Sacramento Appraisal Blog

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Saying goodbye to California

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Goodbye California. Many households have said that in recent years, and in a housing market that feels frozen with so many sellers sitting, one of the groups that still has incentive to sell happens to be residents leaving the state. Today, let’s talk about fresh migration stats. Any thoughts?

UPCOMING SPEAKING GIGS:
11/7/2024 Think Like an Appraiser (3 hours) Register here
11/19/24 Downtown Regional MLS Meeting Q&A 9am
11/20/24 Delia Real Estate Group (private I think)
12/5/24 Made 4 More Team (Exporting Data from MLS)
12/11/24 Gateway: Think Like an Appraiser (private)
1/15/25 Mike & Joel Event (details TBA)
1/24/25 PCAR Market Update (details TBA)
2/6/25 She Invests event (TBA)
2/11/25 MLS Meeting TBA
4/8/25 Culbertson and Gray (private I think)
11/4/25 SAR Main Meeting

WHY ARE PEOPLE MOVING?

There isn’t just one reason why people are leaving California, but some of the usual suspects include retirement, climate change, looking for a different lifestyle, economics, politics, job change, cashing out, etc… I’m sure there are other reasons too. What are you seeing the most?

FRESH STATS:

All visuals are based on the American Community Survey / Census Bureau. These stats are based on 2023, which is considered fresh for migration data. For my real estate friends, please feel free to use my visuals however you see fit (just don’t cut and paste my entire post verbatim). Thanks.

WHERE ARE CALIFORNIA RESIDENTS MOVING?

Is everyone moving? Nope. But the latest stats show 690,127 people left the state in 2023. Here’s a look at the top destinations where California residents relocated. By far, Texas was the number one destination (like almost every year). This visual only includes a handful of states, but see an exhaustive list below. Is this what you’re seeing with friends or in your business? 

MIGRATION HAS SOFTENED SINCE 2021

Duh, we don’t need stats to show us migration has slowed because the stories we’re hearing and conversations we’re having confirm that already. Look, I definitely still regularly hear about outbound migration, but it’s nothing like stories galore from 2021. And while we’re on the subject, I’m not hearing anyone in real estate say things like, “Bro, all the buyers are from the Bay Area,” which also speaks to migration change. Anyway, here’s a comparison of top migration destinations for Californians in 2023 compared to 2021. It’s not a shocker to see the trend decrease, but there are a few states such as Florida, Tennessee, and Virginia that showed more outbound migration in 2023 (impressive). There could be other states with more movement too, and I can dig into that if there is demand (let me know).

REMOTE WORK IS CHANGING

Another consideration for why migration hasn’t been as robust lately is due to remote work starting to pull back from the peak in 2021. Image from ResiClub / Lance Lambert.

YES, MOVING TO CALIFORNIA HAPPENS

People do actually move to California. In fact, the latest stats show 422,075 people moved to the state in 2023. The narrative is that everyone is leaving and nobody loves California anymore, but that’s just not true. Of course, the joke is it’s former California residents moving back. Haha. By the way, Texas almost always comes in first place for exporting residents to California.

A COOL MIGRATION TOOL

Here’s a pretty cool migration resource from the San Francisco Chronicle to see where residents in specific California counties moved. You can track inbound and outbound migration from counties (and even out of state). Keep in mind this tool is based on IRS data instead of the Census Bureau like my post today. And thanks Joe Lynch for the head-up (heard it from you first).

QUESTIONS FOR REAL ESTATE PROFESSIONALS

Many prospective sellers are stuck and unable to move since the math doesn’t work right now, but many of those moving out of state have incentive to list right now despite higher rates. My advice? Find those people.

– Who are your clients going to be over the next two years?
– Who is coming to the market?
– Who is leaving the market?
– What steps do you need to take to position yourself for the future?
– Where can you meet future clients?

WHERE ARE CALIFORNIANS MOVING THE LEAST?

Here’s a top list of areas where California residents are moving the very least. Does anything surprise you? And what works better? Horizontal or vertical bars?

COMING TO CALIFORNIA THE LEAST

And a top list of who is moving to California the least. North Dakota, where is the love? Haha. 

