As you’re wrapping gifts...

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Real Estate

As you’re wrapping gifts for the fast-approaching holiday...  we are preparing to wrap up the last of our 2021 home sales. It’s been another wild ride in the Sacramento real estate market. We’ve seen people come and go from our region.  Prices have continued to go up and mortgage interest rates have remained in the low 3% range… Sound like a broken record??  It does to us, too.

It’s hard to believe that we’re approaching the two-year anniversary of the start of the pandemic – a time that we might have predicted would put the brakes on home sales, but in fact has had the opposite effect. Our market continues to be robust and has no signs of a significant shift any time in the future but I think it’s inevitable that interest rates will increase in the months ahead. The effect of that remains to be seen. For right now, we’re seeing a seasonal slowdown, mainly because during this time of year sellers take their homes off the market and wait for spring - but that’s not necessarily an indication that the market has taken a turn. It’s simply an issue of supply and demand. The demand is still there but the supply is weak so buyers are forced to take a break from their home shopping plans. This happens every year like clockwork.  The question is how quickly will the market resume once we turn the page to 2022.  My guess is that buyers will be anxious to resume their search, but as usual it will be up to the sellers to determine when the market picks up based on how soon they decide to sell. I definitely think that the sellers who come out of the gate first will win.

One change that we’re seeing are skyrocketing rents which has brought more first-time buyers into the market who can now buy for a similar monthly payment to what they’re paying in rent, as well as an incredible number of investors looking to capitalize on the new-found income from tenants. As an example, we just put a duplex on the market that has received OVER 50 offers.  I didn’t see that coming… Needless to say, if you have a duplex you’d like to sell, call me.  We have buyers.

Another change was the addition of Prop. 19, which allows the transfer of one’s current tax base to another home. This recent modification to the existing tax law can be found by googling California Prop. 19.  The law creates opportunity for homeowners over 55 to make a move without paying a higher tax rate not just within the county (as the old law was) but anywhere in the state.

The biggest issue today is affordability.  While we’ve seen property values increase 34% over the past two years, obviously this creates a challenge for buyers.  Unless you’re selling a home that’s provided this same boost to their bottom line, the thought of paying today’s prices is a little daunting; although we don’t see a huge change to prices on the horizon (at least not yet) and we’re still more affordable than bay area prices.  The predictions are that the next few years we will continue to see values go up – unless mortgage interest rates go up, which could further affect affordability.  No crystal ball predictions but rates have an impact on what buyers qualify for and add to that inflation … ho ho ho!

SO… if buying or selling is on your “TO DO LIST” for 2022, it would be our pleasure to help you or someone you know make that happen!  In the meantime, we want to thank you for your continued support of our family’s business and wish you a very Merry Christmas and a Happy New Year!

  Carol Kellogg