Friday, May 5, 2023

2023 in Real Estate... What's happening?

When it comes to predictions, typically real estate markets are pretty easy to have an opinion.  While you can’t always pinpoint the top of the market or the bottom with complete accuracy, you can usually tell what’s around the corner.  However, 2023 may go down as the year of volatility and misinformation. To be honest, this year could go either way.  Let’s take a deeper dive into what’s happening right now.

Because we’re not seeing a large influx of new listings come on the market, homes that are priced right for the condition and location are seeing a flood of activity.  Our last five clients have experienced multiple offers and higher than asking price offers. In April, we saw a pretty significant increase in prices in the four-county region.  While one month doesn’t always create a trend, this isn’t what I would have predicted given the current interest rates buyers are paying.

Speaking of interest rates, the Feds just raised rates for the 10th consecutive time; the largest and fastest climb in rates ever.  This is done to cool inflation but it also could have a negative effect on the looming threat of a recession. And then there’s the third failing bank which is sending a little chill into the room of the banking industry.

With all of this said, you would think that our real estate market would be on the skids, but actually it’s quite active.  Multiple offers are being experienced by over 60% of sellers in today’s local market.  I say “local” because you can never read the national headlines and equate that to what we’re dealing with in the Sacramento region.  It used to be, 30 years ago, that we could see what was happening in the bay area and know that within six months, our market would be doing the same but that isn’t even true anymore.  Our local market is very different from most real estate markets.  Our supply vs. demand remains extremely strong and until we get sufficient housing to fill the demand, it will remain so.

Who are the buyers and sellers in today’s market??  We do expect strong demand from first-time homebuyers over the next several years given the large number of millennials hitting peak first-time homebuyer age, but affordability remains a real challenge in this environment.  Sellers are those who are taking their equity and moving out of California or downsizing – let’s call it ‘right-sizing’ for their current lifestyle.  Perhaps they’re opting to move into a one-story with no pool or maybe into the Del Webb community where you can lock the door and leave for months to travel. It could also be that parents are passing and children are inheriting the homestead that now needs to be sold.  Whatever the case, it’s definitely a time that sellers are cashing in on their equity.

What’s on the horizon is anyone’s guess.  I never would have predicted that with the interest rates the way they are, buyers would be flocking to homes like they are, but they are betting on the ability to refinance into a lower rate once the nation’s economy does slow down and rates are lower. Not a bad idea since prices seem to be on the rise again. The only downturn we saw in prices was the fall of 2022.  This January was actually the lowest we’d seen in awhile but in just 4 short months, they’ve rebounded.  Here’s a graph of the last five years of values in the four-county region.  As you can see, the secret of how great our Sacramento area is to live in is no longer a secret.  While 2022 had a decline in values, we’ve rebounded and are headed back up.

If you or someone you know is in need of a Realtor, I hope you know how much I’d love to be the one you look to for assistance.  No matter what the market is or becomes, I’m here to help guide you through.  Thanks in advance for thinking of me when the conversation turns to real estate.

Friday, April 14, 2023

Fixer-Upper Frenzy: The Pros and Cons of Tackling a Renovation Project

Are you considering buying a fixer-upper? While the idea of transforming a run-down property into a dream home or a profitable investment can be exciting, it's important to weigh the pros and cons before taking the plunge. In this blog post, we'll explore both sides of the fixer-upper equation to help you make an informed decision.

First, let's consider the advantages of buying a fixer-upper. One of the most significant benefits is the potential for increased equity. By purchasing a property below market value and improving it through renovations, you can create instant equity. Additionally, you have more control over the design and renovation process, which allows you to create a personalized space that meets your unique needs and tastes.

On the other hand, there are also some drawbacks to consider. One of the most significant disadvantages is the potential for unexpected costs. When you're renovating a property, there are often unforeseen issues that arise, such as outdated wiring or plumbing problems, which can significantly increase your renovation budget. Additionally, renovating a property requires a significant amount of time and effort, which can be a strain on your schedule and mental well-being.

Another advantage of buying a fixer-upper is the potential for rental income. If you're purchasing the property as an investment, you can renovate the space and rent it out for a profit. This can provide a steady stream of income that can help you pay off your mortgage or save for future investments.

