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Shift Happens…

The Market is Moving.  Are You Ready?

Why does it matter to everyone what is happening with homes over $799,000 in Sacramento County?  Because the high-end market homes tend to be a leading indicator for over-all market moves.  Since they are by definition a luxury purchase for a large majority of buyers (not a necessity purchase), major fluctuations and general market and wage/employment uncertainty effect the high end markets ahead of the general market.  But the general market follows.  Thus, the high-end market is a leading indicator for moves in the over-all market.

If you drill down into the numbers what you will notice is this:

  1. 12.5% drop in pending salesScreen Shot 2016-09-18 at 5.04.53 PM
  2. Price Reductions – measured by Original List Price vs Final Selling Price.  That ratio is down sharply by 72% (23.4% month to month and 20.9% year over year).  This is a strong indicator of softening prices in the high end.Screen Shot 2016-09-18 at 5.06.41 PM
  3. Inventory (housing Supply) Based Upon Pended Sales is up sharply by 17.3% – Measured by Closed Sales, inventory indicates a neutral market (neither a buyer’s nor a seller’s market) trending toward a buyer’s market.  But if you measure inventory by Pended Sales, you’ll notice it is on a upward trajectory (up 17.3% month to month).  This correlates with the previously mentioned 12.5% drop in Pending Sales.

Screen Shot 2016-09-18 at 5.07.49 PM

In a nutshell, all of this points to a softening in the high-end market and an eventual correction.  I believe over a span of about 18 to 24 months prices will fall between 8% and 10% starting in mid to late November.

If you have any questions or would like more information as to how this trend may impact your real estate holdings or plans, contact us right away.  We’re here to help!

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One Response to “Shift Happens…”

  • Derek
    Written on

    Trends are telling. As with the article sent earlier today, the demand has dropped despite lowered interest rates. historically, interest rates are low but the perception seems to be that people are scared that a .25 % increase would be catastrophic. Crazy!

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