Do you ever feel like it’s going to be a good week? I’m definitely feeling that way as I finally got rid of a nagging cold that wouldn’t go away. I tested negative multiple times, so this really was a cold. But besides that, season four of Ozark is coming out on Friday, so I’m doing the happy dance. Anyway, here are a few things on my mind.
January public speaking gigs:
- January 19: PCAR WCR
- January 25: Residential Round-up 2022 (free)
FOUR THINGS ON MY MIND:
1) She became a meme: I was watching the 49ers and Cowboys play on Sunday and I knew right away this woman became a meme. In fact, during the game I tweeted this. To me this is a perfect expression to sum up buyers feeling exhausted in today’s housing market. Am I right? By the way, this isn’t a statement about the Cowboys, so please keep your hate mail.
2) Housing market temperature in one picture: I saw this picture the other day from Realtor Rico Rivera and I think it captures how competitive the market is right now. As I said last week, we just got done with the most aggressive housing market ever and we’ve started 2022 at a really competitive place. Anyway, real estate agents left their business cards on the kitchen counter and this property ended up having over 30 offers. What advice would you give to buyers about getting an offer accepted in a situation like this? I’d love to hear your take.
Graph of offers: By the way, getting 30 offers is wild, but thankfully it’s not common to have that many. However, it does happen. This visual shows the number of offers for the past 45 days of sales and how each property sold in relation to its original price. What do you see?
NOTE: Real estate friends, I appreciate when you input the correct number of offers in MLS because your data-entry matters for credible stats. My sense is we’re still getting an accurate reading about the overall trend, but I wish there weren’t as many zeros (obviously a sale had at least one offer).
3) Is it more aggressive at the top or bottom? I’ve been asked several times if the market is just as aggressive at higher prices compared to lower prices. What would you conclude by looking at stats? And what has your experience in the trenches shown you?
QUICK TRUTHS:
A) There is more cash at the highest prices.
B) There is more competition at lower prices as shown with more multiple offers and taking less time to sell. By the way, take under $300K with a grain of salt as there isn’t much in that range.
C) The higher the price, the longer it typically takes to sell.
In short, the market is freakishly competitive in EVERY single price range, but it’s technically more competitive at the bottom half of the market. There is more cash at the higher end, but that’s not a new trend because it’s been the case for years when I pull stats.
4) Since the bottom: Okay, last thing. If you wanted to compare the bottom of the market in 2012 with this past year, here’s some fresh stats for you. This is the annual median price each year (not adjusted for inflation).
I hope that was interesting. Thanks for being here.
Questions: What do you think of the meme? Any thoughts on the stats?
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Hey Ryan,
30 offers in January is wild.
I think you’ll find that if a listing is reported with no multiple offers, the offer count field shows up as 0. You could probably code that to fix your graph above.
Thanks Joe. But here’s the thing. I hate assuming this means there was actually one offer. I mean, clearly there was at least one offer for a closed sale. If that’s what everyone is doing on the listing side then I can get behind a reasonable assumption. I’m just not 100% certain here. Moreover, the problem is when I run “no” for multiple offers and do a different search with “0” as the number of multiple offers, the numbers are not the same. For instance, I ran stats for January sales so far and there was a difference of about 100 or so properties. So on some level there is inconsistency here. The idealist in me wishes we would see at least one offer as the default, but most of all I’d just like to see the correct number if that’s reasonable to disclose and enter on the agent side of things. I will say the percentage of multiple offers has been a really solid trend through the years as the percentage I’ve extracted has lined up extremely well with other stats. So I feel confident about that. I’m just not as confident about the actual number of offers listed because of the discrepancy here.
Ryan, could the 0 for multiple offer’s be the ones that listing agents chose to not disclose( which makes me wonder why not)?
I’m not certain how that works, though as a side note I was told the not disclose category is going to go away. I’d like to see the default be one offer when an agent selects “no” on multiple offers. That seems very logical. I suspect the zero is like Nathan and Joe said above (probably one offer). But there are likely some agents not filling things out either. I always tell agents it actually helps appraisers though when stats are accurate – no matter what they are.
I am highly suspicious of the undisclosed comps where the listing agent double ended it AND it sold for 91% of list.
Yeah, for me I want to see as much context and transparency as possible. I suspect there are reasons why agents don’t want to disclose. Though I imagine in many cases it’s simply there weren’t multiple offers. It’s not a hill to die on, but I’m okay if this field goes away because I don’t think it adds much value. AND I’m interested in extracting information about multiple offers to help tell the story of the market. I just want the best information possible.
