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The most aggressive housing market ever?

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Was last year the most aggressive housing market we’ve ever had? I’m going to go out on a limb and say HECK YES based on the stats. But what do you think, whether you’re local or in a different market?

A picture of a road in the desert with the caption question, "Most aggressive housing market ever?"

January public speaking gigs:

Post outline (since this is longer):

1) Records were broken
2) Sacramento region recap
3) Sacramento County recap
4) Placer County recap
5) El Dorado County recap
6) Yolo County recap

STATS: Annual stats include the entire year (Jan to Dec). These stats are not just a comparison of Dec 2020 with Dec 2021.

1) RECORDS WERE BROKEN:

A) Fastest-moving market ever: This is no surprise to stressed buyers and a stressed real estate community, but we had the fastest-moving market ever in the region. It took an average of 17 days to get into contract, which is the lowest annual number on record. The wild part is the median days on market was only 7, which means half the market got into contract in a week or less.

This visual shows a line graph of days on market and median days on market from 2000 to 2021.

B) Highest dollar growth ever: Prices increased more than ever this year in terms of dollars. The median price increased by $90,000 and the average sales price was up about $99,000. These are both records. The stunning part is this took place in our tenth year of price growth in this cycle.

What about percentage growth? Percentage growth was NOT a record even though price metrics were up about 20%. The truth is we’ve seen this type of percentage growth before, though when prices were lower it was so much easier to see higher percentages. This is why noting the dollar amount is so important. All that said, let’s remember part of the glowing numbers here has to do with more sales at higher prices (which pads the stats).

C) 18 months of less than one month of supply: Since July 2020 we’ve had less than one month of housing supply in the Sacramento region. There has never been a stretch this long. It wasn’t even this bad during 2013 when investment funds were gutting the market. Having one month of inventory means if no other listings came to the market we would only have enough for one month’s worth of buyers.

A line graph to show the months of supply over the past 2 years (this helps show we've had 18 months of supply under one month

D) Highest percentage of multiple offers ever: In April we reached the highest percentage of multiple offers we’ve seen in the region at 76%. It’s easy to say 100% of sales are getting bid up with multiple offers, but that’s not true. Check out how disconnected a figure like 76% is from normal though. The real shocker though is 57% of sales in DECEMBER had multiple offers, which is higher than any other SPRING market besides 2021. Read that again. By the way, this stat has only been available for five years (though it’s likely April 2021 was the highest ever still). We can debate in the comments or cage fight if needed.

E) One year of paying at or above the list price: Every month this year buyers paid at or above the list price. I know, this sounds a bit dull or obvious, but it’s truly sensational. Take a look at the image to show how far off the orange line (2021) is from the rest of the pack. In a competitive year we might see a few months where buyers on average pay at or above the list price, but last year this happened ALL YEAR LONG. Even in December buyers on average paid right at the list price. In a normal year we should’ve seen 3% or more below the list price in December. Keep in mind we did see seasonal slowing for the second half of the year, but it didn’t feel like slowing to many since the market basically “slowed” to a really elevated level.

NOTE: This is the average. There are many examples of buyers paying well above the asking price and even 15% of buyers last month paid below.

F) More million dollar sales than ever: This past year 7% of sales were above one million dollars and that’s the highest percentage on record. Well, I should say this is the highest percentage without adjusting for inflation, so there is an asterisk here. If someone wants to adjust for inflation, please do so. Also, there were twice as many million dollar sales compared to 2020.

CONCLUSION: In short, the stats are insane. Can you see why I’m saying it was our most aggressive year ever? You don’t need to agree with me, but if you disagree, I’d love to hear why. Also, I don’t have stats for 1853 during the Gold Rush, so I’m really just talking about recent history.

Any thoughts?

