Sacramento Appraisal Blog

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The last question I ask during an appraisal

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Does the value make sense? That’s the last question I ask when finishing an appraisal, and I want to walk you through what that looks like. I hope this will be useful for both agents and colleagues. Let me know what you think.

UPCOMING SPEAKING GIGS:

4/2/25 SAFE Credit Union Coffee Talk (RSVP here)
4/10/25 Yuba-Sutter Association (register here)
4/15/25 Culbertson and Gray (private I think)
4/24/25 KW EDH (private I think)
5/8/25 Private event (details TBA)
5/13/25 PCAR
5/21/25 Grounded Real Estate
6/5/25 Auburn Marketing Meeting
9/26/25 PCAR
11/4/25 SAR Main Meeting

DOES THE VALUE MAKE SENSE?

When wrapping up the value, I find myself stepping back to ask one big question. Does the value make sense when looking at what you can get right now for that amount? I like this because it’s one final question to critique the final value. Does it seem reasonable for the market area? Or is it too high or too low? I think this is a good system of checks and balances to be more confident about value. And yes, this is an AI image I made with Grok of Dave Grohl (I’m a huge Foo Fighters fan). It’s a bit scary how good AI is getting, right?

CHECKING THE IMMEDIATE NEIGHBORHOOD

My appraised value was right around $550K, so the last thing I did in my process was step back and ask what buyers can get for that amount right now. I looked at the immediate neighborhood first as these were natural boundaries. I would be concerned if all recent sales and pendings were above $550K today because that might be a clue I’m coming in too low (unless there is a reason for a lower value). In contrast, if everything was way lower, then maybe I’m too high. As I said, this is a last question I ask to get a good sense of whether the value seems to fit with the market.

LOOKING AT A WIDER AREA TO BE SURE

Like I’ve mentioned in recent weeks, pulling comps today isn’t for the faint of heart because there aren’t that many sales. So, one thing I find myself doing is looking at a much wider area to compare various neighborhoods and understand what buyers are willing to pay in other areas. Here’s an example where I kept drawing different boundaries around various surrounding areas to ask what you can get for $550K or so. I didn’t choose comps in my report from the other areas, but researching these locations helped boost confidence that my value was solid.

Sign riders offering free pizza are the key to my heart. Haha.

ONE MORE THING

The yellow dot represents the subject value, and it was closer to the very top of the competitive sales (dark blue dots). When looking at sales this way, does it make sense for the subject to compete toward the top based on condition, upgrades, and location? In my opinion, yes. Look, it’s possible for some properties to break out of a range in light of upgrades or something special, but this property seemed to fit right in there based on comps (and what you can get right now for properties with similar features). One of the things I like about seeing a range of value is it helps me explain why the subject property’s price position makes sense. In this case, the competitive range was mostly from $450,000 to $550,000, and it was reasonable for the subject to be at the top.

In case you missed this visual last week, what do we do when there aren’t many comps? Here are some options:

Thanks for being here.

LEAVING COMMENTS: The captcha is not working perfectly.  If you open up a new browser, that should solve the issue. It’s been a problem when clicking from my weekly email and trying to comment. My apologies. I hope to have this solved eventually.

Questions: What is the last thing you do when coming up with the value of a property, whether you’re an agent, appraiser, investor, etc…?

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Short sales are BACK (sort of)

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Wait, are short sales back? Yes, they are. But let’s unpack what this means and sift through the hype. Also, I have some thoughts about comp selection and VA carnage. I’d love to hear your take in the comments.

UPCOMING SPEAKING GIGS:

3/20/25 HomeSmart iCare Realty
4/2/25 SAFE Credit Union (RSVP here)
4/10/25 Yuba-Sutter Association (details TBA)
4/15/25 Culbertson and Gray (private I think)
4/24/25 KW EDH (private I think)
5/8/25 Private event (details TBA)
5/13/25 PCAR
5/21/25 Grounded Real Estate
6/5/25 Auburn Marketing Meeting
9/26/25 PCAR
11/4/25 SAR Main Meeting

OPTIONS FOR COMPS TODAY

What do we do when there aren’t many comps? I did an exhaustive post a few weeks ago about the struggle of comps in 2025, and here’s a follow-up graphic.

YES, SHORT SALES ARE BACK

Short sales are more common today, but they’re still a tiny sliver of the market (only 0.5% of all local sales in 2025). Basically, there has been an increase from last year, and the level of short sales is back to 2020 levels. Technically we could say short sales increased by 142% from last year, or we could just say there were ten more. It makes sense to see more today since there really isn’t any place to go but up after being almost non-existent. And most importantly, some consumers are feeling inflation, job losses, and economic carnage. My advice? Watch this closely, and be careful about sensationalism.

