Thursday, February 21, 2019

Bay Area Home buyer Exodus to Sacramento CA? 107924606

As a Sacramento real estate agent, I use a separate marketing blog, directed to the Bay Area, to draw interest from the many migrating home buyers and investors that are interested in our Sacramento area.  I began that project last summer.  The average home in San Francisco is selling for $1.37 Million dollars.* (Note, I said "average.")  The average home in San Jose is selling for $1.09 Million dollars.* 

We also have a Facebook, Instagram and You Tube Audience in the Bay Area that follows our listing and blogs. We even do a video tour of your home and show it to all of those Bay Area buyers who have cash money to buy your home. 

Imagine if their home is above average. That is who is exiting the Bay Area, looking for better values in Sacramento and Roseville/Rocklin, etc., and they are carrying boatloads of cash with them as they come. No wonder they make all cash offers, and they don't mind over bidding everyone else. They can sell an average home over there and come over here and buy an exceptional above average home in Sacramento or surrounding communities for all cash and still have cash to put in their pocket also. Some Sacramento based buyers are angered at having to bid against Bay Area money and with good reason. But Sacramento sellers love it. 

Let's say they sold their home in the Bay Area and netted $1.3 Million in cash. Then let's say they see your home you just listed for $800,000. Someone brings you $790,000 as an offer. But this Bay Area person, who netted $1.3 Million in cash on the sale of their home, offers you an over the bid price of $830,000. Done deal. Were they injured at all for over paying you for your home? No, they used inflated money from their home and your $800,000 home was probably much bigger and nicer than their Bay Area home they sold for well over a Million. It does make you stop and think, doesn't it.

A new survey says that 53% of Californians want to leave the state.* The article I quote below cites the high cost of living as the main reason. But a huge problem which most will agree on in California, is the difficulty in finding affordable housing.

So, if there is a looming exodus in seed form on the minds of many Californians, which may or may not happen, what we do know is that there is an exodus already happening from the big cities, including the Bay Area, due to prices and economics. Apparently, the Sacramento region has been the biggest recipient of the Bay Area outward migration which has resulted in the influx of home buyers to the Sacramento Valley. I want to show you an excerpt from the San Francisco Chronicle SFGate Online article from 2/13/19:

Excerpt begins:

"There have been other signs of the California exodus. In December, it was revealed that one of the most frequently Googled questions in California last year was "Should I move out?" The Bay Area was also found to be leading the nation in outward migration, meaning more people are leaving the region than moving in. However, most people who moved out of the Bay Area didn't go too far; the number one destination was Sacramento, followed by Los Angeles, Seattle, Portland and San Diego."*

End of Excerpt!    To read the full article, go here.

I have set up a marketing system for our clients in the tri-county area to maximize their chances of getting their home noticed by Bay Area home sellers who have cash. It is all about strategic positioning. If our market has softened, then skill and finesse and experience are again going to be in demand as qualities needed in a local real estate agent and firm. In some cases, the way the market was the last few years, a 6th grader could have sold a person's desirable and hot home as the market and the house did its own selling due to low inventory. Commissions nevertheless were paid just the same. Contact us today to discuss your needs and to see how we can help you succeed in selling your home and receiving the best possible offer.

*Source: 53 percent of Californians want to leave the state, according to new survey!
By Alix Martichoux, SFGATE-Online, Chronicle, Published 12:13 pm PST, Wednesday, February 13, 2019

Disclaimer/Indemnification:  This blog is meant for informational purposes only and is not meant to be advice for daily real estate practices. Readers using the materials and sources in this blog understand that the facts are shared as principles, and are not exact advice for specific persons or specific situations. The principles and notifications and facts shared in this blog are meant to raise awareness for consumers so that they may make decisions based on knowledge they obtain from many different sources including this blog. Readers agree to indemnify and hold harmless Greg Nichols and any sources used from liability due to any decisions readers may make in real estate matters based on reading this blog. Readers need to seek out advice from their attorneys or from real estate brokers that they are in contract with who are acting as their legal agents.

