Before Buying a Home in the Sacramento Region, Watch This!

Everyone's asking, is the Sacramento housing market slowing down, heating up, or stuck in limbo? I've pulled the latest data so you don't have to guess, including migration patterns to home sales, to where home prices are trending, and what builders are doing right now to keep buyers interested, including offering some insane incentives right now. This is my November Sacramento real estate market update on my Sacramento Home Goals channel. Thank you for joining me. If you are thinking about buying or selling in the Sacramento region, then please reach out anytime. People just like you watch my YouTube videos and reach out to me every single week to navigate this market. And of course, I'd be honored to assist you as well, coming from someone who's lived here for over 40 plus years. With that said, let's begin today's video because I have a lot to share. All right, let's first talk about migration patterns. This is from Redfin. We'll talk about new home sales and then other metrics at the end of the video. It says here, of all the major U.S. metros, Sacramento was in most search for a destination amongst homebuyers looking to relocate. That's from August this year through October this year. This has been a common trend, the number one destination for people searching for a house for sale outside their area nationwide. Sacramento is in the lead by far. So here it is right here. Top 10 areas people looking to move to, Sacramento. Net inflow was double that of Phoenix, Arizona. So the second most popular destination for relocation buyers, Phoenix. Then we have these other markets as well. And here's a roundup of top 10. In contrast, here are the areas in which people are looking to move out of. That's Los Angeles, New York City, and Washington, D.C. And here's the top 10 as well. Now looking at Sacramento, where are people moving from? The vast majority is the San Francisco Bay area by far. It's nearly 10 times that compared to Fresno, Houston, Los Angeles, and Visalia. In contrast, people who are looking to relocate outside of Sacramento, they live in Sacramento, but they want to move outside of Sacramento. The most popular destinations is Boise, Idaho, Dallas, Texas, Portland, Nashville, and Medford, Oregon. And just from experience, based on all the people who reach out to me from my YouTube channels, the vast majority of people who do reach out to me live in the San Francisco Bay area. I get other people from Connecticut, Las Vegas, Alabama, Texas, all over the US, but the majority of people seem to be living in the East Bay, in the Bay area. All right. So with that said, I want to share some stats regarding new home sales, because of course on this channel, Sacramento Home Goals, I go over a lot of updates and home tours of brand new home construction, because there's a lot of incentives being offered from home builders to home buyers. And this is a report that's not online. I actually had emailed them to get this report. This is for new home sales in the entire region. It says, Sacramento area new home sales dip in September, but remain above historical averages. According to their members, they reported selling 430 new houses. That's 5% above the average of 409 sales during September, dating back to 1997. But sales were down 13% compared to August and down 19% from one year ago. What I really love about this monthly report from the BIA, which is the Building Industry Association for the Sacramento region, they look at new home sales for a particular month and compare that to the same month in years past. And the reason why I love that is that we have seasonality where we have a low level of sales in general during the winter months and a high level during the spring home buying season. And therefore it's really nice to look at our other years for the same month. This is for September. So here's September this year. Again, there was 430. That's lower than last year and the year before that, but way higher compared to 2022. Back then only 279 sales. Therefore this September was lower compared to the past couple of years, but about 54% higher compared to 2022. Obviously back then to start the year of the average 30 fixed rate was around 3% to start 2022 and skyrocketed to 7% by the time we hit October. So rates more than doubled in less than one year causing home sales to absolutely crater that year. Also 430 sales this year is much higher compared to September sales prior to COVID because the average from September 16 through September of 2019 was 318 sales. And again, that's quite a bit lower compared to what we're seeing this year. I think I want to say the falling while mortgage rates have dropped below 6.5%, many potential buyers are betting that they will fall even further in the near future. It's also possible that buyers are waiting to see how soon the government shutdown is resolved. At the time of filming this video, it appears that the government shutdown has been resolved. Markets like certainty, not uncertainty, and home buyers are no different. Buyers should keep in mind that many builders are continuing to offer generous incentives to help make a home buying more attainable. So one thing that's kind of challenging looking at home sale figures for new houses is that right now it's been in common trend for about what a year or so now that builders right now are offering a lot of incentives. So it's really hard to figure out, okay, they could have a lot more home sales compared to pre-COVID, but are they offering more incentives this year compared to years past? It's hard to tell because that information is not public, but I will share some information regarding my own personal experience working with home buyers in the region and also working with home builders, navigating the contracts with my buyers. So here's an example for you guys. I have a buyer that just got in contract just a couple of days ago on a brand new home construction. They were looking at two different builders and two of those builders were offering a hefty closing cost credit. One of them offered about $30,000 as a flex credit. The other one was offering about $55,000 as a flex credit. That's more than double what is being advertised by the builder, by the way. So I negotiated a better credit for my home buyers. They could use that flex credit, by the way, to decrease your closing costs, buy down your interest rate, have more free builder upgrades and