Big update for you… Week six of our “new norm” and two weeks since Sacramento county added real estate as an Essential Business during the COVID pandemic. As expected, real estate activity has picked up. My team at AMG has never been busier. You’ll see why below…
As promised, here’s my weekly update and insights.
I have been watching our local markets closely. Since April 8th (real estate considered essential) there has been an increase in home buying activity. In addition, many of my investors are moving money out of the stock market (recent rebound from lows) and into income property: both residential and commercial. More on this below.
Sacramento Residential Real Estate: New Activity Update: April 13 – April 20:
|Week||New Active||Hold/Cancel||NET Active||New Pending||New Sold|
|Last Wk %||100%||92%||103%||127%||113%|
|6 Wk %||135%||128%||139%||89%||76%|
Important Charts (from https://sacramentoappraisalblog.com/)
What does this mean?
Inventory is below 2019, but creeping up, now up 39% pre-pandemic. Homes taken off the market (Holds and Cancelled) are dropping. Pending Sales bottomed out in early April, have been rebounding and now down only 11%. This is GREAT news. Closed transactions are below 2019 but currently rebounding, now down 24%. Median home prices are too soon to tell, but currently down slightly. It seems that Buyers and Sellers are getting accustomed to our new norm and are viewing property virtually, limiting physical tours and writing offers and closing deals. Clearly, the current low inventory and low interest rates (below 4%) combined with spring buying season, are driving this market.
What about the Credit Markets?
Good news: Interest rates are down again now at 3.57%. Better news: Non QM and Jumbo loans, which had disappeared 4 weeks ago, are coming back slowly (Sprout Mortgage and LoanStream now offering). Underwriting standards continue to be tight, with the major three banks announcing their conventional loans will require 700+ FICO with 20% down. However, LoanStream announced they have reduced their FHA, USDA FICO to 600 and VA FICO to 620. So it’s important to shop this. My partner, Rodney Rose at Fairway is my go to on everything mortgage.
What Should You Do Going Forward?
While many are taking the “wait and see” approach, that is NOT what we are doing here at AMG. I have urged my team, my clients and everyone who will listen – if you are thinking about selling, you need to get your property on the market NOW – before the pending surge of new inventory hits the market.
According to the National Multifamily Housing Council, 31% of renters across the country didn’t pay rent on April 1. We expect May 1st non-payers to be much higher. Many of those tenants are now organizing rent strikes to include neighboring tenants who can technically afford to pay. As for catching up their payments, assuming tenants are willing, it will be near impossible, unless more financial relief is given, or their income somehow doubles during the recovery. By the time eviction and bankruptcy cases catch up in the courts, the properties will have to be sold or will be heading into foreclosure.
Also, by mid May the “stay order” will be lifted and many owners who’ve been waiting on the sidelines to sell will be putting their homes on the market. Next, once the Foreclosure Moratorium is lifted, you can expect to see many new NOD filings; to be followed by foreclosures in about six months. Both landlords with cash flow issues, plus owners who paused their payments, have a window right now to sell, before inventory floods the market. We all know what happens when we have too much inventory and not enough buyers. My team is talking to these owners about taking action now to preserve their equity, before it is gone.
Now is the time to have a plan, and act on your plan.
Let’s take advantage of this uncertainty, and with my direction, create the right plan for you. If you are a cash buyer, please reach out to me. We have a pipeline of deals coming in and the resources to find exactly what you seek. Some of my investors are buying discounted residential properties. Others are selling (or 1031 exchanging) their residential and buying commercial self- storage or medical / dental office – both great recession hedges. With 35 years experience in both commercial and residential real estate you are in good hands with AMG!
Heads Up: C.A.R. just updated their COVID Addendums and Disclosures for all transactions. Now more than ever, it’s important you hire the right agents to handle your next transaction.
Please reply to this email or call me with your questions or concerns. I’m here to help!
Alexis * firstname.lastname@example.org * 916-202-4042