Greg Nichols
eXp Realty
DRE # 00632894

A Licensed California Real Estate Broker

Tuesday, February 12, 2019

What 5 Housing Experts Said About 2019 Sacramento Real Estate Prices! 107924606

From Greg: I quit law school in 1977 to go into Sacramento real estate.  I was 22 years old, and the firm that I joined was Kiernan Realtors, a very large multi-office firm, headquartered at 3001 P Street.  Maybe some of you older individuals that have been around awhile remember that firm.  As I recall, they later merged with TRI Realtors, a firm from San Francisco.  Another firm bought TRI out, I think it was Prudential Real Estate.  Unless I am mistaken, Coldwell Banker now owns all those offices that still exist. 

That was a different era of real estate.  The purchase agreement and offer form back then was a single, legal size page.  There were no disclosure forms that I remember unless provided from the lender later for the seller and buyer to sign.  Now, in 2019, the offer form, called a Residential Purchase Agreement, is 10 letter sized pages long with further attached disclosures plus many, many separate disclosures also.

     The California real estate law has grown enormously since I began in the industry, with aggressive legislation and many court precedents handed down based on lawsuits filed.  This is why there are so many documents, literally myriads of paperwork to sell a single house.  But every document and disclosure is necessary to protect you in this modern litigious environment we have in 2019 California.  Now, most of these forms are signed with e-signing in the client's own home, saving mountains of literal paperwork.  A good real estate agent understands the land mines out there today that can blow up on a seller or buyer, or the agent.  Great care is taken on every escrow to dot every "i" and cross every "t."  These are the times we live in.  In some ways it is better, in some ways it is not.  I began this blog to help sellers and buyers get more understanding of the marketplace and gain information that can protect and serve them in making better decisions and save them $$ on their bottom line.

And now, our feature article.     

What 5 Housing Experts Said About 2019 Sacramento Real Estate Prices!

Just today, I ran across this recent article, written by Tony Bizjak, quoting 5 experts about 2019 home prices.  I was interested to find out that they mostly agreed with my comments to you in the previous 2 blog entries.  entry1  entry2  Not only is there a consensus that there will be home value appreciation this new year, but they also seem to agree with each other that we are not in a bubble like the one that burst in 2008.

The 5 experts are:

Excerpts begin here:

"Our team: Dean Wehrli is an analyst for John Burns Real Estate Consulting.  Erin Stumpf is a Realtor with Coldwell Banker.  Greg Paquin heads The Gregory Group, a real estate research and data firm.  Pat Shea is president of Lyon Real Estate.  And Ryan Lundquist is an appraiser and author of the Sacramento Appraisal Blog.


Stumpf: 'I believe Sacramento will see a slight increase in home prices in 2019. I foresee a balanced market between buyers and sellers, and that is great news as far as I am concerned. The number of homes available on the market will be slightly higher than in past years, and homes will take slightly longer to sell on average. Appealing homes that are appropriately priced ... will still see competitive multiple offers and sell quickly.'

Wehrli: 'Home prices are likely to be pretty stable, rising modestly by year end. I expect a decent spring selling season, particularly if mortgage rates remain lower as they have been very recently. Inventory is likely to rise a bit, but, remember, we are coming from a few years now of extraordinarily low levels of inventory.'

Shea: 'Look for a very predictable sales pattern once again in 2019. One can expect (house price) appreciation to (be in) the 4 percent to 6 percent range. Continued job growth and upward pressure on employee compensation appear to remain in play for the foreseeable future in Northern California. Mortgage rates remain incredibly favorable.'

Lundquist: 'If buyers put their foot back on the gas pedal, with mortgages rates going down now, there is room in the market to see values increase. It all boils down right now to what buyers are going to do. It’s a blank canvas.'

Paquin: 'We are optimistic for sales and pricing in 2019. There is a real possibility that sales will equal and perhaps exceed 2018 numbers. (Newly constructed homes) should see a modest increase of between 2 percent and 3.5 percent.'


All five experts: No

Wehrli: 'The factors that led to a bubble last time — easy money boosting demand artificially and very high levels of supply — are not present now. That is not to say we are not in for a slowdown when the economy cools, but it should be nothing like last time.'

Shea: 'A respectable number of homes in greater Sacramento are free and clear, and the majority with mortgages have significant equity. Payments are very manageable, due to low interest rates and salary escalations.'

Stumpf: 'Previous buyers (a decade-plus ago) hyper-extended themselves and could not actually afford those homes, and when the market declined many had to short sell or were foreclosed. We just do not have those lending products anymore, and buyers have to qualify for loans. Your average buyer today cannot get a loan without a “skin in the game” down payment, good credit, and verifiable income and employment.'

