The Equity Report 2017; Your home may be worth WAY more than you think!

There is no doubt that the US real estate sector is still booming, with prices continuously rising in many markets across the nation. In fact, home prices have climbed higher for 53 straight months now, allowing many home sellers to cash in – and many others to escape a negative equity situation.

In fact, in just the first three quarters of 2016, U.S. homeowners saw their equity rise by $837 billion.

The party kept going as homeowner equity increased to $63 billion in the fourth quarter of 2016, according to real estate data analysis firm CoreLogic. With those strong equity gains to finish out 2016, an estimated 62,000 homeowners across the country went from the red to the black in their home’s value in those three months alone.

Rolling into 2017, 48 million U.S. homeowners had positive equity in their homes. Even better, 13,125,367 U.S. homeowners were in an equity-rich position (loan-to-value ratio of 50 percent or lower), representing 23.4 percent of all U.S. homeowners with a mortgage and an increase of more than 2.6 million from a year ago.

In total, U.S. homeowners now have approximately $11.2 trillion in untapped home equity. Interestingly, $6.2 trillion of that total equity belongs to homeowners 62 years and older.

To see how far up the equity ladder we've climbed, consider that in 2012, less than 5 years ago, we experienced the valley of underwater equity with 12.8 million homeowners owing more than their home was worth. In all, nearly 1 in 3 of all U.S. homeowners were underwater on their homes during the dark days of the Great Recession between 2010 and mid-2012.

However, since that low point, the number of seriously underwater homeowners has decreased by more than 6.7 million.

As of Q3 2016, there were 6.1 million seriously underwater properties in the U.S., which represents nearly 10.8% of all properties with a mortgage. While that seems high, it's still a decrease of 854,000 underwater homes from 2015, as the number of equity-rich homeowners has increased by 2.6 million in just that time.

However, the story about our equity gains and losses remains a tale of two groups of cities. In fact, the zip codes with the highest equity gains in the last year include:

78027 in San Antonio, TX
53.1 equity rich
Up 30%

33974 Lehigh Acres, FL
45.0% equity rich
Up 29%

97206 Portland, OR
52.6% equity rich
Up 27%

37208 Nashville, TN
45.4% equity rich
Up 27%

How about the U.S. zip codes that have the most number of properties still seriously underwater? (Seriously underwater homes are defined as have -125% or more negative equity.)

07017 East Orange, JN
62.4% seriously underwater
Number of underwater homes up 38% in the past year.

64130 Kansas City, MO
51.4% seriously underwater
Number of underwater homes up 30% in the past year.

08865 Phillipsburg, NJ
44.2% seriously underwater
Number of underwater homes up 23% in the past year.

43211 Columbus, OH
71.0% seriously underwater
Number of underwater homes up 22% in the past year.

63121 Saint Louis, MO
54.6% seriously underwater
Number of underwater homes up 22% in the past year.

While the number of seriously underwater homes seem to be most prevalent in certain metropolitan pockets, our median home prices have gone up for 18 quarters in a row, allowing a record number of homeowners to accumulate positive equity.

But it’s not just rising prices that are helping our housing market turn a profit. In fact, homeowners are staying in their houses longer before selling these days, a trend that’s allowing them to accrue more equity, as well. As of Q3 2016, the average home seller has lived in his or her home of 7.94 years, a new high based on modern data.

Before our current equity boom and the Great Recession that preceded it, the average home seller had owned their property only 4.26 years – a stark contrast.

By analyzing 88 metropolitan areas with a population of at least 500,000 people or more, data reveals that the areas with the highest share of equity-rich homeowners include:
San Jose (55.7 percent)
San Francisco (49.8 percent)
Honolulu (39.3 percent)
Los Angeles (38.2 percent)
Pittsburgh (34.5 percent)

Other metro areas in the top 10 for the highest percentage of equity-rich homeowners include Portland (33.1 percent), San Diego (33.0 percent); Oxnard-Thousand Oaks-Ventura, California (32.7 percent); Seattle (31.5 percent); and Austin, Texas (31.0 percent).

However, the same research shows which zip codes have the highest share of seriously underwater homes, including Chicago, St. Louis, Detroit, Columbus, Ohio; East Stroudsburg, Pennsylvania; Trenton, New Jersey; Cleveland, and Milwaukee.

Despite the national trend of upticking home prices and equity-rich owners, the share of seriously underwater homeowners increased in 21 of the 88 metro areas analyzed since just last year – a puzzling and concerning statistic.

But for more Americans than ever, their homes keep on rising in value, creating record equity and an opportunity to profit for prudent and opportunistic homeowners.

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.

How is Placer County measuring up with four important economic factors?

Population in Placer County:

The population of Placer County was estimated at 357,463 people as of the close of 2013.

The largest population center in Placer County is Auburn with 357,463 people. Roseville is next with 123,514, and unincorporated areas combined hold 109,739 people. Colfax is the smallest incorporated area in Placer, with only 1,969 residents.

Since 2003, the population of Placer County had grown 114.9%, with the largest increases in Roseville (31.3%) and Rocklin (26.5%). Since 2008, the population has grown 7.1% Loomis and Colfax are the slowest growing towns.

It’s estimated that by 2018, Placer County will have a population of 389,883 people, a 9.1% increase from its current mark. And by 2023, that number could be up to 420,187, a 17.5% increase.

Income in Placer County:

Per capita income in Placer County was $52,444 at the close of 2012. That represents a 33.9% increase since 2002 and an 8.4% increase since 2007. Those numbers are just about consistent with Sacramento income growth.

The median household income for Placer County was $70,30 as of the close of 2012, which is a modest 2.3% increase since 2007.