——————— huge market recap below ———————

THE SHORT VERSION:

The market in 2021? Prices went way up, housing supply was anemic, volume was slightly higher in most counties compared to the previous year, and properties sold as fast as they ever have. Most of the year the market really felt like an auction due to supply and demand being so lopsided. We have a supply problem with sparse listings and we have a demand problem fueld in large part by mortgage rates around 3%. When looking at the past two years it’s apparent the market sped up again after years of slower growth. Ultimately while the stats are glowing, how many think having another year or two of growth like seems sustainable? I’m guessing few hands went up since affordability has been declining and mortgage rates are presumably going to rise. Anyway, enjoy an offensive amount of visuals and feel free to share some images too.

Thanks for reading my sharing policy so we’re on the same page.

THE LONGER VERSION:

I’ve outlined lots of recap stats below by county and I hope you find these useful. Keep in mind these are ANNUAL visuals that compare a year’s worth of sales to the previous year. This is why some of the visuals don’t have a normal up and down rhythm during the spring and fall. What do you see though? What stands out to you?

2) SACRAMENTO REGION (Sac, Placer, Yolo, El Dorado)

3) SACRAMENTO COUNTY:

4) PLACER COUNTY:

5) EL DORADO COUNTY:

6) YOLO COUNTY:

Thanks for being here.

SHARING POLICY: I welcome you to share some of these images on your social channels or in a newsletter. In case it helps, here are 6 ways to share my content (not copy verbatim). Thanks.

Questions: What stands out to you the most above? What are you seeing out there in the market?

If you liked this post, subscribe by email (or RSS). Thanks for being here.

Foreclosures for Christmas & housing on steroids

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Are you getting into the holiday spirit? I’m not there yet, but I’m hoping to find my way there. I mean, I did see the Foo Fighters play this week and that was incredible. But it didn’t really catapult me into holiday cheer either. Anyway, I’m open to ideas if you have some. For now here are three things on mind:

This visual shows a holiday wrapped gift and some decorations with a caption the same as the blog post title

1) ‘Tis the season for foreclosure press releases:

In the next week we’re going to start seeing press releases about foreclosures being delayed for the holidays. This is a nice gesture, but the truth is foreclosure is going to be unwrapped as a New Year’s gift instead. Even in Sacramento County we see bank-owned sales spike in the first quarter. Thankfully distressed sales aren’t common these days as there were only six bank-owned sales in the region last month (one quarter of one percent of sales).

2) Is this what a slow housing market feels like?

This is supposed to be the slowest time of the year in real estate and there is no mistaking the market has softened from the spring, but it’s still really competitive. This is exactly what I’m hearing from the real estate community and it’s the story stats are telling. As I unpack numbers, I want to reiterate my advice last week to buckle up for the beginning of next year. I’m telling you, we’re poised to begin 2022 at a really competitive spot – especially if this is what the slowest time of year feels like.

3) Speaking gigs in January:

Here are two events I’m doing next month. I’ll have two or three others also, but I haven’t seen details released yet.

Big 2022 market update at SAR: I’m doing a market talk on January 18th from 9-10:30am. Hope to see you there. Sign up here.

Top producer panel: I’m doing a market update at Granite Bay Country Club on January 12th and here is the most random promo video. I didn’t write this script, but I did play along. Haha. 

I hope you’re finding joy during this holiday season.

Thanks for being here.

—–——– BIG MARKET UPDATE FOR THOSE INTERESTED ———––

This image says "Caution" and it's yellow and black. Then it says "big monthly market update below." Skim or digest slowly.

QUICK SUMMARY:

Between November and December we tend to see the housing market hit its slowest point of the year, but it doesn’t really feel like that right now in the trenches. I mean, on one hand we definitely have less demand as some buyers are sitting out because the holidays are upon us. But for buyers playing the market it’s ultra-competitive. There is a smidgen of hope as buyers have slightly more power than the spring, but the market is still more elevated than usual for the time of year.

A quick recap:

This image summarizes other visuals in this report. It is a bullet point list of recent market stats in the Sacramento region. There are about 15 bullet points.

