We hope you’re doing well! In this issue of In the Neighborhood, we’ve got an update on the current market, an idea that can help buyers win, and a few gardening ideas as summer rapidly approaches. We hope you find it interesting and useful!
Note: this article was featured in our May 2023 email newsletter.
Funky Market
After it seemed like we were transitioning to a buyers’ market last fall, this spring has gotten funky again. We’re seeing 10-20 competing offers on many homes in the lower price ranges (especially updated houses under $550k). This isn’t so much due to buyers getting back into the market as it is about sellers not wanting to sell. The number of new listings this year has been remarkably low. Take a look at this graph from our friend, appraiser Ryan Lundquist’s Sacramento Appraisal Blog:
This is by far the slimmest pickings of the last 10 years! Why are new listings so low? Probably because so many homeowners refinanced their mortgages in 2021-2022, some at less than 3% rates, and they are hesitant to sell and lose that benefit.
Anyway, even with the multiple offers we’re seeing, it’s not like early 2022 (or 2021). In the past two years, more than 70% of homes sold in the Sacramento region went over asking price. Now, it’s about 41%. So, most are still going for the listing price or less. But listing price can also be deceptive. When agents underprice compared to the comps, expect to definitely see a home go over the asking price. This is surprisingly common in our recent experience, and it’s probably because they want a bidding war and a quick sale.
Steve spent some time last week at meetings of the California Association of Realtors (he’s on their Taxation & Government Finance and Local Government Policy Committees), and agents from across the state are feeling a bit funky about this market. Like most people in sales, they are perennially optimistic, but ask the right questions, and they generally say that things are pretty tough right now.
Here’s an Idea: How About a New Build?
If you’re looking to buy but concerned about the bidding wars and tight inventory, consider new home builders. Just about all of them have cut prices nicely in the past nine months, and they’re giving incentives that can buy down your interest rate and/or pay much of your closing costs. You can also negotiate for upgraded interior items (flooring, countertops, appliances, etc.) to be included in the price.
Why are they so being so accommodating? Most builders are publicly traded corporations, and they need to show their stockholders that sales are growing again after the slowdown of last summer and fall. Stock values are all about growth in the coming quarters. So, they’re being more aggressive to move their inventory.
We’ve done this recently, and on a home priced in the mid-500s, the builder was giving $25,000 in lender incentives. But here’s the key: bring your realtor (hopefully us!) with you on the first visit. If you do, they’ll let us work for you, and we can strike a better bargain, help review the complicated documents, and help you understand the process better. You need an advocate on your side, because the agent working for the builder is not paid to look out for you! One of our recent buyers had to wade through a 225-page purchase contract. Yikes! We were glad we could help make sense of the process for him.
Finally, another great thing about new builds — usually you can get into contract simply by writing a check for the deposit. It’s first-come, first-served, and you don’t have to bid against 20 other buyers. Right now, that’s pretty appealing.
In the Garden
Time to Plant Summer Veggies!
After this long, cold spring, it’s finally time to get your summer veggies planted. And look at the forecast for 90-degree days next week — summer is coming quick! We just bought a bunch of tomatoes, peppers, squash, cucumbers, and some flowers to include in the veggie beds for good looks and to attract pollinators. Don’t forget herbs for flavor! We also picked up some basil, scallions, chives, sage, and stevia. Let the summer fun begin! 🙂
Check out Steve’s garden updates on Instagram at steve.grows.stuff »
As always, we’d love to hear from you. Just reach out with our contact info below, and we’d love to help with your real estate needs or even just answer a few questions!
All our best,
Santia & Steve