I am presenting Valuing Homes with ADUs for the Real Estate Appraisers Association on Thursday, September 17 via Zoom. This two-hour class will offer advice on appraising homes with accessory dwellings and has been updated with material about ADUs for the new UAD 3.6 reporting format. Register here: Valuing Homes with ADU’s
The Portland, Oregon chapter of the American Society of Appraisers (ASA) has asked me to speak for their May 2027 meeting. I will offer an expanded version of my The Subject in Its Market-Context in Residential Appraisals class. Details coming soon.
It’s been a while since I’ve updated the website because I’ve been busy! I spent the last several years earning my SRA designation from the Appraisal Institute, finally finishing last spring. Covid, volunteer commitments, and large spikes in business kept getting in the way, but whew, I’m done with it. To earn the SRA designation, I had to take challenging classes, submit a sample of my reports for peer review, complete a demonstration report, and pass a test. If you’re an appraiser considering getting your designation, go for it!
Once I wrapped up the final requirement for my SRA, I decided to continue the personal growth and pursue my certified general appraiser license. This upgrade, once I finish, will allow me to appraise any property in California. I’m working part-time with MacLane and Company in Benicia to learn and gain experience and am continuing to run my residential business. Please reach out if you need an appraisal and if I can’t help, I can refer you to someone who can.
The rest of this post is an update on Yolo County residential real estate market trends, starting with countywide trends, then trends in local communities, and finally a look at small acreage residential properties based on a presentation last week for my friends at the Yolo Association of Realtors. I used Metrolist MLS for my data source. To reduce noise in the analysis, I focused on sales reported as a single home on a lot in Metrolist.
You can skip to my takeaways at the end if you don’t like graphs……
Yolo County 2025 Market Trends
Mortgage rates over the past 10 years is the first place to start regarding housing trends
Mortgage rates have had a large impact on the demand and supply for housing, especially since the start of the pandemic. We saw rates go to the lowest on record in early 2020 with demand rising in reaction to increased affordability. That demand soon led to a rapid increase in prices until the Fed raised rates in early 2022. Locally, prices peaked in the spring of 2022, dropped into 2023, and have recovered somewhat since.
Yolo County Yearly Median Sale Price since 2018
Prices jumped significantly since 2018, peaking in 2022, dropping slightly in 2023, and have now bumped up again to a new high in 2025.
The story is similar on a sale price per square foot basis, except Yolo County has not quite recovered to the 2022 peak.
On a price per square foot basis, prices peaked in 2022 and bounced upward again but not quite fully back
A bigger story, especially for those of us in residential real estate in the county, is the lack of demand over the past four years. Demand has been constrained by the rise in interest rates in 2022, reducing affordability and locking in a majority of homeowners into much lower interest rates and monthly payments.
Yolo County sales volume since 2018. Volume is down 47% from 2018
These factors reduced the buyer pool to those who really needed to move.
Below is a summary of county sales comparing 2025 to 2024
Yolo County 2025 to 2024-mostly the same
We saw a slight drop in sales volume, slight increases in price measures, and a large jump in days on market in 2025 in comparison to 2024. The change in marketing time is a sign of a weakening market and worth watching, especially when compared to recent years.
Yolo County yearly mean days on market since 2018. 2025 is significantly higher than recent years
Davis
Davis sales in 2025 compared to 2024
Davis had a large uptick in sales in 2025 compared to 2024. Price metrics are somewhat conflicting because the average size of a home sold in Davis declined across 2025, biasing down sale prices and biasing up sales on a sale price per square foot basis.
One big issue with comparisons like this is that all 315 sales in 2025 get combined into one price, a significant data loss. Because of the seasonality of the Davis market, I use monthly year-over-year comparisons of prices to understand price trends. I don’t use a scatter graph for Davis most of the time because of the high degree of seasonality in the market, with housing activity closely linked to the university schedule.
12 Month change in monthly mean PSF for homes sold in Davis. Trends are negative
Since May, monthly mean prices on a price per square foot basis declined year-over-year in 6 of 8 months. Davis prices are declining heading into 2026.
Woodland
Woodland sales in 2025 compared to 2024
Sales volume increased somewhat in Woodland with a big jump in days on market year-over-year. Prices increased slightly on a year-over-year basis on a sale price basis but declined slightly on a year-over-year basis. Let’s take a closer look at 2025 Woodland sales.
Woodland 2025 sales scatter graph showing prices peaking in the summer then declining the rest of the year
This is a scatter graph of all sales in Woodland showing a peak in the summer and a decline the rest of the year. Woodland is also declining heading into 2026.
West Sacramento
West Sacramento 2025 sales compared to 2024
The story in West Sacramento is clearer. There was a large decline in homes sold in West Sacramento in 2025, a large increase in marketing time, and price declines across the board. This is a declining market as confirmed by the scatter graph below.
West Sacramento 2025 sales show prices declining most of the year. The slight bump up at the end is because of the very high sale towards the end of the year
Winters
Winters is somewhat unusual for Yolo County because over the past five years, a large percentage of homes sold have been new construction.
