The Fall Sacramento Real Estate Market Update
Say what you will about the down Sacramento real estate market years of 2005 through 2012, but the best thing to hit Sacramento real estate is the fact that period is over. This spring marked the turnaround in real estate. We have a little bit more inventory this fall than we did last spring; however, by all practical standards, it’s still a seller’s market, yet buyers are really the deciding factor. So, is that a seller’s market? Based on inventory alone? I don’t believe so. I believe it’s a buyer’s market disguised as a seller’s market.
You know what I see when I look at this chart? I see twice as many homes for sale and half as many selling. The sold numbers have dropped below the pending sales. But the market is still relatively stable because the pending sales are about the same over the past 15 months. This means buyers have choices.
You can look at what the giant investment firm Blackstone accomplished in Sacramento, buying up some 1,500 homes and turning them into rentals, and you can say that was a bad thing for communities. Now, Blackstone has turned those rentals into securities and leveraged their investments by selling off 75% of its value in the form of bonds to pension funds, or so they say. Hard to know how they are establishing market value. They might have decided that their investments have grown by 25% and are leveraging 100%.
It’s similar to what other investors in Sacramento have done by buying homes supposedly for cash and then converting those offers into hard-money financing. I’ve had to counsel investors that writing an offer for cash when the intent was hard money is not a cash offer. It’s a hard-money financed offer. Cash is cash. I would suggest they include the option in the offer to convert to financing, and many did just that.
Of course now, the investors are pretty much gone. I have a fixer in South Sacramento that has not yet sold and, last spring, this home would have had multiple offers with buyers fighting over it.
Most homebuyers in Sacramento who intend to occupy a home, well, they want that home in turn-key condition. They don’t want to have to make any improvements. Many want their homes to be new or remodeled, with all the bells and whistles.
In closing, I spotted a survey by NAR the other day about the types of things that buyers wanted in a home. Top of the list was energy-efficient improvements. Never have I heard a buyer say that energy efficiency was a #1 concern. I wonder if the utility companies or manufacturers of energy efficient appliances sponsored this survey? Or, maybe they interviewed only buyers from Davis. Nope, Sacramento buyers want those granite counters and stainless appliances. Energy efficiency is welcome, but I doubt it’s a #1 motivating factor.