Sacramento Real Estate Blog

Here’s a Short Version of This Article

At least part of the dramatic drop in price that we reported for Sacramento County for first quarter of 2008 is a result of the fact that the cheaper homes are selling better, not the fact that individual homes have fallen as much as the overall average.

Here’s the Long Version

The nice thing about being an surly old bastard is that at some point you begin to care a lot less what people think of you, unless it’s someone with a gun pointed at you, or someone who might make you dinner. 

And so it is that I know that there’ll be those in the Chicken Little Subculture who’ll see this article as an attempt to minimize the bad news coming out of Sacramento County, and I am blissfully indifferent.

Let me be clear:  the real drops in value that we’ve seen in Sacramento County, Placer County, and El Dorado County have been fairly substantial.  Ask anyone who bought a home in 2005 and is selling one in 2008 — that’s not a great position to be in.  Of course, if you bought in 1996 and are selling in 2008, you’re probably kicking yourself for not moving in 2005, but other than that you’re sitting pretty.

So accuse me of minimizing the drops if you want, but I want to re-examine the numbers that came out in my last Sacramento County real estate market update in light of this other update that I did for Placer County.

The Problem With Averages

There’s always a problem when you aggregate data about a population.  On the one hand, you can’t analyze statistical data at all without more than one data point.  But the fact that the average man in America is 5′ 10″ tall (or whatever the average is this year) doesn’t mean that YOU are 5′10″ tall.  This much is obvious.

One of the interesting things I found out in looking at the Placer County numbers was that part of the reason for the roughly 30% price drop in the county was that the places where prices had fallen the most were selling more, so the higher priced homes were underrepresented.  In Lincoln, for example, home prices fell by 35%, and made up a bigger percentage of the total sales Placer County in 2008 than in 2007.  Meantime, Granite Bay, where prices fell only 9.2%, made up 8.8% of the total sales in Placer County in 2007 but only 4.1% of the total in 2008.

Looking at some of the areas we’ve considered in Sacramento County, the same sort of thing appears to be happening.  In Elk Grove, sold price per square foot fell 32.3% from year to year;  volume went up in Elk Grove by 19.8%.  In Folsom, in contrast, sold price per square foot fell more moderately (11.7%); unit volume went down in Folsom by 38.1%.

So what we’re seeing in Sacramento County is the same sort of thing I talked about in Placer County.  Prices have fallen dramatically, but only part of that drama comes from actual drops in the value of individual houses, and the rest is made up of the fact that the homes that have fallen more dramatically are selling better than those where the value has held on better.

Related links:

Sacramento County Real Estate Market Review :: September, 2008
Sacramento County September Real Estate Price Changes By Area
Sacramento County Real Estate Price Changes By Area

Greetings, market statistics fans!  Straighten up those pocket protectors and hang on to your slide rules, because it’s time once again for us to catch up on our REM sleep with yet another thrilling installment of our never-ending saga:  Sacramento (County) Real Estate Market Updates!

And the crowds went wild.

The good news:  905 units sold in February, up some ten per cent from January.  Unit volume was even up marginally from last February — and, yes, this still holds true when you adjust for the leap year.  February’s unit volume was the highest since last July, when 977 units sold.

The average home sold for $273,603 in February, up slightly over January’s average of $269,301, but down 29.9% from last February’s average sale price of $390,043.  The median sale price of $249,000 was down 29.2% from last February’s median of $353,000.  Sold price per square foot is down 28.8% from February to February, at $162.76 this year versus $228.63 last year.

The 905 units that sold in February is not bad for a late winter month where the average over the preceding twelve months was 968 units per month.  Currently there are 9,866 homes on the market, which works out to be 10.2 months of inventory.  33.9% of the homes in active inventory are short sales, but as we’ve reported earlier and a variety of our colleagues in other markets have reported since, the closing rate for short sales is much lower, at 6.6% in February.  Bank foreclosures (REOs), in contrast, make up 28% of the current active inventory (2,763 of the 9,866 available units), but in February they accounted for 59.2% of the homes that sold in Sacramento County (542 out of 905 total sales).

Related links:

Sacramento County Real Estate Market Review :: September, 2008
Sacramento County September Real Estate Price Changes By Area
Sacramento County Real Estate Price Changes By Area

Our recent Sacramento Real Estate Year in Review article covered condos as well as other residential types like single family homes and halfplexes.  Today we turn to our attention to condos only, to see how they compare to the general category. 