Wish we had stats on offers in our market. Looking forward to a good year for real estate.
Hopefully that’ll happen one of these days. And hopefully our paths can cross this year too. It’s been too long. Hope you’re well Gary.
Ozark the TV series has NO interest for me.
I lived in Arkansas for 20 of the longest months of my life. It was awful, but most of the people were nice if you avoided ANY kind of racial issues and said you were not interested in visiting their church.
Racism was mixed into the water – part of their identity.
I cannot speak to real life, but the show is so good. Haha. It’s not for everyone and certainly not kid-friendly due to content. All I’m saying is any show with drug lords and money laundering is probably worth a stab. 🙂
Hi Ryan!
It’s always great to see your newsletter! I wonder how YOU do it? How do appraisers bring in the values of these homes that seem to go far beyond the values that can be found?
I’m Happy they do!!! But, I know that I am having challenges pricing listings and I tend to weigh on the side of “pushing” the price in this market…
Hi Patricia. It’s magic. That’s what it is… 🙂 Realistically appraisers have a difficult job right now. Where is the market in the midst of the sales and everything we’re seeing with pendings and listings?
The truth is sales represent the market from the past. They are like historical artifacts that likely tell us what the market used to be like 30-90 days ago when they got into contract. How has the market changed since these properties got into contract? That’s always the question. It’s never about when sales closed escrow because the sales price was likely established 30-60 days prior. Thus it’s always about gauging the change in the market from the time the price was actually established and now.
I will say weighing demand is not easy though and this is where appraisers need to be skillful (not inventive or magical). When a market is rising in price appraisers simply need to recognize that and apply market-based adjustments to the comps to account for the way the market has changed recently. Frankly this year at times I’ve given some of the largest adjustments for market conditions than ever before.
The goal of appraisers is never to push, but to reflect what is happening. Here we are poised to see an aggressive spring season, so we’ll see how appraisers do.
Hello Ryan,
I just saw you on Instagram from my awesome Realtor Allison Warren!
I am a very analytical person, so what I say on here may come across as insulting to the Appraiser Profession and that is not my intent; I just feel like these gaps are always missing in the value.
I find “The Market” to be a very obscure concept and seriously doubt any Appraiser is truly capable weighing out a value of something without first getting Quotes from the Termite Inspection, Roof Inspection, Plumbing and Electrical. Termite repairs can easily be 20-30K and should be required to be completed, even if it is a “Cash” deal.
To be honest, I find there is way too much emphasis on what people are willing to pay VS’ what the property needs and then nothing is done to improve the property at the sale. “Buyer Credit” does not mean the property is actually repaired or updated.
I feel like Appraisers come and measure (I am being simplistic here) boxes, calculate sq ft, compare other sales transactions and estimate a price. The appraisers value has tremendous power and I feel like the real physical property is ignored and the only thing that matters is what people will pay, even if the physical property needs 100K worth of work. I am not talking about painting a wall!
I saw this happen to a duplex across the street from me and I think the new Landlord and the Tenants got taken advantage of meanwhile the Seller, who only had the property for 2 years (acquired the property by writing an untruthful letter to the old man who owned it for 40 years by saying he was going to move in when in-fact it was “For Rent” the day after it closed!) walks away with about 200K in his pocket! I am not against the Seller making the money although his dishonesty should be called out but it is “Legal” in CA”. The Seller did not fix a serious Termite Problem, Replace the Single Pane Windows from the 70’s, fix the Underground Sewer Leak and truly remodel the kitchen from the 70’s!
I think this Market really makes me
feel like a complete idiot for clearly I do not know a thing about it and yet I am fairly educated and try to be honest with people. Why can’t people have a little more compassion for the next person who will actually live in the house instead of focusing so much on their self gains? I am pretty sure the Seller could have walked away with 100K and the new Owner, Renter or Occupant would have a nice place to live in?
~ Phillip Miller, A Silly Consumer who Thinks People Still Care! ?
Hey Phillip. Thanks for the commentary and there is no offense taken. Appraisers absolutely need to account for what is actually there and there is always going to be a reasonable range of value too. With that said, to be fair, buyers often buy stuff with lots of deferred maintenance and they are willing to accept what is there regardless of the cost of replacement. Right or wrong. There is a danger in real estate where emotions are high and decisions are made that are sometimes regretted later. I see this happen with first-time buyers especially where they buy a house that is technically acceptable to lending standards (so the appraiser did his or her job), but where is the money going to come from for a new roof in two years after the two-year roof certification expires? Or if you buy a house with an HVAC near the end of its life, how is that going to be replaced in coming years?
