The pandemic has changed all of our lives in the past year. In local real estate, activity paused in March and April as shelter-in-place orders took effect. The Fed dropped interest rates to zero, pushing mortgage rates to historic lows. Homes became more affordable but inventory (the amount of time to sell the current number of active listings in a market) tightened because people didn’t want strangers walking through their homes during a pandemic. Low rates combined with low inventory has supercharged the local residential market.
Davis and Woodland have very few homes for sale at present with multiple offers received on most listings. The lack of inventory, very low interest rates, and lots of competition are pushing prices up as shown on the graphs below.
Davis has relatively few sales in January and March so take the 26% price increase with a grain of salt-that number is likely influenced by a change in what sold, potentially a compositional effect. I wrote about compositional effects recently.
Woodland prices have increased relatively rapidly during the pandemic on a price per square foot basis but have leveled off on a sale price basis.
Because of seasonality, I look at 12 month change in prices for Davis. Prices have increased the past 5 months compared to the previous year. Davis is a clearly appreciating market at present.
Much of my work is in unincorporated Yolo County appraising small acreage residential properties. The graph below shows a significant upward trend in these types of properties. Once again, part of the increase can be attributed to a compositional effect: the average size of homes and lots have increased, pushing up the sale price trendline somewhat. That said, prices are still increasing in this market.
Inventory was 2.5 months when I compiled this graph at the beginning of the month, shockingly low. I have not seen this market with less than 5 months of inventory in the past 10 years. Buyer preferences have shifted to having more space away from neighbors.
My friend Ryan Lundquist posted an interesting question last week: How much have prices risen since 2012?
This was the bottom of the market for the Sacramento region. Here’s the summary from his post:
If your timing was great, your median home purchased in 2012 for $199,000 has increased $311,000 to $510,000 today!