Wright Report Q3-4, 2014

July - December, 2014
www.WrightRealEstate.us Page 1 (916) 726-8308
Wright Report
Perspectives and Overview of Northern California’s
Residential Real Estate Markets:
Statistics and Trends for the United States, State of California, and Northern California
Counties: including Sacramento, Placer, Yolo, El Dorado & San Joaquin Counties.
July to December, 2014
TTHHEE WWRRIIGGHHTT RREEPPOORRTT

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The Wright Report
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Prepared By: Joel Wright &
Hayley Cooper
Document Version: Final
Last Updated On: June, 2015

Wright Report
TABLE OF CONTENTS
TABLE OF CONTENTS....................................................................................................................... 3
EXECUTIVE SUMMARY:.................................................................................................................... 4
THE EXPERTS WEIGH IN:.................................................................................................................. 5
Sacramento Appraiser: Ryan Lundquist ............................................................................... 5
Real Estate Attorney: Stephen Beede .................................................................................. 7
MARKET UPDATE:............................................................................................................................ 9
BANKING & LENDING: ................................................................................................................... 14
DISTRESSED PROPERTIES:.............................................................................................................. 15
COUNTY STATISTICS: ..................................................................................................................... 16
Sacramento County ............................................................................................................ 16
Placer County...................................................................................................................... 17
El Dorado County................................................................................................................ 18
Yolo County......................................................................................................................... 19
San Joaquin County ............................................................................................................ 21
HISTORICAL PRICE GRAPH:............................................................................................................ 23
RESOURCES:................................................................................................................................... 24

Wright Report
EXECUTIVE SUMMARY:
Uncertainty! An emotion, definitely present in residential real estate
today. While it has not yet devolved into frustration, over the last half
of 2014 the National and California residential real estate markets
seem to be full of it.
At the national level the economic and job growth numbers look very
promising. They are the strongest since the end of the “Great
Recession” in 2009, yet they are not reflected in the housing market
with increasing prices.
From June to December 2014 the Median Sold Price for resale homes
in the U.S. declined 6% from $222,000 to $208,200. In California
they declined 1.1% during the same period to $452,570, and in
Sacramento Median sold price dropped .7%.
So as our national, state, and local economies are moving past the
Great Recession, people seem to have taken their mind off of real
estate.
Perhaps buyers feel the market is too overheated, or they are just
enjoying a semblance of economic normality before they get back to
sorting out their housing situation. If it is fears of an overheated
Residential Real Estate Markets, then the fears do not seem to be
strongly supported. While 38% of 157 markets across the country
(tracked by National Association of Realtors) are higher than they were
at their peak, (including the Bay Area and other areas with strong job
growth), 61% of metro areas show an average recapture of price of
48%, or half way up from its most recent low to the previous high.
It should be mentioned that with interest rate so low that the
mortgage payment for homes in those metros with historic highs is still
much more affordable than before the downturn.
With rate hikes being inevitable (and coming soon), the economy
mending, positive job growth, new construction increasing, commercial
real estate revitalized, it will be interesting to see what 2015 brings.

Wright Report
THE EXPERTS WEIGH IN:
Sacramento Appraiser: Ryan Lundquist
Mild appreciation during the first half and flat for the second half
In 2014 the housing market saw mild appreciation, but any gains were found in the first
two quarters rather than the second half of the year. Overall the last two quarters of
2014 can be characterized as flat.
The graph above shows an increase in value at the beginning of the year, but then the
market was basically flat for more than half the year. Moreover, the market experienced
a normal seasonal lull during the Fall months. The median price increased by 6% from
December 2013 to December 2014, the average price per sq ft increased by 3.5%, and
the average sales price increased by 4.5%. When considering all these metrics, it
equates to values in most neighborhoods having a modest increase anywhere from 2-
4% over the year.
One of the big reasons the market felt flat for the second half of the year was increasing
inventory and less cash investors. All year long housing inventory was hovering between
2 to 2.5 months of supply, whereas in early 2013 there was only a one-month supply of
homes for sale.

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Having a more reasonable level of inventory helped normalize the market to a certain
extent. In fact, one of the struggles during the latter half of the year was sellers being
realistic about pricing their homes. Sellers seemed to lag behind the market, meaning
the market cooled off, but sellers were still pricing as if it was the most aggressive
season of 2013. This led to many months of price reductions, which also kept the
median price flat for six months straight before taking a dip during the Fall. Additionally,
there were actually 38% fewer cash purchases this year in Sacramento County. Having a
substantially lower level of cash sales in 2014 began to give us a picture of what demand
really looks like in the Sacramento market.

