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pandemic real estate market

Stale real estate headlines & buyers flocking to El Dorado County

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Real estate headlines can get stale quickly, so we have to be really aware of what we’re saying. Is it still even true? Here’s an example of what I mean.

Headlines in recent years: Rising fire insurance rates in California are causing buyers to pull back from more rural areas.

New stats that change the narrative: In El Dorado County this past year we actually saw a larger increase of sales volume WITHIN areas that have higher fire insurance. Take a look at this visual. Typically El Dorado Hills & Cameron Park don’t have fire insurance issues whereas the rest of El Dorado County does (generally speaking). In short, volume in “fire areas” grew more than areas without issues.

Off the charts: Here is a visual to show how off the charts sales volume has been in El Dorado County. There was an initial COVID dip early in the year and then a massive increase WAY beyond normal.

QUICK TAKEAWAYS:

1) The market is always changing, so we need to be sure our narrative is informed by actual data instead of headlines from last year.

2) Uncertainty about fire insurance rates clearly didn’t hold back buyers this year in El Dorado County. Part of this could stem from rates regulating and buyers getting used to higher rates, but there is no mistaking El Dorado County had enormous pandemic migration. Thus incoming buyers simply cared way more about having land and space than fire insurance rates.

3) I’ve only run stats for El Dorado County, so I’d be careful about saying fire insurance is no biggie throughout California. Moreover, this trend could change in coming years. It’s actually very difficult to parse fire stats for Placer County. If anyone has ideas for how to do that I’m open ears. I just haven’t found a way yet.

VIDEO MARKET UPDATE:

Yesterday I did a big market update at Joel Wright’s Residential Roundup event. This is 38 minutes. Enjoy if you wish or skip to the last slide with closing thoughts to focus business in 2021. Watch below (or here).

PRESENTATION TODAY: I’m speaking at a Placer County Women’s Council of Realtors event from 10-11:30am. I’ll have one hour to unpack the market and I have some fresh Placer and El Dorado stats too. Sign up here.

Thanks for being here.

Questions: What are you seeing in El Dorado County or other areas? What are you hearing about fire insurance? I’d love to hear your take.

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Bigger Things, Zooming Out, & Buyers vs Sellers

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There are way bigger things happening in the world than real estate. So this post won’t have much text. For now let’s listen to what’s happening around us and find ways to heal as a country.

Zooming into weekly videos: I was doing five to seven Zoom sessions per week for months and I’m feeling burned out, so I’ll be scaling back after an incredible ride. I’m actually still available for digital speaking gigs, but they’re mostly for associations or for hire. However, I’ve shifted things to YouTube where I’ll be doing a weekly update. Would you join me there? 

More buyers than sellers? For two weeks we’ve seen more pending contracts than new listings. I think this market has surprised lots of people who expect big price declines and dullness. Subscribe to my channel.

Highlight reel:

  • Sales volume is starting to increase again
  • Pendings have crested pre-pandemic levels
  • Listings were lackluster last week
  • Canceled listings are fairly normal again
  • Hold listings are getting closer to normal
  • Prices have been somewhat flat lately

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

Questions: What are you learning about life right now with all the protests going on? As far as real estate, I’d love to hear your take also.

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Wait, isn’t the market supposed to be tanking?

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Surprised. That’s how many people seem to feel about the housing market since it’s way more competitive than we thought it would be for a pandemic. In fact, some buyers think they’re about to score the deal of a century until they start shopping and realize we don’t have that sort of market right now.

Look, I’m not wearing rose-colored lenses. I’m not saying the housing market is perfectly healthy or there aren’t glaring red flags on the horizon. I’m just saying there is a sense of shock right now that the market has felt as strong as it has for these past two months.

Two quick things:

1) Imposing headlines: There are lots of sensational headlines, but we need to be cautious about imposing them on the market. What I mean it’s easy to read a headline about the housing market being doomed because of XYZ, and then we expect to see certain trends in the local market. My advice? Look to local data instead and let the numbers form your perception and narrative of the market.

2) Be objective: Every week there’s a new viral idea about the future, but we have to wait and see what happens. I know it drives some people crazy when I say that, but it’s true. There are obviously red flags about the future in light of forbearance and unemployment in particular, but we still don’t know how both issues are going to play out exactly. This is why I recommend knowing the numbers and being objective about the future instead of tossed around by every new sensational idea.

NEW MARKET VIDEO: We’re two months into the pandemic now and it’s been five weeks since the market bottomed out. We’ve seen a shift up in new listings and pending contracts, and this tells us both buyers and sellers have been getting used to this market. This is 14 minutes. Check it out below (or here).

BRAND NEW VISUALS:

I’ve been in my Excel workshop cutting up some brand new graphs. Are there any keepers?

Unemployment: We’re seeing some huge changes in unemployment, so I plan to update these visuals monthly.

Inventory by price range: Here is a crazy-looking visual to show inventory by price range. I know this is a hot mess, but I share specific price ranges below. The point is inventory is not the same in every price range or neighborhood.

Days on market: Did you know homes spent 29% less time on the market this April compared to last April? Here’s a look at how long it took to sell by price range. In short, the market was more aggressive at lower prices (not a surprise). Also, don’t read too much into million dollar stats because there are fewer sales in this segment.

2-4 Units: I’ll be watching the multi-unit market to gauge change and whether we see a bigger drop in volume than the single family market. Of course we also have to consider rent control as an added layer that can affect the trends this year too.

Volume at the top: I’m watching the market above $600K to gauge if there is more change at the top than the bottom. In this visual I’m asking how the percentage of “jumbo” prices so to speak changes over time. This isn’t the perfect visual to tell us everything, but if we see this percentage decrease it might be a clue that less deals are happening at higher price points. Also, I know I need to change the graph to say “15%” instead of “0.15%”. For the life of me I couldn’t get that to work.

Volume change by price range: It’s important to study what the market is doing at various price points. I’ve been asked countless times about the upper end of the market lately. Frankly, we need more time. We only have two months of data. But here is a visual that I’ll be adding to over time. This visual basically gauges the change in the number of sales between April 2019 and April 2020 by price range.

Keep in mind the BOTTOM IS NOT CRASHING. The lowest prices saw a huge dip in volume close to 60%, but that’s because these price ranges had such a huge rate of appreciation over the past year. There are simply fewer sales under $300K this year, so the numbers at the bottom look really sensational on this graph. In short, this is where we have to know how to think through the numbers. Please don’t say the bottom is crashing (it’s not).

WEEKLY STATS: I’m updating this one every week.

BIG MONTHLY UPDATE:

This is long on purpose. Skim or digest slowly. Your call.

Let’s dive into Sacramento, Placer, and El Dorado County (and the region).

DOWNLOAD 100+ visuals: Please download all graphs here as a zip file. See my sharing policy for 5 ways to share (please don’t copy verbatim).

I don’t have market commentary this month because I’ve been giving so much commentary in my weekly video (and on Zoom calls). It’s just too much to write more here.

SACRAMENTO REGION (more graphs here):

SACRAMENTO COUNTY (more graphs here):

PLACER COUNTY (more graphs here):

EL DORADO COUNTY (more graphs here):

DOWNLOAD 100+ visuals: Please download all graphs here as a zip file. See my sharing policy for 5 ways to share (please don’t copy verbatim).

Questions: What stands out to you about the market right now? What are you seeing out there? I’d love to hear your take.

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Seven things to watch in real estate during a pandemic

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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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