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Folsom Housing Inventory At Three Year Low - Sales Still Strong


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#1 Steve Heard

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Posted 08 January 2016 - 02:31 PM

folsom-sales-dec-15-382x318.jpeg

 

The number of homes for sale in Folsom fell to just 69 units in December, the lowest total 3 years.

December is typically one of the slowest months of the year, with buyers distracted by the holidays, and with shorter, colder, and usually wetter days.  In this case, however, while inventory dropped, sales actually rose. For the quarter, the number of available units fell to 312, down from 429 for the same period last year, while sales were up 27% (253 units vs 208).

 

 

Winter sale prices can drop as well, with only the most serious sellers on the market at that time.  The average price per square foot for homes sold in Folsom in December was $216, down from $223 in November.

 

The new year has started with a slight bump in inventory, and today there are 76 homes for sale in Folsom, compared with 128 at this time last year.

 

Advice to buyers would be to be ready or patient, or both. If you are buying a home this year, make sure you know what you want,  have an underwritten pre-approval in hand, and proof of funds for down payment before you start looking. Priced correctly, homes don't sit on the market for long, and you don't want to fall in love with a house and find yourself unprepared to make an offer.

 

This doesn't mean you need to rush out and buy the first thing you see. Inventory typically increases steadily heading into spring, usually peaking in late summer.  If you are patient, you should be able to find more to choose from.

 

If you or someone you know are thinking of selling, this may be an opportunity to get a jump on the competition. Buyers are out there looking, but they don't have many choices right now.

 

What we don't know is what interest rates will be as the year goes on, nor whether we'll see the typical inventory increases.  Experts always seem to disagree, with some predicting rate increases forcing price drops and a rise inventory, while others say the demand for housing will continue, and expect prices to rise but still remain affordable.

 

As always, your thoughts and perspective are always appreciated.  Your guess is as good as mine.

 


Steve Heard

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#2 2 Aces

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Posted 08 January 2016 - 03:37 PM

Yeah, it's definitely a sellers market.

 

I suspect that many sellers price the house *a little high*...and then they get that price from a buyer that doesn't want to risk being out-bid.

 

And even if the appraisal comes in lower, maybe many buyers feel the pinch and come up with the difference ??

 

Do you see any of that happening, Steve ??



#3 Steve Heard

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Posted 08 January 2016 - 06:27 PM

Yeah, it's definitely a sellers market.

 

I suspect that many sellers price the house *a little high*...and then they get that price from a buyer that doesn't want to risk being out-bid.

 

And even if the appraisal comes in lower, maybe many buyers feel the pinch and come up with the difference ??

 

Do you see any of that happening, Steve ??

 

The part about the appraisal was more common a few years ago when the market was on the rebound. Appraisals hadn't met up with the market, and they were coming in low. Some buyers were writing in or accepting clauses that they pay X even if it didn't appraise.

 

Not as common these days.

 

I haven't had an appraisal come in low in quite some time.

 

In any market, the seller runs the risk of sitting and waiting, and possibly losing, if he/she prices too high.


Steve Heard

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#4 Robert Gary

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Posted 11 January 2016 - 01:22 PM

That's kind of a systemic lacking of the appraisal system. If appraisals rely heavily on comparable sales they will always lag behind the current market conditions.

 

-Robert



#5 Carl G

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Posted 11 January 2016 - 01:54 PM

Are bank owned homes back to historic levels?  Or looking at it from the other side, are foreclosures back to "normal"?



#6 Steve Heard

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Posted 11 January 2016 - 03:59 PM

Are bank owned homes back to historic levels?  Or looking at it from the other side, are foreclosures back to "normal"?

 

Just about, although every year we hear claims of 'shadow inventory' still being out there, including homes the banks foreclosed on but haven't put on the market, or homes where the owners have stopped paying but the bank hasn't yet foreclosed.

 

As for the numbers, we had zero bank-owned homes sold through MLS in 2005, 4 in 2006,  and it went up from there, peaking at 239 in 2011. Last year there were 17.

 

When I get a chance, I'll do a year-by-year comparison. Should be interesting.


Steve Heard

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#7 bsk

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Posted 01 March 2016 - 07:42 PM

Is there any way to find out how many properties are going to move in buyers vs investors who put the property on the rental market? Curious to know with prices so high, how many would be profitable by renting a property after all the expenses. I reckon that with just 20% down payment, it is hard to break even on a rental. If you are looking for a property management company to take care, then you are looking north of 30% down payment, just to break even. How long do you think are these prices sustainable. I am sure there will still be first time buyers and move up buyers. Wondering if others think the same way and if any one is investing in the current market. This is not just in Folsom but anywhere in the Sacramento region.



