Tag Archives: Sacramento

Is the Bubble Going to Burst in Sacramento Housing Market?

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My kids (and adults alike) love these huge bubble makers – they are awesome!  It seems like the public feels the same way about the real estate market.  One investor, friend of mine, who has been in business since the early 70’s – yes, 1970’s) is very skeptical.  He says, “Maybe it’s just the old guy in me talking [kind of sounds like my dad], but I’m sure if this appreciation in the market is real or manufactured?”  He went on to say that with the government backing so many loans at 3.5% down, so many home buyers are instantly upside down in their home after they buy it, as it takes about 8-10% to sell it.”  I’ve never really looked at it like that before. My response was, “but hardly any other buyers are able to even get an offer accepted, let alone close on a home, due to all the investors gobbling up the inventory with cash!”  My seasoned friend mused on, “Even with unemployment going down, I wonder how many of these new jobs are substantial… solid jobs – ones where people are making a good living and able to buy or invest with confidence.”   I left that conversation thinking:  1) The market will keep going up as long as there is demand, and I know with my list of buyers, there is HUGE demand.  And, it will keep going up as long as there is a perception of health in our economy – that seems what everyone wants to feel, even if it’s just a perceived reality.  How long will it last?  Or, at what price are these home unattractive to both investors and buyers?  2) Especially for investing… proceed with caution.  Another friend at the table said that he will only invest if he knows that he can get out safely within 6 months.  It’s interesting to hear seasoned investors say they are unsure and don’t know, especially when the wisdom of the day is to make certain proclamations like, “We got 2 years of appreciation!” or “Once the unemployment rate falls to ____, then interest rates will go up.”  Some of these statements have truth embedded, but beware of those who “knows for sure.”

Another respected voice, Jed Kolko (Cheif Economist) says in a recent article, “that the next housing bubble is probably just a matter of time. But, as Trulia’s Bubble Watch shows, that time is not now.”  See this interesting article HERE.

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Curtis Park Village Developement, Sacramento CA

As a Curtis Park resident, I’ve been following the most recent news on the Curtis Park Village development – here’s a recent piece that goes a little beyond our Viewpoint news.

http://www.sacbee.com/2013/05/05/5393743/petrovich-to-break-ground-on-long.html#mi_rss=Business

Ten Years of Housing Inventory in Sacramento – from Ryan Lundquist

If you are like me, it helps to see a picture to help explain and understand complex concepts.  An appraiser friend of mine does an excellent job of this on a consistent basis – check out Ryan’s most recent blog post HERE

Market Udate, Sacramento CA

[last news letter to our property owners, for whom we manage their properties]

Hope you are finding the spring enjoyable.  As the weather heats up so are the sales.  We’ve assisted several more owners since our last communication in selling their properties at the highest price and in a short time frame.  Others have taken us up on doing a property value analysis and many of the responses have been, “Not yet.”  Or, “I need to wait maybe six months before I sell.” Or, “When the value comes in at $ ______, then let me know and I’m willing to sell at this price.”  I did comps on one owners condo 6 months ago and now the value has come in at nearly $40,000 higher!  These figures have surprised us too and have shocked other sellers.  Take a look at the graphs below that visually show what the market is doing.  Give us a call or email us to take your next step. 

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As you can see, the trend is upward.  Now may be the time to buy as well, as some are concerned about being priced out of the market, or wondering if properties will every cash flow again.  We also began to hear some of our clients buzzing about 1031 exchanges (tax free).  Properties with equity, but a depreciated base can sometimes be parlayed into two or three properties that generate more cash flow and have potential for some great appreciation.  Let’s talk soon to determine your next steps.

Sincerely,

Keith Klassen, Broker                                                                                                    

(916) 669.9030  

Sacramento Real Estate Bubble?

This originally  was a sent out as a market update letter to my clients.  For a good read, check out this article.