However, there are also some disadvantages to owning a rental property. You'll need to be prepared to deal with tenants and their needs, including repairs and maintenance. Additionally, if you're not familiar with the local rental market, you may have difficulty finding and retaining tenants.

If you're willing to put in the effort and have a clear vision of what you want to achieve, the rewards can be significant. However, it's important to be realistic about your budget and timeline and be prepared to deal with unexpected challenges along the way.

If you're interested in purchasing a fixer-upper as an investment property or know someone who is looking to sell an investment property, please don't hesitate to reach out to me. Let's work together to find the perfect investment opportunity!

Friday, March 10, 2023

Will the Spring Market Boom or Bust

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For months the real estate market has felt like it’s been on life support as high prices and rising interest rates continue to sideline would-be home buyers. Sellers had little incentive to list their homes in the first few months of 2023 as home values appeared to be dropping to meet the expectations of the buyers. Buyers were frustrated by the uptick in the cost of money and sellers felt squeezed, unlike what they’d experienced just twelve months ago.

“Purchasing a home is now about 50% more expensive than it was a year ago for those who rely on a mortgage”.  Let that sink in... If you currently have a mortgage at 3% but decided to refinance that same mortgage at today’s rates, the payment would be more than double.

So when we say that mortgage rates have had a negative effect on the market, that’s what we’re talking about. Buyers who are waiting for a bargain price because they think that property values are going down may find that they’ll pay more because of interest rate increases. Even if prices do come down a little, most of those savings will be erased by higher mortgage rates.

Not trying to be Debbie Downer, because that’s so unlike me, but rates have been volatile – going back up over 7% last week. That’s a 20-year high, if you’re keeping track.  I won’t quote a current rate in this blog since they are constantly fluctuating and by the time you read this they would be different, but you might want to check out the Mortgage News Daily site below.

So if you’re trying to time your move with the rates, I wish you ‘good luck’.  That’s like trying to time the bottom of any market. It’s very difficult to do. What most lenders are offering is a no-cost refinance within the two years after you purchase so that you don’t miss out on the house you really want.  And yet you’ll be able to take advantage of lower interest rates when things do finally settle down.  This is actually a very good marketing strategy - especially since the refinance market for lenders is virtually non-existent.

On a positive note, we’ve had a great first quarter.  Sales have been exceptional and we’re looking forward to 2023 being a really good year.  But I’ve seen these markets before and know how to maneuver through them. I firmly believe that the spring selling season will be busier than what we saw in the rainy months of winter.  Flowers will be blooming – which doesn’t sell houses – but they do help to add some nice curb appeal. Our main constraint right now is the limited availability of homes for sale.  For a variety of reasons, people are not selling their home, whether it be that they don’t have anywhere to go, they’re enjoying an interest rate of 3% or less, or their home is paid for and they don’t want to pack boxes. Who knows?  Traditionally the first quarter of the year is always lacking homes for sale.  It’s just a little more concerning this year because of the feds trying to slow inflation and taking it out on the real estate market.

My prediction is that we’re going to see a good spring and summer selling season. Sellers may  however, see buyers that are asking for repairs and credits – something we got used to not talking about over the pandemic-frenzy years.  One suggestion to avoid some of the escrow surprises are with pre-inspections.  Providing the buyer with a variety of recent inspections on your home and negotiating any would-be issues up front is a proactive way of having a smoother sale.  No home is perfect and the contract is “as is”, but it’s always subject to the buyer’s inspections.  By having the inspections done ahead of time, you can pave the way to a more seamless transaction. Call me, and we can discuss the most common inspections and the pros and cons of doing them ahead of time.

As we approach the spring selling season, if you or someone you know is looking for a hard-working Realtor with decades of experience and a great attitude, I’m available to help answer any questions about the market. And if you're ready, I’ll help make the process an enjoyable one.  Thanks in advance for your referrals!

Be sure to watch for ‘Coffee with Carol’, a livestream on Facebook that will look at what’s happening in our local real estate market, keeping you up on the trends and giving you an opportunity to ask the questions that you want answers to.

Send me a friend request and I’ll see you soon!

Friday, February 10, 2023

That Was A Nightmare. This Is Just A Correction.