or to decrease the home price. That is what's called a flex credit. Some builders don't offer the opportunity to decrease the price, but some of them do. So what does this all mean? If you have a hefty closing cost credit for my clients, for example, in this scenario, that means they're going to be buying a brand new house with zero closing costs. The only amount of money they have to pay is for their down payment. The closing cost is covered by their credit. On top of that, they're going to get around a 5% 30 or fixed interest rate. And one of them was offering a new refrigerator and washer dryer as well. So therefore, this is one of reasons why new home construction sales has been on the rise due to all these incentives being thrown at buyers right now. All right. So getting back to this report here, in September, Roseville recorded the most sales with 98. That was followed by Rancho Cordova with 75 sales. Then we had 51 in Sacramento, 50 in Plumas and 36 in Elk Grove. And here's a breakdown of that right here. New home sales by sub market. So in Roseville, there was 98 new home sales. And again, there was 75 in Rancho Cordova. And in Sacramento, there was 51. What really caught my attention though was Eldorado Hills. In Eldorado Hills for the entire month, there was only 10 home sales. Now, albeit these are million dollar properties, over a million dollars, and there's a far less new home sales or new homes actually for sale in Eldorado Hills compared to these other regions. But actually it kind of really surprised me. There was only 10 sales in Eldorado last month. All right. So moving on, I want to talk about inventory numbers because areas in which inventory is up greatly are areas in which home prices are actually going down. And in contrast, areas in which inventory is at very low levels, some areas we're still seeing increases in prices, especially in the Northeast. So this is according to resiclubanalytics.com. It says 17 states are now up back above pre-pandemic, otherwise 2019 levels. So looking at that, I just want to share national numbers and I'm going to share how that all compares to the Sacramento region. So on national level, inventory rose 15% year over year this October, yet we're still down by 9% from October of 2019. And that's this right here. Inventory has been on the rise this year. And in fact, this October is higher compared to any other October looking at post-COVID, but we're still lagging behind pre-COVID era in 18, 17 and 2019. And here's a look at inventory numbers nationwide compared to October of 2019, looking at existing houses for sale, excluding brand new home construction. So in California, we're still down by 9% from 2019. Whereas Arizona is up by 37%, Texas up by 31%. Then we have Colorado, Utah, and Washington all up by more than 20%, including Florida up by 23%. And on top of that, Tennessee is up by a staggering 35% from 2019. Whereas New Jersey is down by 55% and Connecticut is down by a staggering 69%. So let's also have a look at all the major metros nationwide as well. So in the Sacramento region, which encompasses Sacramento, Roseville, and Folsom, inventory is still down by 9% from 2019. Whereas in Denver, Denver is up by a staggering 43%. Phoenix is up by 45%. Then we have San Antonio up by 42%. Austin, big gain up by 55%. Let's look at that rate really quickly here, up by 55%. So this October, approaching 12,000 houses for sale. This is way higher compared to any other October going back to at least October of 2017. In contrast, looking at Sacramento, for example, in Sacramento, we have about 5,000 homes for sale. That's higher compared to any other October looking at post COVID, but still behind 17, 18, and 2019. We're Hartford, Connecticut is down by 72%. So much of the Midwest and parts of the Northeast are still experiencing big gains in prices due to the fact they have an extreme low level of supply. In stark contrast, much of the South and parts of the Northwest, for example, in Arizona have more houses for sale, a lot more houses for sale from years past. So now that we have looked at inventory levels and also migration patterns, let's look at home prices as well from a one year ago. And the most recent numbers we have from Resi Club is for September. I'll probably take another week to have October's numbers. So looking at this, as you can see, much of the Northeast, for example, has a lack of houses for sale and therefore prices are still going up. Milwaukee up by 3.5 and these other markets up by about three to about 5%. Obviously way slower compared to the 20 plus percent gains we saw in 2020 and 21. In Sacramento, we're actually down by 2.5% and still down by 8% compared to the peak of 2022. However, looking at the five year chart, though, the five year chart, we're up by 23%. So even though we're down from the past several years, looking at just five years ago, home price gains are up by over 23%. And by the way, if you guys are located in the Bay Area, want to know about prices there. San Francisco Bay Area is down by 3.5% compared to Sacramento down by two and a half percent. San Jose, though, is actually down by 1.8%. And Los Angeles is down by 1.3. Riverside down by 2.6. And San Diego is down by 2.8%. And by the way, according to Zillow's home value index, for the same timeframe, looking at September compared to September last year, overall home prices are barely up only up by 0.01%. So therefore, big picture, we're still seeing a lot of migration into the Sacramento region, but it really pales in comparison to years past, especially to compare to 2020. If you are interested in buying a home here, you might want to consider buying new home construction because again, just like I shared in that example, builders right now are offering all these incentives to home buyers right now that you could use this flex credit to decrease your closing costs, get a very low interest rate potentially on buying a brand new home. And of course you get an upgraded or not upgraded brand new house with all the warranties as well. With that said, if you guys want more information about what it's like to live in the Sacramento region, then of course, please reach out. Or if you want to buy or sell a house in the Sacramento area as well, I'll provide my information below. Also, you can book a call me right up here as well. Have an amazing day. Thank you for everyone for watching today's video and we'll see you in the next one. Thank you very much.