Current Sacramento Market

[Brannon Pierce]

I am looking to get opinions from current investors and realtors about where the current market here in Sacramento is headed.  These residential and residential income properties are nearing if not at,  the highest price points as well as competition.  Where do you see this going say for the next 6-9 months?

[Aaron K.]

@Brannon Pierce Unfortunately nobody has a perfect crystal ball, just because something is at its all time high doesn't necessarily mean it is too expensive.  Could prices drop in the next 6-9 months sure, but why would they?  Rising interest rates? maybe but that would likely be a minimal effect and would have much more of an impact on multifamily.  Jobs in Sacramento are growing as well and there is no mass exodus from the area that would substantially affect prices.

[Jeremy Brown]

If you ask renters and potential home buyers in Sacramento, they'll tell you prices are too high and many predict a crash. I think that's just wishful thinking. I don't see any signs pointing to a downturn. 

Instead, I see very tight supply, little new construction (and much of that well above the median home price) and continued influx of people. Competing offers are the norm in many market segments and owner-occupants of the standard 3/2 in a decent neighborhood are routinely outbid by cash buyers (either investors or bay area transplants).

What can cause that situation to change? Supply isn't going to suddenly increase. Demand doesn't seem likely to decrease substantially, unless a sudden, unpredictable event triggers it. Interest rates will climb somewhat, but I don't see that stopping appreciation of single-family or small multi-family.

I predict at least another year or two of people complaining about home prices and rents going up and another couple years of people paying those higher prices anyway.

[Brannon Pierce]

I appreciate the information and the perspective as I am actively looking and placing bids here In Sacramento and getting outbid by way, way over asking.

[Ben Howard]

It’s all about relationships. If your agent knows other agents well then your agent will hear about properties before they hit the market. If you are a Buyer then this may help, however those relationships won’t necessarily produce a sale if the Buyer’s offer is low.

Any agent listing a property that is working as a fiduciary for their Seller should let the property reach the market for at least a few days before suggesting that an offer be accepted.

Ask your agent if they attend their local broker tour and also how often. While these tours may seem unnecessary from an outsider’s perspective, the relationships with other agents and vendors is a significant value to the agent’s Buyer or Seller. Also, the more homes an agent sees the more they can credibly speak to the market’s conditions.

[Joe Bertolino]

Higher. There is a ton of pressure on anything under $560k (FHA Territory) and we are starting to see some silly loan products surfacing. The interest rate increases are just pushing people off the fence. None of that is accounting for the 20,000 Bay Area refugees coming into Sacramento annually.

[Derek Jones]

I don't see any price drops or corrections anytime soon. What I am seeing is Bay area buyers moving into the Sacramento market because of affordability. If properties are getting multiple offers then it's still a seller's market and more buyers than homes for sale.

In the investment side it's tough as I'm seeing offers and homes being sold that don't necessarily make financial sense.

[Sam Shueh]

My opinion is nothing is going to change much during 2018. However, if the interest rates are over 6% in 2019 for every 1% mortgage interest hike the affordability is 10% less. When homes like SFBA become unaffordable the demand will be lower. Right now 30 year fixed is 4.71%. Jumping from 3-3.5% from two years the buyers have not lost much enthusiasm. The low gas (i.e. transportation ) cost helped to create a super-low inflation not experienced early. SAC investment properties funding comes a lot from Silicon Valley. So far SABA economy is robust. The mass seems to support those social media, resume, eSignature, and gadgets public companies knowing they are unlikely to be profitable for years to come.

Sam Shueh

Cupertino, CA