The inventory climbed steadily to the end of this summer from 279 listed in December 2013 to 425 listed in August.
Average price steadied at $317,000 until April 2014 then it climbed to $331,000 that month to $347,000 at the end of August. A $30,000 increase in the average. Price per square foot ticked up from $149 in December 2013 to $164 per square foot in August. So if Binh waited until early in 2014 he suffered no harm, but if he waited past the end of winter, he shot himself in the foot. (The square foot)
As far as slowing down...I'd say it's not like it was at the end of last year and the beginning of this year. Homes were selling within days in the $300,000 and under price range. Now it's taking some of them a little bit longer. Inventory has rose in the past eight months which has had an impact on sales and price. Interest rates rose and dropped again recently.
The market has fairly slowed down compared to what it was, but sales are still fairly steady. I'd say this is a great time to buy. Interest rates are relatively low, inventory is a little higher and home values are still slightly rising.
Lyon Real Estate
You should consider that your housing cost should be about 1/3 of your income at most. So you can choose to buy now- at the lowest interest rate and possibly a little higher price, or you can buy later at a higher interest rate and possibly lower housing price. Essentially your monthly cost will be the same. But if you looked at the cost of the fully amortized loan, waiting - and paying a higher interest rate- will actually cost you more over the cost of the loan.
Buy during the holiday season, or at least during the winter season in the Sacramento area, will give you the lowest seasonal rates. Buy now, because I know interest rates will go up more likely than go down.
Just one point to clear up...sellers determine pricing with advice from listing agents. Some don't use that advise. I just had a listing which finally went pending after almost 4 months. The price was too high (I warned them!), but they finally dropped it to market value recently.
Elk Grove is looking pretty good right now. I closed a short sale with a buyer there and by the time the bank approved it, the value had gone up $25K. Nice deal!
Why wait? Find the type of home or investment you want and go buy it. If you wait, you could face more competition from other buyers, or increased values/prices next year. I don't think we are about to see any huge value drops, so if you are gambling on price and waiting to buy, I think that's a losing gamble.
And, check with your tax advisor--I believe some of your costs of purchase are a tax write off, so if you can close this year, you'd start reaping the tax advantage immediately.
On the other side of things, during the spring there are usually more homes to choose from. I guess it's just up to you! Either way, good luck!
The Elk Grove market is indeed seeing increases of inventory on a monthly basis due to the interest rate rise around July of this year and the Hedge Fund investors pulling back their purchasing activity in the marketplace. Many of the price reductions you see right now are not "value" decreases they are typically Listing Agents correcting their value miscalculations when they listed the homes above the comparable property sales data.
If you are paying cash, I would say be conservative in the market and take the time to find the perfect property for you, however if you are obtaining financing, I would say any price decreases next year you feel may happen would be over shadowed by an increase in financing costs. Data coming from many organizations seem to be averaging that the thought is we will be 1- 1.5% higher in interest rates this time next year.
Also QE is on the chopping block which is what has been keeping interest rates down and with each new jobs report it puts more pressure on the mortgage industry because investors are driving up expected rate costs going into the new year. Once QE is no longer a stimulus with the Treasury and they expect the secondary market to come in and fill the space, interest rates will go up to the real risk factor not the stimulus we are in now. (If you don't know what QE is I will make it simple: The Fed is purchasing approx 80B a month in mortage backed securities and that is what is keeping the interest rates below the cost of risk, once it is removed, rates will not be as low as they are today)
NOW, if you are buying as an investment property, keep in mind you are depreciating the purchase cost over a set amount of time (check with your CPA for more details) so any decrease in home pricing may not have a huge impact if you are negating that with tax benefits. The interest rate again would factor into that equation.
If you have any questions or would like updates on inventory levels in the surrounding areas, we review that activity quite often for our clients and would be happy to share.
Bruce Slaton Broker
Realty World eCurb REALTORS