Low Inventory Becomes Our New Normal

By Ryan Lundquist

It’s a seller’s market, and potential homebuyers need to up their game

One of the most pressing topics right now in housing is low inventory. Frankly, there just aren’t enough homes for sale in the Sacramento region, and it’s a problem. If you’ve bought or tried to buy recently, you certainly know this.

Since 2014, we’ve seen the supply of homes for sale in the region cut in half. I won’t bore you too much with numbers, but right now we have about a 45-day supply of homes for sale compared to about a 3-month supply of homes just three years ago. What does that even mean? There are only enough homes listed right now to last for 1.5 months. There are easily three months worth of buyers trying to compete for this small amount though. This is exactly why the market feels so competitive.

What’s causing this shortage? Over the past decade, we’ve had population growth in the region, and new construction has not kept pace. It’s been nice to see more infill projects, but the truth is homebuilding has been weak since the real estate bubble burst nearly 10 years ago. We are nowhere near the level of construction from 2003 to 2005. On a related note, many builders are struggling to find skilled workers because so many laborers left our market when construction came to a standstill.

Additionally, investors went on a spending spree after the bubble burst. Thousands upon thousands of homes were purchased and made into rentals — instead of hitting the market for sale. For instance, the investment fund Blackstone (DBA Invitation Homes) bought the bulk of their 2,892 homes in Northern California during 2012 and 2013. With so many locals lacking the funds to move or unable to qualify for a mortgage because of a previous foreclosure or short sale, investors picked up the slack.

Let’s be real: We’ve loved low-interest rates over the past five years, and it’s been great when buying or refinancing. Yet, we’re starting to see the unintended consequences of historically-low rates. Many owners are sitting on a 3.3 percent interest rate from five years ago, and they just aren’t going to move out and trade up for a higher mortgage unless absolutely necessary. And potential sellers aren’t being pulled out of the area by wage growth or job opportunities elsewhere to make a move, so they’re staying put.

This all sounds negative, but there’s a positive: Low housing inventory means sales volume has been increasing in the region. In simple terms, there are less available listings because more buyers are on the hunt. Also, in years past, a flood of foreclosure listings contributed to greater inventory, and we just don’t have that type of market any longer. In the thick of the economic recession, we saw some dark days in real estate as over 70 percent of all sales in Sacramento County were bank-owned — it’s now only 3 percent.

We frankly need more homes and apartments built, but that’s a marathon approach. For now, having low inventory has become our new normal. This is welcome news for sellers, but it can be discouraging for buyers — they end up feeling hopeless. There are things buyers can do though to better position themselves to get an offer accepted:

Prepare emotionally: Sorry to be a downer, but you probably aren’t going to get into contract on the first home you offer on. Remember, real estate is a bit like dating. You often don’t marry the first person you go out with. So take heart and expect you’ll submit many offers until something sticks.

Shop below your price range: If you are qualified up to $350,000 and money is tight, you might want to consider homes priced $320,000 to $350,000 instead of only looking at houses priced at $349,000. This allows you some space in case of a bidding war.

Remember, it’s not just cash winning contracts: There’s this idea out there that cash investors are gutting the market and leaving everyone else on the sidelines, but it’s simply not true — cash sales in the region only make up about 15 percent of sales each month. In contrast, FHA loans require very little money down and yet are consistently making up 25 percent of all sales in Sacramento County.

Find a way to make your offer stand out: We’re in a market where a house will get multiple offers, so buyers need to make their offers especially desirable to sellers. The offer probably needs to be at list price or above (assuming the list price is reasonable of course). Don’t ask for every little thing to be repaired, because sellers will get some offers without those requests. Try to make an emotional connection with the seller by writing a letter or doing something out of the ordinary. For example, while touring a home, my wife and I heard the seller was going to send her son to a private school at $1,400 per month. So in our full-priced offer we said we’d give the seller an extra $1,400 at the close of escrow to help pay for her son’s school. That made an impression and we got the house.

For now, we can expect sellers to continue to have more power than buyers, for a culture of multiple offers to be commonplace, and upward value pressure to persist in some price ranges and neighborhoods (particularly at the lower end of the market). The reality is nobody has a crystal ball to tell us exactly what values will do in the future, but in terms of inventory, there isn’t any indication it’s going to change for awhile. 








