Above is a great image/graph created by Ryan Lundquist, an excellent Sacramento Appraiser .
This shows the difference in cash buyers for the beginning of 2014 compared to the beginning of 2013 (In the Sacramento Area of course). You can see that amount of cash sales is only half of what it was last year. Financed sales are roughly the same. So the biggest difference in the market right now is less cash buyers compared to last year. The biggest reason is that prices have increased to the point of many cash investment properties not making a lot of financial sense (and huge investment companies like Blackstone pulling out of our market).
Although that means less overall sales, I expect we are going to see a very strong spring and summer market for a few reasons:
1. Many, many people wanted to sell their home and buy a new one last year but did not because finding the replacement home was extremely difficult due to the speed of the market, extremely low inventory and buyer competition. Well the market has gone from lightening speed to just a quick jog, the inventory has slightly picked up a bit and the buyer competition is still there but not as feirce. So this is making for an excellent move up seasons for those needing to sell and buy at the same time and not move twice. The market is prime for that right now so expect all of those people to be driving the market this spring/summer.
2. The inventory is still fairly low. Right now the Sacramento Area has around 2 months of inventory. A "balanced/normal" market is 4 to 5 months of inventory. This will keep prices solid and provide a solid base for the market to stand on this year.
3. Interest rates are still low. For the buyers that have not purchased the last few years, this is going to be a major driving force for them to finally purchase. The Fed has started to taper off their buying program that is keeping interest rates low. Everyone now knows that rates will definitely be going up in the months and years to come.
4. Boomerang buyers. Those that went through short sales and foreclosures in 2008 through 2011 are now becoming eligible to purchase again. Check out this video for more info.
Lastly, here's my predictions video for the 2014 Sacramento Real Estate Market that somewhat mirrors this topic.
What are your thoughts on what the spring/summer market will bring? Check back for updated data. It's going to be an interest selling season that will be unlike any that we've had in the past 5 or 6 years.