Since the end of last year we’ve seen more gradual increases in most Sacramento property values.  Some of you are no doubt thinking that properties values will just continue to increase and holding on must be the best thing to do.  This could be the answer, but let me give you a few ideas to chew on, as to why the market may not continue to go up.Image

1)      The main reason behind this small bubble of increase is the lack of and low inventory (“supply”) and high demand.  If the market gets flooded with inventory, then this dynamic changes and values could go down again.  Some still talk about the bank’s holding back their foreclosure … this is still a big question mark, but if they are, then the flood gates could open again driving the market down. 

–          There has been a 20% reduction of foreclosures in the market since last year.

–          Forty eight (48%) of all sales are still distressed homes.

 

2)      Low interest rates keep money cheap (for those who can borrow it) and keep demand high for buyers, both investors and home owners.  Right now the buyers are stacking up and are having a difficult time purchasing property due to the high level of competition and demand (again, pushing up prices).  Everyone wants to get in on the action of buying a property, locally, the Bay Area, and beyond.  While the Feds continue to promise that interest rates are stable, if they do go up (a factor that can change things dramatically), the increase in home values will level out.

 

3)      Employment… In the Sacramento and California at large, unemployment rates remain right around 10%.  I believe that until this goes down, people’s ability (and confidence) to buy and absorb the higher price tags will not exist and the market will flatten.  In conjunction with the possibility of higher inventory and higher interest rates, this small bubble could pop. 

As for now, the market is ripe for selling.  How long will it last?  Let’s watch these factors and see what the market does in the future.  I would love to hear from some you other economists out there that may have other insights into the market.  Feel free to give me a call, email, or come in for a conversation.  If you are interested in seeing what your property is worth (and receive some coaching on what to do to make it worth more) or need some creative alternatives, let’s connect soon. Either call or email – 916.669.9030 / Keith@BurmasterRealEstate.com

Sincerely,

 

Keith Klassen                                                                                    

Broker                                                                                              

DRE#01867031

Moisture in Windows – Real Estate Sacramento

I have viewed and sold so many homes with dual pane windows that have failed.  The clear, or should I say unclear, indication is fogged up glass.  When you try to clean them, you quickly realize that there is moisture trapped in between the two panes, hence the window has failed.  Most inspectors will tell you that this does not diminish the effectiveness of the window, rather it just looks ugly.  And typically the remedy is replacing the glass or the window, which can be costly.

I ran across an article/ad regarding a newer technology, whereby they can de-moisturize and repair the window by just drilling to small holes in the corners.  Sound great if it actually is legitimate.

Has anyone out there utilized this technology?  And more importantly, does it work?  If so, this would be a great innovation to all those failed windows out there.

Enjoy,

Keith Klassen – Real Estate Broker

916.669.9030

KeithAKlassen@gmail.com

Appraiser Kills Another Deal

[in a very sarcastic tone of voice]

I love spending uncountable hours searching the internet, showing many properties, counseling the buyer, writing a contract (with many revisions), coordinating with the lender/loan officer, scheduling and attending multiple inspections, re-showing the property, counseling the client, meeting for lunch and coffee multiple time to sign disclosures and paperwork, running numbers, Negotiating repairs, etc., etc., etc., …. ONLY TO BE KILLED BY AN APPRAISAL THAT COMES IN $16,000 UNDER THE CONTRACT PRICE.  This killed the deal for both the seller and buyer.  It is not a flip, short sale, or bank owned.  Don’t get me wrong, I love my job and I excel in these situations, but this is ridiculous!

[in a serious tone of voice]

Here are some of the wonderful aspect of the property…

New paint (inside and out); Newer roof; New electrical and plumbing; Renovated kitchen and bathroom; Newer central heat and air; Double size lot; Historic built-in china cabinet; New front door; Several new windows; Section 1 and 2 of pest report to be cleared, and more!

Yes, this property happens to be in Oak Park, Sacramento, but most all knowledgeable appraisers and agents know that Oak Park is “street by street.”  I personally know several of the residents on this street.  Comparing this home to homes a mile away does not do the home justice.

I am coming to believe that this area is being redlined.

Again, my question stands:  When will the market drive the market oppose to appraiser and bank practices?

Enjoy,

Keith Klassen – Real Estate Broker

916.669.9030