Comstock's magazine 1117 - November 2017 - Page 33

Does it surprise you to know that, regionally, cash purchases have only been 15 percent of all single-family detached home sales this year? THE BOTTOM Some of the largest price increases in Sacramento this year occurred at the lowest price ranges. While values in- creased by 5 percent or so for many price points, in some starter areas, values easily increased by twice that amount. So the market is ultra hot at some of the lowest prices in town, but we don’t see the same rate of apprecia- tion at every price point throughout the region. On top of that, this year, prop- erties above $1 million typically took three times longer to sell compared to properties under $300,000. ENTRY-LEVEL It’s easy to say the market is aggressive at the lower end, but it’s actually ex- tremely competitive at just about every entry-level price point. In other words: What is the minimum amount of money it takes to buy into a particular neigh- borhood? In Del Paso Heights, there’s intense competition under $200,000. In Roseville, it’s not easy to get in under $400,000. In East Sacramento, the hous- ing market is really aggressive below $450,000. Buyers are dealing with up- ward pressure and intense competition at many different price ranges through- out the region. THE MYTH OF CASH We often hear about the force of Bay Area buyers and how they’re bringing wads of cash to gut the local market. So does it surprise you to know that, regionally, cash purchases have only been 15 percent of all single-family de- tached home sales this year? This hardly reeks of a market dominated by fat cash from the Bay Area, right? That percent- age also represents a steep decline since the height of cash buyers in 2012 at 29 percent. Granted, many investors are us- ing conventional financing because financing terms are so favorable right now, but this still reminds us that while Bay Area buyers are a force in the market, they are not utterly driving the market. THE ANOMALY OF MIDTOWN A homeowner in North Natomas re- cently said to me, “My property is worth more because of the new arena.” I get the rationale, because the arena is causing some property values to in- crease. The only problem is this man’s home is located almost four miles away from the Golden 1 Center. It’s difficult to imagine someone saying, “I’m going to pay more to live on this street because of the new arena four miles away.” Midtown, however, is getting a ton of positive local and national me- dia coverage for increased residential property values — with some of this no doubt due to the development hap- pening in the city’s central core. But the “hotness” in Midtown ultimately results from a combination of gentri- fication, very low commercial vacancy rates, an influx of millennials who view this neighborhood as a destina- tion, new restaurants opening regu- larly and, you know, an arena with NBA basketball and big-time musical acts not far away. THE TOP Sometimes people talk about the top of the housing market being soft. But over the past five years, the number of million-dollar sales has actually grown by 140 percent in the Sacramento re- gion. Unlike lower price ranges, there’s no housing shortage at this price point. Are you shopping for a house with a budget above $1 million? I have good news: You have more than a six-month supply of homes to choose from, as op- posed to a one-month supply of homes in many of the lower prices. See what I mean now about that unevenly heated Hot Pocket? If someone asked me whether the Sacramento market was “hot,” I’d say yes. But, realistically, I’d probably first answer with a question: “Which mar- ket are you talking about?” n Ryan Lundquist is a certified real estate appraiser at Lundquist Appraisal Com- pany. Read more at sacramentoapprais- alblog.com. On Twitter @SacAppraiser. Join Ryan every other month as he tackles the big real estate issues of our region. November 2017 | comstocksmag.com 33