I can tell you that the indications of market reaching bottom or being near bottom are rising sales, rising pending sales, increasing number of buyers and fewer inventory -- all of which contain variables -- and those are the factors we are seeing right now. Now, many of the sales are REOs, which stands for real estate owned, meaning bank-owned homes. And inventory may be dropping off because more sellers are realizing that they need to be more reasonable in pricing or their home won't sell.
However, the facts are April sales for this year have increased 40% over last April. As of May, in Sacramento County alone, we have 2093 pending sales. In May, in Sacramento County, according to MLS numbers (which do not include every sale in the county) we sold 1785 homes as compared to 1037 in May of 2007. That's a 42% increase in sales over last year.
When you compare inventory, that is the number of residential homes (which include condos and THs) in Sacramento County, we had 6943 active listings in May. In May of last year, inventory stood at 10,440. That means inventory has dropped by more than one-third in year-over-year comparison. That's a huge drop.
Historically, real estate remains a great investment. Sacramento County official stats expect our population to grow by another 180,000 people by 2011. That will place an upward demand on entry-level housing as people will need somewhere to live.
Interest rates are relatively low, hovering around 6%. FHA loans allow financing of homes valued to $580,000, which opens doors for a lot of buyers who were previously locked out of the market.
I can't predict for how long these conditions will remain favorable for buyers and investors, but I can tell you that the market is pretty hot right now. We're like an ocean liner floating along and bumping bottom every now and then. I am witnessing plenty of multiple offers on homes located in desirable locations. The closer you buy to major job centers, the better off you are. Some areas of Sacramento, believe it or not, have not fallen in pricing for that reason.
With one-third less inventory on the market and sales rising by 42% -- not to mention mortgage pros predicting that it is unlikely we will see another fed rate cut (which only indirectly affects interest rates) -- if I were a home buyer or investor who is remotely considering buying, I'd jump with both feet into the market.
If we haven't already hit the bottom in terms of pricing, we can certainly hit it with a rock from here. In fact, just about every transaction that crosses my desk in my office has been involved in a multiple offer situation in which the winning offer has had to compete against several other buyers to get accepted. I feel that's just one of a number of clear indications that, overall, prices are stabilizing.
If a potential buyer were to suggest to me that he or she is inclined to delay their purchase to see if prices do decrease a tick, I would advise that any savings in terms of price point are going to be minimal, and the multiple offer situation is only going to get more competitive. That factor alone is going to drive asking prices up to a point that will probably negate any reduction from where they are right now.
The point made in a previous response about the length of time you intend to retain the home before you sell is also well taken. If this is an investment for you, and you do not intend to resell within the next couple of years, this is prime purchase time for you. It's as safe as it gets to assume that you will soon be building equity with your investment.
I wish you the best of luck in finding the right home for yourself.
EXIT Realty West
It's a great time to buy in Sacramento. Once you are approved for a loan and you have a profesional Realtor working on your behalf, making sure that you get the best price...it couldn't be better. There are some great buys out there, now.
Once it becomes common knowledge that the bottom has been reached, the news will be over a month old and real estate will be on the upswing in terms of prices. Right now, we are seeing a steady increase in the amount of sales as evidenced by my recent report on the market which you can see on my blog at http://sacramentorealestatevoice.com/2008/06/04/the-outlook-
Join the other home buyers and make sure that you don't miss out on getting a home before interest rates go up and supply goes down. Good luck.
Gena Riede, Assoc. Broker