.
Buyers on the other hand might want to consider buying now before interest rates climb ever
higher which they probably will in the coming months.
So if you or someone you know are considering selling, buying, or could use some help in
any real estate matter, contact me Frank Verni, and I'd be happy to answer any questions.
If you found this interesting, please forward to someone that can use it or share on your
Facebook page. I'd also appreciate any comments below or subscribe on the right for further
updates. I'll see you again soon!
Thanks and Good Luck.