Recent real estate trends in the Sacramento area show a changing marketplace. As we come down off the caffeine jitters we saw in 2012, are we returning to normal or is it something else?

The past few months in Sacramento County have seen a fairly flat median sales price, causing many people to wonder what exactly is going on. To best answer that question, we  must look to the rising inventory of homes and the effect that the exodus of cash investors has had on Sacramento County. The story is similar for El Dorado & Placer Counties.

First & possibly most obvious when you look around your neighborhood is the increased number of homes currently on the market. For Sacramento County, there are approximately 25% more homes listed than there were a year ago. When compared to two years ago, there are twice as many homes on the market. The large bulk of these homes come on the market during the Spring & Summer and some fall off during the winter holidays. With more homes on the market, buyers have more options to choose from and competitiveness wanes. It’s a textbook example of supply & demand. Supply increases, demand stays the same, & prices start to slow.

Price & Inventory

The 2nd impact to our local home values comes from the wake the cash buyers & investors left us after their mass exodus during Spring 2013. At one point, cash purchases made up close to 40% of the market & have now returned to a ‘normal’ 20% range. Those cash purchases drove prices up too quickly giving us artificial growth rates. We’re now experiencing a more balanced market.

Cash v NonCash

It is my opinion that the inventory will decrease over the next few months since listings typically drop off during the holiday season. They will pick back up next year and I would hope that prices will continue to grow at a slow, healthy, & sustainable rate. Buyers have some negotiation power back in their court once again, and although it may be an awkward transition, I think we’ll survive.