For much of the past two-and-a-half years, it has been a housing market free-for-all, with bidding wars, multiple offers over list price and homes purchased sight unseen. But all of that is changing as the housing market appears to be making some much needed corrections in 2023. Note that the forecast is for a housing market “correction,” not a housing market “collapse or crash.” It’s also important to note that national statistics and data does not typically reflect the range of housing market conditions locally. Home prices in the U.S. have risen by more than 30% over the past three years. In some local markets, prices have shot up even faster. The run-up in home prices was driven by rock-bottom mortgage rates and pandemic-fueled demand. Now, mortgage rates have risen, (doubled) and the pandemic is easing, which has led to a significant cooling in the housing market and a slowdown in price growth. As demand has stalled and price expectations are being reset, home prices in most local markets are coming down off their pandemic peak of May 2022.

But it is important to note that 2023 is not 2008, when home prices fell by 40% or more in some places due to the perfect storm of loose credit standards, a surge in subprime lending, an oversupply of homes and rising unemployment.  That was a nightmare!  This is just a correction.

But the national figures do not tell the whole story. Housing market conditions in 2023 are poised to be very active in our local market. Sacramento was just named “Best Place to Live in California” by Forbes, indicating that we’re still a good value based on all that we have to offer.  However, that doesn’t necessarily mean that we won’t see a continued cooling of price appreciation and sellers having to make concessions for buyers - something we’d quickly forgotten over the past three years.

What is a prospective homebuyer to make of all the prognostications? First, know that even as the housing market resets in 2023, it is still going to be a challenging environment for buyers. With limited inventory comes a need to move somewhat quickly when you see something you like.  Home shoppers should be prepared with their financing and offer strategy in place so they can make an offer when they find the right home for them.  Second, opportunities for both buyers and sellers will vary tremendously depending on location and price range. It’s going to be important to price your home based on the current market, not based on 2022 sales.  And third, you should not let media headlines tell you whether it is a good time to buy or sell. That big financial decision is 100% personal and needs to be made based on the individual circumstances and needs of each person or family.

Right now what I’m seeing most often are sellers of the age of 55 or older taking advantage of the newly revised Prop.19 which allows you to transfer your current tax base to a more suitable home.  Here’s how it works… If you sell your current home for $600,000 and are paying property taxes based on when you purchased that home (obviously for much less); then you buy a home that suits your current needs for $750,000, the first $600,000 will be based on your current property tax bill and you’ll only pay the increase on the difference of the $150,000.  This change in the law is allowing people to move into that one-story home anywhere in California, or downsize into something smaller and cash in their equity. Maybe you want a bigger home on the golf course, but not that big tax bill.  Call me if you’d like to discuss how that can be done!  You can also google Prop 19 California for the details.

As I’m sure you know, my business is based on working with people who know and trust me.  Your personal referrals mean the world to us!  If there’s anything I can do to answer questions or help anyone you know, it would be my pleasure.  Thanks in advance for thinking of me when the conversation turns to real estate this year.

Carol Kellogg

Be sure to watch for "Coffee with Carol" a livestream on Facebook that will look at what’s happening in our local real estate market, keeping you up on the trends and giving you an opportunity to ask the questions that you want answers to. Send me a friend request and I’ll see you soon!

Thursday, January 5, 2023

Let's Take A Closer Look at 2022


As we close the books on 2022 and turn the page to a new year, there are so many questions about the current, previous and upcoming real estate market that I’m asked every day.  The best way for me to discuss these topics is to pose a few questions and give you my opinion in the form of the answers … a “Q & A” of the real estate market.

What was the biggest surprise in 2022?

Obviously the seven interest rate hikes; the most recent being on December 14th (Merry Christmas).  With the cost of money changing so significantly and so quickly, it sent shockwaves into the market and priced many buyers out of being able to purchase the home they had their eye on.  Thankfully, we are starting to see buyers coming back into the market over the past few months.

Are we experiencing a bubble which will burst in 2023?