Do you see the increase? And do you also see where this isn’t earth-shattering breaking news? Here’s a wider annual view from 2012 onward. I’ll add more years if there is demand.

FHA OWNERS ARE STRUGGLING THE MOST

Look, FHA is only about 11% of regional sales, but when looking at the percentage of short sale listings today, FHA represents 58% of those. Keep in mind there are fewer than forty short sale listings total (including pendings), so we’re talking about a tiny amount. Still, it’s important to watch this. Here’s a link to show why FHA borrowers are going delinquent, and it’s clear that economic carnage is the main issue. My observation is many of the short sales happening right now were last purchased in 2022 or 2023.

ARE WE STARTING TO SEE CARNAGE WITH VA?

There has been an increase in national VA foreclosure starts lately since there was a VA foreclosure moratorium in place that has now ended. We don’t know how many of these properties will end up as actual foreclosures, but this is something to watch. When looking at current short sale listings, VA loans represent 16% of those despite being about 4% of sales in recent years (there are only six VA short sale listings).

CHECK ON YOUR PEOPLE WHO PURCHASED IN RECENT YEARS

There aren’t that many short sales, but FHA and VA borrowers are the ones having the hardest time, so check on your people. Pay attention to those who bought around mid-2022 especially since that was the top of the price market locally. Prices aren’t down much from that time, and having negative equity isn’t a huge issue locally, but short sales do still show up. Keep in mind if prices do dip ahead, that would help lead to more short sales.

WHO IS BUYING HOMES TODAY?

Here’s a breakdown of reported buyer financing so far this year (January to mid-March). This is a good reminder that the market isn’t the same in every location and price range. Also, cash isn’t dominating like so many sellers think. I’m excited about this visual, and I hope you dig it too.

CLOSING ADVICE

Watch the distressed portion of the market closely, but be careful about being swept up in hype. Some housing doomers are using a small uptick in distressed stats to paint a crash narrative for the entire market. Look, if the stats support that idea, we should talk about it. There is nothing wrong with prices going down. Just be careful about saying things like, “We’re all going to die and VA loans are going to crash the market” when VA locally only represents 4% of all sales. Know what I’m saying?

Thanks for being here.

LEAVING COMMENTS: The captcha is not working perfectly.  If you open up a new browser, that should solve the issue. It’s been a problem when clicking from my weekly email and trying to comment. My apologies. I hope to have this solved eventually.

Questions: What stands out to you the most above?

If you liked this post, subscribe by email (or RSS). Thanks for being here.

A tame housing market & condo issues

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Tame. That’s a good way to describe the spring season so far. We are definitely seeing signs of seasonality, but the market isn’t blazing hot either. Historically, the housing market really picks up in March, so let’s talk about that (and touch base on condos). This post is designed to skim quickly or digest slowly.

UPCOMING SPEAKING GIGS:

3/20/25 HomeSmart iCare Realty
4/2/25 SAFE Credit Union (RSVP here)
4/10/25 Yuba-Sutter Association (details TBA)
4/15/25 Culbertson and Gray (private I think)
4/24/25 KW EDH (private I think)
5/8/25 Private event (details TBA)
5/13/25 PCAR
6/5/25 Auburn Marketing Meeting
9/26/25 PCAR
11/4/25 SAR Main Meeting

Scroll quickly by topic or digest slowly.

1) THE PROBLEM WITH HOA FEES

I know this visual is crazy, but it shows HOA fees have definitively risen in recent years. Look, condos have a few different headwinds right now, but one of the bigger issues is the HOA fee is standing out in a bad way. It’s been tough for buyers to digest lofty fees that diminish affordability. Moreover, we may be seeing a preference issue where buyers are wanting a backyard instead of attached living. This is why we’ve seen more subdued condo volume, and why prices in some condo subdivisions have been dropping.

2) HOUSTON, WE HAVE SPRING LIFTOFF

A spring market is definitely happening. I know it feels like it’s not to some, but we’re seeing more supply, slightly more sales from January, it’s taking less time to sell, and prices ticked up higher. This is all the normal stuff we’ve been expecting, but it’s also still been a softer spring so far. Part of the softer vibe stems from rates starting out higher this year, and some of it is having more listings, but we also want to keep an eye on increasing economic uncertainty and consumer confidence.

And year-over-year stats.

3) MARCH TENDS TO PICK UP MORE

We typically hit more a stride in the housing market in March, so we want to watch for that. The number of new listings historically increases 31% between February and March in the region, and the number of pending contracts increases by 25%. The key today is to understand the norm so we can interpret the existing market based on that. Look, we don’t expect anywhere close to the normal level of listings and sales, but we want to watch for the expected amount of seasonal change. Does that make sense?