Winters 2025 sales compared to 2024
The large decline in sales noted above is from a big drop in new home sales. Price trends above are mixed.
Looking at all 2025 sales, prices rose in Winters in 2025
A lovely field in Yolo County
For small acreage residential properties, I also included manufactured homes, 2 homes on a lot, and modular homes on 1-80 acres sold in Yolo County.
Yolo County small acreage residential 2025 sales compared to 2024
We saw a big jump in small acreage residential sales in Yolo County in 2025. While prices increased on a year-over-year basis, marketing time jumped significantly, too. Let’s look at 2024 to 2025 sales.
Yolo County small acreage residential 2025 sales scatter graph
This graph is different from the ones above because I looked at two years of sales to anchor the trends. Prices increased into the summer, peaked, and were declining at the end of the year. Conclusions in this market are less certain than others because of significant differences in property characteristics and lower sales volume.
2025 Fun Facts
The highest price paid in 2025 was $4,120,000
The lowest price for a single-family home was $125,000
The largest home sold in 2025 was 5,889 sf
The smallest home sold 2025 was 588 sf
The oldest home sold in 2025 was built in 1877
One home was listed for 2,523 days before finally selling! That’s almost 7 years on the market!
Takeaways
Yolo County
Sales volume and prices were relatively similar between 2024 and 2025 at the county level
Yearly median prices are at or above historic highs
Sales volume is anemic
Marketing time rose and is high compared to recent years
Individual Markets
Year-over-year trends suffer from information loss, which explains why yearly trends may differ from closer looks
Davis sales volume jumped in 2025 as did marketing time
Davis monthly mean prices on a year-over-year basis have been negative over the last half of the year
Woodland sales increased somewhat, as did marketing time
Woodland price trends show decline over the past six months
West Sacramento sales volume and prices declined significantly in 2025
Winters new home sales dropped in 2025 but prices increased
Yolo County small acreage residential properties had a large increase in sales volume and marketing time
Price trends show a decline since the spring but with uncertainty because of large differences between individual properties
I hope this is helpful. I plan to post more frequently in 2026 as my somewhat packed schedule allows.
What stands out to you about 2025 in Yolo County residential real estate?
Editor’s note: Yes, this originally went out with the wrong year in the title. I guess I’m excited for 2025.
Happy holidays! One of our best Christmas holidays was spent a couple of years ago at Ano Nuevo State Park near Santa Cruz watching the elephant seals. Highly recommended if you’re ever in the area.
Elephant seals sleeping off Christmas dinner
Just 30 minutes up the coast is Mavericks Beach. No, I didn’t spend Christmas trying to ride giants…..
Many authorities predicted that interest rates would drop significantly in 2024 once the Fed started to reduce interest rates. Three rate drops later, mortgage rates remain persistently high, impacting affordability and local residential real estate. Mike Simonsen goes into a deep dive into what to expect for 2025.
Yolo County Data
Below is a breakdown of sales in 2024 by community for residential sales on lots smaller than 60 acres, excluding condominiums, townhouses, and halfplexes. All data from Metrolist MLS.
Let’s focus on volume.
I see a positive: 2024 sales volume is ahead of 2023 by 30 sales with a week to go. However, the bad news clearly outweighs the good. Yolo County is missing about 450 sales this year compared to the pre-pandemic five-year average. The lack of affordability and low-rate lock-in have combined to reduce demand and supply. For those of us in residential real estate, the lack of transactions continues to be a problem.
Below shows Yolo County monthly mean sale price trends since 2016.
The data is affected by seasonality, which can hide the trend somewhat. The graph below looks at the 12-month change in monthly mean sale price per square foot, reducing the impact of seasonality.
Prices show little change over the past six months for all homes sold in Yolo County.
Yolo County inventory at the end of November was 3.3 months, back to late 2019 levels.
Yolo County inventory increased in 2024 and is at the highest point in the past four years, good news for buyers. Low sales activity is driving inventory at present.
Days on market is back to pre-pandemic levels.
The sale price to list price ratio, or how much the sale price of a home changes from the reported list price, is another indicator of market strength.
Homes in Yolo County sold slightly below initial list price over the past two months, very typical before the pandemic.
Yolo County Summary
November 2024
November 2023
Change
Active Listings
238
171
39%
Inventory
3.3 months
2.1 months
57%
Sales
70
86
-19%
Mean Sale Price
$601,123
$649,909
-7.5%
Mean PSF
$365 PSF
$358 PSF
2.0%
Sale Price/List Price Ratio
98.45%
99.90%
-1.5%
Mean Days on Market
33 days
34 days
-2.9%
Mean Number of Offers
1.7 offers
1.8 offers
-5.6%
In summary for Yolo County, sales volume is down significantly, inventory is up significantly, and prices show little change over the past six months.
Davis and Woodland
This analysis only includes sales of homes on less than one acre of properties labeled as “single family residences” in Metrolist.
Sales volume for Davis and Woodland are trending down, too.
Davis is down more than 100 sales per year from the pre-pandemic trend.