#8 Steve Heard

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Posted 03 March 2016 - 04:26 PM

Is there any way to find out how many properties are going to move in buyers vs investors who put the property on the rental market? Curious to know with prices so high, how many would be profitable by renting a property after all the expenses. I reckon that with just 20% down payment, it is hard to break even on a rental. If you are looking for a property management company to take care, then you are looking north of 30% down payment, just to break even. How long do you think are these prices sustainable. I am sure there will still be first time buyers and move up buyers. Wondering if others think the same way and if any one is investing in the current market. This is not just in Folsom but anywhere in the Sacramento region.

 

That data is not stored in MLS, our most readily available resource, because buyer's intent is not of note. 

 

Tax records are often used to check individual properties, because the tax bills go to the owner's address.

 

So, really, I don't know. I've contacted someone at one of the real estate tracking services to see if they can provide any insight.

 

I will say that very few of my recent Folsom sales have gone to investors, as prices have risen to the point that it is difficult to get a good cap rate, or positive cashflow or whatever instrument you decide to use to measure whether or not it is a good investment.

 

Back in 2012 and '13, when prices were at the bottom, we saw lots of cash buyers coming in and snapping up properties. In fact, Blackstone, one of the countries larges property holders, opened an office in Sacramento to take advantage of the market, and they purchased hundreds, if not thousands of homes. 

 

Today, most of my buyers are owner-occupant.

 

I have recently sold investment properties in other communities. I just closed on one today in the Tower Park area of Rancho. The homes are newer (2007) close to freeway, new shops, and lots of businesses.  They can go for $100K less than Folsom, but get about the same in rent. 

 

I've had quite a few investors looking at MidTown and West Sac, but prices are skyrocketing there, as well. 

 

I'll let you know what else I find out. 


Steve Heard

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#9 Rich_T

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Posted 15 March 2016 - 08:15 AM

I have a gut feeling that this year is like 2005, and that it's going to be the best year to sell a house in Folsom for a long time, with next year taking a hit.  Hopefully my gut is telling me wrong. FWIW I had the same feeling in 2005.

#10 Steve Heard

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Posted 16 March 2016 - 04:26 PM

I have a gut feeling that this year is like 2005, and that it's going to be the best year to sell a house in Folsom for a long time, with next year taking a hit.  Hopefully my gut is telling me wrong. FWIW I had the same feeling in 2005.

 

 

I'm hoping that we remain fairly steady, with modest price increases. Take a look at where I price per square foot has been going. We were at an average of $224 per foot in February, about a 10% increase over the same period the previous year.

 

 TGChartImage_zpsa8xpsrco.jpeg

 

 

Back in 2005, the price per foot peaked at $271.

 

TGChartImage%204_zpsnradmrpm.jpeg

 

One thing to watch is the direction inventory goes. 2005 started out low, but within months, it seemed people started to panic, and the market was flooded. At one point we had 390 homes on the market. Today in Folsom, we have 87. Let's watch the coming months to see where it goes. With interest rates low, unemployment low and the economy seemingly strong, I can't imagine a catastrophic collapse like we had back then.    

TGChartImage%203_zps1lnukfhw.jpeg

 

Our most recent inventory:

 

TGChartImage%202_zpsrhqesy8u.jpeg

 

Also note that we've got less than 2 months supply right now, and were at almost 8 months when it started going south. 

 

Let's keep our eyes open and see what happens. 


Steve Heard

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#11 Rich_T

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Posted 16 March 2016 - 08:48 PM

Well, we'll know by mid-2016 either way.  I'm thinking there might be national turmoil that would affect the stock market and thus the housing market.



#12 4thgenFolsomite

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Posted 17 March 2016 - 03:22 AM



Well, we'll know by mid-2016 either way.  I'm thinking there might be national turmoil that would affect the stock market and thus the housing market.


I suspect the markets will remain relatively calm after the presidential elections, no matter who wins because they like certainty. And the fed has indicated two slight interest rate hikes, rather than four and the market likes that too. With new businesses coming to Folsom, I think we should be pretty stable overall.
Knowing the past helps deciphering the future.

#13 Rich_T

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Posted 17 March 2016 - 08:08 AM

I suspect the markets will remain relatively calm after the presidential elections, no matter who wins because they like certainty. And the fed has indicated two slight interest rate hikes, rather than four and the market likes that too. With new businesses coming to Folsom, I think we should be pretty stable overall.

 

 

Hope so!






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