4) $2.4 BILLION IN VOLUME SO FAR IN 2025

As of last week, we had $2.4 billion in purchase volume in the wider region. As a side note, if you work in real estate, you may need to expand your coverage area since there aren’t as many buyers today. This is why it’s important to keep an eye on what’s happening in other areas too. 

5) SUPPLY IS GROWING, BUT NOT LIKE 2008

In 2023, it was a really tight market when sellers stepped back, but sellers are thawing out much more right now. We are still far below normal levels, but the market is really feeling more active listings since the number of buyers has been subdued. By the way, the number of active listings in 2008 was about 14,000 at this time. Just in case you were thinking today was similar. Keep in mind active listings isn’t just about more sellers. It’s also about properties staying on the market longer.

6) SPRING PRICE BUMP, BUT A MIXED BAG

We’re seeing price metrics tick up early in the year, and we should see that next month also since pending contracts are larger in size and getting into contract at higher levels. Yet, despite an increase for the region as a whole, so many neighborhoods just feel very flat, and it’s possible some could be declining too. The market is a mixed bag right now. Keep in mind some smaller counties could be all over the place with price metrics too since there isn’t much data, so be careful about interpretation from month to month.

7) COMPETITION LEVELS ARE PRETTY NORMAL

Some properties are getting bid up while others are sitting. When we look at the numbers below, competition actually looks pretty normal. This doesn’t mean the market is normal, but the stats in this regard sure are. No matter what, properties are either getting lots of attention quickly or sitting. It’s either multiple offers or crickets. That’s the vibe.

8) FRUSTRATING FOR BUYERS DESPITE HEADLINES

Many headlines are talking about good deals for buyers right now, and I get that in light of the market softening. But the struggle right now is the hottest property for sale is the one that is well-priced and in good condition (upgraded too). So, there can be heavy competition for certain properties in particular, which creates a disconnect between a dull housing narrative and the actual market.

9) THE STORY ISN’T THE SAME FOR EVERY PROPERTY

Here’s a cool way to look at how every property sold compared to its original price. Some got bid up 15% while others sold 25% below their original price. My advice? Be sure to look at the entire market to understand the trend. In other words, don’t judge the forest by just one or two trees. Remember, the story isn’t the same for every single property.

10) GETTING BID UP HAPPENS RIGHT AWAY

If a property is going to go over the asking price, it happens pretty much in the first two weeks – but especially the first week. Then, the longer a property is on the market, the lower it tends to sell from its asking price. Look, so much of this hinges on the credibility of the original price. It’s not like properties are getting bid up 15% over market value. Nope. When a property has a freakish number of offers and goes way over asking, it’s probably due to being priced too low.

11) PENDING CONTRACTS ARE GROWING (BUT LOWER)

We’re seeing spring happen in the pendings too. The hope is the entire year will outpace last year, but so far, it’s been about on par with last year. Do you see that little uptick on the right side of the graph? Yep, that’s spring. And a good way to describe the market is listings are growing faster than pendings.

12) NO LONGER LIGHTNING SPEED

Gone are the days where mostly everything was selling in lightning speed. Today’s trend (blue) has been very consistent with the pre-2020 norm (red). We could get sensational and say properties are taking twice as long to sell today compared to 2021, but that was a freakish year, so we have to back up and ask what the normal trend looks like.

And here’s a cool way to look at days on market by price. The higher the price, the longer it takes to sell. That’s the trend, and it’s something we’ve seen consistently through the years.

13) “FHA IS GOING TO CRASH THE MARKET”

There is so much attention right now on rising mortgage delinquencies among FHA loans. This is not something to sugarcoat, but let’s stay in touch with the reality that FHA was only 11% of the entire market last year locally. So, when we hear that FHA loan problems will crash the entire market, that sounds sensational. Again, I’m not sugarcoating, so save your hate mail. Let’s just be realistic about context.

14) HITTING A SPRING STRIDE

The number of new listings should pick up more significantly in March, and we’re already starting to see more action in recent weeks when looking at the daily trend.

Thanks for being here.

LEAVING COMMENTS: The captcha is not working perfectly.  If you open up a new browser, that should solve the issue. It’s been a problem when clicking from my weekly email and trying to comment. My apologies. I hope to have this solved eventually.

Questions: What stands out to you the most above? What are you seeing in the market right now?

If you liked this post, subscribe by email (or RSS). Thanks for being here.

