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:
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 ———––
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:
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.
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?
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Good data as always makes me look at my stuff for Agents. Okay to Christmas spirit, first off, I must be a lot older than you. What is a Foo Fighter????, course if they ain’t country or Classic Vinyl Rock from the 60’s and early 70’s then that might be a reason. Second grab your beautiful bride and sit down and watch a Hallmark Xmas TV movie. That will get you going. Oh yea just in case in the end when they kiss it is usually snowing. Since you are in Sacramento snow is the white fluffy cold stuff that falls down from the sky not my head when I take the Stetson off and turns things a pretty shade of white until it starts to melt and then it turns brown and mushy. Okay so have a great Happy Holidays YOUNG MAN. Yak Soon. Off to teach some RE agents my version of what exactly is going on and how they should be dealing with Sellers and Appraisers. Now ain’t that a scary thought. Enjoy my Friend.
Brad, Foo Fighters is a rock band. The drummer from the band Nirvana created this band in the mid-1990s after the lead singer for Nirvana passed away. If that doesn’t sound at all familiar, I’m sorry friend. 🙂
Thanks for the education on snow. Haha. Our version of snow here is leaves. Enjoy the class. Keep up the great work.
2022 will be interesting. It seems that there is so much equity that foreclosures would be a faint possibility regardless of policy. Any homeowner in financial distress should be able to put their home on the market and sell it for a profit within days. That event (and your new whip) look pretty fancy, I am sure you will bring it. Good to see you gettin out to see the Foos-Taylor was a Laguna local way back when. Merry Christmas!
Thanks Mark. Yeah, people really do have options. The level of equity is astounding for many. I wish that was my car. It actually wasn’t my car or my house. 🙂
Love the information as always. I will watch for the news on foreclosures and I’m looking forward to a good start to next year.
Thanks Gary. The news cycle is pretty predictable. I was actually fascinated to really look at bank-owned sales in my area too only to see a spike. There could certainly be other reasons for a Q1 speak nearly every year, but I have to think delaying foreclosure during the holidays plays into it.
Happy Holidays, Ryan. I’m with Brad about watching a Hallmark movie to get in the holiday spirit. While the movies are predictable they are very simple and feel good and you don’t have to strain your brain. Keep up the great work writing about your market and keeping locals informed. I’ll be keeping my I on the foreclosure market.
Thank you Tom. We will definitely watch a few. Tonight we are going to see some friends and that will probably help too. Merry Christmas, friend.
Thx Ryan. Good stuff as always. I share most of your info to my “On The Fence” clients. It helps me show buyers a market crash is not in the cards and sellers to sell for top dollar .
Right on Johnny. I really appreciate that.
Hey Ryan,
So nice to have this data so well laid out, accessible, thank you. Any idea on the Cash purchases breakout? Private party vs. Institutional vs. Upfront Cash companies vs. say an Opendoor
Any idea where this type of breakdown would be available?
Hi Bruce. That’s a great question. It’s been on my radar to break this down, but I just haven’t had the bandwidth to do so. I will say cash percentages did increase these past few quarters and I’m sure part of that has to do with the iBuyer model. The only place a breakdown would be available would be to run the stats manually. This could be very tedious unfortunately.
Thank you for the quick response. Yeah that was my hunch. Tedious you say?
Yeah, tedious I think. Though honestly not that bad. It would be a matter of exporting all cash sales and simply sorting the buyer. It’s really not a big deal to sort Opendoor because they only pay cash and they only buy under one name. The problem is a company like Zillow who is represented by a local brokerage. We have to be careful to not say every cash purchase from this brokerage is Zillow because that might not be true. In short, if there was a way to quickly export the name of the new owner, that would be the easiest way to do it. I’m just not aware of that being possible. I’m open ears if someone knows more though.
Here is a visual to show a bigger context of cash purchases through Q3 2021. There has been an increase of cash lately, but it did seem like cash dipped slightly during the beginning of the pandemic to a somewhat abnormally low level. So part of the increase could be a slight correction to more normal rather than just the iBuyer model. Ultimately we are still seeing pretty low levels of cash when considering the past decade. https://i0.wp.com/sacramentoappraisalblog.com/wp-content/uploads/2021/11/CASH.jpg?w=551
Great information Ryan! It must take you forever to produce all these graphs! Thanks for all you do to educate us!
Happy Holidays!
Thank you DeeDee. I really appreciate you.