The last quarter of 2015 is has come to a close, and so far the real estate sector has been more tame than years past. Values have seen only single digit appreciation, and the amount of available inventory has dropped off after a peak in July. Based on seasonal trends this slowdown is not completely unexpected. Market activity is slowing down as buyers and sellers shift focus to the holidays, school events, and visiting relatives.
The currently available inventory of high end real estate is seeing less activity, and buyers are very particular about the homes they’re viewing. Buyers are searching for value now more than ever. As home values have appreciated, buyers look for desirable and unique features. A discernible “value” has become much more important in the last 12 months as home prices creep back to previous highs.
The bay area continues to drive demand due to the constantly appreciating values. Although price increases have begun to lose steam in the last 6 months, they still provide a steady stream of relocation buyers for the greater Sacramento Area.
Since the $1 million + section of the Sacramento real estate market is much smaller, we look to the overall market trends for a better idea about past data and a possible future direction. Current trends point to a much more stable market with single digit movement. Some data actually shows a depreciation in values after peaking in May. I expect this is just a slight adjustment after the upward momentum of the last 3 years. Values should stabilize and we’ll see what may deserve to be called a “normal” market.
I expect to see a fairly flat real estate market for 2016. Buyers will continue to look for the best overall value and concern themselves less with “average” listings. Sellers will continue to lose their position of power as overall demand slows. Listing agents and sellers will be under pressure to bring the best product possible to market. This will require sellers to do basic home cleaning, fix small repair items, and make sure to price the home RIGHT from the beginning. Real estate agents will be under pressure to provide professional photos, well planned marketing, and a higher than average level of customer service to engage potential buyers.
Overall my outlook is positive, but measured for our local real estate market during the next 18-24 months. The market appears to be shifting from a seller market back to a more balanced market, slightly favored toward buyers.
High end real estate will move slowly as many sellers downsize and cash out. Luxury buyers will continue to move from the Bay Area and other locations around the country to take advantage of the temperate weather, reasonable cost of living, and the available school districts.