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Market Commentary – 2015 August

Market Summary

In general, the market has become quiet since June; maybe sooner. Certain price ranges and locations are still commanding more attention and, hence, sustained momentum (“p”).

  • Inventory — 35% of Sold inventory was less than $350K. Five months ago, 30% of inventory was less than $250K. This summer has seen more demand for higher priced homes. Total For Sale is down 10% from last year and Sold is up 4%. Pended sales are up 28% from July ‘14. Months of Inventory for homes Sold over $1M is at a 10-year low.
  • Sacramento Median Price is flat for the last 3 months but is up 8% since July ’14.
  • El Dorado Median Price is up 17% since July ‘14.
  • All-Cash buyers have dropped 18% since July ‘14.
  • Zip codes with increases in momentum (p) have dropped 17% since last month but are up 850% since July ‘14. This is explained more with the Swing Indicator below. This is a sign that we hit resistance in June.
  • Mortgage rate is slightly down from July ‘14. More on this later, too.

Data is useful in showing historical activities and GUESSING at the future direction. But psychology is not a data point shown on any chart. Consumer sentiment is tracked by the government and that is exactly why I don’t trust the reported data. When the prognosticators share our guesses with the participants, it can affect our collective psychology. As well as possible, I track numbers and trends which are the important market forces, peppered with my prognostications, and where I perceive the possible shifts in psychology in the market.

  • Interest rates are expected to increase or stay where they are. Friends of the Fed don’t even know what will happen in September. It’s a game of parsing the language, buying on the rumor, and selling on the facts.
  • If the rates go upward, the net effect on a monthly payment may be $30 to $50. This should also motivate sellers to sell now. This impact may not be drastic since lenders are starting to lessen their lending restrictions.
  • Fannie and Freddie are changing their disclosure and reporting formats so processing a loan will come with more pages, time, and costs. Make sure you understand how this can impact your strategy for selling or buying.

Fits and Starts

My Swing Indicator is the EKG of the general market. It shows 54 momentum indicators; 51 are zip codes and 3 are the Counties. All but 19 are unchanged or decreasing. Recent variability of the Up Ticks is rare during what looks to be the start of an upward swing. There is something that has been keeping this market subdued and it goes beyond inventory.

Zip codes with increases in momentum have dropped 17% since last month but are up 850% since July ‘14. This is a sign that we hit resistance in June since Down Ticks are only slowing decreasing in numbers when, historically, the end of a down market is usually an abrupt swing.

Appraiser’s Notes

My favorite appraiser (Ryan Lundquist) does a good analysis of the market on a monthly basis. And his bullet points and charts are helpful.

  • The median price has been hovering at $290,000 for 90 days.
  • It took an average of 31 days to sell a house last month (30 in June).
  • Cash sales were 16.7% of all sales in July (very normal level).
  • Short Sales and REOs were only 4% of sales last month.
  • FHA sales were 26.5% of all sales in Sacramento County in July.
  • Sales volume is 8.6% higher so far in 2015 compared to last year.
  • Sales volume was 12% higher in July 2015 compared to July 2014.
  • There is a 1.9 month supply of homes for sale (1.6 in June).
  • The average price per sq ft is 185 (6% higher than last July).
  • The average sales price is $320,732 (slightly lower than previous month).

One Paragraph on the Market: The housing market has had an aggressive feel for most of the year. Pending sales have been a good 10-15%+ higher than normal, sales volume in the Sacramento region is up 10% this year, and values have seen a modest seasonal uptick too. Overall the market is still quite competitive in some price ranges because inventory and interest rates are still low, but there have been some subtle changes lately that help us see the market is beginning to slow down. Remember, it is normal for markets to slow, and the past two years have seen a very definitive seasonal market where the Spring is hot and the Fall is soft. For instance, it took 2 days longer to sell a home last month compared with the previous month, price reductions are growing in number, the median price in Sacramento County has been hovering at the same level for 90 days, interest rates have seen a minor increase, and housing inventory has seen a slight uptick. As housing supply presumably continues to increase over the next few months, watch out for more price reductions, unrealistic expectations from sellers, and buyers gaining more power.

How to Get the Latest Design Trends into Your Home

We all want a little luxury in our lives, and staying up-to-date on current design trends is just one great way that we can incorporate a bit of luxury style into our everyday décor. Whether you’re just looking for a few new pieces to spice up your living room or you’re ready to revamp your entire master bath, taking a few design cues from luxury real estate can be a great way to stay current and fresh.

Rather than have you sift through countless magazines to stay abreast of these trends, here’s a list of some of the biggest trends to watch for in 2016.

Bringing Nature Inside: Elements from nature elevate your décor. Invite green plants into  the house in all shapes and sizes. Lush ferns and delicate succulent gardens help to calm you by grounding you with nature. Look to natural fibers for accent pieces, such as sisal and wool and organic shapes, found in uncut tree trunks or rough-cut stone.

Brass Accents: The warm metal is poised for its shining moment. Aged brass accents will continue their meteoric rise. Add burnished bronze and brass pieces for a bold statement.

Mix and Match Metals: Don’t be afraid to clash. Brass paired with silver and copper have been spotted in the upcoming trends. Metallic shades will channel their retro roots and reboot for a modern touch.

Stealth Electronics: Nothing feels more luxurious today than total integration of your home placed into the palm of your hand. Control your lighting, entertainment system, and environmental controls, even your garage door, with just your phone. Integrate your security as well. Several options are available that allow you to access strategically placed cameras in any room in the house.

Electronic Entry: Never get locked out again. Electronic integration continues to customize the residential market. Smart locks feature unique identification codes in a sleek touchpad. Available in many fine finishes, smart locks also boast high-end craftsmanship.

The Rustic Farmhouse: Farmhouse kitchens blend rural charm with modern design. Traditional kitchens have evolved to transitional style, merging rustic design with contemporary utility. Pair a farm-style tub sink with stainless appliances in an open floor plan to achieve this balanced style.

Smart Gardening: Reflect the beauty of your local landscape by Xeriscaping. This method utilizes local vegetation intelligently to create a stunning sustainable landscape. Incorporate native grasses and flowers along with natural pieces to cultivate a striking garden.

Library Retreats: Distinguish your home with your own literary sanctuary. The home office has advanced to a tranquil library to accommodate your interests. Unplug from modern life and sink into a relaxed pace, surrounded by priceless pieces of literature and culture.

Luxury in 2016 will incorporate sophisticated technology with natural and timeworn accents. Striking the balance between sleek modern and the rustic yesteryear, with added lush finishings and natural elements will elevate your style for the coming year

Beef Tips and Noodles

Ingredients (8 servings)

  • 1 pound sirloin tips, cubed
  • 1 can (10.75 oz) condensed cream of mushroom soup
  • 1 package (1.25 oz) beef with onion soup mix
  • 1 can (4.5 oz) mushrooms, drained
  • 1 cup water
  • 1 package (16 oz) wide egg noodles

Instructions

  1. Preheat oven to 400 degrees F (200 degrees C).
  2. In a 13×9 inch casserole dish, combine the mushroom and beef onion soups, canned mushrooms and water. Mix thoroughly and add beef tips. Turn to coat well.
  3. Bake in a preheated oven for 1 hour.
  4. While beef tips are baking, bring a large pot of lightly salted water to a boil. Add pasta and cook for 8 to 10 minutes or until al dente; drain. Serve beef tips and sauce over noodles.

Call or text me: 916-517-9606


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