Woodland is down more than 150 sales per year from the pre-pandemic trend.
Davis and Woodland Summary
Davis
Woodland
Active Listings as of Dec 2024
37
57
Sales Last Month
14
23
Inventory
2.6 months
2.5 months
Mean Sale Price Nov 2024
$766,339
$577,151
12-Month Change Mean Sale Price Mean PSF
-18.6% -4.6%
-11.8% 5.9%
Sale Price/List Price Ratio
94.8%
100.99
Mean Days on Market Nov 2024
54 days
35 days
Let’s look closer at price trends.
Because of the seasonality of residential real estate from the impact of UC Davis, I pay attention to 12-month changes when evaluating the Davis market. The chart below shows the change in monthly mean price per square foot for Davis sales from 2024 to 2023. For example, the mean price of homes sold in Davis in November 2024 was 5% less than in November 2023.
Prices increased in early 2024 and switched between increasing and decreasing since June. The chart below shows the 12-month change in mean sale price for Davis.
The 12-month change in monthly mean sale price switches between increasing and decreasing most of 2024.
Woodland has less seasonality, so I normally use a scatter graph showing linear trends.
Woodland prices overall have been relatively stable in 2024.
In conclusion, Davis prices were increasing on a year-over-year basis in early 2024 but are now switching between increasing and decreasing. I generally interpret this as stable. Woodland prices were substantially stable overall in 2024. Both markets suffer from low listing and sales volumes. Inventory levels are in line with pre-pandemic levels but are on the high side since mid-2020.
I hope this is helpful. Here’s to a joyous and prosperous 2025.
I’m teaching Excel for Appraisers for the REAA North Bay chapter in Petaluma on Thursday, January 16. We’ll cover using Excel for market analysis, supporting adjustments, and maintaining a workfile. The class will specifically address the new GSE market analysis reporting requirements. More information here
George Dell has invited me to speak at the Community of Asset Analysts 4th Annual Conference in Las Vegas this February. Hope to see you there. I’ll share a link once it’s available.
I’m speaking at the NorCal AI Chapter Spring Conference on Monday, March 3 about ADUs. I’m teaming up with Kim McAlister, Residential Appraisal Manager at Fremont Bank to look at valuing accessory dwellings in lending assignments. More information here
I’m speaking at the Northern California Chapter of the Appraisal Institute’s Fall Conference this Friday in South San Francisco. I have 45 minutes to discuss the ABCs of ADUs. It’s a short class but I hope to offer new, useful material to attendees.
Happy Father’s Day to all the dads in the room! Here’s a picture of my dad on our favorite trail.
We’ve been going back to this place for more than 40 years
Yolo County Market Trends
Interest rates continue to weigh heavily on residential real estate in the US. All the experts, including the Fed, agree that we should not expect to see more than one interest rate drop this year.
Last month, interest rates were at 7.09% for a 30-year fixed rate. The latest survey has dropped to 6.99%. At least the direction is helpful….
Let’s hope the trend continues!
Once again, here’s Len Kiefer‘s affordability chart, showing the impact of rising interest rates on affordability.
The vertical scale shows loan amount while the horizontal scale shows interest rates. The blue lines show the payment for a given loan amount and interest rate combination. In 2021, the average loan amount of approximately $400,000 meant a monthly payment of about $1,900 per month. The 2024 average loan amount, approximately $475,000, requires a monthly payment of about $3,100, a 63% increase. Just as bad as last month!
We’re still in high interest rate environment with significantly reduced purchasing power from two years ago, reducing demand. At the same time, because so many homeowners locked in rates at 3% or lower, supply continues to sit below pre-pandemic levels.
Yolo County Data
Below is a breakdown of sales in 2024 by community for residential sales on 60 acre or less lots, excluding condominiums, townhouses, and halfplexes. Note that small acreage residential sales are included in this snapshot. All data from Metrolist MLS.
Yolo County Sales summary by community
Very few sales in the Capay Valley and Clarksburg area so far this year. The overall reduction in sales has a significant negative impact on the ability of appraisers, and everyone else, to figure out market trends and market value for individual properties, especially for anything unusual.
Monthly sales volume for all homes sold in Yolo County since 2016 per Metrolist. The trend is not your friend for those of us working in Yolo County residential real estate
Below shows the growth in mean sale price for Yolo County since 2016. Prices have increased significantly over the past eight years and are now at a series high (on a nominal basis).
Let’s see how the market has reacted since the rise in interest rates in early 2022.
Yolo County prices have bounced around since the start of 2022
Prices peaked in early 2022 and declined the rest of the year as the market digested the massive change in affordability. Prices recovered somewhat in early 2023 and have tended towards stability since. However, prices ticked up with the latest data and are now at a series high.
Inventory fell to historically low levels during the pandemic and rose in reaction to the interest rate increase in early 2022 but still sit well below pre-pandemic levels at present.
Yolo County SFR inventory trends with current inventory still below pre-pandemic levels
Monthly mean days on market continue to be slightly elevated from pre-pandemic numbers.
