Interesting Sales Activity in Neighborhood (Elk Grove) (Sacramento: short sales, foreclosures)

[ecsdude]

I've been hearing a lot about stiff competition for home buyers in Sacramento in recent months; multiple offers, investors swooping in with winning offers, and etc.

Been monitoring my own neighborhood (HOA community), and around 4 months ago, homes were selling for anywhere from $130k-150k on average, depending on square footage, how many bdrms and what not.

Recently, one of the houses that would have probably sold for $160k tops 4 months ago, listed at $249k... for a week or two, it was still not showing as pending, but seller lowered price to $225k and shortly thereafter the status of the listing went to pending. This was for a 3bdrm, 1600 sq ft home that 4 months prior would have sold for $65k less or so.

The week after said house went to sale pending status, another house on the street over listed for $210k (smaller house at 1350 sq ft). The weekend following when the listing went up, they had an open house, and by Tuesday after the weekend, the listing went to sale pending status at the asking price of $210. This for a 3dbdrm, 1350 sq ft home that would have gone for $50k less about 4 months prior.

Zillow/Trulia still lists the property values around the $140-160k range. I guess with the lower supply and greater demand, the home owners and their selling agents decided that they could get significantly more for their homes - and apparently, based on the current pending states, they were right?

Had a coworker that was thinking of selling since the value of his home went up $65-70k, but his agent is telling him to not sell yet, as she thinks the prices will keep going up.

Do you all think now is the time to sell due to interest rates creeping up and rainy fall season being around the corner? Or do you think these two recent home sales are flukes more than anything?

[NinaN]

First of all, don't look at Zillow. The values are meaningless except for looking at trend data for a whole city. Even then, there are better sources of that data like Trendgraphix.

Rates are creeping up and this is the peak buying season. Historically, the May-July closings have the highest 4/sq ft of the year in this area. OTOH, prices are expected to continue rising, but a bit more slowly than the last 6 months.

The question for your co-worker depends on what he will do after selling. Rent? Move out of town? Buy another house? It's better to buy up in a down market. So if he's thinking of buying a more expensive home then waiting for prices to go up will hurt him. If he's thinking of buying something less expensive, than waiting will help. But he really needs to look at his plans and then determine what to do.

[calnbs]

From what I read, banks are no longer flooding the market with short sales and foreclosures which leads to short supply, jacking up the prices on what is currently available in the market as buyers go into a bidding war to buy a house. I believe house prices will continue to rise.

How much? How long? I don't know. All I know is, up to what people can afford. If everyone starts to keep driving the prices up and continue to buy even though they can't afford it, it will all come down crashing again. Honestly, what did people expect from the last house boom? That it would last forever? Based on the average income of Sacramento Household, it can not sustain a $350-400K mortgage. I don't know why Banks thought Joe, the Janitor...Jannette the Cashier can pay for a $400K house in the first place?

Will it continue to rise? I believe so. How long? Don't know. Will it reach to the prices before the crash? NO, not enough high paying jobs in Sacramento to support high price mortgage.