When I looked at the numbers, the results were surprising given the traditional wisdom that condos are the first to fall in a down market and the last to rise in an up market.

Comparing 2006 to 2007 overall for all of Sacramento County, we find that the average condo sold in 2007 for $236,914, down 6.9% from 2006’s average of $254,370.  2007’s median price for a condo was $218,000, down 7.2% from last year’s median of $235,000.  On a sold price per square foot basis, the average condo’s value fell 10.8% during the same period, from $218.16 in 2006 to $194.51 in 2007.

As we saw for residential units overall, the numbers from December to December were more dramatic than the year to year numbers.  Sacramento County Condo values fell some 18.7% on a sold price per square foot basis from 2006 to 2007.  Though of course that’s a non-trivial drop, it’s somewhat smaller than the sold price per square foot drop of 21.8% from December to December for the residential category generally.

I suspect the traditional wisdom that condos are the big losers in a down market fails to take into effect the slight but real differences in the number of foreclosures on condos.  Among all residential categories, the number of bank owned foreclosures (REOs) sold in December was 47.2% of all sales — for condos that number was 28.1%.  Similarly in active inventory, short sales and REOs make up 55.7% of inventory for all residential units, but 46.4% for condos. 

There are two possible reasons for this.  The more obvious one is that condos are cheaper, so buyers were less overextended and therefore slightly less likely to default.  Another possibility — but I haven’t researched it so I only raise it as a conjecture — is that it’s possible more condos were owner occupied and fewer were purchased as investments. 

Whatever the reason, a slightly lower default rate has helped condos retain their value somewhat better than residential properties generally.

The Rosemont area of Sacramento has many relatively affordable homes in established neighborhoods, convenient to both Folsom and Rancho Cordova on the east and to downtown Sacramento on the west.  In November, 21 homes sold in both Rosemont zip codes, 95826 and 95827.  The average sale price was $241,400, down 21.4% from last year’s average price of $307,095.  The average sold price per square foot was $176.98, down 19.3% from last November’s average of $219.20.  The median sale price of $244,000 was down 23.1% from last year’s median of $317,500.

The 9.45 months of inventory in Rosemont has a fairly high percentage of Foreclosures (20.8%) and REOs (26.4%) — though slightly less than the average for Sacramento County.  Of the homes that sold in November, 42.9% were bank owned foreclosures, versus only 2.3% last November.

Related links:

Sacramento County Real Estate Market Review :: September, 2008
Sacramento County September Real Estate Price Changes By Area
Sacramento County Real Estate Price Changes By Area

If you’re shopping for a home around Highway 50, you might want to consider Cameron Park / Shingle Springs. There are some pretty nice homes in this area and the lots around homes are bigger than most other areas. Add to that the fall colors that are so enticing this time of year!

Last year, 317 homes sold in the 95682 zip code which includes both Cameron Park and Shingle Springs. The median value of a single family residence last year was $500,000. Homes stayed on the market 65 days before they were picked up.

This year so far, only 192 homes have sold and 23 more are pending sale. The median price has fallen to $465,000. Buyers can expect a savings of approximately 7% from last year’s prices.

There are currently 227 homes to look at in this area between $240,000 and $3,495,000. Lots to look at!

Related links:

A Perfect 10 in Cameron Park
Market Update - Focus on Cameron Park / Shingle Springs

The real estate market for Sacramento for September, 2007 was the slowest we’ve seen since the MLS data begins in August, with 730 units (down 41.3% from last September’s volume of 1244 units).  By itself, this is fairly depressing, but fortunately we have somewhat better news in that 1314 units are pending sale, so it’s possible the unit volume will pick up some for October.

In terms of price, this year’s average home sold in Sacramento County for $342,640, 12.4% less than last September’s average of $391,165.  Sold price per square foot declined more, 14.2%, from $235.08 on average last year to $201.79 on average this year.  The median price fell 12.1%, from $353,750 last year to $311,000 this year.

The total number of expired listings was down slightly this September, but because of the sharp drop in unit volume, the expired to sold ratio stood at 153.6% in September, as opposed to 96.2% a year earlier.

Bank owned properties, making up just over 25% of sales in August, accounted for 26.2% of sales in September (i.e., 191 of the 730 units sold).

There are currently 11.4 months of unsold inventory in Sacramento County.

Related links:

Sacramento County Real Estate Market Review :: September, 2008
Sacramento County September Real Estate Price Changes By Area
Sacramento County Real Estate Price Changes By Area