If you’re a homeowner in the Sacramento area and thinking about putting a For Sale sign in your front yard, the perfect storm of market factors is now in your favor – a veritable seller’s paradise.
No matter if you’re listing your home with the ultimate goal of cashing in on a half-decade of rising prices, relocating to a more desirable neighborhood, or even selling and downsizing, now may be the ideal time to get started.
If you live in Placer, El Dorado, Yolo, or other surrounding counties, don’t worry – your ship has come in, too, with much of the same rise in equity that Sacramento homeowners have seen.
But this won’t last for forever.
Already we see one key indicator of a healthy cool-down, the average Days on Market, increasing slightly. Add in the fact that mortgage interest rates have nudged higher (but are still great), and it’s clear that your window to sell for top dollar is wide open at this moment, but may start to gently close.
Let’s look at why it’s a home seller’s paradise in Sactown right now:
Homes in the greater Sacramento area have seen an unprecedented run of price appreciation. In fact, median residential real estate prices have gone up every single month over the last six years – at least 72 months of positive growth!
For instance, if your home appreciated only 1% every month during that 72-month spell, your house would now be worth 72% more than it was back in 2012.
However, homeowners should be overjoyed that we’re not talking about only marginal increases. In fact, as of the April 2018 resale home report, Sacrament county prices jumped to $356,000 year-to-year, an impressive 13% annual increase.
Likewise, Placer County now boasts a median home price of $479,500 – up 7.9% from this time last year, and El Dorado County homes sit at a $450,000 median that’s 4% higher than a year ago.
Remember that example I gave above of a home that is worth 72% more than in 2012 (assuming that it only went up 1% every month)? Well, the true appreciation could be much more than that. In fact, the median home price in Sacramento County hit the skids in late 2011 and early 2012 at only $155,000! That also means that we’ve seen prices double -and then some- over in that same period.
There’s even more room to grow, as the Sacramento median price still sits below the all-time high that was recorded in the mid-2000s, pre-real estate crash and mortgage meltdown. In fact, the median property price was $360,00 in 2006.
At first glance, it may look like we’re close to that all-time high number. However, economists point out that if you adjust for inflation (2006 dollars versus 2018 dollars), the Sacramento median back then was probably closer to $442,000 in today’s value.
So, why not sit tight and wait for homes to keep appreciating?
Aside from the Average Days on Market statistic (that I mentioned earlier) ticking up, we’re also experiencing increases in available home sale inventory. More inventory = more options for buyers + less competition, which results in less upward pressure on prices.
Additionally, a good deal of these rosy appreciation and sales volume numbers include new home sales, which were unusually vibrant early this year after a long pause in new home building.
Don’t forget, too, that summer is HOT home buying season, as most families prefer to buy and move in before the school year starts. So, the summer and fall are always the most active times of the year for listings, buyers, and price bumps.
But what will the market look like this fall and into the winter?
Will the Days on Market continue to increase, forcing sellers into more price reductions? Will mortgage interest rates edge up again, bringing this seller-friendly market back in balance? Will demand wane as Sacramento wage earners can’t justify paying prices that are inching closer to those in the Bay Area?
Remember that there is never one exact, perfect time to sell your home since so many factors are in play (including the desire to buy a different house here once you sell!).
Therefore, this is no dire warning that you NEED to sell now or that there’s another real estate bubble ready to pop soon. (You don’t and it’s not.)
However, statistical evidence and market trends all point to the fact that the top of the home price mountain is in sight, so if you want to cash in and get top dollar (without the risk of selling as the market softens), we should list your home very soon!
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