By: Jordan Triveri, REALTOR®
Here are the predictions from an expert –
Last year saw rising prices in Sacramento-area real estate as buyers competed for a tight supply of homes for sale.
What will 2018 hold?
The Sacramento Bee asked the unbiased expert, Ryan Lundquist an appraiser who tracks housing trends on his Sacramento Appraisal Blog, on his thoughts on what he is seeing in our Market.
Q: What will happen to home prices in 2018 and beyond?
Lundquist: Prices have been trending upward since 2012. Last year they went up again by 8 to 9 percent. That’s pretty consistent with the past few years, the way the market’s behaved. We have a market trying to figure out, “What does normal look like?”
Q: Where are we in the current housing cycle? How much longer will the upswing last? Is it a good or bad time to buy or sell?
Lundquist: The first and most important thing I’d say is, “My crystal ball is broken.” When I ask people who bought in 2012, “Did you buy at the bottom of the market on purpose,” they almost all say, “Nope, I just got lucky.” Buying a home has so much to do with lifestyle. It’s not just an investment. Are you comfortable with the mortgage payment, and does this house make sense with your lifestyle? There’s no guarantee of what will happen in the future. I would advise someone (thinking of buying or selling) to be cautious. It feels like we’re closer to the top of the cycle than we are to the bottom, but it’s a guess about whether or how long home values will increase.
Q: Are we in another housing bubble?
Lundquist: As prices increase, it’s only natural to have those conversations. I’ve heard more and more talk this year (about a potential housing bubble). With Bitcoin being in a very clear bubble, it provides a natural platform to parlay that into real estate. If you compare the numbers now and in 2005, you see the price metrics are getting pretty close. If we have a normal year of appreciation, by the end of the year we’d be pricewise right about where we were at the top (of the market in 2005). It’s only natural for people to see that. But we’ve had a lot of inflation for the past 10 years. It’s such a different market today than in 2005. We don’t have the ticking time bomb of variable-rate mortgages. Back then lenders were giving money to anyone with a pulse.
Q: Is there any relief in sight for the Sacramento region’s tight housing market? Will the supply of resale homes and new housing increase significantly in 2018?
Lundquist: A shortage of housing plays a huge role in the market being competitive. I hope inventory improves slightly this year. It’s just going to take time. Unless something happens that we don’t expect, it’s just going to be a longer ride to see that play out. More new construction of single-family homes and apartments would help. It’s not just all on the builders. Cities and counties need to cooperate and have a building-friendly environment. That’s really the big solution to the housing crisis. We need more units, and those units have to be built.
Q: How will the Bay Area’s economy influence Sacramento home values, whether it continues booming, or, as some suggest, hits a downturn?
Lundquist: I think what happens in the Bay Area can impact our market to a certain extent, but I don’t think Bay Area home values are the main driver for Sacramento. If we have tech money coming in, and there’s a tech bubble, that would remove buyers from our market, particularly those with cash or looking for an investment. But I don’t think that’s the number one driving factor in our market.
Source: https://www.sacbee.com/news/business/article193300214.html – Hudson Sangree