2020 Market Observations

25 Feb 2020 Market Observations

Its hard to believe we are already near the end of February in 2020. So far this year, my assignments have consisted of a continued mix of lender (mostly VA or conventional purchases) and private work. I am getting some calls from agents and/or homeowners who are discussing the possibly of selling their home and need a neutral 3^rd party appraisal to guide.

What is interesting is interest rates are very attractive seemingly. At a glance last week, the average 30 year fixed rate is hovering around 3.75% and the 15 year rate is at 3.08%.  Will low rates encourage buyers to spend more and spur on prices? From my appraisal work, this does not seem to be the case.

Here are a few observations and tips.

1. The market has slowed. Slow does not mean the sky is falling or there is any immediate danger. Its just that- slowing. In many areas, days on market has increased and pricing is very critical. I can’t emphasize that enough.
   
   
2. Buyers are generally not over paying. With expenses continuing to rise and in the Foothill market the spike in home insurance costs, this will impact the buyer’s bottom line. Buyers know the numbers and are being generally cautious. It’s not just buyers obtaining an appraisal, but also cash buyers. I’ve completed a handful of private appraisals the past year for cash buyers who are concerned of not wanting to over pay.
   
   
3. Pay attention to recent closed sales as well as active listings and pending sales. I’ve completed some purchases recently where the contract price was not supported in my estimation. In an ROV (reconsideration of value) recently sent to me, the addresses sent to review in an attempt to support the contract price were 2 sales from 2018. There were plenty of comps in the PUD subdivision in 2019/20 as a reference.
   
   
4. Pay attention to sales in your segmented market and subdivision, NOT sales in the entire zip code. Neighborhoods may trend slightly different and while the zip code provides an overview of the market, it may not apply to subject’s neighborhood.  Just because a similar size SFR sold 2 miles away at xxxx, does not mean the same size unit in subject’s subdivision will sell at same price.  There may be different market influences in place influencing price.
   
   

With spring just around the corner, it will be interesting to see how the winter market evolves into spring. I am sure we’ll get an influx of positive spring numbers but the above can’t be overlooked. There are definitely some underlying changes happening in the market as a whole.

Bryan Lynch
Certified Real Estate Appraiser
Office: 530-878-1688
Bryanclynch@gmail.com
Roseville Office : Auburn Office
www.AdvantageAppraisalsCa.com

Disclaimer: All information deemed reliable but not guaranteed. The information is meant entirely for educational purposes and casual reading only and is NOT intended for any other use.  This information is NOT intended to support an opinion of value for your appraisal needs or any sort of value conclusion for a loan, litigation, tax appeal or other potential real estate or non real estate purpose. This appraiser is NOT a qualified home inspector and any tips are for informative purposes only. If you’d like to obtain and order an appraisal for your specific needs, please contact Bryan at 530-878-1688 for more information.