The typical Sacramento home sells in 12 days: Housing market update
A historic inventory squeeze is putting massive pressure on prospective homebuyers.
Updated: 10:44 AM PDT Sep 28, 2023
PHNjcmlwdCB0eXBlPSJ0ZXh0L2phdmFzY3JpcHQiIHNyYz1odHRwczovL3N0YXRpYy5teWZpbmFuY2UuY29tL3dpZGdldC9teUZpbmFuY2Vfdmlld3BvcnRfZGV0ZWN0aW9uLmpzPjwvc2NyaXB0PjxzY3JpcHQgYXN5bmMgdHlwZT0idGV4dC9qYXZhc2NyaXB0Ij5teWZpV2F0Y2hXaWRnZXQoJ215ZmlXaWRnZXRfMTUnKTtteWZpV2F0Y2hXaWRnZXQoJ215ZmlXaWRnZXRfOCcpO215ZmlXYXRjaFdpZGdldCgnbXlmaVdpZGdldF85Jyk7PC9zY3JpcHQ+Lauren Williamson is the Financial and Home Services Editor for the Hearst E-Commerce team. She previously served as Senior Editor at Chicago magazine, where she led coverage of real estate and business, and before that reported on regulatory law and financial reform for a magazine geared toward in-house attorneys. You can reach her at [email protected] Television participates in various affiliate marketing programs, which means we may get paid commissions on editorially chosen products purchased through our links to retailer sites. This may influence which products we write about and where those products appear on the site, but it does not affect our recommendations or advice, which are grounded in research.Mobile app users, click here for the best viewing experience.Pending home sales in Sacramento declined almost 22% in recent weeks, the fifth largest drop in the nation, according to Redfin data — but not for lack of buyers.Housing inventory is at historically low levels as homeowners who locked in rock-bottom mortgage rates during the pandemic opt to stay put. Rates have more than doubled from their pandemic lows.At the same time, Sacramento continues to welcome an influx of new residents who seek more affordable pastures outside the Bay Area, where the median sale price is nearly $1.4 million. In fact, Sacramento is the most-searched destination right now for homebuyers looking to flee San Francisco — 12,140 San Franciscans scoped housing in Sacramento between June and August. As a result, the typical home is selling in just 12 days — eight days faster than last year. Homes in the most popular areas of the city are getting snapped up in as few as six days. Yet prices have remained relatively stable. The median sale price in August was $490,000, the same as it was in August 2022.The squeeze is likely to continue for some time, as mortgage rates show no sign of cooling down. In fact, this week they reached new multi-decade highs.Mortgage rates reach 23-year highSkyrocketing mortgage rates have created one of the most challenging homebuying environments in decades. The average for a 30-year fixed-rate mortgage reached 7.65% on September 27, its highest level since November 2000, according to Mortgage News Daily.The surge happened despite a pause from the Federal Reserve in its historically aggressive series of rate hikes, aimed at bringing down inflation. As many analysts predicted, the Fed held the benchmark borrowing rate at 5.25%-5.50%, though it left the door open for another hike this year. Stubborn inflation could keep mortgage rates high, even without a Fed rate hike. Plus, the Fed indicated that it will likely leave rates elevated for the foreseeable future.Inflation was up 3.7% in August over 2022 — the second month in a row that it increased after several months of more encouraging data. The Fed’s goal is to bring inflation down to 2%. Jobless claims last week were also at their lowest since January, another sign that the economy is still chugging along at a healthy pace. Thirty-year rates weren’t the only ones jolted by the economic news. The average 15-year fixed-rate mortgage went up to 6.93%, according to Mortgage News Daily. The average for a jumbo mortgage is 7.60%, while the average for a 5/1 ARM is 7.09%. Even amid the wave of sky-high rates, it’s possible to find better mortgage rates by considering offers from various lenders, springing for discount points, and improving your credit score.Mortgage rate trendsMortgage rates closely track the 10-year Treasury yield, which goes up with the federal funds rate. After the Fed’s rate announcement on Wednesday, the 10-year Treasury yield rose 15 basis points to 4.492%, the highest it’s been since 2007.Back in June, the Fed projected four rate cuts in 2024. The economy has proven to be more resilient than expected, however, with inflation still well above the Fed’s target. It’s now revised its projections to two rate cuts in 2024, which means the 10-year Treasury will likely stay elevated for quite some time — and so will mortgage rates.What should you do if you have to move?If you need to move now, even as rates reach multi-decade highs, real estate pros have an adage for you: “marry the house, date the rate.” Translation: If you see your dream home now, you don’t necessarily have to walk away just because mortgage rates are high. You can always refinance once rates drop. Just a three-quarter point decline is enough to make refinancing worth it. And, as you look for the