June Sales Statistics

Sacramento area home sale prices increased by 1.4% in June, compared to May. June’s median sales price was $347,250.


The amount of single family homes listed for sale in June increased by 8.8%. If you’re wondering if it’s a good time for you to sell, call me and I would be happy to go over the numbers with you.


Many homeowners would like to know about how long it would take to sell their home. While the amount of time varies, the average DOM (days on the market) in June was 18. The above chart shows that 84% of homes were on the market for 30 days or less. If you would like to know more about why a home may sit on the market longer than average, then give me a call.


Sacramento, emerging from Bay Area’s shadow, becoming booming urban alternative

A once-sleepy state capital is now the state’s fastest-growing big city




Sacramento’s scorching real estate market stays hot

Mike Luery

Sacramento’s real estate market is now one of the hottest in the country.

More than 1,700 homes sold in May, which is the highest number recorded since 2012.

The median sales price rose from $329,500 to $342,500, an increase of 3.9 percent from April to May. By contrast, the median sales price was just $160,000 in January 2012.

The average Sacramento County home is on the market for just eight days before selling, SAR’s Tony Vicari said.

It’s really all about supply and demand, Kellie Swayne of Dunnigan Realtors said.

“Right now, California’s real estate is hot, hot, hot,” Swayne said. “With so little supply out there we’ve got lots of buyers in the market. We’ve got multiple offers most of the time.”

Multiple offers make it a sellers’ market, and that means some first-time home buyers may find themselves priced out of certain properties.

“We really have a shortage of housing,” said Ryan Lundquist, a certified real estate appraiser in Carmichael.

Even though interest rates are low, Lundquist said, affordability is beginning to vanish for some buyers.

“There’s less inventory at the bottom of the market because there’s more buyers playing at that level trying to get into the market. So there’s intense competition out there,” Lundquist said.

It’s so intense that half of the 122 homes under construction at The Creamery in downtown Sacramento have already sold out, with prices starting in the mid-$500,000 range.

But with prices on the rise, some wonder if Sacramento’s housing bubble could one day crash as it did in 2008. Swayne said conditions are different now because inventories are so low.

“For right now, there’s no end in sight in Sacramento, and frankly across the state, for relieving of more inventory on the market,” Swayne said. “When that happens maybe we can start talking about a bubble.”

The short supply of housing makes economic conditions different now, Lundquist told KCRA 3.

“So I think that’s what driving the market right now as opposed to investors driving it and rampant speculation,” he said.





May Sales Statistics

Sacramento area home sale prices increased by 3.9% in May, compared to April. May’s median sales price was $342,500.


The amount of single family homes listed for sale in May increased by 9.3%. If you’re wondering if it’s a good time for you to sell, call me and I would be happy to go over the numbers with you.


Many homeowners would like to know about how long it would take to sell their home. While the amount of time varies, the average DOM (days on the market) in May was 8. The above chart shows that 84% of homes were on the market for 30 days or less. If you would like to know more about why a home may sit on the market longer than average, then give me a call.

April Sales Statistics

Sacramento area home sale prices increased by 0.5% in April, compared to March. April’s median sales price was $329,500.

The amount of single family homes listed for sale in April decreased by 1.8%. If you’re wondering if it’s a good time for you to sell, call me and I would be happy to go over the numbers with you.

Many homeowners would like to know about how long it would take to sell their home. While the amount of time varies, the average DOM (days on the market) in April was 8. The above chart shows that 81% of homes were on the market for 30 days or less. If you would like to know more about why a home may sit on the market longer than average, then give me a call.

Improvements That Increase Your Home’s Value

This year, if you’re looking to increase the value of your home but are unsure what home improvements to make, think curb appeal.

According to a recent report from Remodeling magazine, curb appeal projects, such as changes to windows, siding, and doors, lead to a higher return on investment (ROI) than interior improvements.

Over the past 30 years, Remodeling has compared the average cost of improvement projects with their value at resale, based on the experience of real estate professionals. The magazine’s 2017 Cost vs. Value Report supports the generally held opinion that today’s home buyers, while still enthusiastic about the bells and whistles, want to ensure their homes are structurally sound with all systems functioning efficiently.

Remodeling’s projects include a basement remodel, an entry door that was replaced with 20 gauge steel, and the addition of stone veneer. All of the 29 projects tracked returned on average 64.3 cents per dollar spent.

