Mid- Year Real Estate Update – June 2023
Well, can you believe half the year has already passed? It’s time for my mid-year update. Real estate is a fickle business. It’s much like the weather “if you don’t like it stick around it will change”. So, here’s my observations on today’s real estate market in the greater Sacramento area.
- Inventory - How low can we go? Nobody wants to sell. We currently have 1.4 months supply of homes on the market. A balanced market is considered to be 3-6 month supply. The chart below shows how it fluctuates. When interest rates shot up last fall you can see how the inventory started to rise. However, we still have more buyers moving to our area than seller’s leaving.
Another way to look at the low inventory is to follow the number of homes for sale less pending sales. As the chart demonstrates...we almost have nothing on the market!! 2. Interest Rates
– Yes, they are higher than they have been in many years. We went through an abnormally low interest rate period because of the pandemic and the Fed kept them suppressed to keep the economy afloat. Unfortunately, this added fuel to inflation.
When will rates come down? When the Fed sees inflation in check then we should see rates pulling back from the current 7%. However, don’t expect to see low rates of 3-4% anytime in the coming years. For those of you who don’t currently own a home I recommend you FOCUS ON THE MONTHLY PAYMENT rather than interest rate. Are you comfortable with your budget. Getting into a home vs. rent is always wise regardless of rates. Besides you can always refinance if rates go lower.
3. Home Values – Real estate is a hyper-local business. The national media forecasted a decline in home values. To some extent this happened but not anything like a crash. Some areas that were hyper-inflated, (ie San Francisco), have seen a substancial drop in values. The Sacramento area is seeing an increase in people moving to our area therefore homes values pulled back but as you can see from the chart below the price per sq.ft. dropped in the past 6 months but now starting to climb again.
If you need more information or wish to share a comment, please reach out to me by email, text or simply call me.
John Ecklein, Realty ONE Group/Complete -916-308-7642 - firstname.lastname@example.org
Lic. # 01310793