best possible rate right now, make sure you compare offers among multiple lenders. Just getting quotes from four lenders can save you up to $1,200 every year on your mortgage, according to a study by Freddie Mac. Refinancing is not the only strategy for navigating high rates, however. Here are a few tips for getting a better rate on your mortgage.Shop around: You can save as much as $1,200 a year on your mortgage payments just by comparing quotes from at least four lenders, according to Freddie Mac. Most mortgage lenders let you answer a few questions online to start the process, making it easy to learn about your options.Consider different types of loans: Fifteen-year fixed-rate mortgages, adjustable rate mortgages, and government-backed mortgages all have different rates. The average for a 15-year fixed-rate mortgage was 6.81% on September 26, almost 0.70 percentage points lower than the rate for a 30-year fixed-rate mortgage. If you go that route, just be ready for larger monthly payments, since you’ll be chipping away at the loan over half as many years.Pay for discount points: Mortgage points generally cost about 1% of the total loan amount but can trim your mortgage rate anywhere from ⅛ to ½ a percentage point. If the seller is eager to unload their home, you might even be able to get them to pay for the points.Make a bigger down payment: If you can swing it, the more you pay now, the less you’ll pay over the life of the loan, since you’ll have a lower principal. What’s more, mortgage lenders may reward you with a lower rate, since they’re taking on less.What determines mortgage rates?Mortgage rates are influenced by a variety of factors, including:Your credit scoreDown paymentYour debt-to-income ratio (DTI)The type of loan you’re gettingLoan termInterest rate type (fixed vs. adjustable)Inflation and the overall economyThe Federal Reserve (which doesn’t set mortgage rates, but it certainly influences them)APR vs. interest rateIf you’re currently shopping for a mortgage or considering refinancing, you’ve probably wondered why the quoted interest rate isn’t the same as the APR. That’s because the loan’s interest rate is what you pay the lender to borrow the money, while the APR (annual percentage rate) encompasses both the interest rate and all loan-related fees. Loan-related fees can include:Mortgage broker feesLoan origination feesMortgage insurance premiumsSome closing costsThe APR, therefore, is a truer measure of what it will actually cost you to borrow money to buy a home.Editorial Disclosure: All articles are prepared by editorial staff and contributors. Opinions expressed therein are solely those of the editorial team and have not been reviewed or approved by any advertiser. The information, including rates and fees, presented in this article is accurate as of the date of the publish. Check the lender’s website for the most current information.This article was reviewed by Lauren Williamson, who serves as the Home and Financial Services Editor for the Hearst E-Commerce team. Email her at [email protected].
Lauren Williamson is the Financial and Home Services Editor for the Hearst E-Commerce team. She previously served as Senior Editor at Chicago magazine, where she led coverage of real estate and business, and before that reported on regulatory law and financial reform for a magazine geared toward in-house attorneys. You can reach her at [email protected] Television participates in various affiliate marketing programs, which means we may get paid commissions on editorially chosen products purchased through our links to retailer sites. This may influence which products we write about and where those products appear on the site, but it does not affect our recommendations or advice, which are grounded in research.Mobile app users, click here for the best viewing experience.Pending home sales in Sacramento declined almost 22% in recent weeks, the fifth largest drop in the nation, according to Redfin data — but not for lack of buyers.
Housing inventory is at historically low levels as homeowners who locked in rock-bottom mortgage rates during the pandemic opt to stay put. Rates have more than doubled from their pandemic lows.
At the same time, Sacramento continues to welcome an influx of new residents who seek more affordable pastures outside the Bay Area, where the median sale price is nearly $1.4 million. In fact, Sacramento is the most-searched destination right now for homebuyers looking to flee San Francisco — 12,140 San Franciscans scoped housing in Sacramento between June and August. As a result, the typical home is selling in just 12 days — eight days faster than last year. Homes in the most popular areas of the city are getting snapped up in as few as six days. Yet prices have remained relatively stable. The median sale price in August was $490,000, the same as it was in August 2022.The squeeze is likely to continue for some time, as mortgage rates show no sign of cooling down. In fact, this week they reached new multi-decade highs.
