I have a few things on my mind. Let’s talk about more home owners, slumping volume, confidence, and outliers. Anything to add?
Increasing home ownership rate: There’s so much dreary news these days because of slumping sales volume. So here’s some good news first. We’re seeing an uptick in the home ownership rate (especially with buyers under 35). Check out the right side of the graph. It doesn’t look like much, but it’s welcome news. Image source: Len Kiefer.
Slumping volume & the Superbowl: Last week CNBC published a story stating national sales volume was down 6.4% in December. This is something we saw in many markets across the country, though the Sacramento region was down a whopping 25%. Right now we’re watching closely to understand how this will play out in the new year. The market is starting to wake up, but it still has a subdued feeling as early January is usually slow. In Sacramento many agents report the market starts to heat up after the Superbowl. Being that the big game is this Sunday, let’s watch stats closely in coming weeks.
Confidence: I like what NAR Chief Economist Lawrence Yun had to say about sales volume in this CNBC article: “The latest decline is harder to explain. Perhaps it is the decline in consumer confidence that’s been occurring in the latter half of 2018.” As Yun mentions and we’ve been talking about, interest rates going up really slowed down the market last year. But is it more than just rate changes? Could it be consumers losing confidence in the market? That’s something we have to explore and watch over time. How do you think we’d gauge that? I’d love to hear your take in the comments.
The Governor’s outlier purchase: I mentioned California Governor Gavin Newsom just bought a house in Fair Oaks for $3.7M. Well, here’s what that purchase looks like on a graph. It’s an outlier in price, but it’s also an outlier because of the huge lot size and square footage. It’s the fifth highest sale ever in the county and definitely the highest ever in Fair Oaks.
That $238M sale & Sacramento’s Top 10: You probably heard about that $238M sale in New York. Crazy, right? Did you know $238M would allow you to buy 25% of all listings right now in Sacramento County? That’s nearly 500 homes. Speaking of high sales, here’s the region’s Top 10.
I’m expecting really dull January stats: I imagine we’ll see dull sales stats in many markets in January, and that’ll be the case in Sacramento where it looks like sales volume could easily be down 15-20%+ again. I’ll know more in two weeks for sure when I pull my stats. In short, it’s a big deal if we don’t start to see this trend turn around over the next few months. It would be a sign the market has changed. Let’s remember though that January stats don’t actually tell us about the market in January. In fact, January sales tell us what the market used to be like in November and December when these properties got into contract (and then closed in January).
Preview of 2019 trends right now: The big question right now is what the market is going to do in 2019. We’ll begin to see that in sales stats in March and beyond, but right now we’re getting a preview in the listings and pendings of today that’ll eventually become sales.
I hope this was interesting or helpful. Thanks so much for reading.
Making graphs: Last week I asked if anyone wanted to learn to make graphs. Here’s a tutorial for how to make neighborhood sales graphs. This was a game-changer for me to learn. I’ll do a tutorial soon for how to make the price per sq ft graph I showed last week (hopefully in the next couple weeks).
Questions: What are you seeing in the market so far this year? Normal January or not? And Rams or Patriots? I’d love to hear your take.