Paquin: 'As compared to the last housing boom-bust cycle of 2008, there has not been the rapid or significant price increases, the artificial lending that helped facilitate the rapid price increases and lenders have become much more diligent in who can or cannot receive a new-home loan.'"*

End of excerpts

*Source:, Real Estate News, writer - Tony Bizjak, January 10, 2019, updated January 17, 2019. 

From Greg: There are some great insights above, especially about the 2019 prices and appreciation.  As far as the part about not being in a bubble, I will, for now, not say much but I may have some thoughts on it.  It is possible we may actually have a current price bubble though smaller and less destructive than 2008's bubble, but a bubble just the same, but that is a subject for a future blog.

See the last 2 blogs: 

What is Going on in the Local Real Estate Market?

Are Real Estate Prices Going Up or Down?

Greg Nichols
eXp Realty
DRE # 00632894

A Licensed California Real Estate Broker

Wednesday, February 6, 2019

Are Real Estate Prices Going Up or Down? 107924606

     In our previous blog, we stated that many believe the market has leveled out and softened, but we also stated that there seems to be a pent up demand for many types of houses in newer and higher socio-economic neighborhoods.  One basic rule of economics is that if the demand exceeds the supply, then prices will not decrease, but "may" yet increase more.  Is there still a demand for certain types of homes?  Yes, I believe most of us believe that a huge demand is here.  How many of us even since the New Year of 2019 have heard people shout out on social media, "my house just sold in one day," or, "my house just sold in two days?"

     Not only are there qualified buyers with housing needs right now within our own tri-county region, there are also Bay Area people wanting affordable "nice" housing and many of them have cold hard cash and will even sometimes pay more to beat the competition, thereby eliminating the appraisals that are needed on usual transactions.  This drives prices up.  So if we have mixed signals of a softening marketplace or a leveling, then can that cause a pause in buyers to wait and see?  Probably not because home-buying is an emotional act from the heart which causes people to buy quickly, even at wrong times.  You have the "softening" lingo on one side, and the "demand" principle on the other.  

     A Note on iBuyer firms.  These may seem like a simple solution to softened market selling as you get an instant offer.  One such firm is Opendoor. These firms do charge a fee to the seller.  "iBuyer profits mostly stem from the service fee they charge, which tend to be higher than typical listing agents' commissions."*

*Source:  From the "California Real Estate" magazine, September 2018 issue, page 23, from article, The ERA of iBuyers.

A Critical Inspection Needed in a Home Purchase Transaction

     There are a few inspections that no home sale should be without, except in cases of the most knowledgeable buyers such as property flippers.  But even most of the flippers want to see a pest inspection too.  Right here I will discuss one of the most important inspections a buyer should have. 

What is a Pest Inspection Report?

     "Also called a termite inspection, this visual inspection is conducted by a state-licensed professional hired to look for signs of infestation or damage to a structure by wood-destroying pests.  Pest inspectors look for: Wood-destroying pests, such as termites, carpenter ants, rot fungus and wood-infesting beetles."**

     From Greg: One of the most expensive pest report finds to repair is dry rot. (rot fungus)  Dry rot is a slow creeping thing caused by moisture and if not put in check periodically, can cause a home seller a fortune at selling time.  It is good to get a pest inspection at least every 2-3 years when owning a home.  The danger to one's pocket book is that dry rot is not always visible but can be growing in a home internally and out of site.  It is up to a buyer to request a pest inspection when making an offer, and a good agent will guide them to do so.  Either the buyer or the seller may pay for the inspection.  The buyer then has a contingency period to examine the report and the seller can be required to fix the problems if the offer was written and accepted that way.  Only in rare cases would I ever sell a person a home without having a pest control inspection report provided.  Talk about flying blind.  A pest inspection is worth its weight in gold but only costs about $95 to $125 depending on the firm.

     My goal with this section about inspections is to give buyers and sellers better understanding of the escrow and inspection process.  My next blog entry will discuss another critical inspection.

**Source:  State of California Structural Pest Control Board, Q & A PDF

Greg Nichols
eXp Realty
DRE # 00632894

A Licensed California Real Estate Broker