Mortgage rates reach 23-year highSkyrocketing mortgage rates have created one of the most challenging homebuying environments in decades. The average for a 30-year fixed-rate mortgage reached 7.65% on September 27, its highest level since November 2000, according to Mortgage News Daily.The surge happened despite a pause from the Federal Reserve in its historically aggressive series of rate hikes, aimed at bringing down inflation. As many analysts predicted, the Fed held the benchmark borrowing rate at 5.25%-5.50%, though it left the door open for another hike this year. Stubborn inflation could keep mortgage rates high, even without a Fed rate hike. Plus, the Fed indicated that it will likely leave rates elevated for the foreseeable future.Inflation was up 3.7% in August over 2022 — the second month in a row that it increased after several months of more encouraging data. The Fed’s goal is to bring inflation down to 2%. Jobless claims last week were also at their lowest since January, another sign that the economy is still chugging along at a healthy pace. Thirty-year rates weren’t the only ones jolted by the economic news. The average 15-year fixed-rate mortgage went up to 6.93%, according to Mortgage News Daily. The average for a jumbo mortgage is 7.60%, while the average for a 5/1 ARM is 7.09%. Even amid the wave of sky-high rates, it’s possible to find better mortgage rates by considering offers from various lenders, springing for discount points, and improving your credit score.Mortgage rate trendsMortgage rates closely track the 10-year Treasury yield, which goes up with the federal funds rate. After the Fed’s rate announcement on Wednesday, the 10-year Treasury yield rose 15 basis points to 4.492%, the highest it’s been since 2007.Back in June, the Fed projected four rate cuts in 2024. The economy has proven to be more resilient than expected, however, with inflation still well above the Fed’s target. It’s now revised its projections to two rate cuts in 2024, which means the 10-year Treasury will likely stay elevated for quite some time — and so will mortgage rates.
What should you do if you have to move?If you need to move now, even as rates reach multi-decade highs, real estate pros have an adage for you: “marry the house, date the rate.” Translation: If you see your dream home now, you don’t necessarily have to walk away just because mortgage rates are high. You can always refinance once rates drop. Just a three-quarter point decline is enough to make refinancing worth it. And, as you look for the best possible rate right now, make sure you compare offers among multiple lenders. Just getting quotes from four lenders can save you up to $1,200 every year on your mortgage, according to a study by Freddie Mac. Refinancing is not the only strategy for navigating high rates, however. Here are a few tips for getting a better rate on your mortgage.Shop around: You can save as much as $1,200 a year on your mortgage payments just by comparing quotes from at least four lenders, according to Freddie Mac. Most mortgage lenders let you answer a few questions online to start the process, making it easy to learn about your options.Consider different types of loans: Fifteen-year fixed-rate mortgages, adjustable rate mortgages, and government-backed mortgages all have different rates. The average for a 15-year fixed-rate mortgage was 6.81% on September 26, almost 0.70 percentage points lower than the rate for a 30-year fixed-rate mortgage. If you go that route, just be ready for larger monthly payments, since you’ll be chipping away at the loan over half as many years.Pay for discount points: Mortgage points generally cost about 1% of the total loan amount but can trim your mortgage rate anywhere from ⅛ to ½ a percentage point. If the seller is eager to unload their home, you might even be able to get them to pay for the points.Make a bigger down payment: If you can swing it, the more you pay now, the less you’ll pay over the life of the loan, since you’ll have a lower principal. What’s more, mortgage lenders may reward you with a lower rate, since they’re taking on less.What determines mortgage rates?Mortgage rates are influenced by a variety of factors, including:Your credit scoreDown paymentYour debt-to-income ratio (DTI)The type of loan you’re gettingLoan termInterest rate type (fixed vs. adjustable)Inflation and the overall economyThe Federal Reserve (which doesn’t set mortgage rates, but it certainly influences them)APR vs. interest rateIf you’re currently shopping for a mortgage or considering refinancing, you’ve probably wondered why the quoted interest rate isn’t the same as the APR. That’s because the loan’s interest rate is what you pay the lender to borrow the money, while the APR (annual percentage rate) encompasses both the interest rate and all loan-related fees. Loan-related fees can include:Mortgage broker feesLoan origination feesMortgage insurance premiumsSome closing costsThe APR, therefore, is a truer measure of what it will actually cost you to borrow money to buy a home.
Editorial Disclosure: All articles are prepared by editorial staff and contributors. Opinions expressed therein are solely those of the editorial team and have not been reviewed or approved by any advertiser. The information, including rates and fees, presented in this article is accurate as of the date of the publish. Check the lender’s website for the most current information.This article was reviewed by Lauren Williamson, who serves as the Home and Financial Services Editor for the Hearst E-Commerce team. Email her at [email protected].
https://www.kcra.com/article/sacramento-housing-market-september-28/45347629