Some visuals eh…

SEASONAL MARKET ON STEROIDS:

That’s a really good way to describe the market right now. Statistics are showing clear seasonality, but the market is still way more competitive than it normally is at this time of year.

YEAR OVER YEAR:

Year over year stats are important to digest, but don’t forget to look at month to month stats to understand what the market is doing right now.

A recap of the Sacramento region year over year

MONTH TO MONTH:

Stats from October to November were somewhat flat. I mean, technically prices rose, but I wouldn’t make too much of that. At this time of year stats bounce around all over the place. In other words, when the market starts to slow at the beginning of summer we don’t always see a dramatic decline each month. Sometimes the numbers are up and sometimes they’re down month to month. Ultimately what I’m trying to say is don’t write home and talk about the market showing a price increase from October to November.

WHAT THE…. STILL SELLING ABOVE THE LIST PRICE:

Two years ago properties on average sold about three percent below their original list price at this time of year because that’s what tends to happen during a slower fall season. But last month properties on average sold at 100.27% of their original list price. This might sound incredibly minor to say homes sold 0.27% above their asking price on average, but compared to a normal trend, homes really should be selling a few percent below their list price. In short, this is bananas.

On average properties sold $1,671 above their original list price. Remember, this only represents the average. It does not perfectly describe every escrow because clearly some sold way above that amount, some sold at list price, and some sold below. The bigger issue is if we had a normal market properties on average should be selling about $15,000 or so below the asking price.

Being that only 13% of sales sold below the list price last month, that’s a sign the market is not overpriced as a whole. It is true that sellers who list too high are going to have properties that sit (seriously). It’s just stats show this is not what every seller is doing.

HOW IS THE MARKET DISTRIBUTED?

I’m glad you asked. This is a cool visual I’ve been making for a few months. It shows how prices are distributed throughout the market. Do you dig this one?

STRONG SALES VOLUME:

There is no mistaking prices have risen and the housing market is becoming more difficult to afford, but stats still show buyers are getting it done. This is not to gloss over the reality of some buyers being priced out of the market. I’m just saying statistically sales are happening at strong levels. Here is what sales volume looks like right now in various counties.

OTHER VISUALS:

As if anyone really wanted more…

MARKET STATS: I’ll have lots of market stats out this week on my social channels, so watch Twitter, Instagram, LinkedIn, and Facebook.

Thanks for being here.

SHARING POLICY: I welcome you to share some of these images on your social channels or in a newsletter. In case it helps, here are 6 ways to share my content (not copy verbatim). Thanks.

Questions: What are you seeing out there in the market?

If you liked this post, subscribe by email (or RSS). Thanks for being here.

Housing on steroids, slowing, & smaller homes

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Real estate has been slowing, but it’s still completely nuts. I’ll explain below. But first let me unpack the NAR conference in San Diego and share some exciting personal news. Oh, and let’s talk about smaller homes selling. Then stats and perspective for those interested.

This picture shows an asphalt road with the words "fast" and "slow" written on the asphalt. The top of the image includes the blog title

NAR Conference & my new BFF: I had the honor of sitting on an appraiser panel last weekend at the National Association of Realtor’s annual conference. I appreciated being asked to share my two cents and I’m so grateful to have met and mingled with colleagues too. Also, I met former quarterback Drew Brees since he spoke at the conference and he’s pretty much my new BFF.

This photo shows a few pictures of the NAR conference in San Diego. These are other apprasiers with Ryan. Though one picture has quarterback Drew Brees and Ryan.

500 days of no beer: In personal news it’s now been 500 days since I gave up alcohol. I said goodbye to alcohol for health reasons and I’m feeling really good. This was a personal milestone and now I’m targeting two years. At some point in the future I might re-introduce beer back into my life, but for now I’m taking some time to focus on health. This has been good. And my pants fit better too.  🙂

Slowing but not slow: The housing market has been experiencing definitive seasonal slowing and I’ve been talking about that for months, but at the same time the market is still so much more competitive than it usually is for the time of year. In other words, the stats are slower than spring, but they’re elevated way beyond normal for the fall season. On that note, when some say the housing market is crashing, I wonder if they’re in touch with how aggressive some of the statistics are right now.