BRO, I WANT TO SEE AN EXHAUSTIVE LIST

Okay, here are two more visuals to show migration data for every state instead of just top destinations above. These are probably too large for social media, but I’m anticipating questions about other states, so I’m trying to be thorough and avoid hate mail.

I hope this was helpful.

Questions: Does anything surprise you about the stats above? Why are people leaving and coming? Did I miss anything?

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Flat prices & the insurance mess

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Prices have been pretty flat. That’s a really good way to describe the housing market lately in many areas across the country. Let’s talk about that today as well as dig into insurance. I have some encouragement to share too about mindset.

UPCOMING SPEAKING GIGS:
11/7/2024 Think Like an Appraiser (3 hours) TBA
11/19/24 Downtown Regional MLS Meeting Q&A 9am
12/5/24 Made 4 More Team (Exporting Data from MLS)
12/11/24 Gateway: Think Like an Appraiser (private)
1/15/25 Mike & Joel Event (details TBA)
1/24/25 PCAR Market Update (details TBA)
2/6/25 She Invests event (TBA)
2/11/25 MLS Meeting TBA
4/8/25 Culbertson and Gray (private I think)
11/4/25 SAR Main Meeting

HALLOWEEN COSTUME?

Is anyone dressing up for Halloween? My wife and I were invited to a costume party, so I’ll be wearing a yellow hazmat suit and respirator to emulate my favorite cook from Breaking Bad.

HAVE PRICE BEEN FLAT?

One of the best ways to describe the housing market in Sacramento and some other portions of the country is to say we’ve had very modest appreciation over the past year. In other words, prices have been pretty flat. I’m noticing this in regional stats as the median price is only about 1% higher than last year, but I’m also seeing it when pulling comps. In 2021, there was substantial change between older comps and today, but that’s just not the reality right now.

NOTE: The flat trend may not be in every neighborhood and price range, so look to the comps to understand the market.

BRO, STOP BEING SO NEGATIVE

Before saying more, I have some quick thoughts about mindset. I find sometimes there is resistance in real estate circles to saying prices have been flat, as if it could somehow change the market by being “negative.” It almost reminds me how people didn’t want to say the name “Voldemort” in Harry Potter out of fear of consequences. I’m not trying to sound preachy, but there’s a huge difference between talking about slowing housing stats and having an optimistic mindset about life and business. Those are two totally different things. My advice? If you work in real estate, take the pressure off yourself. What you say about the housing market can’t change the trend (true for my words also), and your role is to simply find people who are participating regardless of what the market is doing – whether it’s hot, cold, or mild. Look, if real estate professionals could alter the trend, we wouldn’t be seeing such crazy low sales volume right now. One more thing. I can’t transform my stock portfolio by thinking positively. I can’t change the election next week by just thinking about it. And I can’t fit into certain pairs of jeans either just because I’m positive about my body image. Look, I’m a huge optimist in life, and cultivating positivity is essential. If you’ve lost your sense of hope, you need to dig deep to find it. Fight for optimism and surround yourself with people who will build you up!!! And unsubscribe from voices that only promote doom because there is an agenda there (and they’re getting rich off your clicks). All I’m saying is a positive outlook in life is something far different than being real about housing market conditions. Sermon done.

SOME NEIGHBORHOOD EXAMPLES

Here are some examples of scatter graphs with flat prices. I realize not everyone resonates with graphs like this, but do you see how the dots are sort of going more horizontal lately? Down some from 2022 and modest price growth at best since last year. Of course, not every neighborhood will look the same, but I wanted to share these examples lately.

THE BIG TAKEAWAY & DIFFERENT TRENDS

Look, if your property checks all the boxes, it’s highly possible to get multiple offers (if priced right). And stepping back, about 40% of pendings are getting multiple offers right now in the region (a pretty normal level). But otherwise, 2024 is a different vibe compared to 2021, and it’s important to adjust and price reasonably to capture the attention of buyers. In some cases, you might see older comps and recognize there hasn’t been any real value gain too. The other day a lawyer reading my appraisal report criticized me for using a comp from one year ago, but here’s the thing.  There aren’t many comps today to choose from since volume has been down so much, AND the market today is at a similar level from then, so it was actually a really solid comp that didn’t need any adjustment for price change. Obviously, the trend isn’t exactly the same in every neighborhood, so I get it if you say prices are going nuts in XYZ Neighborhood. I’m speaking generally here, and stats are supporting the idea that the overall market has been…. flat. 