Another measure of market strength is the sale price to list price ratio, or how much the sale price of a home changes from the reported list price. A ratio is greater than 100% shows prices getting bid up while under 100% shows sellers forced to discount.
Watch this graph as a leading indicator of market change
On average, buyers are paying slightly more than the initial list price in Yolo County at present, a sign of market strength.
Yolo County Summary
May 2024
May 2023
Change
Active Listings
211
146
46%
Inventory
1.6 Months
1.0 Months
60%
Sales
129
144
-10%
Mean Sale Price
$785,931
$713,085
10%
Mean PSF
$401
$369
8.7%
Sale Price/List Price Ratio
102.09%
101.12%
0.9%
Mean Days on Market
26 Days
29 Days
-10%
Mean Number of Offers
2.8
2.8
0%
For Yolo County year-over-year, listings are up, inventory increased significantly, sales volume declined, and prices are up year-over-year. Prices increased but the slowdown in sales and resulting increase in inventory bears watching.
Davis and Woodland
This analysis only includes sales of homes on less than one acre of properties labeled as “single family residences” in Metrolist, the local MLS. The same rules apply to the West Sacramento analysis below.
Sales volume has drifted downwards for both Davis and Woodland.
Declining sales is the clear trend for DavisSales volume trending down in Woodland
Number of offers on average for Davis and Woodland are trending up and are above pre-pandemic numbers.
More competition for listings in DavisCompetition for listings is rising in Woodland too
Davis and Woodland Summary
Davis
Woodland
Active Listings as of June 11
37
57
Sales Last Month
40
42
Inventory
0.9 Months
1.4 Months
Mean Sale Price May 2024
$1,186,480
$580,940
12 Month Change Mean Sale Price Mean PSF
20.1% 12.9%
-1.6% 6.5%
Sale Price/List Price Ratio
104.11%
100.19%
Mean Days on Market May 2024
18
17
The summary table above captures a point in time. Below are scatter graphs of all homes sold in Davis and Woodland since 1/1/23.
Davis is showing the typical seasonality we’ve seen prior to the pandemic, tracking the university schedule. Prices in May, 2024 jumped significantly higher than prices in May, 2023.
On a price per square foot basis, Woodland has shifted into an increasing market
On a price per square foot basis, Woodland has shifted to increasing but stable to increasing on a sale price basis.
On a sale price basis, prices appear relatively stable to increasing. One to watch
Davis inventory remains low with increasing and elevated prices. Woodland inventory has climbed but is still somewhat low by pre-pandemic standards. Price trends in Woodland are somewhat uncertain, with prices increasing on a price per square foot basis but stable to increasing on a sale price basis. If inventory continues to rise in Woodland, expect prices to stabilize or shift to declining.
West Sacramento
Sales volume is down in West Sacramento as shown below.
West Sacramento declining sales volume
Offers received per sale in West Sacramento are below the pandemic era but above 2018 and 2019.
West Sacramento number of offers remains above pre-pandemic levels
West Sacramento Summary
Active Listings as of June 11
70
Sales Last Month
38
Inventory
1.8 Months
Mean Sale Price May 2024
$645,194
12 Month Change Mean Sale Price Mean PSF
2.9% 0%
Sale Price/List Price Ratio
101.03%
Mean Days on Market April 2024
29
Inventory increased significantly in May while prices ticked up as shown on the graph below. The scatter graph is the best way to measure most markets. I’ll have more to say about tracking market changes in the near future.
West Sacramento prices are increasing in 2024
Summary
The overwhelming factor in local housing prices at present is affordability, or the lack of it. Interest rates persist at a high level, dramatically reducing affordability, reducing demand, and even reducing supply with low interest rates lock-in prevalent. Lack of demand and lack of supply continue to shrink the number of homes sold with large impacts on both agents and appraisers.
That said, those who are buying are paying increasing prices as demand appears higher than supply at present in Yolo County and especially Davis.
My goal is to regularly produce local real estate market trend analysis on a monthly basis, focused on my primary markets of Yolo County and Northern Solano County. I’ll have Solano County analysis next week. I’ll also mix in relevant news and articles of interest.
New California Realtor Forms
The California Association of Realtors (CAR) is revising most of their forms for compliance to the recent settlement regarding buyer broker compensation. These changes are scheduled to be released the week of June 25th.
Because we are required to analyze purchase agreements by USPAP, you should take a look at the upcoming changes. It’s probably good practice going forward to request a copy of the Buyer Representation and Broker Compensation Agreement and Cooperating Broker Compensation Agreement until local markets adjust to the settlement. The forms are being finalized but should be essentially the same.
On the good news front, the Fair Appraisal Act Addendum, the form released in 2022 to address bias claims, is being retired with the language moved into a paragraph on another form. I appreciate that CAR is de-emphasizing this language unfavorable to appraisers.
Yolo County Market Trends
The never-ending story of residential is interest rates. Last year at this time I frequently heard predictions of mortgage rates near 5%, like here:
Freddie Mac’s Len Kiefer publishes a chart, below, showing the impact of rising interest rates on affordability.
