In a summer surprise, home values continued an upward surge again last month in the Sacramento region despite the ongoing economic turbulence caused by the coronavirus pandemic.
The median price hit $425,000 in Sacramento County and $469,000 in the four-county region last month, up roughly 10% from last year at this time, according to data from appraiser and real estate analyst Ryan Lundquist.
That alone is a surprise for many who saw prices dip in March and April during the early days of the pandemic when home sales were essentially stalled for weeks by a local ban on physically allowing potential buyers to tour a house.
Since then, health officials have green-lit home visits, unleashing pent-up demand for homes in the capital region, including from displaced Bay Area residents.
But the local housing market is out of balance and arguably unhealthy, the data show.
The supply of monthly existing resale houses in Sacramento County hit a 20-year low at the beginning of August. The region as a whole is seeing the lowest available housing numbers in a decade, according to Lundquist.
It has become hard to find a suitable house for sale this summer under $350,000. One such house, a $250,000 fixer-upper in Fair Oaks, got 31 offers.
For comparison, last year at the start of September, there were 4,700 houses listed for sale in the region. This year, it's 2,220.
That has led to a sellers' market, forcing buyers into fierce competition with one another. Rather than turning their backs, buyers appear willing to bid for homes, agents say, in part because mortgage interest rates have hit historic lows, at about 3%, allowing lower monthly payments.
As a result, even though Sacramento sales numbers in July weren't huge, it still was the highest July sales month in Sacramento in a decade.
Industry watchers and agents say some would-be sellers don't want to go through the extended process of selling a home during the COVID-19 scare, which often involves home and pest inspectors coming through their homes, workers doing fixes around the house and numerous potential buyers touring the house.
"It's daunting to have a parade of buyers coming through your home," said agent Erin Stumpf of Coldwell Banker.
She has one client who wants to sell and downsize, but has held off this year because "she is not sure where she will be able to buy" given how tight the market is.
Some in the real estate field say they worry more homeowners could run into financial trouble because of the pandemic. One national estimate shows that only a small number of mortgage holders have worked out forbearance deals with their lenders, allowing them to pay reduced mortgages for now.
But Kellie Swayne of Dunnigan Realtors said she just sold a house for a client whose job was negatively affected by COVID and who wanted to get out from under mortgage payments.
"We haven't scratched the surface of the economy feeling the effects of this," said Swayne, a board member for the Sacramento Association of Realtors. "The worst is yet to come. There may be more people who need to sell. "
But those are not going to lead to foreclosures like the slew of financial failures that rocked the industry during the Great Recession a decade-plus ago, analysts say.
That's because many, if not most current homeowners have experienced all or part of an eight-year run-up in home values, providing them with a substantial equity cushion in their homes.
Also, analysts say there still appear to be plenty of buyers for more low- and median-priced homes, as well as homes that are topping $600,000. Some of those buyers are coming from the Bay Area.
A bigger, more slowly emerging worry is that continually rising house values will price more people out of the market. That's exacerbated by the lack of inventory. "The way to get pricing down is to create a more balanced market," Swayne said.
