EL DORADO HILLS REAL ESTATE MARKET UPDATE WINTER 2019
By Jim Barnes
Serrano sales tempo improving
The pending sales rate for Serrano homes under $1,000,000 has caught up with the rest of the market in El Dorado Hills. Earlier in the year, Serrano had a surplus of inventory with sales lagging the rest of the local market. Serrano Absorption rates are beginning to swing back into favorable territory which is good news. The bad news is that January sales in El Dorado Hills overall are down 25% year over year.
El Dorado Hills real estate 2019: A mixed bag so far
We have a reasonably balanced market right now based on the current rate of pending sales vs. unsold listings. Buyers are passing by functionally obsolescent and or incorrectly priced homes.
The number of unsold listings in El Dorado Hills was up 7.3% from one year earlier and up 35.4% from the previous month. The number of sold listings decreased 25% year over year and dropped 19.5% month over month. The number of under contract listings was up 34.4% compared to the previous month and down 6.5% compared with last year. The Months of Inventory based on Closed Sales is 2.7, up 42.9% of the prior year.
Bay Area / SoCal real estate sluggish
Outward migration from the Bay Area continues to represent a vital home buyer segment; however, sales there have slowed significantly causing homes to stay on the market longer causing sellers to fine-tune pricing. High priced metro areas in Southern California are also seeing slower sales rates as compared to one year ago as the pool of home buyers that can afford current levels are shrinking. The days of the Bay Area home buyer aggressively bidding on homes in our area has passed.
New builders getting ready for the largest expansion of new homes in a decade
You’ve seen the earth movers all around El Dorado Hills, and framing is already visible in some locations. We have grown accustomed to most of the new construction occurring south of highway 50 however builders are poised to introduce hundreds of new homes in and around established neighborhoods all around El Dorado Hills. New Serrano villages, Hawkview at Bass Lake Hills, Saratoga, Bell Woods are just a few of the new subdivisions that have broken ground. Competition between home builders and a leveling off of demand all have the potential to put pressure on resale pricing. Builders are already offering generous incentives to entice buyers.
Unsold resale inventory remains at seasonally normal levels… for now
Springtime is prime time for real estate, and that’s when we usually see more homes come to market giving buyers more choices in the market place.
Mortgage rates remain stable… for now
The good news is that mortgage rates have remained tame and have even declined slightly partly due to the lack of demand for mortgage money. No one can predict how rates will behave, but if demand for mortgage money increases or the yield on the ten-year bond goes up, we will see a spike in rates that will impact homes sales. Home builders have an advantage in a rising rate environment because they can always “buy down” the mortgage rates with their in house lenders.
Recommendations:
It’s more important than ever that sellers price their homes accurately in this current market. We feel that the downside risks out weight the benefits of trying price above the comparables. The longer a listing stays on the market, the fewer buyers that will value it and ultimately result in lower offers. Our local real estate market peaked last July and year over year sales have been declining ever since. The pool of buyers who can afford housing in our area has been on the decline according to the California Association of Realtors. In our opinion, new home builders pose the greatest threat to resale pricing in 2019.
| ALL PRICE SEGMENTS | Average Days on Market | ||
| El Dorado Hills All listings | |||
| UNSOLD | 135 | 74 | |
| PENDING | 76 | 60 | |
| Absorption rate | 56% | ||
| SERRANO | |||
| UNSOLD | 58 | 74 | |
| PENDING | 26 | 61 | |
| Absorption rate | 45% | ||
| El Dorado Hills EXCLUDE SERRANO | |||
| UNSOLD | 76 | 66 | |
| PENDING | 50 | 60 | |
| Absorption rate | 66% | ||
| UNDER $1,000,000 | |||
| El Dorado Hills ALL | |||
| UNSOLD | 91 | ||
| PENDING | 61 | ||
| Absorption rate | 67% | ||
| SERRANO | |||
| UNSOLD | 28 | 63 | |
| PENDING | 18 | 62 | |
| Absorption rate | 64% | ||
| El Dorado Hills EXCLUDE SERRANO | |||
| UNSOLD | 63 | 58 | |
| PENDING | 39 | 41 | |
| Absorption rate | 62% |
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