October 2020 Sacramento Area Housing Market Update
October 2020 Sacramento area housing market update is a wake-up call for buyers. Another great blog is written by our very own Josh Amolsch. Enjoy — JaCi Wallace.
If you bought a Sacramento County home in October 2019, you likely have 15% more equity today than you did the day you bought it. Crazy, right? That is highly above normal. The October 2020 Sacramento area housing market update also shows the median home price increase from Oct 2019 to Oct 2020 in Yolo and Placer counties clocking in at 8.6% and 8.7%, respectively. Sure, the first few years of monthly mortgage payments are interest heavy, with less than half of the payment going towards the principal loan amount, but you still chip away at the loan amount. The heavy lifting this last year was in appreciation. The average annual appreciation, according to the California Association of Realtors, is usually 4-6%. Appreciation for 2020 is projected to be a little over 8%.
This graph above has been one of those “nod and mumble, yeeeeep” for me the past couple of months. Sellers are getting most of what they are asking and in many cases, much more. Homes are selling super quickly and often within the first day or two. New home starts are down 10% from July 2020 vs. July 2019 too, so where do people go to buy? Either to existing homes or they move out of state, a metric which, by the way, is the highest it has been in years. But even with the exodus, there are plenty of buyers in the Sacramento region to keep upward pressure on those home prices. Me and any other Realtor worth their salt don’t see it flipping the other way anytime soon.
“Well, what about the foreclosures coming down the pike due to all of the covid-related job losses?” While there are many foreclosure homes, “Foreclosure activity has, for all intents and purposes, ground to a halt due to moratoria put in place by the federal, state and local governments and the mortgage forbearance program initiated by the CARES Act” (Attomdata.com). Even when those foreclosure proceedings continue, minus the homeowners that complete loan modifications, there is so much equity built up in the market that these owners could very likely sell to a buyer, still make money and still retain their ability to buy a replacement home, thus keeping the level of buyers in the market flat or even increasing. We need more new homes, plain and simple. By and large, buyers don’t have faith in that “bubble is gonna burst soon” narrative.
A case in point is the red pending line in the above graph. October 2020 had the 3rd lowest inventory in the last 15 months but saw the highest number of homes go into escrow in that same 15 month period. October was not a normal October. When product volume is lower than demand, prices go up. But buyers don’t seem to care right now, or at any time in the last 10 years, so it appears. Interest rates are HISTORICALLY low, neighborhoods are changing, buyers’ temperament is changing, and my hairs’ color on my head is changing. It is fall, you know.
October 2020 Sacramento area housing market update is informative and will answer many of your questions about real estate in our area. If you are thinking of buying or selling real estate call Weintraub & Wallace Realtors with REMAX Gold. We can be reached at 916-233-6759.
— Josh Amolsch