There has been a lot of talk about the market slowing – and not just seasonally. Are we at the peak of the market? If you’ve read our market updates in the past, you know we don’t like to make real estate forecasts because:
- We are not psychic.
- We do not posses the gift of precognition.
- We do not have a crystal ball.
HOWEVER, we can tell you what is happening now in the market, and what’s happened in the past. Our favorite Sacramento appraisal blogger, Ryan Lundquist, just posted some interesting data graphs from the last few decades. Let’s have a look, shall we?
The following chart shows the annual median price in Sacramento county starting in 1999, which is the farthest the information goes back on our MLS:
Can we go back farther? Ryan uses the Freddie Mac Price Index to pull data from the 70’s and 80’s. You can see in this graph that the 90’s cycle starts a little before 1999:
Take a moment to analyze these graphs and let us know what you see. Here are some things to consider:
- How do you think your neighborhood compares to these Sacramento county graphs?
- Do YOU think we’ve hit the peak of the market?
- How does that affect your feelings toward real estate?
The median price this year is $365,000 which is pretty close to that peak in 2005 at $372,000. Will 2019 surpass 2005? We’ll let you know next year. The thing about the real estate market is that you can’t know for sure you’ve hit the peak until the market starts to go down. So, we’ll keep you posted!
P.S. Here is a link to a market update I did in June 2017. There’s a more in-depth analysis of pricing and inventory there.
Why You Should NOT Freak Out
If you are a BUYER, you might be freaking out because you don’t want to buy at the peak of the market. Take a deep breath. Remember, interest rates are historically low right now (around the low 5’s). Yes, they were even lower a few years ago, but we can’t go back in time. Interest rates are only going up, so buying now will allow you to take advantage of those great rates. Also, real estate is cyclical (as shown in the graphs above). So yes, the market may go down after you buy, but it will eventually go up again.
If you are a SELLER, you might be freaking out because you feel you may have missed the peak of the market. Take another deep breath. Remember, we can’t know for sure that we hit the peak of the market until it starts to go down. Again, we can’t go back in time. Even if you sell a year after the peak, you are still selling at a historical high. In this last cycle, the median prices TWO years after the peak were higher than one year before the peak.
Either way, you shouldn’t freak out because LIFE happens and you can’t always plan your moves around the real estate market. Just make sure that when it is time to move, you have a great team of Realtors (cough Byers Team cough) to help you take advantage of the current state of the market.
Also, follow our favorite Sacramento Appraisal Blog written by Ryan Lundquist. He puts out a weekly real estate article with great information and presents it in an entertaining way.