The vertical scale shows loan amount while the horizontal scale shows interest rates. The blue lines show the payment for a given loan amount and interest rate combination. In 2021, the average loan amount of approximately $400,000 meant a monthly payment of about $1,900 per month. The 2024 average loan amount, approximately $475,000, requires a monthly payment of about $3,100, a 63% increase. Yikes!
We’re still in high interest rate environment with significantly reduced purchasing power from two years ago, reducing demand. At the same time, because so many homeowners locked in rates at 3% or lower, supply continues to sit below pre-pandemic levels.
Yolo County Data
Below is a breakdown of sales in 2024 by community for residential sales on 60 acre or less lots, excluding condominiums, townhouses, and halfplexes. Note that small acreage residential sales are included in this snapshot. All data from Metrolist MLS.
Yolo County 2024 Sales by Community
Most of the sales in Yolo County occur in Woodland, West Sacramento, and Davis, especially in early in the year.
Below shows the growth in mean sale price for Yolo County since 2016. Prices have increased significantly over the past eight years.
Yolo County Monthly Mean Sale Prices since 2016. I see the pandemic in the data, do you?
Let’s see how the market has reacted since the rise in interest rates in early 2022.
Mean Sale Price for all homes sold in Yolo County since 1/1/22
Prices peaked in early 2022 and declined the rest of the year as the market digested the massive change in affordability. Prices recovered somewhat in early 2023 and have tended towards stability since. However, prices are slightly down on a year-over-year basis, discussed below.
Inventory fell to historically low levels during the pandemic and rose in reaction to the interest rate increase in early 2022 but still sit well below pre-pandemic levels at present.
Inventory remains below pre-pandemic levels
Monthly mean days on market are slightly elevated from pre-pandemic numbers and need to be watched.
Monthly mean days on market are slightly above pre-pandemic numbers
Another measure of market strength is the sale price to list price ratio, or how much the sale price of a home changes from the reported list price. A ratio is greater than 100% shows prices getting bid up while under 100% shows sellers forced to discount.
List Price/Sale Price Ratio for Yolo County sales, another measure of market strength
On average, buyers are paying more than the initial list price in Yolo County at present, a sign of market strength.
Yolo County Monthly sales volume is down
Sales volume continues to be suppressed below pre-pandemic levels.
Yolo County Summary
April 2024
April 2023
Change
Active Listings (May)
199
142
40%
Inventory
1.7 Months
1.5 Months
13%
Sales
109
97
12%
Mean Sale Price
$696,669
$728,080
-4%
Mean PSF
$366.79
$388.41
-5.5%
Sale Price/List Price Ratio
100.27%
100.54%
-0.2%
Mean Days on Market
28 Days
34 Days
-18%
Mean Number of Offers
2.1
2.8
-25%
For Yolo County, listings are up, inventory is up slightly, sales volume is up, and prices are down slightly year-over-year. Market heat is down with decreasing sale price/list price ratio and fewer offers on average, but marketing time has decreased. Overall, the Yolo County residential market is softening.
Davis and Woodland
This analysis only includes sales of homes on less than one acre of properties labeled as “single family residences” in Metrolist, the local MLS. The same rules apply to the West Sacramento analysis below.
Sales volume has drifted downwards for both Davis and Woodland.
Declining sales is the clear trend for DavisSales volume trending down in Woodland
Number of offers on average for Davis and Woodland are trending up and are above pre-pandemic numbers.
More competition for listings in DavisCompetition for listings is rising in Woodland too
Davis and Woodland Summary
Davis
Woodland
Active Listings as of May 9
30
27
Sales Last Month
18
45
Inventory
1.7 Months
0.6 Months
Mean Sale Price April 2024
$1,124,972
$608,554
12 Month Change Mean Sale Price Mean PSF
13% 5%
12% 7%
Sale Price/List Price Ratio
104.39%
99.25%
Mean Days on Market April 2024
18
27
The summary table above captures a point in time. Below are scatter graphs of all homes sold in Davis and Woodland since 1/1/23.
Davis prices evolve around UC Davis. Note the seasonal hump and decline following the university schedule
Davis is showing the typical seasonality we’ve seen prior to the pandemic, tracking the university schedule. Prices in 2024 are slightly ahead of 2023 prices.
Not captured above in the summary is that Woodland prices have been essentially stable in 2024
In contrast, Woodland shows no seasonality with prices increasing into late 2023 but relatively stable since. Notice how the summary table above misses the switch to stability in Woodland.
West Sacramento
Sales volume is down in West Sacramento as shown below.
West Sacramento declining sales volume
Offers received per sale in West Sacramento are below the pandemic era but above 2018 and 2019.
West Sacramento number of offers remains above pre-pandemic levels
West Sacramento Summary
Active Listings as of May 9
33
Sales Last Month
29
Inventory
1.1 Months
Mean Sale Price April 2024
$628,097
12 Month Change Mean Sale Price Mean PSF
1% -5%
Sale Price/List Price Ratio
98.39%
Mean Days on Market April 2024
19
West Sacramento trends are mixed, showing increases on a sale price basis and declines for most of 2023 with an uptick in early 2024 on a price per square foot basis-see the two graphs below.