No.  This market, while challenging and a little unpredictable, is nothing like the market of 2008-09 when we experienced the mortgage meltdown.  Right now, sellers still have equity that was gained from the pandemic era.  Homes went up 30% during those two years.  Even if we lose equity in the next few years while waiting for the economy to stabilize, homeowners shouldn’t be underwater.  Having a mortgage balance higher than what the home was worth is what caused sellers to walk away from their homes during the meltdown.  We don’t anticipate that happening this time.

Are we going to see prices come down in 2023?

The short answer is “probably”, but much will depend on the job market and ongoing volatility of the interest rates.  We are anticipating an approximate reduction of up to 10% in home values if rates remain around 7% and if we start to see lay-offs. This will significantly affect the market.  It could also cause sellers to need to put their homes on the market if they don’t have enough savings to withstand a jobless period. But, if our economy improves, we will see modest appreciation. It’s still too early to be certain.

Is it a good time to buy or sell real estate?

If you are selling a home and purchasing a different home that better suits your needs, it really doesn’t matter what the market is doing.  You’ll be selling and buying in the same type of market. Sellers right now are having to be patient because it could take 30-45 days to obtain a buyer, unlike last year.  As for the interest rates, you can ask the seller to contribute toward your closing costs to buy-down the rate, and if rates settle down in the months and years to come, you can then refinance into a more comfortable loan.  Real estate is still one of the best long-term investments available.

Why are there so few homes on the market and will that change?

In the first six months of 2023, I’m hopeful that we will have more homes to choose from but unfortunately most people are comfortable where they are. Our local population has grown, but the number of homes in our region hasn’t kept up with that growth.  It may seem like a lot of people are moving out of the area, but it’s really not significant enough to make a difference.  So, if you want to sell, call me.

Are Sellers considering “contingent offers” from Buyers?

Yes, if your home is in escrow.  I know it sounds scary to think of listing your home if you don’t know where you’re going, but it’s almost the only way that we can ensure writing an offer that a seller will consider.  When we list your home and find a buyer, that buyer has to be willing to wait until you find and negotiate your replacement property.  Otherwise, you’re contingent on getting your home on the market and finding a buyer, which can take 30-45 days.  Most sellers are not willing to wait that long; but they might be willing if you’re already in escrow and can move forward with the process right away.  I won’t let you become homeless – I promise 🙂 Let’s talk options!

If you have friends and family moving outside of the area, can we help them?

Absolutely!!  We go where you go if it’s within the four-county region. In certain circumstances, we’ll even go into the bay area.  If it’s outside of our area or even outside the state, we can help you find a great Realtor that will work hard for you.  

If a move is in your 2023 plans, let us know how we can be of service!

Happy New Year!!

Be sure to watch for "Coffee With Carol" in the mornings on Facebook 

Sunday, December 11, 2022

As 2022 comes to a close...

This year has certainly been one with many twists and turns.  Coming out of the 2020-2021 housing market which was fueled by incredibly low interest rates, buyers making decisions to move based on the pandemic, and the issue of not knowing what lied ahead – It created a massive demand for home purchases as consumers competed to win a sales contract and get a home with a 2 to 3% interest rate. It resulted in outrageous house price appreciation of approximately 34% nationally in just a two-year period. It boxed out many first-time homebuyers who found themselves unable to compete against buyers willing to place a non-contingent offer above full price. That was then…

As we started 2022, to say that we were braced for just about anything would be an understatement.  In January, we started the year with no change to interest rates and an active first quarter; however, it quickly became obvious that change was coming – change in the form of six interest rate hikes between March and November. (I didn’t see that coming) I don’t have to tell you the shock waves that sent into our housing market. Through November, sales are now down 47% over this same time last year. In the four-county region, prices are down 13% since April, which was when the cost of money began to increase. Keep in mind that values rose 34% over 24 months, but that equity you’re sitting on now could be vaporizing if these rates continue to stay in the 6 to 7% range next year.  My crystal ball is still a little foggy, but my guess is that we’ll see rates remain in these ranges for a while.

2022 started with sellers getting over asking price in a matter of days, but has now become a more ‘neutral’ market with homes taking 25 to 40 days to sell, depending on the area and price range. Yes, some sellers are still experiencing multiple offers and quick sales, but it’s not as common. The median price has gone from $620K back down to $550K, giving first time buyers hope that they too may someday be able to own a home.  We’re even starting to see first time buyer grant programs with down-payment assistance again – something we hadn’t seen in awhile, so not everything about these changes in the tide are bad.

