By Beth Moran–
Real estate is currently undergoing a total makeover nationwide and it’s evident our market hasn’t been spared.
One of the most impactful factors has been the changing work paradigm. Preliminary data indicates that last year Sacramento County saw a population increase of more than 13,000 people. This was about the same as the prior year’s increase, except that we were supposed to be on lockdown due to the pandemic.
Citrus Heights experienced stardom as one lucky seller received the highest number of offers on a single-family residence.
Related: Citrus Heights couple sells home after receiving over 100 offers the first weekend
Another contributing factor impacting our already dwindling stock of listings was the passage of Prop 19. This is a game-changer, as those who qualify can keep their tax basis when moving within California.
The net effect is that our small market is beginning to experience big city issues typically seen in large metros but are now a part of our landscape. There is a silver lining but it’s not business as usual.
A decade ago, a home in Citrus Heights selling at $200k is now worth more than twice that amount, and amazingly the current interest rate is half of what it was to purchase that home!
I’d like to speak to those sellers anxious to take advantage of this market and let them know that they need a plan. I’m not talking about a general overview or timeline, but specific events attached to specific outcomes.
For example, a client had been trying to sell their family home since the kids were grown and had moved out of state. Dad had a business he could take anywhere but mom was tied to the area until another position opened up out of state.
Since March 2020, everyone worked from home so they took advantage of the situation and put their home on the market. Within days they received multiple offers and accepted a 30-day close for thousands over asking.
Now what? They thought they could just rent another smaller home, but after looking at the rentals in their area they realized that they were better off paying their mortgage than renting.
So, they decided to move into their RV and rent space at an RV park while awaiting a job offer. Needless to say, adjusting to full-time camping while trying to maintain a professional image is difficult at best, so don’t get caught short on where you’ll land…have a plan firmly in place.
The silver lining is that they’re flush with cash and free to move whenever they find their forever home.
Last November Californians passed Prop 19, which replaced Prop 60. This has opened up a lot of territory previously closed to seniors, the disabled and those who suffered the loss of their home due to the wildfires.
Previously, a county had to opt-in to cooperate with the county from which a person relocated. The new version allows those qualified to move anywhere in the state and keep their original tax basis — and do so up to three times!
This went into effect April 1, 2021, and did you notice the uptick in sales during the months of April through May?
Since our area is still considered affordable, many young families are relocating and the grandparents are reaping the reward by bringing their tax basis with them as they follow. Also, those who lost their homes from the various wildfires are able to keep their tax basis when relocating out of those areas and the disabled can shop for a property that better suits their particular needs.
As you can see, these three categories of buyer have contributed to our rising prices, overlapping the demand for properties.
The seasonal cooling of the market typically at the end of the summer is the silver lining. The percentage of homes listed for sale in July in Citrus Heights shows a 24.01% increase from June.
As buyers welcome the increase of inventory, this by no means indicates that our market has slowed its pace. Competition is still high as we remain way under the number of homes needed to meet demand.
According to the California Association of Realtors the average price of homes in Sacramento County is $465K , causing some resentment among local buyers.
As August arrives and with interest rates historically low, I encourage sellers to price your home competitively. Typically, prices rise when interest rates fall, this is the usual inverse dynamic of pricing vs interest rate.
Expecting a random out-of-area buyer to pay way-over asking is what we call a “unicorn” and will result in a seller chasing the market. It seems even a pandemic can’t slow our market, but once interest rates rise, I surmise we’ll start to see the bubble deflate.
Beth W. Moran is a local real estate Broker who has been selling homes since 1999. She can be reached at Beth@SacAgent.com, or (916) 947-3993. DRE#01264309
