Quarantine. Wearing masks. Social distancing. It’s so weird that these are regular things now. The world indeed has changed over the past month and so has the housing market. Let’s talk about some new developments.
FIVE WEEKS AGO: About five weeks ago the real estate market started to have a strong reaction to the coronavirus. I look to March 12th as our day of change as that’s when things started to kick into high gear with events cancelling and sellers and buyers backing off the market.
OBSERVATIONS RIGHT NOW:
1) Pendings and listings declined heavily for a few weeks.
2) Pending contracts have begun to increase again.
3) More new listings are hitting the market.
Here’s a closer look at the numbers. These are single family detached homes without condos. I don’t include condos because they’re a different market that can water down the data. If you include them in your numbers, that’s cool.
Here is a look at new listings. There has not been a dramatic uptick, but we are seeing more new listings compared to a month ago (the first week we had sheltering in place).
SOME CLOSING THOUGHTS:
1) Goodbye cliches, hello experts: In a market like today it forces us to place our cliches, canned statements, predictions, and positive or doomy narratives aside. We simply must look to the numbers to understand the market. When trends change it creates opportunities for experts to arise. It also creates opportunity for credibility to be destroyed by making predictions that don’t come true and getting swept up in every single sensational headline.
2) Other markets too: This dynamic of the market seeming to hit a bottom a few weeks ago is something that is happening in some other areas across the country too as reported by Mike DelPrete in his email yesterday (a must follow). I’ll talk about this more in my weekly video at the end of this week. Please know I’m not saying prices or other metrics have bottomed out. I’m only saying it looks like listings and pendings (for now) have begun to increase again.
3) The future: We still don’t know the future, so I’d exercise caution in saying definitively the market has begun a recovery or rebound and will move forward from this point onward. We need time to see how everything shakes out and we’re still living in the midst of so many unknown factors that could sway the market in many ways. The reality is what we say about the market could be different next week based on new data.
4) Getting used to the pandemic: For now it looks like buyers and sellers have started to get a little more used to this pandemic market, which is evidenced by more pending contracts and an increase of listings lately. It’s possible some of this could be attributed to real estate agents being deemed essential too. Will this continue? Is this a trend we’ll see more in coming weeks? To be determined.
GRAPHS: I plan to make a tutorial soon on how to make a few of the graphs I’ve been posting. Appraiser colleagues, I haven’t forgotten.
I hope this was helpful.
Okay, moving on:
RESOURCES:
New market video: Here is a fresh market update video. This is 25 minutes and perfect for the background while working. Check it out below or here.
Interview with The Appraiser Coach: I did an interview with Dustin Harris to talk about not waiting for sales to see pandemic data. Watch below (or here).
Interview with Brad: I did a Facebook Live Q&A with Brad L’Engle last week to talk shop. Enjoy here if you wish (you don’t need Facebook to watch).
I hope this was interesting or helpful. Thanks for being here.
Questions: What do you make of the stats above? What are you hearing in escrows from buyers and sellers? If you’re not local, what are you seeing happen in your market?
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Thanks for the I haven’t forgotten you appraiser comment. You the man. Second down in my neck of the woods it is city by city right now. I am seeing the pending sales still significantly lower on a year over year comparison to the point of where in some locations/markets the data is showing it heading towards the typical December lows. New Listings are off by 30% or so but the interesting thing is the lower priced market range for us seems to be seeing some uptick. Now the problem that I face is that RE agents are telling me the prices are increasing and the Economists are telling them that everything is going to be good. I hope they heck they are right, but I caution agents that some of these same Economists missed the 2008 recession. So let us be data dependent and not Economist dependent. I remind the agents I speak with that looking after 3/15/2020 is key to me. Look for data that was listed, went into escrow and closed and you should be talking with those agents. the 3/15/2020 is my date Ryan as that is the date the Feds lowered the Fed Funds rate and 3/16/2020 was the day everyone knew there was an issue with the virus as the stock market fell off the cliff. As always great, great stuff in the middle of a three ring circus looking for a big top to perform under. Take good care my friend and be safe.
Thank you Brad. I always appreciate your perspective. It’s great to hear your rationale for why you use 3/15/2020 also. I’ve heard another person say 3/08/2020 is COVID Day so to speak. In my mind March 12th was huge because that’s when we started to panic as a society. We found out Tom Hanks had COVID and events cancelled in mass that day and beyond. I even cancelled all my presentations (on the 12th and 13th). I think we noticed a definitive difference in holds and cancelled listings very shortly afterward. I think there was something psychological that began to happen here on this date where things really began to move. Then in California we had sheltering in place on the 20th, so things moved very quickly from then onward. But I wouldn’t split hairs with you or anyone. It’s not like it makes an enormous difference by a few days anyway.
My market is like yours in that pendings are down significantly from last year. I have yet to create that graph, but it’s a big number. Listings are down 30-40% from last year too. My post today is only focusing on the immediate past few weeks.
Keep up the great work Brad.
Great to see some positive sings in the market. I’m still very concerned, particularly about how unemployment and vacation rentals will influence the market in coming months. I’m also concerned that if this is the summer, will this winter be the slowest ever, will winter be busy because or shifted demand, or will winter be normal. You just keep telling the story and I keep waiting wanting more 🙂
Thank you Gary. Yeah, there is tremendous uncertainty right now. I imagine some onlookers will take my post to say the market has rebounded and everything is fine, but that’s where it’s important to actually read the post. 🙂 It is nice to see pending contracts up these past few weeks. Let’s see if it continues.
I love your “goodbye cliches, hello experts” phrase as it really pertains to the current situation. We are in such a unique time in our history that we have never seen before. The market changes daily and it will be the people that track the changes and keep up with the results that lead the way in educating others so that they can make informed decisions. Keep up the great work.
Thank you Tom. Well said. I appreciate the way you’re making graphs for your market and staying on top of changes. Way to go!!
I’d be interested in exploring whether there is a marked difference between Sac and Placer Counties since the two counties have different restrictions. In Sac Cty, occupied homes cannot be shown under any circumstances. In Placer County, occupied homes can be shown as long as sellers agree and appropriate safety measures are in place. I would expect the Placer market to be faring better than the Sac market simply for that reason. Is there data to support that theory?
That’s a good thought Joanie. I think theoretically occupied homes are not shown, though we also have to consider that it’s likely in some instances that showings are happening despite the rules. I suppose the best data would be from MLS itself / lockbox traffic. But that’s not public unfortunately. Otherwise I suppose we could look to pending contracts. But not all pendings have had physical showings, which makes it complicated.
Starting this month I will be pulling county-specific stats again in terms of sales volume, median price, inventory, etc… So I will put out lots of data and hopefully we can discern if there are any difference in volume over time. For now I haven’t studied this and I don’t have time to delve into the question. I am so maxed these days with all the new stats I am pulling and describing. But like I said I will be putting out some of the more typical market stuff in coming time to recap April so we can compare various counties over time. April stats will start to reflect mid-March and beyond, though they won’t perfectly reflect pandemic-only data yet either.