To be honest, it all depends on what your future plans in the real estate market are.  If you were one of the lucky ones who refinanced during those amazingly low rates, you’re probably not too interested in trading that in for a 6 ½% loan today – hence why we continue to have inventory shortages. But situations change and stuff happens. I’m seeing people deciding to move to other states for job opportunities or a change of scenery.  One thing is for sure - homes will continue to sell in our region.

Seldom do I make predictions about what will happen next for our market. There are just too many variables, but if I WERE to wager a guess… and that’s all it is… I’d say that we will continue to see decreases in home values over next year’s market. We have had a tremendous trajectory in our prices in a very short time. Now that the cost of borrowing has more than doubled, prices are flattening and in many cases we’re seeing a decline. What we experienced over the two-year pandemic wasn’t normal. Incremental increases are sustainable – the jump in value from 2020 to 2022 wasn’t incremental. It was a frenzy.

Another factor is that builders are still few and far between, providing us with enough new housing to meet the increasing demands of our local growing population.  As high mortgage rates, elevated inflation and stubbornly high construction costs continue, they act as a drag on builder confidence going forward. We need stability in the market for them to jump back in.

As we close the books on 2022 and begin a fresh start in 2023, our hope is that you’ll think of us when the discussion turns to Real Estate.  Whether you’re just curious, or have an immediate need, we are here to serve YOU and all of your referrals.  It’s because of YOU that we continue to enjoy success in our profession and love what we do.

May the holiday season find you beginning each day with a grateful heart.

All the best to you,

Friday, November 4, 2022

With Fall Comes Change

It’s time to dig out that umbrella and do some of those housekeeping details that we love so much like cleaning out the gutters as the leaves begin to come down. In a normal real estate cycle, during the fall months we typically see fewer homes on the market as the holidays approach.  But, this market is anything but normal or typical.

I could have told you what goes up eventually comes down – or at least slows down, but what I didn’t predict was the severity with which the interest rates would jump.  While 2.75% wasn’t sustainable (congratulations to those of you who capitalized on those rates), who would have believed that just six months later we would exceed 7%?  For those who aren’t looking to purchase a home, you may not realize what that does to a buyer’s payment but here’s an example.  If I was showing you homes around $700K at the beginning of the year, you now may only qualify for $450K now based on the interest rate increases.  And they’re not done raising those rates yet…

What has this done to our local real estate market?  It’s obviously slowed things down. In October, sales were half as many as we had during the same month last year.  The time it’s taking for homes to sell on average has tripled, going from an average of 7-10 days to over a month to find a buyer and sellers in most cases are fortunate to have one or two offers – certainly not a dozen or more that you’d receive during the pandemic.

Oh yes… the “pandemic”.  That thing that happened that caused so many people to make a move to a more suitable home while we all hunkered down.  Well, turns out some of those buyers are now feeling a little remorseful about what they purchased.  At least their interest rates were low!  But we’re also seeing people who are now wanting to make moves and are hopeful that their homes are still able to be priced higher than the last sale, but that’s not always the case.  In our current market, 46% of sellers are having to reduce their prices before they’re able to successfully put their home in escrow.

Are prices coming down??  Not yet… but as sales continue to slump, my crystal ball tells me that it’s only a matter of time that we start to see some of that “pandemic pricing” start to wane.  Real estate is all about supply and demand.  During the pandemic, there was tremendous demand for homes.  Sellers were able to capitalize on that frenzy, but right now the frenzy has subsided.  People will always be buying and selling homes due to job transfer, divorce, death, or just your typical “this house doesn’t work for us anymore” situations.  The key right now is that it’s not an ‘anything goes’ market. That’s why we’re seeing so many price reductions.  Sellers aren’t giving their houses away, but they have to come to the realization that buyers do have some say in what they pay for a home, not to mention that banks are being much more cautious about what they are willing to lend.

