I have three things on my mind today. I’d love to share a helpful analogy for today’s housing market, let’s talk about unrealistic seller expectations, and then unpack some fresh stats.
Real Estate Week: Next week I’ll be taking part in a free video interview with The Sacramento Bee to talk about the insanity of today’s market. I’ll be talking shop on the first day on August 23 at 12pm. Sign up here.
THREE THINGS:
1) Speeding and slowing car analogy: The housing market is like a car speeding on the freeway that recently let up on the gas. It’s moving really fast, but it’s also slowing. Both things are true at the same time. I find some people fixate only on slowing or only on moving fast. My advice? Pay attention to both.
I like this word picture because it recognizes the speed of the market and recent seasonal cooling. In my mind fixating on only one of these things is a mistake that can cause misinterpretation of trends. Of course a narrow focus for some might also be due to an agenda.
2) Unrealistic seller expectations: Sellers are by far still in the driver’s seat in today’s market, but it’s a good time to weigh expectations as the temperature of the market has been changing. I’ve been hearing a few disappointed sellers say stuff like this: “We only got two offers and only went $12,000 over asking.” I get it because the expectation was to have thirteen offers and go 15% over the list price. But that’s just not always going to happen. My advice? Price reasonably according to similar listings that are getting into contract and adjust your expectations as the market temperature changes.
3) Fresh neighborhood stats: This image shows how much buyers paid above the list price in various areas for sales between July and mid-August. In short, as I keep saying, the market is slowing, but that does NOT mean it’s slow. Those are two different things. Keep in mind these are averages, so they don’t perfectly represent each individual escrow. In other words, some properties sold for way more and some for way less.
NOTE: One thing to remember is these stats are based on sales, which tell us more about the past when these properties got into contract in June most likely. The current market is best seen in the listings and pendings.
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Questions: What do you think of the analogy? What are you hearing from sellers and buyers? I’d love to hear your take.
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Great analogy Ryan. You have layers and layers of them. I’m going to try and work this one into a conversation soon 🙂
Thanks Gary. Yes, fit it in a conversation. 🙂 I find it’s such a useful way to describe things. I hope it resonates with others. By the way, if any onlookers have different or better analogies, please share.
Thank Ryan. Always enjoy your stats and insight. Great Webinar this morning.
Thanks so much Brian. I really appreciate it. Thanks for attending too. Very cool.
I’ve been using the analogy that the housing market has been like a hurricane and we have now gone to a tropical storm.
Thanks Leslie. Very interesting. I always appreciate a word picture. I’ll think on this one. Thank you again.
Great analogies of a speeding car slowing down. Definitely seeing signs of slowing here too.
Thanks Shannon. I think our markets are experiencing similar dynamics. The stats aren’t exactly the same, but as I’ve watched your visuals through the years it’s clear we’re on the same wavelength.
I am experiencing this with my sellers as well. My latest listing in Manteca( closing soon) had 2 offers and went $10K above asking-sellers were SOOOO disappointed, even though I had prepared them for this. They had expectations of $40K above( not based on market stats I showed them for sure) but when I showed them your blog from last week, it made sense to them! Thanks for sharing what you know!
Thank you for sharing Karen. I appreciate it so much. I get it when sellers feel this way, but it’s really important for sellers to understand temperature changes. So critical. Congrats on closing the deal.
Great analogy. I recently described the Sacramento Market as having been almost too hot to handle unless you have a specialized tool (aka $$) and now has cooled enough to handle with care. It seems there are more price reductions than I’ve seen in quite awhile, fewer offers per listing and longer DOM. That’s what I’m seeing.
Oh, I dig it. Thanks Alice. I appreciate hearing what you are seeing. I’m hearing very similar feedback from others (and that’s what the stats are saying to me also).