What direction is our real estate market headed
November 19, 2009 by avoidforeclosureteam
Filed under Foreclosure News
Where is our Sacramento market headed?
It was recently reported that eight out of every ten cities in the U.S. fell in the 3rd quarter of this year compared with the same period a year ago as heavily discounted distressed sales made up 30 percent of all real estate transactions. I think this is a little conservative. I feel this number is actually above 50% in most of our local markets.
But home sales continue to climb with quarterly sales outpacing the second quarter and the previous year’s figures, reported by the National Association of Realtors.
Locally the tri-county area of Sacramento, Placer and El Dorado Hills, our median prices have shown a very stable market with slight monthly increases. Median Prices in the Tri-County area increased $5,000 for the month. SOLD properties in tri-county had a median price of $215,000 compared to September figure of $210,000, but we still have a ways to go to reach October 07 median price of $335,000! Placer County had a slight Median price increase to $295,130 compared to September sales of $294,090.
While median prices are slowing climbing, unit sales are on surging. In the tri-county area, units sold increased from 21,270 units in 2008 to 22,035 2009 year to date representing a 3.6% increase, but most of this inventory being sold is in the lower price ranges.
Contributing to these increases is a very stable inventory with a high absorption rate, meaning a very close percentage of sold units vs. homes coming into the market. Additionally, the interest rates are incredibly low, currently hovering close to 5%.
So, going back to the question, where is the market going? Locally the fall of real estate came fast and early so we have had a while to bounce back. Many areas of the country are still feeling the hurt big time. Florida is in big trouble for many reasons. Way too much building that hinged on speculation in the height of the market and now for the first time in recent memory, more people are moving out of the state than coming in. We heard that Miami has over a three year inventory of homes. This is opposed to our 5-6 months worth.
In many peoples opinion, including mine, with this low inventory, fantastic prices and attractive interest rates, we would typically be seeing a higher surge of prices, but double digit unemployment and tight lending practices are holding back the market. Appraisers are still for the most part listing the market as declining values which negatively effect any refinances (for the few that have equity) and resale. Banks continue to insist that they have foreclosed properties in their inventory and will be releasing them shortly. We have heard that the banks have over 1 million homes in their inventory. Our local market could easily handle around 1,000 homes, but could be heavily hit if we had 10,000 bank owned properties hit the market.
Where does this leave you if you are thinking or in the need to sell your home? Nobody can predict the future, but we do know what we know now. Most would agree that there will be a close watch on inflation with interest rates rising sometime in the future, most likely sooner than later. Many will contend that we have a sort of artificial interest rate in order to encourage the current market. Lending practices will remain incredibly tight for quite a while. There just are not that many private lenders still lending money. Fannie Mae and Freddie Mac which are federally owned are representing about 50% of the current loans being issued.
Bottom line is if you are thinking of selling anytime in the near future, NOW just might be your best opportunity!
If you have any further questions, please don’t hesitate to contact the HomeStalkers team. We are here to answer any of your questions or comments.
