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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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Home prices during the pandemic

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What are prices doing? That’s the question I’m getting asked the most. Here are some thoughts about how to look at prices during the pandemic. I also have two brand new price visuals.

FIVE THINGS TO KEEP IN MIND ABOUT PRICES:

1) Eggs in one basket: I recommend watching multiple price metrics instead of putting all our eggs in one basket. So in addition to the median price we can watch the average sales price and average price per square foot.

2) Pure pandemic data: When May stats come out we’re likely going to see 80-90%+ of those sales having gotten into contract after mid-March when the pandemic began to affect us. Thus May sales will be a stronger indicator of pandemic trends than April sales.

3) Seasonal rhythm: It’s key to understand the seasonal rhythm of the market because it helps us spot what is normal and not. For example, the median price usually increases from March to April, but this year we saw the median price dip instead. What does this mean? We need time to understand it. For now we’re recognizing something has happened that is less common. It’s worth noting we often see the median price climax around May or so, which means if we see prices soften in coming months we’re going to have to ask whether it’s a seasonal thing, pandemic thing, or something else.

4) Prices are the last thing to change: We often obsess over prices and look to them first to understand a real estate market, but prices are usually the last thing to change. In other words, we experience a difference first in the listings and the number of sales happening before the trend eventually catches up to prices.

5) Weekly & monthly: I recommend looking at the market in monthly chunks, but it’s also worth watching prices by the week. The huge downfall of weekly prices is they shift dramatically depending on what sold that week. This is why it’s best to look to monthly data (but still get clues from weekly data).

MONTHLY PRICES:

WEEKLY PRICES:

CONCLUSION: Right now it looks like most price metrics have held fairly steady or even increased slightly, but the median price in the region dipped 1% recently. Some weekly price metrics have seemed to soften lately, but we’ll see what the stats show us in a couple weeks when reporting May data. Ultimately my sense is many neighborhoods feel flat and others at lower price points are still having upward pressure. The reality is we have a market with tight inventory and lots of competition. The temptation is to think home prices would be tanking during a pandemic, but that’s not what we’ve seen. For reference, this past week there were more pending contracts than before the pandemic began (I talk about this in my video). By the way, are any areas declining? Let me know what you’re seeing in the trenches.

RESOURCES:

New market video: Here’s my weekly video where I talk about climbing back to pre-pandemic levels. This is about 15 minutes. Check it out here (or below).

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

Questions: What are you paying attention to right now to gauge price movement? What did I miss? Anything to add?

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

What words are used to sell homes?

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What words are used to sell homes? Let’s get lighthearted because it’s been intense lately with the pandemic. I thought it would be fun and fascinating to see how many times certain words were used in real estate listings.

Realtors do a great job selling and here are words used in public property descriptions in MLS listings in the Sacramento region. There were 33,884 sales since last year. Some of this is just for fun.

How often were the following words used in home sales?

I hope you enjoyed and even laughed a little.

RESOURCES:

New market video: Here’s my weekly video. I talk through two markets. The future and the present. I also have a woodworking sign giveaway in the video. Check it out below (or here).

Millennial Millionaire Podcast: I was on this podcast recently and the episode is called “Teacher turned appraiser by accident.” Yes, I used to teach Middle School if you didn’t know. This was recorded about two months ago.

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

Questions: What stands out to you most about the words above?

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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?

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