Is it a buyers or a seller’s market today in Stockton? As experts in the Stockton real estate market, we get asked this question a lot.
The answer isn’t as simple as yes or no.
The State of the Market for Buyers in Stockton, California
First, it really depends on the property type, location and the condition.
Throughout most of 2018, single-family homes in great locations that are priced well have been flying off the shelves. There’s a lot of demand in the market for all areas and even in what was typically a slow market, we have seen houses of all price ranges sell.
We started to see an end of year slow down but I think that is more a seasonal thing than a concern. Prices in all ranges have stalled so where we were seeing 3% to 5% growth in prices from this year to last we are starting to see a leveling off in the numbers. The market appears to be slowly adjusting. It may be too early to call it a real slow down.
Buyers at all levels are often looking for the same thing – good neighborhoods, access to transportation, shopping, good schools, close to work, etc. Properties that deliver all these are definitely a hot commodity. Sellers with a highly desirable property are in control of the market still even when the market typically tends to slow seasonably.
But for condos and townhouses – especially those a little off the beaten path, or with some funky features – it can be quite a different story. Prices were up in certain areas of Stockton, but seem to be leveling off as the rental market increases.
That is the real story. Rents are rising at the fastest pace since 2005 and 2006. Its getting to the point that many families are complaining about the high cost of rent even in the San Joaquin Valley.
Investment properties are in demand – Investment properties are always in demand, but in today’s low inventory real estate market, things are uncomfortably tight for investors. There are just not a lot of bargains out there and the ones that are no one is hearing about.
That combined with the massive amounts of foreign cash that was flooding into invest in US real estate have somewhat dried up and that has impacted the Lodi market in unique ways.
Overall, those people in a position to pay cash for properties have been looking to picking up the good deals in the marketplace, but things have slowed considerably… actually to a halt.
Lots of sellers are trying out speculative prices just to see if anyone bites, but most investors are walking away from deals that will not pencil out. It is simple for investors, the emotional buy is not a factor.
Financing is still a major obstacle for buyers and sellers – Banks are still being incredibly strict, requiring lots of money down and even changing their terms at the last minute. It’s not uncommon for approved buyers to get their loans pulled right before closing escrow, although it’s getting better than it was just a couple of years ago.
But the reasons for the transactions failing are now because houses in all markets may not be hitting appraisals and or inspections are failing to give lenders the confidence that the houses themselves are in good shape. Many sellers are rushing to the market without making repairs and upgrades taking a chance that the banks, the buyers, the appraisers and inspectors wont notice. They are noticing.
Overall the markets remain very polarized – there is a lot of action at the very top and the very bottom, with the biggest challenges in the middle (from $300,000 to $550,000). That in itself has changed substantially as prices in all market segments have continued to rise. There used to be an under $200,000 market and now that is $299,000 and below and what used to be Houses that were priced at under $275,000 and those
Pricing has become very important and there are a lot of homes that just recently made their way to the market without a lot of upgrades and some in desperate need of repairs from ongoing deferred maintenance.
These types of houses have speculative prices attached to them and are sitting for long periods of time because they are just priced too high for the condition and features of the house. It is almost as if the sellers are trying to cash in on the rising real estate prices without having to do any work on the properties and without any financial investment.
The problem with that kind of mentality and strategy for selling a home spells disaster when it comes time for appraisals, inspections and of course lenders to approve the purchase with a loan approval. All I can say is Good luck with that approach as the houses just sit and become over exposed. There are going to be a lot of frustrated buyers and sellers if that trend continues.
Sound confusing? It is. But We Can Help.
Overall the real estate market is healthy but there is trouble looming if new construction does not find its footing in the lower end of the real estate market soon. The problem is that low end buyers, buyers of houses priced under $250,000 have no where to turn except for older homes in the oldest neighborhoods of east and south Stockton. To make matters worse, no one is building even though there is demand. There is demand for new houses but because of the large and burdensome permit fees of the City of Stockton, new houses cannot be built for under $300,000.
There’s a lot of growth in the US economy still taking place, and the markets are moving fast in lots of directions at once. We’re investing in Stockton because we believe in the community and the people here.
If you need to sell a property near Stockton, we can help you.
We buy properties like yours from people who need to sell fast.