Sacramento housing statistics all point to the telltale signs of a strong seller’s market with a low supply of homes for sale countered by strong demand from local buyers and “Bay Area refugees” flush with cash.

But there are some early indications that the ground below this fundamentally sound market foundation is slowly beginning to shift, according to local market observers.

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Brent Gove

“Before we could get away with an overpriced home; the market would catch up with it quickly. But we can’t get away with that now,” said independent Sacramento broker Brent Gove, a real estate author and host of a weekly real estate show on local radio station KFBK.

“What’s moving is the stuff that’s priced properly.”

Gove and other local real estate experts said the higher end of the Sacramento market is less forgiving for sellers than the lower end.

Gove said that rock-bottom inventory numbers in Sacramento are starting to inch higher, a trend also observed by Joel Wright, a Sacramento-area broker who carefully monitors local market statistics.

“People are thinking you have 1.2 months or 1.3 months of inventory, and if five months is the norm, that’s huge. But that is not the norm for Sacramento,” said Wright, who added that the market is still strong for sellers who price right.

Wright and other local market experts point to an influx of home purchases by Wall Street hedge funds and private equity firms in late 2012 and early 2013 as a major driver of the frenzied market at that time.

“They are not a force in the market anymore,” said Ryan Lundquist, a local property appraiser who writes the popular Sacramento Appraisal Blog, of the institutional investors.

“They are still buying, but it’s been a drop in the bucket. Nothing that’s really swaying the market.”

Still, if Blackstone and other institutional investors decide at some point to liquidate their inventory quickly, it could create a drag on the Sacramento housing market, according to John P. Acord, broker and owner at Arda Realty.

“When do these investors want to start cashing in and start taking their money to another opportunity?” questioned Acord, who has a degree in chemical engineering and worked in that field before jumping into real estate nine years ago. “And if that becomes a reality, we could have a shock because we would have an influx of inventory.”

Sacramento home prices will continue to rise in the near term, according to Robert Campbell, who publishes The Campbell Real Estate Timing Letter monthly for 19 U.S. cities, including Sacramento. Campbell said all of the metrics he tracks indicate it is not yet time to sell in Sacramento.

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“The Sacramento housing market is still solid and housing prices are likely to keep going up,” he said; he added that his data shows a 9.8 percent year-over-year increase in median sales prices in May in Sacramento County. “That’s doing better than San Diego, Los Angeles and a lot of other places.”

Caution on the part of larger homebuilders along with a housing price bubble in San Francisco is benefitting smaller custom builders like Jeff Grenz, a broker with Equity Properties who also flips properties and builds custom homes on a small scale. Target buyers for Grenz are what he calls “refugees” coming from the San Francisco Bay Area to escape the high housing prices there.

“The property we’re building right now is an empty nester target property, so that’s a Bay Area refugee,” he said; he noted that many coming from the Bay Area are retirees who have cashed out of a property. “We have sold to Bay Area refugees that just pay all cash.”

Two buyers who recently purchased a Sacramento-area property with a low down payment loan were the son and daughter of Gove, the radio show host.

“They teamed up and bought it together. Neither could afford to buy on their own,” he said, adding that they only ended up putting $600 down each thanks to a down payment assistance program for first-time homebuyers.

“I don’t care if the market goes to hell in a handbasket, they are still cash flowing,” he said. “It’s always a good time to be buying if you can buy at the right price.”

It’s always a good time to be buying if you can buy at the right price.

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Read the full article and more in RealtyTrac’s monthly Housing News Report.

Daren Blomquist is the vice president of RealtyTrac.

Email Daren Blomquist.

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