Here's what one expert says is influencing Sacramento's declining real estate sales
SACRAMENTO — Sacramento once had one of the hottest real estate markets in the country, but today, people looking to purchase homes are struggling.
"I think this market has surprised a lot of people," said Ryan Lundquist, a Sacramento-area appraiser and housing analyst.
New numbers show a dramatic decline in the city's real estate sales.
"We're in a situation where we've seen almost 5,000 fewer sales happening in the region," Lundquist said.
According to Lundquist, higher interest rates are mostly to blame.
"When rates go up, it impacts affordability," he said.
Mortgage rates now sit around 7% and have more than doubled in fewer than two years.
"That is going to stop most people from purchasing a house," said Suneet Agarwal, the CEO of Best Sac Homes Group. "You're payment is going to be twice as much."
Agarwal said it's frustrating for many of his clients looking to buy.
"You get beat up by the rejections, by the limitation of your options, and I feel really bad for people," he said. "We see people say we're just going to stop looking."
Fewer homes on the market are going fast — 86% sell within thirty days or less.
"It's a strange experience because you don't normally have fierce competition in the midst of a lot of buyers going 'Hey, I'm struggling with affordability,' " Lundquist said.
One bright spot is the new homes under construction across the region that help create more options for buyers.
"Builders are offering incentives, credits to buyers, buying down the mortgage rate to help buyers find more affordability," Lundquist said.
Experts warn there won't be much relief until interest rates fall.
"What's it going to take for prices to come down?" Agarwal said. "A big surplus of houses. We know that that's not happening."
The current market conditions are not having much impact on boosting the value of homes. The median sales price in Sacramento is $530,000 which is 5% lower than last year.
