Thursday, March 24, 2016

A Time to Sell; Why it’s a perfect time to list your home in the Sacramento region

Have you thought about selling your home but you’re not sure if it’s the right time? Well right now we’re in the midst of the perfect storm of economic and market factors in Sacramento that make this one of the absolute best times to sell. 

From red-hot demand to a severe shortage of inventory, and rapid price appreciation over the last couple years, homes that are listed now are usually selling quickly, for top dollar, and with multiple offers. 

So if you’re on the fence about whether to sell now, or have considered moving up to a bigger, nicer house, here are three things you’ll want to consider:

Demand is way up
There is no doubt that Sacramento has a shortage of affordable and middle-of-the-market housing, and that shortage is manifested with a fervent demand by homebuyers. Interest rates are still favorable, job and income numbers are strong, and the region is still growing steadily – all reasons why people are looking to buy homes.

With new construction lagging far behind what you might find in comparable metropolitan cities around the country and low housing inventory (we’ll cover this next), there are only so many options or houses for sale to choose from.

Further fueling demand is the fact that rents are rising in the region. More renters than ever are paying at least 30% of their income towards housing expenses, and in 2015, we saw the first year that home ownership was only half as expensive as renting, as renters paid an average of 29.9% of their monthly income toward rent compared to an average of 15.3% for homeowners.

Older Millenials – 80 million strong - are starting to enter the housing market en masse, and Sacramento is no exception. Millennials now make up about a third of the home buying market and roughly about 30 percent of the population in the region.

Add it all up and 2016 will be even more expensive for Sacramento renters, creating a surge of demand for home buying and further stimulating the housing market. Good evidence of this is the fact that it took 12 less days for homes to sell this February compared to last February.

Housing inventory is really low
Sacramento is in the midst of one of the most profound housing shortages we’ve seen. We’ve seen a short supply of homes for sale before, but the market was padded by hundreds (and even thousands!) of short sales, foreclosures, and other distressed properties for sale that constituted almost the entire low end of the market. But now, with the banks working through most of their distressed housing inventory. In fact, in January 2016, conventional sales were up 11.6% compared to only one year earlier (meaning that distressed property sales were a smaller share of the housing inventory.)

But at the same time, overall inventory numbers have shrunk. The inventory in January 2016 was a jaw-dropping 27% less than in January of 2015, which was incredibly low to start with. Inventory further declined in February 2016!

While we might expect a seasonal uptick in homes listed for sale in the spring and summer months, as we can predict every year, the number of homes for sale are still astoundingly low in the Sacramento area.

Home values have increased
Demand is high, supply is low, and that can only lead to one thing: rising home prices. But the good news is that this housing recovery isn’t driven just by an imbalance of supply and demand, but a strong housing recovery fueled by an economic strength in a growing region, including downtown redevelopment and organic job growth.

In fact, the median home price in Sacramento rose by 11.2% over the past year and there’s not a lot of evidence that will stop any time soon. The median price of homes as of February 2016 is up 6.7% compared to the same month a year earlier, and the average price per square foot is also up 6% year-over-year. Sacramento was named one of the 10 hottest real estate markets in the country to watch in 2016, and the confidence seems justified, as the median home price in the Sacramento region went up by 2.5% just between January and February!

What about Placer and El Dorado Counties?
These general trends seem to extend into Placer Country, El Dorado County, and most of the greater Sacramento area. In fact, housing inventory is 17% lower than it was last year at the same time. The median price of homes in Placer went up by 2.5% over the last month, as well, and year-to-year values are up 11% from February 2015.


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