THE INSURANCE CRISIS ISN’T JUST ABOUT FIRES

Okay, let’s look at one more big trend. We’ve been talking so much about the insurance crisis in outlying areas prone to fires, but one place we’re seeing insurance carnage is with condos / HOA communities. It’s not that individual owners are having a problem obtaining insurance, but the association itself is experiencing a massive rise in the cost of insurance, and that’s often passed on to owners with HOA fee increases. But it’s more than just the HOA fee. Check out my Facebook post yesterday where people chimed in about financing issues due to the HOA having insufficient funds, and even SB 326, which requires some condominium associations to inspect and repair balconies. All that said, condo sales have been slumping this year compared to detached units, which has caused condo inventory to spike. In short, watch condos carefully and recognize there could be some brewing downward price pressure here.

I hope this was interesting or helpful.

Questions: What have prices been doing in the neighborhoods you cover? What are you noticing about condos?

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Stop expecting lightning speed in real estate

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Properties were selling in lightning speed a few years ago, but that’s not the vibe today. The truth is it could easily take twice as long to sell today, but the stats actually feel somewhat normal. I wonder if we’ve forgotten what the market used to feel like before 2020. Let’s talk about it.

UPCOMING SPEAKING GIGS:
10/23/24 SAFE Credit Union (details TBA)
10/29/24 Orangevale MLS Meeting
11/7/2024 Think Like an Appraiser (3 hours) TBA
11/19/24 Downtown Regional MLS Meeting Q&A 9am
12/5/24 Made 4 More Team (Exporting Data from MLS)
12/11/24 Gateway: Think Like an Appraiser (private)
1/15/25 Mike & Joel Event (details TBA)
1/24/25 PCAR Market Update (details TBA)
2/6/25 She Invests event (TBA)
2/11/25 MLS Meeting TBA
4/8/25 Culbertson and Gray (private I think)
11/4/25 SAR Main Meeting

I saw this Miata over the weekend, and it made smile. Haha. If the owner gets wind of this, please take me for a spin. Well, a loan officer on X said “higher for longer” when I shared this image, and that made me chuckle. So far that’s been the vibe in the housing market where mortgage rates have seemed to stay higher.

WHY ARE WE STUCK?

I find many people are having a hard time with the stats today because properties aren’t selling instantly like they used to. For some, this makes sense if they entered real estate in 2020, and only knew hyper speed as the norm. But to be fair, there’s also a disparity between properties that are actually selling (my stats below), and listings that are lingering. I suspect it’s tough at times to think past the ones that aren’t moving. Ultimately, my advice is to step back to gain some perspective about what “normal” looks like, and stop expecting 2021 vibes in 2024. And maybe consider a price reduction if you’re sitting without any interest.

Check out these stats though. Dorothy, we’re not in 2021 anymore…

NORMAL & SUGARCOATING

When looking at the stats, the number of days it’s taking to get into contract has been pretty normal lately. I’m not sugarcoating here. There are some really abnormal things happening today such as the low number of sales. But days on market is…. pretty normal according to the stats. The red line represents the pre-2020 average, and the green line is today. The interesting part about 2024 is the market was more competitive in the beginning of the year, and things have slowed as inventory has built.

And here’s what 2021 looked like (orange). It’s astonishing to see that properties were basically selling in less than half the normal amount of time back then.

OKAY, LET’S LOOK AT MORE YEARS

The black numbers are October, and 35 days is pretty consistent with many years prior to 2020. Could this change in the future? Of course. I’m just saying right now the stats aren’t sensational.

PRICE REDUCTIONS

I might write about price reductions soon. I think there is a need for more context as to what is happening today compared with the norm so to speak. Let me know if that might be of interest.

SELLING LOWER AS YOU LINGER

The longer you’re on the market, the lower you tend to sell from the original list price. Duh, we know that’s true. But it’s still cool to see it on a visual. Here are closed sales in the region over the past week. It’s really the first two weeks where things tend to get bid up more. What I really love to see though are properties that sold below the original price immediately since it shows those sellers listened to the market right away. 

THINKING ABOUT WEEKS INSTEAD OF DAYS

Instead of thinking about days on market, let’s think in terms of weeks. I think this is a cool way to consider the stats. And this is a good reminder that the trend isn’t the same in every county.

