Words With Friends
Economic transformation is occurring, in my opinion. This is not my dad’s economy and our teenage boys will have yet a different experience as they go out on their own. Change is constant. More people are paying someone else’s mortgage (“renters”) and even moving back in with their parents until opportunities increase. Yes, there are jobs to be had and some young people have outlandish expectations of their first job but the economic transformation, like my Swing Indicator, goes through a “middle ground” between the bubbles and vacuums. The pundits have called this the malaise — not bubble and not vacuum.
A Swing That May
The local market is still quiet. It is a Buyer’s Market for those who are serious, motivated, and able. The pattern, if it holds true, means we’re poised for an active Spring time. And the early bird gets the worm. Interest rates have actually decreased a little and sellers, while waiting longer, are still in a better market when compared to 5 years ago. The pattern of the swing (right) shows more extended increases (green) and brief decreases (red). These swings are necessary as bubbles give way to vacuums.
Supply and Demand.
The Sacramento County market in 8 bullets:
- median price is up 8% YOY, down 2% MOM.
- inventory is up 70% YOY, down 13% MOM.
- Months’ Inventory is up 111% YOY, up 17% MOM.
- Average Days on Market is approaching 60.
- sales are seasonal; down 10% YOY, down 26% MOM
- cash sales are down 5% YOY.
- conventional up 30% YOY; FHA up 24% YOY.
- 30-year rate is down 5% YOY.
Cash investors are siting on the sidelines waiting for the vacuum to call them. Price appreciation that was spurred by the cash infusions of 2013 were not helpful to sellers this year especially since May/June.
Sellers need a persistent and patient strategy AND a clean house. Call me if you want an honest, knowledgeable professional on your team.
Confidence is Key.
We live in a beautiful part of a beautiful state on a perfectly placed planet. We are blessed. And since most people build wealth by building equity in their home, we can appreciate how fair and resilient our local real estate can be.
We were all affected by the vacuum that started in 2007 from which are now slowly recovering. We should not want nor expect the rate of appreciation that occurred between 2000 and 2006. Because the bigger the bubble, the bigger the vacuum that corrects the market. Big vacuums pull on more than home values. It has pulled on the entire building industry. Construction jobs left the state. Employment in other areas is still struggling. Wage increases are low, if they exist at all. And this all pulled down on general confidence.
Confidence is required to buy a home, start a family, change jobs, retire, go on vacation, buy a car, and even upgrade your home. Without these events in life, it’s hard to get enjoyment or build wealth and momentum in the economy. Saving money should be as important as giving and spending but all 3 have decreased as debt loads have increased. I’m not talking about congress as they are spending plenty and taking more from you and me and our family not yet born.
What we need, other than elected officials who honor their duty more than their tenure, is confidence. There is much more to life than the economy and money. Without confidence, however, life and growth are subdued.
Aging and Shrinking.
The real estate industry must adapt to the demographics of the region. While our population is aging and becoming more diverse, the process strategies, tactics, and housing characteristics are all attempting to accommodate and even predict the changes. Single story houses are much more popular since the “McMansion” days when larger homes ruled the market. In some markets, these large homes occupied a major portion of the parcel, leaving small yards for play and entertainment. Now the tendency is toward small homes, well-appointed yards, and kitchens that don’t separate the cook from the family.
When you interview agents to help guide and manage the sale or purchase of your home, it’s important they understand your requirements in addition to the changes shown by the data and trends. The trends go beyond sales figures and include the population of homes and buyers that meet your target. Ask these agents if they know what is getting built, who is buying, where the activity is highest, and whether they have a marketing and negotiation plan that accommodates and predicts these factors.
Family, colleagues from past careers, and referrals have had success in their sales and purchases this year. My heartfelt appreciation goes out to all who have blessed me with their business, trust, and continued friendship.
For my fifth straight year, I achieved “Masters Club” level of sales volume. That makes me a “Life” member of this group of agents in which fewer than 5% of agents belong. And this is a fulfilling career. Every client is different with different reasons for the change in their lives and different needs for a real estate solution. I love architecting solutions for people.
Strategies for selling in a buyer’s market require more thought and activity. And buying in a seller’s market can be frustrating especially for buyers without limitless funds. Marketing, negotiating, and promoting my clients and their products add spice to each day and brings joy when they, in turn, refer me to their friends and family. There is no higher compliment than getting a referral.
Do you know anyone that needs a thorough and professional real estate broker with a love for the means and the ends? Call me with their name and number. I guarantee a smooth experience. And the VFW or Wounded Warrior Project get a contribution from my commission if my client is a veteran. I’m proud to call all of these people clients and friends.
Call or text me: 916-517-9606