Real Estate Price Cycles – Sacramento Appraisal Blog


I have two things on my mind today. Price cycles and bid increase during the first week. Well, and banks fail. And my 23rd wedding anniversary this week. And get in shape. Anyway, let’s look at the first two things.

A wooden background with a black caption that says:

03/24/23 How to Think Like a Reviewer (at SAR)
3/28/23 Downtown MLS regional meeting
4/1/23 NAA Conference in Sacramento
04/13/23 meeting of realists
4.5.23 event with UWL TBA
5/22/23 Yolo YPN Event TBA


I had no idea there were so many experts on bank failures, but they’ve been all over social media this week. Haha. Seriously, this is something to watch, and we need time to see if other banks will follow Silicon Valley Bank.


It’s been a few months since I updated this image, so I wanted to share a new version. Here is the price change in Sacramento since the days of the shag rug in 1975. This is based on the Freddie Mac Price Index and I have adjusted it for inflation as this helps show more pronounced changes.

Here’s what the nominal price data looks like (not adjusted for inflation):


1) Back and forth: Markets go up and down. bottom line. A simplified explanation for real estate is that it’s supply and demand, but what’s happening behind the scenes with the Fed and fiscal policy is a massive factor in shaping the real estate market (including supply and demand).

2) Seasonal price increases: The charts above don’t show it, but a spring seasonal uptrend can occur during a bearish cycle. For example, in spring 2007 and 2008 there was a seasonal increase in both volume and prices. We’ll see what happens in the coming months as prices are higher now, but early 2023 has seen a seasonal price spike so far. I find that in many areas of the city there has been a huge price drop from May 2022, but now prices are flat or slightly higher given the growing spring demand. In short, last year’s sharp decline appears to have leveled off in recent months.

By the way, reviewer, which box are you ticking?

3) Cycle length of five to six years: Prices in Sacramento tend to fall for five to six years when there is a downward trend, and we should brace for that. But It would be a mistake to say that we are locked into a given timeframe for this upcoming cycle. Finally, with high inflation, the Fed trying to break something, and volatility in mortgage rates, the market is feeling so uncertain right now that we need to see what happens (while staying in touch with the normal trend). It’s also worth noting that we currently have such an odd dynamic of off-market sellers and we’ve only scratched the surface of what this will mean for the next few years.


The market has heated up for the spring and properties are selling fast again. This isn’t at all like early 2022 in the stats, but half of the pendings since March have been in the market for 15 days or less, and that’s a blazing speed compared to the ice bath fall season.


Yes, some properties are bidding high today, but it’s not at the level of early 2022. If there is an increase in bids, it usually happens in the first week or so. When properties are bid up, it is usually 5% or less above the original price. And the longer homes are on the market, the lower they tend to sell from their original price (duh, thanks). Right now we’re seeing about a quarter of sales just above the original price, which is a little lower than normal for the time of year and significantly lower than the last two years.


There are also many properties that sold BELOW their original price in the first week. Kudos to the sellers who listened to the buyers and responded quickly.


A few people have asked me for more images of this type, so here they are. These charts show the relationship between days on the market and property sales compared to their original listing price. By the way, it is easy to see only the luminous part of these pictures, but don’t ignore the rest. Oh, and the original list price obviously makes a big difference here. I find that when real estate is offered at the top these days, it often is a reflection of the far too low price.


I’ve had so many speaking engagements lately and I’m having a great time. I wanted to thank everyone for showing up. I am deeply honored. And thanks to the organizers of the event for inviting me. Photos by Carlos.

I hope that was helpful.

MARKET STATISTICS: I’ll be posting a lot of market stats on my social channels this week, so keep an eye out TwitterInstagram, LinkedIn and Facebook.

Questions: Do you see a spring bulge when pulling comps? Or are the prices still low? What do you think of the new visuals? I would like to hear your opinion.

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