Projections show that Placer County income growth will continue to be positive and steady, with an anticipated 14.2% increase by 2017 for a $60,024 median, and a 22.4% increase by 2022 for a median household income of $64,337.

Employment in Placer County:

Placer County now has approximately 131,800 employed citizens, representing an increase from 120,700 employees in 2002, or a 9.2% rise. However, since 2007, Placer County has seen a -6.1% decrease in employed citizens. But that’s still better than the corresponding employment numbers for Sacramento, who experienced a -1.2% decrease since 2002, but a sharper -8.9% decrease since 2007. 

Since 2007, business growth has been most prominent in the fields of Agriculture (33.3%), Education and Health Services (29.1%). However, during that same time, Mining and Logging (-100%), Construction (-42.9%), and Manufacturing (-25.9%) saw rapid declines.

Employment projections for Placer County are still strong with an anticipated 21.7% increase to 160,464 jobs by 2017 and a 32.4% increase to 174,441 jobs by 2022.

The lion’s share of growth will be in certain industries such as education, health services, and utilities. In fact, it’s projected that by 2022, about 20% of employment will be in the Trade, Transportation, and Utilities field, and another 16% in Educational & Health Services.

Paralleled by employment numbers, unemployment in Placer County has remained lower than Sacramento averages. As of 2012, unemployment was 9.4%, which compares unfavorably to 2002’s 4.9% mark. But with the recession and real estate bust of 2008, unemployment rose to 6.4% in 2008 and an alarming 11.5% in 2010, so today’s numbers are a healthy reversal of that trend.

Real estate in Placer County:

In the 2000s, real estate sales in Placer County exploded, with many luxury new home divisions built. Currently, the median value of single-family homes in Placer is $404,900 and the median sale price is $380,250. Those numbers have risen about 5% in the last year, with stable appreciation and secure values with Placer County real estate. Houses for sale in Placer County only stay on market an average of 78 days.

Only 9.9% of homes in Placer have negative equity or are underwater, compared to the U.S. average of 16.9%. 79.9% of homeowners still have a mortgage in Placer County, with just over 20% owning their homes free and clear.

The homeownership rate in Placer County is 70.6%, with 27% of residents renting. There are currently 26.2% more housing units than existed in 2002 and 4.8% more than in 2008.

Home sales in Placer County are expected to stay hot over the next year with values increasing steadily, based on market factors and the desirability of living in the area.

A snapshot of the Sacramento region real estate market, spring 2015.

As summertime rolls around once again in the Sacramento region, we find ourselves busier than ever, with proms and graduations, family gatherings and vacation planning, and plenty of fun activities like outdoor concerts, sports, and festivals. In between it all, many of us will look to sell our house and/or buy another one before school starts in the fall or before the winter holidays. So what can you expect to find in the Sacramento area real estate markets these days?

 

Overall, our real estate market can be characterized as very healthy, with a huge buyer demand, but there are some key differences from pre-recession white-hot markets that were over-inflated. For instance, even though our demand has never been higher, inventory is down 6.4%, and far less Sacramento homeowners are underwater on their mortgages or in danger of foreclosure, we’ve seen normalized home appreciation rates, around 9.5% over the last year.

Many experts predict that will continue in the right direction even with the expected interest rate increase in the summer and fall, with our homes appreciating about a 6.6% to next year.

Here is the most recent data on real estate in Sacramento County, Placer County, and the combined four-county area, released for April of 2015. Remember that these figures compare April to April the year before, and often deal with median numbers, not averages.

So if you’d like an accurate market analysis of your home’s worth or to find out what homes are for sale in your price range in a certain area, feel free to contact us.

Sacramento County:

The median list price in Sacramento County is $281,000

That median price is 5.6% higher than one year ago, in April of 2014.

It took 42 days to sell a house in April, 2015.

Cash sales were only 16.5% of all sales.

FHA sales were 27% of all sales in Sacramento County.

Sales volume was 9.2% higher this April compared to one year ago.

We now have 1.5 months of housing inventory compared to 1.8 months the same time last year.

The average price per square foot is 182, which is 7% higher than April of 2014.

The average sales price in April of 2015 was $310,000, 5.7% higher than last year.

It took 3 days longer to sell a house this April compared to last.

Placer County:

The median price in Placer County was $391,500 in April of 2015.

That median price is 6.9% higher than one year ago, in April of 2014.

It took 41 days to sell a house in April.

Cash sales were 17% of all sales that month.

FHA sales were 20% of all sales in Placer County in April.

Sales volume was 27.5% higher this April compared to last April.

There is now 1.9 months of housing inventory, compared to 2.5 months in April of 2014.

The average price per square foot is 200, which is 3% higher than April of 2014.

The average sales price in April of 2015 was $441,163, which is 3.8% higher than April of the previous year.

It took 10 days shorter to sell a house this April compared to last.

Regional Market Trends for Sacramento, Placer, Yolo, and El Dorado counties:  

The median price in the Sacramento Region was $325,000 in April of 2015.

That median price is 9.4% higher than one year ago, in April of 2014.

It took 44 days to sell a house in April of 2015.

Cash sales were 16.9% of all sales that month.

FHA sales were 23.7% of all sales in Sacramento County in April of 2015.

Sales volume was 10.5% higher in April of 2015 compared to April of 2014.

We now have 1.7 months of housing inventory, compared to 2.1 months last April.

The average price per square foot was 192 in April of 2015, 7.2% higher than April of 2014.

The average sales price in April of 2015 was $360,351, which is 6.9% higher than April of the previous year.

It took the same amount of time to sell in April 2015 compared to April 2014.