How will the pandemic shape buyers and sellers?

April 30, 2020 By Ryan Lundquist 8 Comments

How will this pandemic shape buyers and sellers? What will people do differently when it comes to real estate? Here are some things on my mind. What do you think? Please comment below.

Rural areas: I’ve heard data firms and colleagues talk about growing interest in rural areas, so this is something to watch to see if it pans out. The idea is people are craving more space, so they’ll embrace a country lifestyle.

Land: A friend the other day was talking about land on the outskirts of the region. Owning a couple acres for $20K is appealing in light of the idea of having more space. Here’s a list of thirty lots under $50K.

Family & Divorce: Some people may want to move closer to family while other households are going to be splitting due to divorce.

Buyers more sensitive about location & condition: For years buyers have been exhibiting sensitivity to adverse locations and homes that are not in pristine condition. In other words, buyers have higher expectations about what they are buying and they aren’t overlooking the true condition of a home or paying top dollar for junk. I expect going through a pandemic will only inflame this dynamic.

Accessory dwelling units: I’m guessing accessory dwelling units will be more useful and desirable for extra income as a rental, housing family members, helping friends who lost jobs, and working from home. Here are all sales in MLS over five years with a listed guest house (I may do a deeper post on this soon). Some of these properties of course had more of a pool house, but many do have a legit ADU / second-unit / apartment thingy.

Moving out of state: This pandemic may motivate people to finally make that move they’ve been talking about to a different county or state. I’ve heard some locals say things like, “I’m heading to Texas as soon as this ends.” And I imagine some Bay Area residents are declaring, “I’m going to Sacramento when this is over.” Migration has been a trend already, and we’ll see how it evolves.

Home office: We’ve all been having Zoom meetings and figuring out ways to work from home lately. I suspect many businesses will go back to normal, but some may adapt their model. Thus having dedicated space for working from home could prove to be more valuable over time. I don’t know that buyers at the moment are actually shopping with this in mind, but if we see a bigger change in business models this will be something that becomes more important.

Cash out at the top: Some people are concerned about the market changing directions, so we’ll see certain owners try to cash out at the top so to speak. I’m not saying we’re at the top of a price cycle. I’m only saying some people think the pandemic has pushed us or will push us into a new price cycle.

Downsize & Upsize: There are households in need of more space because they’ve learned their home is too small. In contrast, maybe it’s time for some to sell, buy a smaller home, and pocket cash (or invest in hand sanitizer and toilet paper).

Gardens: It seems like everyone and their Mom is either baking bread or starting a garden (except for my house). Thus I expect to see more gardens in coming time when visiting properties. The other day someone asked me if a one-acre parcel would now be more appealing because of all the extra space to start an urban farm. Well, in my mind most people are not looking to have a garden of that magnitude.

No effect at all: Let’s be real that lots of people will come out of this not doing anything differently.

Other: What else? I’d love to hear your take in the comments.

Okay, moving on.

FRESH STATS:

Like I said last week, buyers are starting to get more used to this market, and this week it looks like pending contracts are on pace again to outpace the previous week (we’ll know more in a few days).

RESOURCES:

New market video: Here’s a fresh market update. It’s 20 minutes and I talk about the future (NOT a prediction video). Check it out below or here.

SAR market event (free): On Monday May 4th at 10am I’m doing a free big market update with the Sacramento Association of Realtors. This will be about an hour and it’s for anyone (not just members). Register here.

Videos this week: I’ve been doing lots of video conversations lately. I figured I would post the recorded ones here in case anyone wants to listen.

4/22/2020 Conversation with Madison Chase Team
4/24/2020 Conversation with Rico Rivera
4/24/2020 Conversation with Jenica Williams
4/27/2020 Conversation with Kristin Cooper

Appraiser John Carlson GoFundMe: John is a well-known appraiser in Southern California and he is going through a difficult time as he was diagnosed with cancer and hospitalized. I invite you to pray for him and donate if you can. See more here.

I hope this was interesting or helpful. Thanks for being here.

Questions: How do you think quarantining will shape buyers and sellers? What else would you add to the list? What did I miss?

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Are buyers & sellers getting used to the pandemic?

April 22, 2020 By Ryan Lundquist 8 Comments

Quarantine. Wearing masks. Social distancing. It’s so weird that these are regular things now. The world indeed has changed over the past month and so has the housing market. Let’s talk about some new developments.

FIVE WEEKS AGO: About five weeks ago the real estate market started to have a strong reaction to the coronavirus. I look to March 12th as our day of change as that’s when things started to kick into high gear with events cancelling and sellers and buyers backing off the market.

OBSERVATIONS RIGHT NOW:

1) Pendings and listings declined heavily for a few weeks.
2) Pending contracts have begun to increase again.
3) More new listings are hitting the market.