Smaller homes: During the beginning of the pandemic there was a notable uptick in the size of homes selling. Initially I thought it was maybe due to buyers targeting larger homes to sort of quarantine in style, but now with the benefit of hindsight I think the real culprit was a spiked emphasis on more expensive (and larger) homes due to an influx of buyers at higher prices.

Here are a few visuals to show this spike in size in 2020 and now a slightly smaller size in 2021. I wanted to mention this because part of me wonders if we are starting to see a bit of the pandemic home size sizzle begin to fade slightly.

This visual shows the median home size and average home size in the Sacramento region since 2012. It has increased over time and there was a spike in 2020 in particular. This is a line graph.

This image shows the average home size and median home size in Sacramento since 1998. Size has increased and it shows there was a slight tick down in 2021 from 2020. This is a line graph.

This visual shows a dip from 2020 to 2021 in home size. It almost looks like 2020 was an elevated year and now the trend is getting back to normal.

Sharp size drop lately: There has been a definitive drop in home size since May. It’s normal to see larger homes sell for about half the year and then smaller homes for the second half of the year. The drop this time around though has been sharp and that’s something I’ll be watching. This could speak to a normalizing of the higher end market (fewer higher-end sales after a pandemic spike), but we need some time to understand. Stay tuned.

This visual is both a bar chart and a line graph to show the average sales price (bars) and average hom size in the Sacramento region (lines). This shows a seasonal rhythm to both over time.

No blog post next week: I won’t have a blog post next week because I’ll be thinking about family, woodworking, and eating pie. I am doing Run to Feed the Hungry, so I hope to see some local friends there. Happy Thanksgiving!!

Thanks for being here.

—–——– BIG MARKET UPDATE FOR THOSE INTERESTED ———––

This image says "Caution" and it's yellow and black. Then it says "big monthly market update below." Skim or digest slowly.

QUICK SUMMARY:

The market is so obviously not as hot as it was during the height of spring. Yet the slower speed today is still so much faster than a normal fall season. This is why I keep saying the market is like a car speeding on the freeway that recently let up on the gas. The car is clearly slowing, but it’s still going really fast. Both things are happening at once. Ultimately buyers have been gaining more power and it’s been a bit easier to get into contract, but there is a difference between easier and easy.

Some visuals eh…

YEAR OVER YEAR:

Year over year stats are important to digest, but don’t forget to look at month to month stats to understand what the market is doing right now.

Sacramento housing region stats for price, number of sales, cash percentages, and other elements.

Sacramento county stats for price, number of sales, cash percentages, and other elements.

Placer county stats for price, number of sales, cash percentages, and other elements.

MONTH TO MONTH:

Stats from September to October basically show more seasonal slowing, but not every category is slowing. Remember, stats around this time of year tend to bounce around a bit. One month prices might be up slightly and the next month they could be down slightly. And remember, part of prices dropping has to do with smaller homes selling. Technically the median price in the region has dropped 4% from June, but this does NOT mean prices are 4% lower in every area. Simply put, some of this price drop really has to do with size.

Sacramento region stats for price, number of sales, cash percentages, and other elements. September to October stats.

Sacramento county stats for price, number of sales, cash percentages, and other elements. September to October stats.

Placer county stats for price, number of sales, cash percentages, and other elements. September to October stats.

STILL SELLING ABOVE THE LIST PRICE:

Here are some visuals to show how properties have sold in relation to the original list price. In short, we are seeing more properties sell at or below the list price, but last month on average properties still sold almost 0.50% above the original list price. For context, 43% of the market sold at or below the list price last month (most of that is not below). In 2019 more than 70% of all sales sold at or below the list price though, so despite seasonal slowing the market is still moving really fast. It is actually highly unusual to see homes selling above the list price in October. On average homes sold about $2,800 above the original list price whereas in October 2019 homes sold about $15,800 below the list price.