So what does the future look like in local real estate?  Well, we will still be standing tall when the dust settles. After 30 years in the business, we have seen many cycles and know how to weather the storm, but I do think that come January when real estate dues are due, there will be a number of part time Realtors who will exit the business. It’s considerably more work to sell homes (or should I say we earn our keep) during markets like this. I’ve gone back to paying for professional staging of homes and making sure that we’re the best value, not only in what we offer our clients but also helping our clients look their best to their potential buyers. I honestly like this type of market much more than the frenzy. Now it’s about providing the quality service that makes a difference – not who can write the fastest, non-contingent offer for a buyer who may become remorseful about their purchase.

While interest rates may not look desirable to everyone, life happens.  People will always be buying and selling homes.  I think the current pace will continue into next spring.  Economists believe that rates will come down, which will cause more to jump into the market and those with the current interest rates to refinance. If rates don’t come down, watch for more homes to come on the market and prices to level off even further as we find a balance between home prices and what buyers can afford to pay.  The reset won’t be comfortable but it’s necessary in order for us to return to a more ‘normal’ real estate market.

Be sure to watch for ‘Coffee with Carol’ a livestream on Facebook that will look at what’s happening in our local real estate market, keeping you up on the trends and giving you an opportunity to ask the questions that you want answers to.  Send me a friend request and I’ll see you soon!

If you or someone you know is looking at the market and has questions, I’m here to help.  I appreciate your referrals more than you know!

Sunday, September 18, 2022

Slump or Slowdown...

Slump or Slowdown… What's really going on in the housing market?

When it comes to the housing market, there are many ‘predictions’ of what’s happening. First the obvious; higher interest rates has led to fewer qualified buyers causing the frenzy of the pandemic-induced race for space to be in our rear-view mirror. But has it stopped all sales?  That doesn’t appear to be the case. It’s still a busy, but not frantic market. Let’s just say we appear to be moving at a more normal pace with homes taking 25-30 days to sell instead of 3 or 4.

While sellers were used to having a dozen offers to choose from, now they are lucky if two or three buyers show interest in their home. This change has led to buyers feeling a little more in control of the situation and has caused them to expect concessions in the form of credits and repairs – how quickly the tide has turned!  Not surprising since they were at the mercy of sellers for over a decade. So while you may not see prices coming down significantly in your neighborhood, behind the scenes there may be more negotiating going on than you know.

And don’t get me wrong, prices are coming down in the form of price reductions but that’s because hopeful sellers were pricing their homes too high to begin with – 48% of homes that went into contract in our region last month had made a price adjustment.

Since the market shifted in April, prices have adjusted - in some areas more than others – but prices had gone up so significantly over the past two years that sellers won’t be under-water on their values anytime soon. Most sellers are sitting on a fair amount of equity that they’ve built up over the past decade. With the rise in interest rates, they won’t be tempted to refinance and pull out that ‘free money’.  Thank goodness, since that’s what contributed to our last collapse. In some areas, home prices are still on the rise but the rising cost of living and increasing interest rates are starting to have an effect. With one more increase in mortgage interest rates expected in 2022, it’s anyone’s guess what that will do to our buyer pool, much less in 2023??

While the rates are still significantly lower than they have historically been, the price of a home is ten times what it was in 1982.  Rates are probably the most significant change in our market today.

Increased interest rates have a much more significant effect on a buyer’s monthly payment than a reduction in the home’s price of say $20,000.  This is why if someone is considering buying a home, it’s wise to do it while rates are still relatively low and not wait.  Many buyers who thought that the market would slow down and prices would come down have been priced out of the market by the increase in the cost of money.

For sellers who are considering making a move, the ‘anything goes’ market is now in the history books.  We’re back to the market of pricing it right and baking cookies to give that “there’s no place like home” feel.  This type of market is one that I enjoy much more than the frenzy.  It’s fair on both sides of the aisle. If you’re thinking of buying or selling, or you know someone who is, I would love to be of assistance in the process.

Be sure to watch for 
Coffee with Carol” a daily livestream on Facebook that will look at what’s happening in our local real estate market, keeping you up on the trends and giving you an opportunity to ask the questions that you want answers to.  Send me a friend request and I’ll see you soon!

2023 in Real Estate... What's happening?

When it comes to predictions, typically real estate markets are pretty easy to have an opinion.  While you can’t always pinpoint the top of ...