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Lastly, it is important to be aware of the current context of the market. The median
price in Sacramento County currently resembles the median price from Q1 2004 and Q1
2008. Overall the median price is still roughly 33% lower than it used to be at the peak
of the market in 2005.
Ryan Lundquist is a Certified Real Estate Appraiser in the Greater Sacramento
Area. He also specializes in reducing property taxes. Check out his great Blog at
www.SacramentoAppraisalBlog.com or contact directly at (916) 595-3735.
Real Estate Attorney: Stephen Beede
2015 has started out with more questions than answers. The real estate market
remains relatively flat since the supply of homes for sale caught up with the supply of
buyers. The Fed is still talking about an interest rate increase but so far has held
off. Perhaps, like me, they feel this recovery is still too unsettled to absorb a rate
increase.
Perhaps the only possible good news has been the announcement in December that the
Debt Forgiveness Act has been extended once again although only for 2014. Every
upside down owner trying to figure a direction wants to know whether it will be back for
2015. But there is no clarity. It's being talked about in Congress and it's in President
Obama's Budget proposals but no-one knows if and when it will get acted upon.
Another December passage only impacts those who rolled the dice and short-sold or
had a foreclosure. Significantly, most people (and agents) forget that the Debt Relief
Act is only one of 5 different ways of avoiding this tax.
One thing however does seem clear: the chances of getting a loan modification are
nearing zero even for those with the greatest hardships. Why? It's simple, rising prices
have made it more attractive for lenders to force a short sale or foreclosure so they can
clear bad loans off their books. So Loan Mods are being rejected using the Net Present
Value (NPV) test where the lender or investor simply determines that they'd be better
off getting whatever they can now. Need proof? Since last June, foreclosure starts have
skyrocketed while mods have disappeared. For most upside down owners, short sale is

Wright Report
the only solution. But maybe not for high asset debtors unwilling to disclose their
financials.
On the positive side, the recovering market has spurred new housing development as
well as commercial building, particularly projects connected to our aging population
such as assisted living facilities. We're working on several of these right now. Further
our law practice is booming with Probates, Trust Administration, and lots of litigation
related to increased prices finally creating equity in properties and battles over whether
they should be sold now or held for more growth. And of course, there's always title,
easement, and other issues to be resolved.
As we get further into this year, look to the Wright Report to give you a summary of our
evolving real estate universe.
Stephen Beede is a prominent local attorney with very wide experience with
residential real estate that he brings to his law practice. He can be reached
online at www.bpelaw.com and sjbeede@bpelaw.com. He also keeps an
excellent blog at www.stevebeede.com; contact him directly at (916) 966-2260.
If you or your clients have any immediate legal needs, please consider us to gain
direction and, when needed, legal representation. Our flat fee, one hour
attorney consultation is usually the best way to start. To schedule an
appointment, please call our office at 916-966-2260 or you can e-mail me at
sjbeede@bpelaw.com.

Wright Report
MARKET UPDATE:
National & State
The median price across the United States hit $208,200 in December
2014, rising 5.3% year over year. Conventional homes averaged 66
days on the market. Nationally, December closed with 4.4 months of
inventory, while Sacramento only had 2.2 months of inventory at the
close of the year.
In December, the median sold price in California hit $452,570 down
1.1% from June ($457,630.) That median price is 85% higher than
the 2009 bottom of $245,230. The CA market is still 24% below the
2006 high of $594,530.
Affordability, the percent of people in California who can afford to
purchase the median priced home with 20% down payment, is down 1
point to 31% from Q4-13 to Q4-14. Sacramento’s affordability is at
49% in Q4-14: 2 points lower than in Q4-13 and up 1 point (48%)

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from Q2-14. This increase in affordability is due to lowering interest
rates at the end of 2014.
The 2014 National Home Ownership Rate decreased to 64% in Q4 of
2014. The demographic seemingly most affected are individuals age
35 to 44.
Sales of SFR (Single Family Residence) Resale Homes across the
nation reached 4.34 million units in 2014, a 3% decline from 2013’s
4.48 million.
SFR New Home sales reached 435,000, just 1.4% higher than the
429,000 units sold in 2013, but nowhere close to the historical
average of more than a million units built and sold annually. The
median New Home sales price for 2014 was $283,600, up 5.5% from
the 2013 median sales price of $268,900.
Sacramento County
In Sacramento County the average price rose 1% between June to
December to end the year at $294,094. From December 2013 it rose a
total of 4.8%.
Here are the Average Sold Prices for the four counties making up the
Sacramento Metro Area:
COUNTY
Average Sold Price %
Change
Dec-13 Dec-14
Sacramento $280,714 $294,094 4.77%
Placer $403,136 $429,140 6.45%
El Dorado $381,985 $415,284 8.72%
Yolo $334,559 $361,556 8.07%
Since it reached its lowest point in January 2012 with a median price
of $160,000, Sacramento County’s median sold price has risen 67.5%;
a full $108,000 to $268,000 in December 2014.

