Insane. Crazy. Irrational. The housing market has been described this way in many places around the country lately. But in the midst of freakishly high demand there is still a seasonal rhythm to see in the background. Let’s talk about that.
Today’s post seems long, but it’s mostly images.
BIG POINT: Understanding what the market normally does throughout the year helps us give good advice, make plans, do a better job with valuations, and spot when something abnormal is happening.
WHAT DOES THE MARKET DO DURING THE YEAR?
Seven years in one graph? Yep. This visual looks at the average of seven years worth of sales for each month, so even though there is just one line we end up with a solid visual of how the market behaves throughout the year. This is so important because being a real estate expert involves lots of things, but one big factor is understanding how the market moves.
Tutorial: I’m actually game to do a video tutorial on how to make this visual. If I get a number of people interested I’d be glad to do that. Let me know.
Here is 2020 showing an abnormal trend…
NOT THE SAME:
Many markets have a similar pattern to the one above, but others look totally different because of weather, being a vacation destination, etc…
MARKET UPDATE VIDEO: Here are a few things on my mind right now.
ANOTHER VISUAL:
Here’s a different way to look at sales volume. Check out this year in black compared to previous years. What is volume doing?
THE TAKEAWAY:
The black line shows sales volume looks like it hit its peak for the year a couple months ago, so even though we are calling this market white hot, we can still see a slowing trend creeping in the background. This doesn’t mean the market is dull (I didn’t say that). In short, this year we’re beginning to see a change in volume, but overall the fall season hasn’t been normal because by now prices are usually cooling off and it should be taking longer to sell rather than fewer days.
Okay, two more counties…
PLACER COUNTY & EL DORADO COUNTY
Check out the rhythm of the market in these two counties. This is a really good picture for how the market tends to behave through the year.
Now check out the black line. Do you see the increase lately? Like I said a few weeks back we’ve seen a huge influx of buyers in Placer & El Dorado County. In other words, the black line shows an abnormal amount of buyers lately. Also, we see what looks like a seasonal slowing of volume as the black line looks to be curving down.
Anyway, I hope this was helpful or interesting.
Thank you again for all of your support in my life these past months. I am fully back to work and doing my best to pace myself.
Questions: Do you think this fall we’re going to see a big slowing or barely any slowing? What are you seeing out there? I’d love to hear your take.
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Hi Ryan, happy to see you are back to your amazing blogs again! Definitely count me in on any and all video tutorials you are willing to teach!
Thanks so much Pia. I appreciate it. Hope you are well.
I love seeing the seasonal change this year in comparison to other years. This is very close to what we are seeing up north.
Thanks Gary.
Our data driven Appraisal guru, Ryan Lundquist, continues to deliver timely graphs, epic charts and compelling conclusions… It is so wonderful to have you BACK IN ACTION, Ryan ! Today’s stuff is remarkable…
Keep up the great work !
Thanks
Bruce J. Ford
Chief Appraiser
NorCal Quality Appraisal
28 yrs CA. Certified Appraiser
Thank you so much Bruce. I appreciate it. I’m really excited for this visual actually. I think it packs a punch and really brings something solid to the table. I know sometimes I get excited for stuff though and other people think, “Meh, no biggie.” Haha.
Hey, let’s make that phone call happen soon. I’m glad to schedule some time. Would love to connect.
Always informative! Thank you, Ryan. I especially love the graphic showing 2020 and other ‘normal trends’!
Right on. I always hope graphs will resonate. Thanks Christine. 🙂
You are amazing! Thank you for being so generous with sharing this. Even though I’m in the east bay, I’m obsessed with the industry as a whole. It’s nice to have this all pre-chewed for me!
Thank you so much Amy. I appreciate you. I find myself paying closer attention to the Bay Area these days too. What happens there can certainly affect us here in Sacramento. On that note, I’m really glad to be connected. Let’s stay in touch. I’m always open to hearing anything you might find interesting too. 🙂
When I see you posts, I often stop what I am doing to read them. Today’s was exceptional! I was just thinking it seems like the market is slowing a bit and there you are with data. I am interested in learning how to create a graph like that. Thank you for all you do for our industry.
Thank you so much Sheryl. I appreciate hearing that and I’m so glad for your confirmation. I think sometimes in real estate there is a fear of calling the market slower. It feels like real estate sin so to speak. But the market isn’t always doing the same thing and we need to give tailored advice depending on how trends are changing. A glowing positive narrative really strongly favors sellers too. What about the buyers? 🙂
Thanks again.
Love the graphs! I’m definitely feeling the effects of that line!!!
Thanks Marcy. It’s been a wild market these past six months. I don’t think anyone would have thought we’d be where we are today. Just two years ago I was talking about market momentum slowing way down, but here we are having sped up significantly lately…
Thaks, Ryan, for your informed and insightful analysis. How would it look if we compared “pending” instead of “sold” graphs? That might reflect the more accurate picture we are experiencing on the ground. After all, once a property goes “pending” it is basically gone at that time.
Hi Jim. Yeah, we have to consider sales are the result of pendings 30-60 days ago, so you’re right that pendings give us clues into the market right now instead of just sales. Based on Trendgraphix for September pendings are definitely up from last year. That’s no surprise. Yet they’ve also sort of flattened out in the Sac Region as well as local counties. Pendings really should be dipping more in light of the fall season, but they are flat or dipping slightly, which seems to be similar to the trend of sales I shared here. This tells us the fall season hasn’t been normal as it’s been much more aggressive. It also tells us the market seems to have slowed a bit since we’re not seeing that increase in pendings (or sales). The real tell will be when we start to get more data over the next month or so. Let’s keep watching.
This is such an awesome visual! Thank you for always adding so much value to our community. It has felt a bit overwhelming and unpredictable so your pictures of what the market is doing helps to make sense of things. Welcome back! Adriana
Thanks. Yeah, these past few months have definitely been abnormal. Demand is still crazy high. If demand continues to be this high for the fall things could be just as aggressive if not more. Let’s keep watching. Please keep me posted with what you are seeing out there too.
Ryan,
So enjoy your blog! It is always so informative and helpful to see everything visually. I would be very interested in a video tutorial on your graph.
Thanks so much
Thank you so much Annette. I appreciate your vote too. Lots of people have responded so I’ll be sure to make that tutorial.
Thank you for putting in so much time to help make us better at setting expectations. It is comforting to be able to depend on these stats and graphs. I will always go for the graphs over video!!! You are appreciated!
Thank you very much. I appreciate hearing that. It’s funny how people like different things whether video, blogs, podcasts, etc… I think I prefer just seeing visuals and getting stuff by email rather than on my cell phone (such as podcasts).
Great info again.
Thank you very much.