The Sacramento region’s hottest real estate market is finally slowing. But here’s the catch

Home buyers in the highly-desirable Placer County real estate market are finally gaining some leverage.

After two years of intense competition and skyrocketing prices, the market in suburban Placer County has cooled. The trend largely mirrors the rest of the Sacramento region and Northern California, where prices and sales began to dip in May.

So what’s driving the change?

Sacramento real estate market analyst and appraiser Ryan Lundquist said it’s a mix of rising mortgage rates, lower median prices and a drop in sales volume.

“It’s made the market more challenging, and (buyers) have gained more power because it’s more difficult to afford and sellers are having a harder time selling,” Lundquist said.

It’s not entirely a rosy situation for buyers, however. Mortgage rates have zoomed past 7%, adding hundreds of dollars to monthly payments even as prices have fallen. At the end of June, just 27% of Placer County residents could afford the median-priced home, down from 38% the year before, according to data from the California Association of Realtors.

There are some positive signs for potential buyers. The median price in the region dropped an average of 2.5% every month for the last five months, according to Lundquist’s data. The median price dropped 12.4% in Placer from May to October, the steepest decline in the Sacramento region, the data show.

What’s more, nearly 56% of the 525 active listings on the Placer County market last week had a price reduction, the highest percentage in the four-county region, according to Lundquist, author of a popular real estate market blog.

The pace of sales is slowing, too. In 2022, home sales dipped by 26% compared to 2021. And the average number of days a home was on the market more than doubled this year compared to last.

From September to October, the median price in Placer County dropped from $649,888 to $644,000. The median this year is nearly identical to what it was in October 2021. The number of sales in the county has dropped by 26% since last year and there are roughly 2.5 months of supply on the market, a huge increase over 2021.

That means “buyers can command credits and price reductions so that’s the good news,” Lundquist said.

The median price for a home in the four-county Sacramento region stood at $550,000 in October, exactly what it was the year before, according to Lundquist. Even with the reductions, Placer County still has the highest median prices in the area.

This story was originally published November 10, 2022 at 5:30 AM.