Among the trends, the higher return of curb appeal projects and projects that required the replacing of windows, doors, etc. Replacement projects generally scored higher than remodeling projects; the ROI of replacement was 74% and of remodels was 63.7%.

As in the previous year, adding loose fill insulation to the attic returned 107.7% and was the only project on the list whose value exceeded its cost. Steel door replacement and addition of stone veneer also paid off, at 90.7% and 89.4% respectively. Interestingly, these are among the cheapest projects, although their costs were up over the previous year.

Those who want to tackle an interior project might do well to consider a basement remodel, providing it’s done well; a high-end basement remodel was perceived as high value, returning 7.4% more than the same project last year, while a mid-range basement remodeling project only increased in value by 3.3% over the previous year.

Something to consider when you’re planning your next home improvement project.

March Sales Statistics

Sacramento area home sale prices increased by 0.9% in March, compared to February. March’s median sales price was $328,000.

The amount of single family homes listed for sale in March increased by 3.8%. If you’re wondering if it’s a good time for you to sell, call me and I would be happy to go over the numbers with you.

Many homeowners would like to know about how long it would take to sell their home. While the amount of time varies, the average DOM (days on the market) in March was 10. The above chart shows that 64% of homes were on the market for 30 days or less. If you would like to know more about why a home may sit on the market longer than average, then give me a call.

Spring Maintenance Checklist – More Than Cleaning

by HomeAdvisor

Too many homeowners believe spring maintenance is all about the cleaning. Sure, spring cleaning comprises a big chunk of any spring home maintenance schedule, but maintenance aimed at various structures, appliances, and systems within the home is, arguably, just as important. Nearly all homeowners love to see spotless windows for that first sunny, 70-degree day, but you can’t forget your roof and the possibility that ice dams formed over the winter. Indeed, just as much as that first spring day should provide an excuse to go for a hike or a picnic, it should also provide a reminder that your outdoor spring maintenance is waiting. Follow this spring maintenance checklist to ensure your home is in optimal condition for the rest of the year.

Spring Maintenance Checklist

  • Gutters and downspouts: Pull leaves and debris from gutters and downspouts. Reattach gutters that have pulled away from the house. Run a hose on the roof and check for proper drainage. If leaks exist, dry the area and use caulking or epoxy to seal the leak.
  • Siding: Clean siding with a pressure washer to keep mold from growing. Check all wood surfaces for weathering and paint failure. If wood is showing through, sand the immediate area and apply a primer coat before painting. If paint is peeling, scrape loose paint and sand smooth before painting.
  • Exterior caulking: Inspect caulking and replace if deteriorating. Scrape out all of the eroding caulk and recaulk needed area.
  • Window sills, door sills, and thresholds: Fill cracks, caulk edges, repaint or replace if necessary.
  • Window and door screens: Clean screening and check for holes. If holes are bigger than a quarter, that is plenty of room for bugs to climb in. Patch holes or replace the screen. Save bad screen to patch holes next year. Tighten or repair any loose or damaged frames and repaint. Replace broken, worn, or missing hardware. Wind can ruin screens and frames if they are allowed flap and move so make sure they are securely fastened. Tighten and lubricate door hinges and closers.
  • Drain waste and vent system: Flush out system.
  • Hot water heater: Lubricate circulating pump and motor.
  • Evaporative air conditioner: Clean unit, check belt tension and adjust if needed. Replace cracked or worn belt.
  • Heat pump: Lubricate blower motor.
  • Foundation: Check foundation walls, floors, concrete, and masonry for cracking, heaving, or deterioration. If a significant number of bricks are losing their mortar, call a foundation professional. If you can slide a nickle into a crack in your concrete floor, slab or foundation call a professional immediately.
  • Roof: Inspect roof surface flashing, eaves, and soffits. Perform a thorough cleaning. Check flashings around all surface projections and sidewalls.
  • Deck and porches: Check all decks, patios, porches, stairs, and railings for loose members and deterioration. Open decks and wood fences need to be treated every 4-6 years, depending on how much exposure they get to sun and rain. If the stain doesn’t look like it should or water has turned some of the wood a dark grey, hire a deck professional to treat your deck and fence.
  • Landscape: This is a natural for spring home maintenance. Cut back and trim all vegetation and overgrown bushes from structures. Limbs and leaves can cut into your home’s paint and force you to have that side of the house repainted. A little trimming can save a lot of money and time.
  • Sprinklers: Check lawn sprinkler system for leaky valves, exposed lines, and improperly working sprinkler heads. If there is an area of your yard that collects too much water or doesn’t get enough, run the sprinklers to figure out the problem. If it’s not something you can fix yourself, call a professional before your lawn needs the water.



