Posted on May 13, 2022

Amanda Allum and her boyfriend began looking for a home in the Sacramento region in December. About 35 home visits and a couple of failed bidding wars later, the young couple finally landed the house they were looking for in Carmichael. “We almost gave up at one point,” Allum, 34, said.

The Sacramento region’s real estate market was a rocky, turbulent ride for many homebuyers during the first few months of 2022. During the first six weeks of the year, 42 homes in the region sold for at least $100,000 above the original list price, according to data from national real estate firm Redfin.

Median home prices grew by astonishing rates in January, February and March. Just one in 15 homes sold for below the list price, a “wild” rate that was about half what it should have been, local market analyst Ryan Lundquist said. Even for those who were successful, home hunting could be a trying experience.

Allum beat out 13 other offers for the house in Carmichael – and won because she and her boyfriend were the only bidders who did not intend to “flip” the home. “We were a young couple and we worked the story,” she said. They still needed to bid more than $50,000 over the final asking price and make a $100,000 down payment, she said.

Their new home sits on a quarter of an acre on a quiet street, where Allum’s boyfriend can work on his classic cars and not bother the neighbors. In the end, they found a home with the privacy they were seeking at a price that was well below the median for Sacramento County. “You have to find what’s most important to you,” Allum said.

Some of the bidding wars that took place during the first few months of the year were the stuff of real estate legend.

A four-bedroom estate in Loomis with an infinity pool and a gourmet kitchen sold for more than $1 million above the list price. A fixer-upper in Granite Bay that hadn’t been renovated in 50 years but is within view of Folsom Lake sold for more than $200,000 above asking. A home in North Highlands that wasn’t livable sold for well above the list price to an investor.

“What we’re seeing is pretty eye-opening,” said Anthony Alfano, a Rocklin-based real estate agent.

The number of homes here that sold for at least $100,000 above the listing price was more than the total seen in large markets such as Atlanta, Miami, Charlotte, Chicago, Philadelphia and Las Vegas. And they marked an increase of more than 60% over the same period last year.

The remarkable statistic was another in a market seeming to set new marks each week. However, to put the number in some perspective, homes that sold for at least $100,000 above the list price made up just 1.6% of total transactions in the Sacramento region. By comparison, an estimated 40% of homes sold in San Francisco and 45.5% of homes sold in San Jose went for at least $100,000 above the asking price.

Still, some sales were astonishing. A home on Rutherford Canyon Road in Loomis sold for $4.5 million – a bit more than $1 million above the original list price of $3.475 million. It sold in a matter of days after receiving “five very strong offers,” said the listing agent, Michael Yarmolyuk. “This home has generated a ton of interest from the day it hit the market,” he said.

“We had back-to-back showings with qualified buyers, scheduled immediately after the listing went live.

“Facilitating a transaction to have that much margin over the asking price was pretty epic,” he added.

The estate on Rutherford Canyon Road fit the profile of a home that continues to draw a bidding war. It’s in one of the region’s most desirable suburbs. It is in a private setting, among vineyards and nature preserves in the Sierra De Montserrat neighborhood. And it had unique features such as the infinity pool and other touches in a “transitional farmhouse style,” Yarmolyuk said.

That was also the case with a home in Granite Bay Alfano recently worked on. The home on Sierra Drive listed at $900,000. After 17 offers, it sold for $1.13 million. The buyers paid cash, Alfano said.

The deck in the backyard was broken. The home was built in 1971 and had limited updates, besides the roof and HVAC system. Yet it’s nearly a lakefront property, backing up to Lakeshore Drive.

“I’m seeing (more overbidding) with properties with unique features,” Alfano said. “We anticipated it being sold for more than a million, but not that much higher. We thought people would have pushback due to what needs to be done with the property.”

In terms of dollars, the median price growth in the region from January to March was the biggest leap going back to at least 2004, according to Lundquist’s data. Buyers paid an average of $23,000 above the asking price in March and roughly 72% of homes attracted multiple offers, Lundquist said.

“In short, the stats in March were stunning,” Lundquist said. “It’s very normal for prices to tick up during the spring. It’s just that this spring was bananas.”

Adding to the difficulties for homebuyers were surging mortgage rates. Driven by inflation and the war in Ukraine, rates have gone up roughly two percentage points this year, adding hundreds of dollars to monthly payments for those buying homes in the past few months. But that has also led to home sale prices flattening in many markets, including Sacramento, as the first signs of a buyers’ market began to emerge in April.

The wild environment was also felt in the new home market. New communities are being built throughout the region, especially in eastern suburbs and Placer County, but not nearly enough to keep up with demand.

“It was a phenomenal first quarter,” said Dean Wehrli, a principal with John Burns Real Estate Consulting. “Supply is just so insanely historically low and it still is that even if demand is winnowed a bit because of (higher mortgage) rates, you still have this imbalance in favor of demand.”

The demand has led some new home builders to accept multiple bids on properties, a rarity for most builders who generally sell homes for the list price. Builders could see 200 or 300 qualified buyers on a list for 15 available homes, Wehrli said.

The turmoil in the real estate market, both locally and nationally, has left many feeling pessimistic about homeownership.

A Gallup poll released last week showed just 30% of Americans believe now is a good time to buy a home – the first time it’s been below 50% since the polling company began asking the question in 1978. Optimism is particularly low in the western United States, where the number dipped to just 27%.

An overwhelming majority of those polled think prices will keep going up.

“The combination of record-high home prices, rising mortgage interest rates and a limited supply of housing is likely persuading Americans, for the first time in Gallup’s trend, that it is a bad time to buy a house,” the polling firm wrote. “For now, Americans continue to expect home prices to rise, even though higher interest rates mean prospective homebuyers will have to stretch themselves to make higher mortgage payments or settle for a less expensive house.”

Original article: https://www.sacbee.com/news/business/real-estate-news/article261032372.html