What Can You Expect in 2014?

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Today I wanted to talk to you about what you can expect in 2014. Just this past week, Chairman Bernanke made another announcement concerning tapering off the purchases of the mortgage-backed securities and bonds. We expected that interest rates might sharply go up again, although this time people had known this was coming since June and he is only going to taper the purchases by 8%. Bernanke also provided a long-range view of what to expect.

That being said, we hopefully won’t see the sharp and sudden rises in interest rates that did this past summer, but interest rates have crept up a bit. Also, after January 1st, many mortgage lenders will be under a whole new set of guidelines for processing loans and giving preapproval.

What does all this mean for you if you’re looking to buy or sell a home? If you’re a potential buyer, there probably won’t be any advantage in waiting. Inventory will most likely rebound and pick up in January-March which is a seasonal trend we always see from year to year, along with a rise in demand. This rise in inventory brings more competition compared to the fourth quarter of the year.

People are still predicting that interest rates will rise above 5% by the end of the year. With every 0.5% that interest rates rise, buyers lose 5% of their purchasing power. There is also enough demand in the Sacramento area where forecasts for equity appreciation range from 3-4% on the low end and 6-8% on the high end. We won’t see 2-3% appreciations per month the way we did before, but we won’t expect any decreases on the price side.

For sellers, everything we said about buyers affects you too. If you’re selling with the notion of moving as well, whether it’s moving in to something smaller or larger, there is no reason for you to wait either. Although prices are increasing, it isn’t enough to offset the rising interest rates. Furthermore, as this happens, your supply of buyers will be shrinking. The people who will be able to afford your home are buyers who had to back pedal and this makes your home look older and in worse condition than what they started looking at. If this continues into 2014, it will repeat what we saw last year.

I hope this information helps you make the best decision this year. Thanks and have a great day!

What Did You See in 2013?

Today I wanted to take a look back at 2013 and to look forward at 2014 and what we can expect in the real estate market here in the greater Sacramento area. Basically, 2013 was almost two different years in one. The first 4-6 months of the year, we were still in this “manic bubble” state where we had 30-50 offers on properties for 10-20% over list price. The market was very competitive and strongly favored sellers. This was driven by out of town investors that came primarily to buy single family homes in the lower to middle price ranges at rates of 50-100 homes per month.

By the time June arrived, prices in some neighborhoods had increased by 40-45% above where they had been in the spring of 2012. For buyers, this was a pretty discouraging time. Once Ben Bernake made his announcement in June that the Federal Reserve was considering cutting back on their purchases of treasury bonds and mortgage backed securities, the stock market and interest rates reacted very quickly and strongly. This took interest rates from all-time historic lows of 3.25% up to 4.5% in just a few weeks. This hindered buyer’s purchasing power and slowed the activity of those out of town investors.

When you take this all into account, the last six months of the year turned the market into a balanced or normalized market. Inventory has tripled and quadrupled in many areas; however the market went from all-time lows up to 4-6 months’ supply of homes.

Thanks and have a great day!

Have You Seen Our New Market Snapshot Tool?

Today I just wanted to let you know about a new service that we offer. It is called our snapshot tool and is a website where you can request the current market value for your home. One of the great features of this site is the ability to pull data from our metro lists, which is the large database that realtors use and have as their reference source in real time. This information will be based on the most complete, up to date and accurate data there is available and should prove to be much more accurate than going to some other websites (which I won’t mention) that realtors regard as highly inaccurate.

Secondly, the site will present a map format that allows you to see homes around you that are currently or previously were on the market. You also be able pictures of the home and the property description. Thirdly, you will get a report with a summary of all the statistics related to the market value of your home and surrounding area. Lastly, the site will keep you updated by choosing how often you would like to receive those updates. The updates will be sent to your email with no obligation, cost, spam and we will not give your information to anyone else.

If you’re thinking of moving to another area, you can pick a house you’re interested in and check out its market value to determine if the property is priced correctly. This will be available on our website or you can call, text or email us and we will provide you the link. Thanks and have a great day!