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December 2014 saw 12.7% of sales as distressed sales (Short Sales or
REO); down from 18.6% in December 2013. Short sales made up
6.7% of sold properties in December, and REOs (foreclosed bank
owned sales) made up 6% of sales.
In California, year over year, bank owned property inventory
decreased to 38,788 from 41,559. This 7% decline means that
distressed sales make up an ever smaller section of inventory
In Sacramento County the inventory of homes available for sale
increase from December 2013 with 2509 SFR units available for sale,
to December 2014 with 2799 units on the market; an increase of
11.6%. There were 2,210 listings available for sale at the end of Q4-
14 on January 1, 2015.
December 2014 also had approximately 2.2 months of unsold
inventory; which is generally considered very low.
Sales of SFR homes in December 2014 saw some 54% selling for a
price below the listed price, with the median price drop being $7,500.
In December 2013 47% of homes sold for below asking price. So
while the number of homes that received price reductions off of the
listed MLS price went up, so did the price through the year.

Wright Report
MACRO ECONOMIC CONDITIONS:
Residential real estate nationally has increased in price since the low in
2012 and sales numbers are stable, though not as high as right before
the recession.
The GDP is estimated to have increased 5% in Q3 and 2.2% in Q4.
Consumer confidence is growing and consumer spending also rose
4.3%. Both the increase in GDP and an increase in consumer
spending help contribute to a general increase in market confidence.
Beginning in 2014 new air regulations affecting coal burning power
plants began New Year’s Day. These and other regulations to come in
the first half of 2015 may affect consumer electricity bills in the year to
come. Higher electricity bills will help to undermine at the roots of
household disposable income.
The US unemployment rate was 5.6% in December, over a 1 point
decrease from 6.7% in December 2013. In California the
unemployment rate was 7.1% in December. California showed an
increase of 320,300 jobs for 2014, which came to an increase of 2.1%

Wright Report
year over year. Sacramento’s unemployment reached 6.3% in
December 2014.
http://www.zerohedge.com/news/2015-01-21/total-announced-job-cuts-2015-just-topped-32000
Even though unemployment continues to decline the labor force
participation rate (the % of the population actually working) is also in
decline dropping through the first half of 2014 to 62.8% in June and
hovered there through December, with a rate of 62.7% after seasonal
adjustments.
The lack of wage growth through the U.S. is concerning. The Center
for American Progress reports that average wages, adjusted for
inflation, have grown .7% in the last five years. Housing costs, both
rent and mortgages, are outpacing wages.
The Mortgage Forgiveness Debt Relief act was extended for some
participants at the end of 2014 is again hotly disputed by Congress
and if it is not extended will have serious tax consequences for those
needing to short sale this year.

Wright Report
BANKING & LENDING:
In 2014 the average FICO score for FHA mortgages was 684. In 2013
the average score for the same loans were 11 points higher at 695.
For conventional mortgages, there is less change. In 2013, the
average credit score for borrowers was 759, and this year the average
dropped down 4 points to an average of 755.
QM (Qualified Mortgage) requirements went into effect in 2014. Part
of these requirements is a debt-to-income ratio limit of 43%: student
debt included. These requirements are restricting the type and
improving the quality of loans banks are doing, which affects the
number of borrowers that can qualify.
Interest rates declined to 3.86% in December 2014 from 4.46% 1 year
earlier. This is just a ½ point higher than the all time low of 3.35% we
saw in November and December of 2012.
Freddie Mac is predicting to raise rates to 5% by late 2015. When the
FED Funds rate increases, we will see a reciprocal rise in mortgage
rates.
There is nothing unusual about talk of shifting interest rates. It is no
argument that interest rates have been historically low for over the

