January 2021 Sacramento Area Housing Market, written by Josh Amolsch, is an informative eye-opener, Enjoy–JaCi Wallace.
Sacramento is officially in the big leagues. We have now reached a median home price that is only a couple clicks down the recent Kiplinger’s list from New York, Los Angeles, San Francisco, San Diego, San Jose, and two or three other high-end but still fairly obscure cities. Maybe those cities were cow towns once before as well. A place only good for getting gas and asking the wife, “so where are we at again?”. Yes, Sacramento reached a new high in January, a month where prices typically go down, and inventory goes up. January 2021, and all the vicious action therewithin, birthed a $449,000 median home price for Sacramento County, an 18.2% increase from Jan 2020. Placer County shot up 17.8% from a year ago to $581,000.
It’s really simple when you think about it—the whole thing about how the current housing market resembled the run on toilet paper in 2020. Rates are crazy low, and those Bay Area buyers are still flooding the market. That isn’t anything new. That Bay Area migration has been steady for years. The thing that has exacerbated the issue has been the drop in rates, which caused a record amount of refinances. There are closing costs when you refi, and that can take many years to break even on. Why would someone sell and move to throw themselves into the dog fight of limited homes when they can stay put and lower their payment. Seems like an easy choice. Check out the inventory graph above. New listings are not keeping up with new escrows. In fact, they are down 20% from last January, and sales are down 55%. So you can bet that bedazzled mask of yours that inventory will remain suppressed while prices increase more and more until affordability erodes. There is no price police, so this will need to play out naturally. I don’t mean to sound negative, but a healthy market is not what we are in right now. Something will need to give, and I think we have maybe one more year of this growth we have been experiencing. Government spending and its effect on bonds have everything to do with the housing market. When borrowing gets more expensive, buying slows, inventory rises, and prices stabilize—the hip bone’s connected to the knee bone thingy.
Everything has been upside down over the last year. EVERYTHING. I can’t even watch the news anymore. These numbers are crazy, but at least they are rooted in reality. When there are thousands of more buyers than there are homes to buy, you get a January where homes are going into escrow faster than they were at peak selling season. Usually, January is the slowest month; but not in Sacramento County in 2021. It’s all different these days. Redfin has Sacramento #3 on its Top 10 Most Competitive Cities to buy a home in, and lumber prices are up 169% since mid-April 2020. That has increased the price of new homes a median of $16,000 per the National Association of Home Builders. If you want to win in this market, HIRE TALENT. Weintraub and Wallace Realtors can be reached at 916-233-6759 with RE/MAX Gold. Josh Amolsch | Realtor Weintraub & Wallace Team