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!