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last 5 years, and it is possible that hesitation on the part of the Federal
Reserve Bank to raise interest rates is due to the implications an
increase will have on U.S. public debt and the motivation cheap loans
bring for business expansion.
DISTRESSED PROPERTIES:
Inventories of Short Sales and REOs (foreclosures) continue to decline
throughout the Sacramento Region. In December 2014 only 11% of
SFR properties for sale were distressed. That is lower than the 15% of
inventory in December 2013.
Sales of distressed properties have dropped dramatically over the past
year as 12.7% of homes sold in December 2014 were distressed
18.6% of all homes sold in December 2013 were distressed.
SELLER TYPE
Average Sold Price by County (December 2014)
Placer Sacramento El Dorado Yolo
Conventional $433,197 $304,354 $441,526 $373,041
Foreclosure $407,342 $207,927 $228,100 $195,700
Short Sale $328,733 $240,676 $340,858 $332,167
New Foreclosure Filings: California NOD (Notice of Default) filings
fell 14% and NOT (Notice of Trustee Sale) filings fell 27% from
December 2013 to December 2014. The number of properties that
went back to the bank decreased 21% during the same period to
1,900 from 1,510 in December 2013.
Existing Inventory: Pre-foreclosure inventory (NOD - Notice of
Default) in California was down 17% to 31,847 (Dec 2014) from
38,458 (Dec 2013). NOT (Notice of Trustee Sale) inventory is down
another 20% for the same period to 15,480 units, and the number of
bank owned inventory (REOs) is down 7% to 38,788 in December from
41,559 units in December 2013.

Wright Report
COUNTY STATISTICS:
Sacramento County
Q4-2014 ended with 2210 listings on January 1, 2015, down 7.5%
from the 2055 listings 1 year earlier - January 1, 2014. REO (Real
Estate Owned- foreclosed properties) inventory dropped slightly to 147
listings and Active Short Sale listings were down 25% over the same
period. Conventional sales inventory was up 12% to 1,917.
Pending: Pending sales are down 11% annually (Jan. 1, 2014 to Jan.
1, 2015.) Pending foreclosures are up 35% to 139 from 103 for the
same period and Pending Short Sales are down 28%. Pending
conventional sales are up 7.4% to 1,091 homes.
AVERAGE SOLD
PRICE by SELLER
TYPE
# Sold
December
2014
# Sold
December
2013
Yr/Yr %
Change
Average
Sold Price
Dec. 2014
Average
Sold Price
Dec. 2013
Yr/Yr
%
Change
Total Sold 1280 1284 -0.3% $294,094 $280,714 4.8%
REO 86 92 -6.5% $207,927 $221,998 -6.3%
Conventional 1118 1046 6.9% $304,354 $291,956 4.2%
Short Sale 76 146 -47.9% $240,676 $237,175 1.5%

Wright Report
Sold: Sales numbers for SFR (Single Family Residence) for December
2014 were 1,280 units sold in Sacramento County. Foreclosures
accounted for 6.7% of properties sold, and Short Sales accounted for
6% of sales. Conventional sales accounted for the rest, 87.3% of
sales. Average Sold Price increased 4.8% from $280,714 in December
2013 to $294,094 in December 2014. The biggest shift was in the
number of Short Sales sold, which dropped 48% from December 2013
(146) to December 2014 (76).
Placer County
Placer County ended Q4-2014 with 840 listings on January 1, 2015, up
19% from the 709 listings 1 year earlier - January 1, 2014. REO (Real
Estate Owned- foreclosed properties) inventory declined slightly to 28
listings (from 32) and Active Short Sale listings were down 40% to 25
for sale over the same period. Conventional sales inventory rose 25%
also from January to January.
Pending: Pending sales are up 3% annually (Jan. 1, 2014 to Jan. 1,
2015.) Pending foreclosures are down 3.7% to 27 from 26 for the

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conventional sales are up 29% to 370 homes.
2014 were 469 units sold in the County. Foreclosures accounted for
2.8% of properties sold, and Short Sales accounted for 3.2% of sales.
Conventional sales accounted for the rest, 94% of sales. Average Sold
Price increased 6.5% from $403,136 in December 2013 to $429,140 in
December 2014. The biggest shift was in the number of Short Sales
sold, which dropped 50% from December 2013 (30) to December
2014 (15).
AVERAGE SOLD
PRICE by SELLER
TYPE
# Sold
December
2014
# Sold
December
2013
Yr/Yr %
Change
Average
Sold Price
Dec. 2014
Average
Sold Price
Dec. 2013
Yr/Yr %
Change
Total Sold 469 386 21.5% $429,140 $403,136 6.5%
REO 13 14 -7.1% $407,342 $299,494 36.0%
Conventional 441 342 28.9% $433,197 $407,912 6.2%
Short Sale 15 30 -50.0% $328,733 $397,059 -17.2%
El Dorado County
El Dorado County ended Q4-2014 with 530 listings on January 1,
2015, up 3.3% from the 513 listings 1 year earlier - January 1, 2014.
REO (Real Estate Owned- foreclosed properties) inventory declined
slightly to 32 listings (from 33) and Active Short Sale listings were
down 38% to 28 for sale over the same period. Conventional sales
inventory rose just 5% from January to January.
Pending: Pending sales are down 15.5% annually (Jan. 1, 2014 to
Jan. 1, 2015.) Pending foreclosures are the same at 17 for the same
period and Pending Short Sales are down 52%. Pending conventional
sales are down 4% to 154 homes.