We really don’t have an overpriced market, but some sellers need to adjust to the reality of a slower pace compared to April. Buyers, there is a little more hope for you, but you still have to bring a strong offer. Only 13% of homes sold below the original list price last month. In a normal market his number should easily be 20% or more. Hang in there.

A line graph to show the original sales price to list price ratio since 2018 in the Sacramento region A line graph to show how much buyers have paid in relation to the original list price since 2018 in the Sacramento region August through October stats for specific price ranges

This visual shows the percentag eof homes that sold above the list price from November 2020 through today This visual shows the percentag eof homes that sold at or below the list price from November 2020 through today

UPDATED VISUAL:

This is a cool visual I’ve been making for a few months. It shows how prices are distributed throughout the market. I actually corrected this visual since I made an error in Excel that pushed the columns over one bin (and that changed everything). Sorry about that.

TWO BRAND NEW VISUALS:

Here are a few new visuals to show how much buyers paid above asking price. I like this format because it compares multiple years at once. But I’m not totally sold on this either because 2020 was such an odd year and 2021 is so far removed from the trend. It just feels a bit awkward maybe. No matter what though, do you see how normal it is at this time of year to see cooling? It’s like the market goes up for about half the year and then things descend.

A BUNCH OF VISUALS:

In case you’re still reading, here are a bunch of visuals to digest. I’m playing catch-up after being out of town, so I don’t have any more time to organize these. Let me know if anything stands out to you.

MARKET STATS: I’ll have lots of market stats out this week on my social channels, so watch Twitter, Instagram, LinkedIn, and Facebook.

Thanks for being here.

SHARING POLICY: I welcome you to share some of these images on your social channels or in a newsletter. In case it helps, here are 6 ways to share my content (not copy verbatim). Thanks.

Questions: What are you seeing out there in the market?

If you liked this post, subscribe by email (or RSS). Thanks for being here.

10 ways the housing market is slowing

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The housing market has turned the corner and we are seeing definitive slowing. Here are ten ways I’m seeing slowing in the market. If you’re not local, what are you seeing in your area?

NOT DULL: The market is slowing, but it’s not dull. It is still really competitive.

DOOM AND GLOOM: The doom and gloom crowd loves to say the market is starting to crash because of the slowness we’re seeing, but stats right now don’t support a crash and burn narrative. In my mind it’s premature to say the market has shifted directions. Of course if the stats go that way I’ll change my narrative. For now it’s most reasonable to say we are seeing what looks to be a normal seasonal slowing. Stay tuned.

Glowing & slowing market update:

I’m doing a big market update for SAFE Credit Union next week. There is no cost. It’s totally free, but you have to register. It’ll be at 9am on Zoom on Wednesday August 18, 2021. It’ll be about an hour and packed with lots of stats and perspective. REGISTER HERE.

10 WAYS THE MARKET IS SLOWING

1) Prices are starting to dip: Last month we finally saw most price metrics take a dip from the previous month. The median price usually peaks around July, so this is what we would expect to see in a normal year.

2) We’re seeing fewer sales happen: Around this time of year we start to see sales volume slump. Here is one of my favorite images to help explain what I mean. The green line represents average monthly sales volume and we typically see the number of sales increase from January to June before dipping for the rest of the year. This is normal. The black line represents 2020 and it was such a freakishly abnormal year. Check out the red line though (2021). Volume peaked in June and it started to soften in July, which puts us right on track with normal historical averages. By the way, we had a thirteen month streak where monthly volume was up over the previous year, but that streak has been snapped. Last year we saw highly abnormal demand in July onward, which is  why this year volume is actually down (even though it was a normal month in terms of numbers).