Here’s a closer look at the numbers. These are single family detached homes without condos. I don’t include condos because they’re a different market that can water down the data. If you include them in your numbers, that’s cool.

Here is a look at new listings. There has not been a dramatic uptick, but we are seeing more new listings compared to a month ago (the first week we had sheltering in place).

SOME CLOSING THOUGHTS:

1) Goodbye cliches, hello experts: In a market like today it forces us to place our cliches, canned statements, predictions, and positive or doomy narratives aside. We simply must look to the numbers to understand the market. When trends change it creates opportunities for experts to arise. It also creates opportunity for credibility to be destroyed by making predictions that don’t come true and getting swept up in every single sensational headline.

2) Other markets too: This dynamic of the market seeming to hit a bottom a few weeks ago is something that is happening in some other areas across the country too as reported by Mike DelPrete in his email yesterday (a must follow). I’ll talk about this more in my weekly video at the end of this week. Please know I’m not saying prices or other metrics have bottomed out. I’m only saying it looks like listings and pendings (for now) have begun to increase again.

3) The future: We still don’t know the future, so I’d exercise caution in saying definitively the market has begun a recovery or rebound and will move forward from this point onward. We need time to see how everything shakes out and we’re still living in the midst of so many unknown factors that could sway the market in many ways. The reality is what we say about the market could be different next week based on new data.

4) Getting used to the pandemic: For now it looks like buyers and sellers have started to get a little more used to this pandemic market, which is evidenced by more pending contracts and an increase of listings lately. It’s possible some of this could be attributed to real estate agents being deemed essential too. Will this continue? Is this a trend we’ll see more in coming weeks? To be determined.

GRAPHS: I plan to make a tutorial soon on how to make a few of the graphs I’ve been posting. Appraiser colleagues, I haven’t forgotten.

I hope this was helpful.

Okay, moving on:

RESOURCES:

New market video: Here is a fresh market update video. This is 25 minutes and perfect for the background while working. Check it out below or here.

Interview with The Appraiser Coach: I did an interview with Dustin Harris to talk about not waiting for sales to see pandemic data. Watch below (or here).

Interview with Brad: I did a Facebook Live Q&A with Brad L’Engle last week to talk shop. Enjoy here if you wish (you don’t need Facebook to watch).

I hope this was interesting or helpful. Thanks for being here.

Questions: What do you make of the stats above? What are you hearing in escrows from buyers and sellers? If you’re not local, what are you seeing happen in your market?

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Seven things to watch in real estate during a pandemic

April 14, 2020 By Ryan Lundquist 25 Comments

What’s the market doing? What can we watch right now to get a better sense of housing trends during the pandemic? Here are seven things I’m keeping my eyeballs on these days. Anything to add?

SEVEN THINGS I’M WATCHING DURING THE PANDEMIC

1) Listings: We often think about listings increasing as a way to see the market changing, but right now many markets across the country are seeing fewer new listings. So at times change is best seen with less of something rather than more. It’s not a surprise to see fewer new properties during a pandemic, right?

2) Pendings: When the number of pending contracts declines it’s likely a sign that buyers have begun to back off the market. Like many areas across the country, pendings are down 40% right now in the Sacramento region. There are simply fewer buyers willing to engage with the current market. Also, one of the things we want to watch is the gap between all listings and current pendings. If this gap widens it will soften prices and give buyers more power.

3) Sales volume: When fewer sales start to happen, it’s a sign the market has changed for some reason. This image below shows we are at the beginning stages of seeing sales volume dip due to the pandemic. In other words, the second week of April clearly saw FAR fewer sales compared to last year at the same time. From here on out it’s likely we’re going to see bigger changes in sales volume since many homes beginning to close got into contract over the past month during the pandemic.

4) Canceled / Hold: A market isn’t just about what is listed, but what used to be listed. There have been over 1,000 listings taken off the market in the Sacramento region over the past four weeks. The removal of these listings has helped the market feel much more balanced than had these listings still been active. Key questions: How many of these listings will come back? When will they hit the market? Will there be enough pent-up demand to meet the supply?

5) Word on the street: What are buyers, sellers, and real estate professionals saying? The stories of today become the stats of tomorrow, so paying attention to what people are saying is huge.

6) Other metrics: There isn’t one end-all metric to tell us everything we need to know about the market, so it’s important to pay attention to lots of little things such as days on market, changes in financing, the average list price, the sales to original list price ratio, price reductions, the number of multiple offers, changes in various price ranges, concessions offered by sellers, etc… Let’s remember the market isn’t going to be the same for every property type or in every price range or neighborhood.