The “R” word in real estate

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I’m starting to hear so much more chatter about the “R” word, so let’s talk about it. What happens to the housing market during a recession? What happens to homes prices and jobs? I have some new visuals to help us talk through this. Also, let’s look at some spicy issues to keep an eye on.

NOTE: There are many places to rant about politics, but not here. I won’t approve comments that are only political and don’t add to the conversation.

UPCOMING SPEAKING GIGS:

3/6/25 Yolo Association YPN Event
3/12/25 Windemere Sierra Oaks
3/20/25 HomeSmart iCare Realty (private I think)
4/2/25 SAFE Credit Union (details TBA)
4/10/25 Yuba-Sutter Association (details TBA)
4/15/25 Culbertson and Gray (private I think)
4/24/25 KW EDH (private I think)
5/8/25 Private event (details TBA)
5/13/25 PCAR
6/5/25 Auburn Marketing Meeting
9/26/25 PCAR
11/4/25 SAR Main Meeting

DEEP THOUGHTS ABOUT THE “R” WORD:

Are you hearing more people talk about a potential recession? I’m seeing lots of chatter on social media, so let’s dig in. What happens to the housing market during and after a recession? Let’s have some conversation.

1) PRICES DON’T ALWAYS GO DOWN DURING A RECESSION

Lots of people say prices go down during a recession, but what do the stats show? Well, sometimes prices do drop or flatten. But other times they don’t. If the images below were all white in the background, and I asked you to guess where the recessions were, it would be really challenging to be right about all of them. Stats: Quarterly median sales price and Freddie Mac Price Index.

2) LOCAL MARKETS COULD BE DIFFERENT

National stats are cool, but let’s always try to digest local trends. So, here’s what Sacramento looks like. It’s hit and miss, right? Sometimes prices dip after a recession, but sometimes the market goes up. It’s not just one thing. 

And in case you’re longing for an inflation-adjusted image…

3) UNEMPLOYMENT RISES DURING A RECESSION

Like clockwork, the unemployment rate shoots up during a recession (or it could start to increase before one happens). This is true in the United States and locally. If you want to see an image that really drives this point home, check out the United States from 1948 onward.

4) THE GREAT RECESSION ISN’T THE NEW TEMPLATE

What happened in 2008 isn’t the new template or formula for every future recession and housing market correction. I don’t say this to sugarcoat since there is nothing wrong with home prices going down. Let’s just recognize not every recession is the same in severity or length, so it makes sense to not impose what happened during the Great Recession onto every future market. All that said, there is no mistaking we’re seeing consumer debt and delinquencies growing. Real estate friends, check on your people.

Some closing hot issues:

5) POLITICS COLLIDING WITH REAL ESTATE:

Here are three quick topics I’m watching. This is NOT a partisan post, and this is not controversial, but sometimes housing and politics collide, so we need to digest this stuff together.

HIGHWAY TO THE TARIFF ZONE

We want to watch the economy closely as we’ve entered a tariff era under President Trump. Only time will tell how this affects prices for consumers, and so much of it depends on how long these tariffs last. In terms of real estate, there are definitely a few things we want to fixate on. Let’s look at consumer confidence, purchasing power, mortgage rates, and the price of new construction.

GAVIN NEWSOM CALLS STATE WORKERS BACK

This week Governor Newsom called state workers back to the office. This is going to be a massive lifestyle change for so many residents. In terms of the housing market, my inclination is to think this isn’t going to mean much for the residential market since many people will simply start commuting to work again without selling or buying a different home. There are some workers though who moved out of state or area, and now they have a decision to make about whether to come back or stay put. There could be others who use this as a catalyst to make a lifestyle change though – downsize, retire, move elsewhere, find a different job, etc…

ELON MUSK CUTTING FEDERAL JOBS

Let’s pay attention to federal jobs being cut across the country from Elon Musk’s DOGE (Department of Government Efficiency). This could matter for locals since we have over 14,000 federal jobs in Sacramento according to FRED data. It’s not clear yet how many jobs will be cut, but let’s keep this on the radar. On a personable note (and not a partisan statement), I want to encourage those speaking out in favor of the cuts to be aware there could be locals losing jobs who are reading your posts.

Thanks for being here.

LEAVING COMMENTS: There are many places to rant about politics, but not here. I won’t approve comments that are only political and don’t add to the conversation. The captcha is not working perfectly.  If you open up a new browser, that should solve the issue. It’s been a problem for some when clicking over from my weekly email and trying to comment. My apologies. I hope to have this solved eventually.

Questions: What stands out to you the most above? Have you been having more “R” word conversations? Anything else you are watching in the market right now?

If you liked this post, subscribe by email (or RSS). Thanks for being here.

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