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Conventional sales accounted for the rest, 93.9% of sales. Average
Sold Price increased 8.7% from $381,985 in December 2013 to
$415,284 in December 2014. The biggest shift was in the number of
Short Sales sold, which dropped 46% from December 2013 (30) to
December 2014 (15).
AVERAGE SOLD
PRICE by SELLER
TYPE
# Sold
December
2014
# Sold
December
2013
Yr/Yr %
Change
Average
Sold Price
Dec. 2014
Average
Sold Price
Dec. 2013
Yr/Yr %
Change
Total Sold 180 201 -10.4% $415,284 $381,985 8.7%
REO 16 13 23.1% $228,100 $325,188 -29.9%
Conventional 151 164 -7.9% $441,526 $384,687 14.8%
Short Sale 13 24 -45.8% $340,858 $394,285 -13.6%
Yolo County
Yolo County ended Q4-2014 with 182 listings on January 1, 2015,
down 6% from the 193 listings 1 year earlier - January 1, 2014. REO
(Real Estate Owned- foreclosed properties) inventory increased slightly
to 15 listings (from 14) and Active Short Sale listings were down 38%
to 9 for sale over the same period. Conventional sales inventory
dropped 2.5% from January to January.
1, 2015.) Pending foreclosures are down 30% to 7 from 10 for the
conventional sales are down 4% to 99 homes.

Wright Report
Sold Price increased 8% from $334,559 in December 2013 to
December 2014 (15).
AVERAGE SOLD
PRICE by SELLER
TYPE
# Sold
December
2014
# Sold
December
2013
Yr/Yr %
Change
Average
Sold Price
Dec. 2014
Average
Sold Price
Dec. 2013
Yr/Yr %
Change
Total Sold 114 118 -3.4% $361,556 $334,559 8.1%
REO 6 8 -25.0% $195,700 $234,404 -16.5%
Conventional 102 96 6.3% $373,041 $351,262 6.2%
Short Sale 6 14 -57.1% $332,167 $277,250 19.8%

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San Joaquin County
San Joaquin County ended Q4-2014 with 1,173 listings on January 1,
2015, up 40% from the 838 listings 1 year earlier - January 1, 2014.
REO (Real Estate Owned- foreclosed properties) inventory however,
decreased to 62 listings (from 82) and Active Short Sale listings were
down just 9% to 76 for sale over the same period. Conventional sales
inventory increased dramatically, 50%, from January to January.
1, 2015.) Pending foreclosures are down 24% to 68 from 52 for the
conventional sales are up 2.6% to 504 homes.
AVERAGE SOLD
PRICE by SELLER
TYPE
# Sold
December
2014
# Sold
December
2013
Yr/Yr %
Change
Average
Sold Price
Dec. 2014
Average
Sold Price
Dec. 2013
Yr/Yr
%
Change
Total Sold 505 560 -9.8% $285,337 $262,437 8.7%
REO 35 36 -2.8% $192,608 $180,880 6.5%
Conventional 438 434 0.9% $297,788 $276,920 7.5%
Short Sale 32 90 -64.4% $216,334 $225,219 -3.9%

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7% of properties sold, and Short Sales accounted for 6.3% of sales.
Sold Price increased 8.7% from $262,437 in December 2013 to
December 2014 (15).

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HISTORICAL PRICE GRAPH:

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RESOURCES:
ABREVIATIONS
CAR = California Association of Realtors
HAFA = Home Affordable Foreclosure Alternative
HAMP = Home Affordable Mortgage Program
MLS = Multiple Listing Service
NAR = National Association of Realtors
NOD = Notice of Default
NOT = Notice of Trustee Sale
REO = Real Estate Owned by a bank, or foreclosure
SAR = Sacramento Association of Realtors
WRE = Wright Real Estate
ADDITIONAL RESOURCES
MetrolistMLS.com- to search for properties. www.metrolistmls.com
NorthState Building Industry Association (BIA) www.northstatebia.org
Rental Housing Association (RHA) www.rha.org
Sacramento Association of Realtors (SAR) www.sacrealtor.org

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Serving Sacramento since 2000.
Check out our BLOG and additional STATISTICS on the web at:
www.WrightRealEstate.US
For FREE Information and Consulting Services contact us:
Office: 916.726.8308 Joel@WrightRealEstate.US

Wright Report Q3-4, 2014

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