Sacramento Shines for First Homes and Forever Homes

This afternoon, Redfin CEO Glenn Kelman was a guest on CNBC’s Closing Bell. During his segment, Kelman informed the audience that Sacramento, CA was the number 2 city in the nation in terms of buyer inflow. Sacramento has experienced a 70% increase in year over year inflow of home buyers into the region. Conversely, he stated that San Francisco, CA has experienced a 50% increase in outflow of buyers moving out of the Bay Area.

Kelman’s interpretation of the current real estate market around the country was that it was crazy, and yet everyday it seems to get crazier. He pointed out that interest rates continuing to be below 3% are a strong catalyst to the highly competitive market place. While rates cannot stay below 3% forever, he does forecast that they will remain low through 2021. Another item of note from his interview was that he does not see the same risks and red flags during the current market cycle when compared to what was experienced in 2005, ‘06, and ‘07. Lending practices today are far stricter than they were 15 years ago, and the current property appreciation is the result of genuine buyer-side demand. Not the result of rampant speculative buying practices, which played a large part in that 2007 housing bubble bursting.

I decided to write about Kelman’s outlook because I agree with a lot of what he had to say. What he described on the national stage is what I’m seeing here locally in Sacramento. The incredibly low interest rates, which as of this morning were at 2.5% for conventional and 2.25% for FHA, make right now a really good time to buy your first home or your forever home. The incredibly low rates also make it a really good time to invest in 2-4 unit residential income properties. But the stiff competition in the market for single family homes has caused me to personally take a step back from buying / investing in those as rentals.

As always, you can reach out to me at mark.delgado@cbnorcal.com or at 916.705.2298 with any real estate questions you may have. Especially if you are looking for your first home or that forever home. While every search I’ve embarked on with my clients this year has been tough, they have all loved the home they eventually found. The peace of mind that comes along with buying your first home or your forever home, and doing so with a historically low rate mortgage rate, is significant.