Housing numbers show lower sales, higher prices

We’re just past the half-way mark of 2024, and it’s a good time to assess the Folsom housing market.

Is it a buyer’s market? Some say ‘yes’ as the high interest rates have put home ownership out of reach for many.

Is it a seller’s market? Some say ‘yes’, as those who can afford to buy are facing limited supply, and are willing to pay more.

Actually, there’s truth in both of those statements.

Yes, we’ve seen fewer buyers in the market since interest rates virtually doubled in 2022. The second half of that year saw a sharp decline in sales, and nearly 15% drop in home prices.

Since then, however, we’ve found there are many buyers who are ready, willing and able to pay today’s interest rates in order to secure housing.

Fewer Buyers Fewer Sellers

Through the first half of 2024, 278 existing homes were reported sold thorugh the MLS. That’s up slightly from 2023, when there were 267 sales, but a far cry from 2021, our last ‘hot’ year, when 456 homes were sold in the first 6 months of the year.

While there were fewer sales, the supply still remains low. As of today, there are 99 existing homes for sale in Folsom. The reason is simple, with the majority of American home owners holding mortages below 4%, many are staying put; the so-called ‘Golden Handcuffs‘ effect.  The usual life-events, marriage, divorce, death, the need for more space, less space, etc., are still happening, but some home owners are holding out as long as they can.

My daughter, Jenny, is a perfect example. She was enjoying a 2.75% mortage rate, living in Santa Maria. Now with 3 sons, she wanted to get closer to home, and back to Folsom’s great schools and safe environment. She expressed her desire to come back over a year ago, but was holding out hope that rates would come down. Eventually, the desire to return to Folsom became stronger than her desire to keep that 2.75% interest rate, so we sold her home and got her into a place here. It costs more, but to her and her family, it’s worth it.

Many others are still holding out, and that leaves buyers with limited choices. Multiple offers are common, and 63% of homes sold this year had them. 37 homes received 5 or more. 60% had multiple offers last year, and a whopping 80% had multiple offers in 2021.

How Fast are they Selling?

Although overpriced homes are sitting for extended periods, the average days on market this year stands at 20 days, and 49% sold in 7 days or less. The average was 27 days in 2023, but back in 2021, it only took 9 days on average, to get your home sold.

This tells us that if you price your house correctly, the market will snap it up quickly. If you don’t, it won’t.

Is Cash Still King?

When the price is right, sure. This isn’t the time for low-ball offers, though. 21% of this year’s sales have gone to cash buyers, with 55% of those buyers paying above listed price. Back in 2021, only 14% were cash buyers, so while the numbers are up, they aren’t dominating the market.

What about prices?

Folsom housing prices are rising. The average sale this year is $818,000, 3.5% above 2023, and 2% higher than 2022. As rates start to tick down, more buyers are expected to enter the market, and unless there’s a significant rise in inventory, we may see a significant rise in prices.

A Few other Notes

At the current rate of sales, we’ve got about 1.7 months worth of inventory.

Numbers above do not include new construction, as most sales are not made nor reported through MLS, and I really wanted to focus on existing home sales.

The market can change at any moment. An election year, the new rules under the commission settlement, interest rates and consumer sentiment can push it one way or another.

Today, there aren’t any signs of a market downturn. With millions sitting on plenty of equity and enjoying low rates, even if buyer activity were to slow down, it’s unlikely we’d see a major correction.

In fact, with experts predicting lower rates as the year moves on and into next year, buyer activity is expected to increase, and prices should continue to climb.

Picking up my car from the mechanic shop yesterday, my guy Vince asked if he should sell now. I told him that selling is a very personal decision with a lot of considerations. I asked ‘do you have a compelling reason to move?’ He said, ‘Yeah! To get the heck out of California!’ Then yes.

If you’d like more info, curious about another housing market other than Folsom, considering buying or selling, or if you’re opinion differs from mine, don’t hesitate to reach out.

Steve Heard – EXP Realty of Northern California, Inc – DRE#01368503 – 916 718 9577 – steve@myfolsom.com