7) Prices: In real estate we are so obsessed with prices, but that’s really the last place to look to see the market. What I mean is change happens first in the areas above before showing up in sales stats a couple months down the road. In short, for now the slower pandemic trend hasn’t infiltrated sales price figures as of yet in Sacramento. This doesn’t mean the market is stable in every price range and location. All I’m saying is regional and county stats don’t show price declines right now. Normally I pull monthly price data, but I’ve switched to weekly in order to see the trend sooner rather than later.

I hope that was helpful. And yeah, that was long. But hopefully it was worth digesting whether you’re local or not.

Okay, moving on.

A FEW RESOURCES:

New market video: Here is a fresh market update video. This is 30 minutes and perfect for the background while quarantining. Check it out below or here.

Q&A video: Here is a video I did recently with Doug Reynolds to talk about the market and appraisal stuff. I have many of these lined up and I’m glad to share them in the future. As a side note, I’m not an advocate for any brokerage and I’ll never take sides. I’ll do interviews with just about anyone as long as there is mutual respect and I have time to do so. I’ll share videos here only if the end-product is worth sharing.

Zoom with Grounded: I mentioned a Zoom meeting last week hosted by Grounded and some of you were able to join live (thank you). I have about four to five Zoom sessions per week these days, though most aren’t public. I look forward to doing these with many brokerages. Watch below or here.

BIG MARKET UPDATE (ON HOLD): I normally write a huge market update around this time of the month, but my entire life and social media feed has been one big market update lately. So I’m putting my typical format on pause so I can spend time on more pressing visuals.

I hope this was interesting or helpful. Thanks for being here.

Questions: What are you watching in today’s market? Did I miss anything?

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Watching listings, the word on the street, & being negative

April 9, 2020 By Ryan Lundquist 21 Comments

This shabby chic piece hangs in my office and I love the phrase. The market is always moving. It’s just true. This means there is always something new to say and understand about housing trends.

Anyway, here are four things on my mind:

1) Watching listings: I am getting many questions about what prices are doing, but we just don’t have many sales yet. Like I said last week, only 2.9% of all sales in March actually got into contract after March 12th, which is the day our pandemic seemed to kick into high gear with events cancelling and such. While we don’t have many sales yet, we do have listings which will give us clues where the market is heading. Are you seeing price reductions? Are properties sitting instead of selling? Are new listings tending to get into contract at lower levels than recent sales or current pendings? Are buyers absorbing inventory or not?

2) Don’t be so negative: I’ve been told a few times lately to lay off talking so negatively about the market, but what I’m doing is sharing facts. In truth I’m not being positive or negative. My goal is to be neutral and sling perspective without sensationalism. In other words, let’s talk about the market that actually exists while not getting swept away in every scary headline that may or may not happen. The reality is facts are neutral and less-than-positive sounding stats are not a threat either because they help us make decisions.

3) Mindset vs market conditions: In real estate it’s tempting to only speak positively about the housing market. It’s like a Harry Potter world, but instead of not being able to say the name of you know who, we cannot talk about the market changing (sorry if you didn’t get the reference). The bottom line is there’s a huge difference between having a positive mindset in life and being real about market conditions. Those are two distinct things.

4) Word on the street: Right now we are beginning to get some solid pandemic real estate data which I share below, but we’re still waiting to see exactly what happens to the direction of prices over time. This is why the word on the street is so powerful. What are buyers, sellers, and real estate professionals saying, doing, and believing about the market? The truth is the stories of today become the stats of tomorrow. On that note, here is a Twitter poll I have going. There is nothing scientific here, but it’s fascinating to have these conversations. One day left if you want to jump in.

Okay, moving on.

A FEW RESOURCES:

Zoom call this morning: If you’re around, I’m doing a public Zoom session on Thursday April 8 at 11am. A local real estate office asked me to do this and they opened it up to anyone. Hopefully there is not a cap to the number of people. Anyway, you can see the Facebook event for details or click here to sign in on Zoom. I’ll give a brief market update and then we’ll do Q&A.

UPDATE: Here’s a recording of the Zoom meeting.

New market video: Here is a new market video from a few days ago. This is 20 minutes. I’ve been having a blast and I’ll keep doing these as long as people keep watching. Check it out below or here.

Mike DelPrete: If you’ve watched any of my videos lately I’ve mentioned Mike DelPrete’s graphs and analysis. This guy is bringing important perspective. Here’s a 29-minute webinar from last week.

Fresh pandemic real estate visuals: Here are some visuals to show how the pandemic is affecting the local market. Right now we don’t have much data on prices, but that will come in time.

I hope this was interesting or helpful. Thanks for being here.

Questions: Why do you think it’s so tempting to talk about real estate in glowing terms? What do you think of my thoughts on market conditions vs mindset?

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