West Sacramento Sales on a price per square foot basis. Note the decline through most of 2023Sale price trendline for West Sacramento sales since 1/1/23. Prices have mostly increased during this time frame
Why do we see declining prices in one graph and rising prices in the other?
This third graph will explain.
Home size over time for West Sacramento sales since 1/1/23
The graph above shows the reported living space for every home sold in West Sacramento since 1/1/23. The red trendline shows that the average size of homes sold increased 1 sf every three days, or about 150 sf from the start of the period to now. This change in home size is known as a composition effect, which I wrote about here.
The move towards larger homes pushes up the sale price trendline and pushes down the price per square foot trendline. For 2023, prices were stable to decreasing in West Sacramento but appear to be stable to increasing at present.
Summary
The overriding story for housing in Yolo County at present is the continued elevated interest rates and resulting lack of affordability. Supply continues to be restrained while demand is reduced by the reduction in affordability. Sales volume and inventory are both below normal pre-pandemic levels.
Countywide, prices have declined slightly on a year-over-year basis with other indicators of a softening market. Davis has rediscovered seasonality while Woodland prices are up year-over-year but have been relatively stable in 2024. West Sacramento indicators are mixed but prices have ticked up in early 2024.
I hope you find this useful. I’ll cover Northern Solano County next time.
Thanks to the Northern Solano County Association of Realtors for hosting us
Thanks to everyone who came to the 5th Northern California Residential Appraiser Conference jointly hosted by the Real Estate Appraisers Association (REAA) and the Northern California Chapter of the Appraisal Institute last week. While attendance was somewhat lighter than in past years, it was great to see so many in person. We had fantastic speakers, starting with Sandra Adomatis, SRA, 2024 National President of the Appraisal Institute.
AI National President Sandy Adomatis
Sandy gave us an update on current industry trends and the Appraisal Institute. I enjoyed hearing about PAREA, the training program alternative to the traditional appraiser apprenticeship, and am hopeful to see younger folks entering the profession. She shared a slide showing most states ready to accept PAREA now or very soon.
Of the 70,000 appraisers in the US at present, 4,000 are SRAs, 8,400 are MAIs, and another 1,400 hold reviewing designations. She also mentioned how the AI will be pushing back on the trend of using property inspectors in appraisals and the misperception of appraisers as mostly biased.
Heather Sullivan, NAA Appraiser of the Year
Next up was Heather Sullivan, head of learning and development for Aloft Appraisal, and the National Association of Appraisers Appraiser of the Year! Congrats Heather!
Heather’s talk was applying the business book classic Who Moved My Cheese? to the current state of the residential appraiser industry. Because of PTSD from my past life working for a rapidly growing music wholesaler, I can’t recommend the book, but I can recommend her talk. She discussed the changes coming and the overall process of accepting change, leaning heavily on WMMC. If you’ve been in the appraisal industry for any length of time, you’ve seen many changes (typewriters, 24-hour photo, MLS books for data, the 1004, UAD, online data availability, etc.). We’re about to see more change with property data collection, new automated tools for analysis, and new appraisal “forms.” Clients are pushing for faster production and if we’re going to serve those clients, we’ll need to adapt.
Heather shared a breakdown of the new appraisal report coming soon to a lender near you. There will be one report instead of the 15 or so different reports we deal with today with options to show sections as they apply. You start by selecting the type of property to be appraised, then the software will display required sections for every report (summary, assignment information, subject property, site, sketch, etc.), with optional sections able to be added by the appraiser as needed (energy efficiency and green features, manufactured home details, rental information, income approach, cost approach, etc.).
Side view of Jeff Bradford
Heather handed over to Jeff Bradford, CEO of Bradford Technologies. Jeff continued the discussion about the new forms coming soon and likened it to filling out your taxes with Turbo Tax. Not the most exciting description. He went into detail about the difficulties developing the new software and some challenges the industry might see. Both Heather and Jeff see the appraiser’s role in this new world to evolving even further into data analysis.
Jeff sees a problem with splitting the data collector role from the duties of the appraiser with a potentially lower income in the future the outcome. His solution-build software to help the appraiser preserve relevance in the residential lending valuation process. We then saw a demonstration of Bradford Technologies solution, NightHawk. Jeff showed us how this tool, in development, would allow for fast analysis with lots of ways to search and analyze competitive sales data, plug into an appraisal, and quickly report the results. I can’t wait to see NightHawk roll out.
From Left: Jon Reiter, Susan Reiter, Stephanie MacLean, and Amy Bolton-Christopherson. The panel was organized by Lou Rusert, standing far right
This panel was especially interesting because each builder occupied a different market segment. Blue Mountain is a production home builder with communities across Northern California. Christopherson Builders is based in Santa Rosa and aims for the custom, higher quality market. I recognized Christopherson because they have rebuilt homes destroyed in the LNU Complex Fires north of Vacaville, one of my prime markets. Reiter Fine Home Building is a top of market spec builder in the Wine Country, with homes starting at $15,000,000 going up to more than $65,000,000.