5 Tips for First-Time Homebuyers

By • Bankrate.com

Buying a home can be thrilling and nerve-wracking at the same time, especially for a first-time homebuyer — it’s difficult to know exactly what to expect. The learning curve can be steep, but most of the issues can be resolved by doing a little financial homework.

Take these 5 steps to help make the process go more smoothly.

Check your credit

The homebuyer’s credit score is among the most important factors when it comes to qualifying for a loan these days.

“In addition, the standards are higher in terms of what score you need and how it affects the cost of the loan,” says Mike Winesburg, formerly a mortgage planner with McKinley Carter Wealth Services in Wheeling, West Virginia.

Scour the reports for mistakes, unpaid accounts or collection accounts.

Just because you pay everything on time every month doesn’t mean your credit is stellar, however. The amount of credit you’re using relative to your available credit limit, or your credit utilization ratio, can sink a credit score.

The lower the utilization rate, the higher your score will be. Ideally, first-time homebuyers would have a lot of credit available, with less than a third of it used.

Repairing damaged credit takes time — and money, if you owe more than lenders would prefer to see relative to your income. If you think your credit may need work, begin the repair process at least 6 months before shopping for a home.

Evaluate assets and liabilities

So you don’t owe too much money and your payments are up to date. But how do you spend your money? Do you have piles of money left over every month, or are you on a shoestring budget?

A first-time homebuyer should have a good idea of what is owed and what is coming in.

“You should understand a little bit about monthly cash flow,” says Winesburg.

“If I were a first-time homebuyer and I wanted to do everything right, I would probably try to track my spending for a couple of months to see where my money was going,” he says.

Additionally, buyers should have an idea of how lenders will view their income, and that requires becoming familiar with the basics of mortgage lending.

For instance, some professionals, such as the self-employed or straight-commission salesperson, may have a more difficult time getting a loan than others.

According to Winesburg, the self-employed or independent contractor will need a solid 2 years’ earnings history to show.

Organize documents

When applying for mortgages, homebuyers must document income and taxes.

Typically, mortgage lenders will request 2 recent pay stubs, the previous 2 years’ W-2s, tax returns and the past 2 months of bank statements — every page, even the blank ones.

“Why it has to be every single last page, I don’t know. But that is what they want to see. I think they look for nonsufficient funds or odd money in or out,” says Floyd Walters, owner of BWA Mortgage in La Canada Flintridge, California.

Buying a home can take a long time, but knowing what you need and where to find it can save time when you’re ready.

Qualify yourself

Ideally, as a first-time homebuyer, you already know how much you can afford to spend before the mortgage lender tells you how much you qualify for. Bankrate’s “How much house can I afford?” calculator will help.

By calculating debt-to-income ratio and factoring in a down payment, you will have a good idea of what you can afford, both upfront and monthly.

Though there’s not a fixed debt-to-income ratio that lenders require, the old standard dictates that no more than 28% of your gross monthly income be devoted to housing costs. This percentage is called the front-end ratio.

The back-end ratio shows what portion of income covers all monthly debt obligations. Lenders prefer the back-end ratio to be 36% or less, but some borrowers get approved with back-end ratios of 45% or higher.

“Find out what you can afford and then you can back into everything else. We know the money you have available to put down, we know the monthly payment and we can solve (the equation) for the third variable — and that is the home price,” Winesburg says.

Figure out your down payment

It takes effort to scrape together the down payment.

There are programs that can assist buyers with qualifying incomes and situations.

“I’ve helped arrange assistance loans for $10,000, which are interest- and payment-free, and forgivable after 5 years. Although considered a loan, they’re more like grants. Other programs can provide up to $40,000 interest-free,” says Winesburg.

“Each state is different, but most of this money comes from the HOME Investment Partnership Program, which is a federal block grant to create affordable housing,” he says.

Finally, speak with mortgage lenders when you’re starting the process. Check with friends, co-workers and neighbors to find out which lenders they enjoyed working with and ask them questions about the process and what other steps first-time homebuyers should take.