It is amazing the amount of change we have seen over the past two years in the real estate market. Not only here in the Sacramento area but nationwide.
It was just two years ago this month when, what had been a red hot real estate market started to change. All of a sudden listings stopped getting multiple offers and didn’t sell in the first few days. At the time, most of us following the Sacramento real estate market had no idea how much change would take place in the next two years. It seemed natural and even expected that the five years of double digit appreciation could not go on forever and slowing down to more historical growth rates was going to be good.
Early on we had a number of people, who came to be known as “bubblers,” who were using words like, “crash” and “doomsday.” Right now, I don’t recall anyone being very close to predicting where we are today. The local real estate market has not crashed, not all homeowners wish they were renters; some of us who are working in the industry still have jobs and are making a living doing something we enjoy. At the same time it is also clear that all the changes of the past two years have taken their toll on companies and individuals. Many jobs in the industry are gone, there are more homeowners facing foreclosure than we know about and some dreams based on growing equity have been shattered.
Real estate has long been known as slow moving , where changes take long periods of time, allowing participants to react and protect themselves, at least when compared to the stock market, for example. Most of the changes in the past two years came on very quickly and many were unprepared.
I hate that the changes in the real estate market have and are hurting people. At the same time I like some of the things that have happened and feel what we have gone through will establish a better foundation for the future. In particular, the tightening of credit standards by lenders is a positive development. Yes it has removed some potential buyers from the market and it will make it more difficult for some but it is the right direction to move. I have watched this pendulum before and know we will go through a period of very conservative lending practices before it eases back to the middle. Along with the more conservative credit standards we are seeing a decline in some of the more creative financing packages. I am glad that not every home buyer can get a 1st, 2nd and in some cases even a 3rd mortgage, adding up to more than 100 percent financing. Gone are the truckloads of investors and flippers. There is a place for this kind of participant but the market should not be a double digit percentage of them. Even in my portion of the business, we don’t need a licensed Realtor for every 5 people in the State and now the entrance requirements are becoming harder to achieve. This will lead to a more qualified and experienced cadre of agents available to serve their clients. Maybe we will even see a decline of mortgage brokers trying to sell real estate!
During these two years of change at least one fundamental of owning real estate has stayed the same. If you are buying or own property because you want to live there and enjoy the home and intend to do that for 5 to 7 years it will be a good investment.
If you have any questions about buying or selling a home in the current market, feel free to reach out to me at the MagnumOne Realty Office in Roseville at (916) 899-6571 by email to [email protected]. I would be happy to answer your questions.
We specialize serving the needs of buyers and sellers of homes in the Sacramento area including Sacramento, Placer, El Dorado, Sutter and Yuba counties.