Amy from Christopherson emphasized the difficulty in building new homes in California because of regulations and high indirect costs. Her example of a 1,200 sf accessory dwelling with a base price of $558,600 was eye-opening.
Stephanie from Blue Mountain reviewed the process her company goes through for developing a subdivision, from conception through feasibility, acquisition, marketing, and selling. She highlighted a new subdivision in Elk Grove with entry-level homes at $400,000, very reasonable and attainable for many in the Sacramento region.
Reiter Fine Home Building is different. Jon Reiter described their model of staying current with the latest trends in the very top tier of new homes in the US, designing and building one at a time. He discussed the importance of site selection for privacy and views for those who can afford a $65,000,000 home and emphasized that home size is less in demand in the top tier. He also discussed evolving tastes and how his company moved from Mediterranean to barndominium to modern.
All three panelists were kind enough to answer questions at the end of their presentations.
Yours truly in the deadliest slot, last
The final section was a discussion of short-term rental properties. Seth Carlsen, a Sacramento-based real estate investor, shared with us an introduction and lessons learned in acquiring and managing his 21 short-term rental properties. He reviewed AirDNA, the primary data source for short-term rentals, and provided comparisons to data provided about his properties by AirDNA and the actual data. He warned us to be careful to compare properties with similar amenities and maximum guest count, and to use multiple data sources.
I wrapped up the day with a comparison of short-term rentals to the standard rental properties residential appraisers deal with on a regular basis and warned about the relatively common request appraisers receive from lenders to provide a “rent survey” for short-term rentals. I encourage everyone interested in the topic to read John Dingeman’s article about the issues regarding lender rent survey requests and short-term rentals.
Thanks to host Northern Solano County Association of Realtors for allowing us to use their excellent facility. Thanks to all of our speakers who traveled near and far to share their wisdom and expertise. Thanks to Lisa Estes from the Appraisal Institute for managing the logistics so well. And thanks especially to my fellow committee members Lou Rusert and Chris Daniels, SRA for their work in planning this event.
I had a problem earlier this week with this website reverting to a 2016 version but was able to quickly fix with the help of the fine folks at my host, SiteGround. When reviewing the issue, I noticed that my last post was last summer. Yikes! Here’s the first effort to be more timely with my writing.
The Northern California Residential Appraiser Conference
Friday, May 3 (tomorrow), I am speaking at the Northern California Residential Appraisal Conference in Fairfield, California. My topic is a brief introduction to short-term rental (STR) properties with a focus on the issue of what to do when a lender asks for an appraiser to report “rental income” for a STR on the 1007 form.
Denis DeSaix, Penny Woods and I came together to produce the first joint conference between the Real Estate Appraisers Association (REAA) and the Northern California Chapter of the Appraisal Institute (NorCal AI) in 2018. Our goals were to bring the excellent teachers from NorCal AI to REAA residential appraisers and to build connections between the two organizations. Tomorrow is the fifth annual conference (Covid canceled the 2020 event) and we have a great group of speakers.
The California Probate Referees Association has invited me to speak at their conference on Monday, May 20. I plan to discuss market change adjustments and contrasting, two quick and easy tools every valuation professional should use. This event is not open to the public but if you’re a probate referee in California, I hope to see you there.
Tuesday, June 4 I am teaching a time adjustments/market change adjustments class via Zoom for REAA. I will discuss time adjustments in detail here in a series of posts over the next several weeks.
What I’ve been doing instead of updating my website
I immensely enjoyed my trip to Palm Springs for the Community of Asset Analysts meeting in January. It was great to see in person many of my valuation friends. Below are some photos from the trip.
From upper left clockwise: George Dell speaking at the Community of Asset Analysts meeting; my fellow asset analysts; Brad Bassi in real life!; first time in Palm Springs; Joshua Tree NP was amazing; Yosemite Valley in the snow on the way home
Here are Yolo County residential real estate market trends as of August 23, 2023, based on analysis of sales in Metrolist MLS for my presentation at the Yolo County Association of Realtors marketing meeting last week. In the past, I’ve not included county-wide data nor West Sacramento. I’ve added both at the request of local agents.
The Elephant in the Room-Interest Rates
Every presentation I’ve done since the pandemic started has included a discussion of interest rates. The drop in interest rates at the start of the pandemic helped fuel the rapid increase in prices we experienced. The rapid increase in interest rates in early 2022 put the brakes on residential real estate, especially in California, by hammering affordability.
Thanks to Len Kiefer for this graph
The graph above shows the longer run of interest rates this century, trending down to a low below 3% during the pandemic with a rapid return to 2002 levels in less than two years. Interest rates are now at their highest point since I started my career as an appraiser in June, 2002.
This graph explains the residential real estate inventory effects from the change in interest rates since 2019:
Thanks again to Len Kiefer
Almost 2/3 of current mortgages have interest rates below 4%. There is a very strong financial incentive for anyone with one of these mortgages to not sell their home because a replacement will trigger a much higher monthly payment, thus reducing the available inventory.