And here’s the same data, but days on market instead.

HELLO LONGER DAYS ON MARKET

One last batch of visuals. We’ve seen an increase in days on market in every local county. It seems most areas look like they’re almost at “normal” levels, but Yuba is getting up there. Let’s keep watching this over time.

CLOSING THOUGHTS

Let’s keep watching the numbers and change our narrative as needed. Ultimately, I think it’s time to embrace a wider perspective with days on market stats and stop expecting 2021 lightning speed. Yet, I know it’s tough on sellers and agents to wait though, but the reality is market is going to involve more waiting. On that note, in light of the stats above, when do you suggest doing a price reduction?

I hope this was interesting or helpful.

Questions: Does anything surprise you above? What are you noticing with listings right now.

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Which neighborhoods are doing better than others?

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Who is buying in today’s housing market? Some say it’s only the wealthy or institutional investors, and first-time buyer are missing in action. What do stats show when we look at forty local neighborhoods? Let’s find out.

UPCOMING SPEAKING GIGS:
10/18/24 Prime Real Estate (private)
10/22/24 Culbertson and Gray Group (private (I think))
10/23/24 SAFE Credit Union (details TBA)
10/29/24 Orangevale MLS Meeting
11/7/2024 Think Like an Appraiser (3 hours) TBA
11/19/24 Downtown Regional MLS Meeting Q&A 9am
12/5/24 Made 4 More Team (Exporting Data from MLS)
1/24/25 PCAR Market Update (details TBA)
2/6/25 She Invests event (TBA)
4/8/25 Culbertson and Gray (private I think)
11/4/25 SAR Main Meeting

QUICK THINGS TO KNOW

The market isn’t the same: Not every neighborhood or price range is experiencing the same exact trend.

Sellers need to see this: In today’s market, it’s key for sellers to understand there is a limited pool of buyers. I hope these graphs can help drive home that point.

Demographics: Both 55+ Sun City neighborhoods have normal volume (uncommon to see), and that speaks to people not putting off retiring. Yet, Del Webb volume in Elk Grove is down, so this is also about location in Placer County.

Higher prices vs lower prices: Generally, higher-priced areas are doing better with volume as these buyers are less sensitive to interest rates and affordability. That’s why in some higher ranges we only see volume down by 20% (that’s actually good for today). Yet, it’s a mixed bag because volume isn’t robust in all higher-priced locations. Ultimately, there is no mistaking lower prices have been hit really hard as many entry-level price points are down in volume by 40% or more.

Interpreting good and bad: Today, if volume is only down 15% to 20%, that’s actually really good. That might sound strange to say, but being down by 30% or so is pretty much the norm right now. My advice? Compare 2024 with a year like 2019 (or the average of 2016 to 2019). Don’t get caught up comparing today with 2021 because that was typically a heightened migration year. A few areas doing “good” this year include Folsom (down 21% from the pre-2020 avg), Granite Bay down 22%, and Lincoln only down 13%. In contract, Oak Park is down 49%, Rocklin is 33%, East Sac is 30%, and El Dorado Hills is 33%. In short, like I said, the norm is being down 30%. But areas like Tahoe Park and Meadowview are down closer to 50%. Yikes.

Things to keep in mind: Some areas don’t have many sales, so be careful about interpretation. Also, certain locations have more new construction, which can matter. For instance, Anatolia looks strong in 2024, but it’s new homes listed on MLS that made the difference.

A QUICK RECAP INSTEAD OF 40 GRAPHS

Okay, since this morning I made two recap images to quickly summarize the volume trend. These are in order from worst to best volume. One image was too long, so it had to be two.

VOLUME IN 40+ NEIGHBORHOODS

Scroll to see an area you’re interested in. I asked people on my socials which neighborhoods they wanted to see, and here are many of them. I couldn’t get to everything, but this is a good start. If you need larger versions, please email me. 

IF YOU WANT THE GRAPHS:

Email me if you want all the visuals (larger versions). Happy to share. Please use them as you see fit on your socials, bu don’t cut and paste my post verbatim. See sharing policy.

I hope this was interesting or helpful.

Questions: Does anything surprise you above? What are you noticing about volume in the market right now?

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

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