3) It’s taking longer to sell: Last month it took an extra day to sell in Sacramento County and two extra days in the region. Since August pendings in the region have taken sixteen days to get into contract, which is up two days from July sales. This is still lightning fast, but it’s clearly slower than it was a few months ago.

4) More homes are selling below the list price: There are slightly more homes selling at or below the list price right now. For two months in a row we’ve seen this metric increase and it’s a sign of a market that is slowing. Keep in mind in a normal market we should be seeing closer to half of all homes sell at or below the list price, so this market is still on steroids.

5) There are fewer offers above the list price: Here’s a visual to show what buyers are paying compared to the asking price. Most categories slowed slightly last month, but not every category. The most aggressive range in the market is 1-5%. Last month properties on average sold 3.7% above the original list price, which is still one of the highest percentages ever for the region, but it’s down 4.1% from the previous month. Keep in mind stats show we do not have an overpriced market, but sellers would be wise to note the clear change in temperature lately and price according to similar properties that are getting into contract instead of sensational headlines from a few months ago.

6) Housing supply has increased slightly: We are seeing an uptick in monthly housing supply. We are still at an absurdly low level with basically less than a one-month supply of homes for sale in most surrounding counties. In the region we have 0.92 months of supply, which means we basically have a month worth of listings before they run out. This number should be easily twice this amount.

7) More listings are hitting the market: We are definitely seeing more listings hit the market, but we are nowhere close to normal levels yet. About six months ago we had 1,200 or so listings on any given day and now we have over 2,000 listings. Granted, we should have about twice as many listings, but this is a step in the right direction. We typically start to see fewer new listings hit the market around this time of year, but one thing to watch is whether sellers pull back from listing their homes in light of the Delta variant. To be determined.

8) Smaller-sized homes are selling: If you didn’t know, when the spring market fades we typically start to see smaller homes sell, and that is exactly what has been happening for two months. The dark blue line represents the average home size in Sacramento and it goes up and down like clockwork each year. Do you see how size typically hits a seasonal peak during May or June (besides last year)? Anyway, the average size slumped in July quite a bit. This is actually something to watch because it can affect price stats. What I mean is whenever we interpret price stats we have to be in tune with what is actually selling. 

9) Fewer multiple offers: For three months in a row we’ve seen fewer multiple offers in the Sacramento region. Keep in mind the percentage of offers is still about as high as it’s ever been.

10) Word on the street: I’m hearing from lots of real estate agents, loan officers, and appraisers that they’ve seen a slightly slower vibe. I haven’t heard many people call this market dull, but there is lots of chatter about slowing. At the same time I’m hearing things like, “My listing had 11 offers” or “We got outbid again,” which speaks to how competitive it is right now. Buyers, be hopeful that we’re seeing some seasonal slowing, but be careful not to think you’re poised for a big price discount. We’re just not in that sort of market.

Now more stats if that’s your thing.

——————– BIG MARKET UPDATE ——————–

JUNE TO JULY:

This is a helpful view to understand the market has been slowing. Take a look at how most metrics softened from June to July.

LAST YEAR VS THIS YEAR:

Last year the market was dull at the beginning of the pandemic, so this year versus last year gets a little weird for a comparison. My advice? Take these percentages with a grain of salt because they’re inflated due to sagging numbers last year. And remember these percentages DO NOT actually mean every house is worth that much more either.

MORE PRICE VISUALS:

A few more visuals to show the insanity of price growth and softening lately. Look how far disconnected 2021 prices are from previous years.

Anyway, this is starting to get way too long.

MARKET STATS: I’ll have lots of market stats out this week on my social channels, so watch Twitter, Instagram, LinkedIn, and Facebook.

Thanks for being here.

SHARING POLICY: I welcome you to share some of these images on your social channels or in a newsletter. In case it helps, here are 6 ways to share my content (not copy verbatim). Thanks.

Questions: What are you seeing out there in the market? What are you hearing buyers and sellers say? I’d love to hear your take.

If you liked this post, subscribe by email (or RSS). Thanks for being here.

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