Let’s look at the demand side:
Thanks again Len
This graph is a little difficult to decipher but tells a crucial story for residential real estate. The left Y-axis shows the monthly payment for the given terms. The right Y-axis shows the average loan size. The X-axis shows the interest rate. The dots show the meeting of the average interest rate, loan amount, and monthly payment for each year.
To buy the typical house in 2021, the payment was approximately $1,800 per month. Now, in 2023, the typical house payment is $3,000 per month. Affordability has been hammered by the rise in interest rates and not helped by increasing prices.
Combined, we have very reduced inventory combined with reduced demand. In 2022, the demand reduction “won” in our region, leading to price drops. In 2023 so far, the reduction in supply seems to be “winning” with price increases common. The residential real estate industry is probably the biggest loser in 2023 with significantly fewer sales this year compared to previous years.
Yolo County Data
Below is a breakdown of sales in 2023 by community for residential sales on 60 acre or less lots, excluding condominiums, townhouses, and halfplexes. Note that small acreage residential sales are included in this snapshot.
2023 Yolo County Sales by Community
Most of the sales in Yolo County occur in Woodland, West Sacramento, and Davis.
Below shows the growth in mean sale price for Yolo County since 2016. Prices have increased significantly over the past seven years.
Yolo County Sales
A closer look at sales since 1/1/22 shows a different story:
Prices peaked in the spring of 2022, declined the rest of the year, and started to increase again in the spring. The last two months show some softening of prices.
Current inventory countywide is above the lows of the pandemic era but significantly lower than typical:
Yolo County inventory is on the low side at present
Inventory is lower than typical but monthly mean days on market countywide is back to pre-pandemic levels:
Days on market are closer to longer term averages
Another measure of market strength is the sale price to list price ratio, or how much the sale price of a home changes from the reported list price. If the ratio is greater than 100% shows prices getting bid up while under 100% it shows sellers forced to discount.
Homes are selling for close to asking at present
This measure increased dramatically during the pandemic, dropped after the rise in interest rates in 2022, and has recovered to a somewhat stronger level.
Sales volume drop is the biggest issue for real estate professionals looking for work
Sales volume is depressed below pre-pandemic levels because of lack of inventory meeting lack of demand. After two/thirds of 2023, Yolo County has about half the number of sales typical year to date before the pandemic.
Countywide, prices are stable to increasing with low inventory and typical days on market. Let’s take a look at the larger Yolo County markets.
Davis and Woodland
This analysis only includes sales of homes on less than one acre of properties labeled as “single family residences” in Metrolist, the local MLS. The same rules apply to the West Sacramento analysis below.
Sales volume has drifted downwards for both Davis and Woodland:
Davis sales volume since 2018 per MetrolistThe change in sales volume is more pronounced in Woodland
Metrolist tracks how many offers were received for each sale, another indicator of market activity. Davis and Woodland both show elevated numbers of sales receiving multiple offers in 2023 so far:
Multiple offers imply a seller’s market
Below are summary statistics for Davis and Woodland:
Inventory is relatively low but above pandemic levels. Days on market, multiple offers, and the sale price/list price ratio show both markets overall are leaning towards sellers at present.
Davis price trends since 1/1/22 show a peak in the spring of 2022 followed by decline to a low at the start of 2023, with prices increasing so far since:
Woodland follows a similar pattern:
To recap, Davis and Woodland are showing low inventory, low sales volume, some buyer competition, and increasing prices.
West Sacramento
The story is familiar for West Sacramento.
Sales volume for 2023 so far is about half prior to the pandemic with two-thirds of the year gone with the longer trend declining.
Multiple offers in West Sacramento are elevated but appear somewhat more volatile than in Davis and Woodland:
West Sacramento Summary:
Price trends in West Sacramento follow the same pattern as in Davis and Woodland: peak in the spring of 2022, followed by decline to a bottom in early 2023, with rising prices now.
West Sacramento is trending along the same lines as Davis and Woodland
Yolo County Small Acreage Residential
Finally, let’s look at the Yolo County Small Acreage Residential market. In this analysis, I included homes sold on 1-60 acres reported to be one home on a lot, two homes on a lot, manufactured homes, or modular homes. I excluded Davis and Dunnigan addresses because these two markets trend differently from the rest of the county.
Inventory is on the low side at present in shortage. This market typically has 6-12 months of inventory but is somewhat more volatile because of lack of activity.
Recent price trends are stable to increasing. Please keep in mind that conclusions are significantly more uncertain because of lack of conformity between the properties sold.
Note that this market did not have the same protracted dip seen in other Yolo County markets throughout 2022.
Takeaways
Rates continue to dominate our local residential real estate markets.
Very low supply is overriding low demand.
Prices switched from declining to stable to increasing throughout the county.
We have a very low number of sales.
Valuations are difficult at present because of changing market trends and few sales to use for sales comparison.
Thanks for reading. Please leave any comments or questions.