The cost to replace some of these things can be very expensive, but let’s be real. The full cost of these things don’t often translate dollar for dollar in the resale market unless they need to be replaced immediately. So naturally there isn’t going to be a dollar for dollar reduction just because something is older. I get your critique regarding condition and there is certainly validity in some cases – especially if appraisers are ignoring things. But it’s important to recognize the market isn’t going to always deduct the full cost of replacement for older stuff OR add the full cost to value for something newer. It’s like a sewer pipe I replaced last year for $14K. I only wish the market would absorb that cost, but I’m pretty sure buyers would pay practically nothing for that expensive feature because they expect for a sewer pipe to be present and working.
I wrote a bit about dollar for dollar here in case it’s of interest. I know I have some other posts floating around on the subject too. https://sacramentoappraisalblog.com/2018/05/02/the-myth-of-dollar-for-dollar-in-real-estate/
I find this dollar for dollar issue shows up quite a bit with big ticket items where a seller might have spent good money replacing something. The seller often expects the full cost, but the irony here is the buyer isn’t even willing to pay the full cost in the resale market for the brand new item. So even the buyer expects a discount and doesn’t recognize dollar for dollar in value (in so many cases). I’m not trying to minimize your critique, but I only wanted to mention there is a real dynamic at play here where buyers, especially in a lopsided market, are willing to gloss over some issues. Right or wrong.
People do still care. It’s just very unfortunate to have a market this lopsided because it puts buyers in a really difficult spot. The market has been an ultra sellers’ market and it’s just too lopsided. I feel for you and if you have any questions, please reach out. I’m around if needed (not for hire though as your lender will choose the appraiser if there is going to be an appraisal).
Best wishes. Hand in there. Stay hopeful.
Great response and info as usual Ryan, thanks!
Thanks so much Michael.
Thank you, Ryan! Great answer as always!
You are so welcome. Keep the questions coming. It keeps me on my toes. And I appreciate hearing what you are seeing out there in the trenches.
I think the challenge you are encountering with so many sales reported with “zero” for the Numbers of Offers field is that it is actually zero multiple offers, so just the one offer.
The listing Status Information tab in the MLS allows us to select from the drop down of Multiple Offers as either Yes or No. Most agents select No for Multiple Offers if we only had one offer. There is no additional entry field for 1 offer.
If we select Yes for Multiple Offers, we are then prompted to enter how many offers we received. Apparently from your chart, some agents are selecting Yes for Multiple Offers and then entering that they only received 1 offer, thus the five sales indicating just one offer in your graph.
The real issue is that the MLS reports have the Number of Offers column either mislabeled and it should say Number of Multiple Offers or better yet, if the property had No selected for Multiple Offers then it should make the assumption of 1 offer.
This is helpful. Thank you Nathan. I guess I’d like the default to be one offer regardless of which box is checked. That would help promote clarity and accuracy. I can actually export these fields to analyze trends and I’ve stopped exporting the number of offers because I’m not as confident about that one. I believe you are right that most are really representing one offer.
I love this meme! That is how I feel as my buyer’s agent. I have to ask my clients when they are so excited about a house, “Can your offer be all cash? Are you prepared to remove or significantly shorten all contingencies? Offer over asking?” Because you have to if you want to win.
At the same time, there are houses that are not selling. But my buyers don’t want those houses!
(eye roll)
Just keep swimming and staying positive.
Thank you Charlotte. I appreciate hearing. Buyers today have really high standards, which is a good thing. But it’s also a struggle at times because anything that is pristine and upgraded is going to have more competition.
Seattle market — I do primarily appraisal reviews and most sales have multiple offers. Haven’t seen 30 offers, but 5-10 is common. Many are selling 15-20% above original list whether in the $700-800K area or the $1.5-2 million neighborhood, but I am seeing more appraisals for less than the contract price. And on follow-up research after closing, the sale recorded at the contract price, but the LTV is 65-80%. It is still a very aggressive market.
Thank you for sharing Barry. 15-20% above list is massive. In my area that’s a pretty small percentage of the market, but up to 10% is a big chunk. Technically only just over 1% of sales closed as much as 15% or more of the contract price in December. Yet about 33% of sales sold within 5% above and about 20% of sales sold 5-15% above. Anyway, I just wanted to compare notes. Regardless of the numbers, you are 100% correct. It is still quite aggressive. The stats are nowhere near normal. There are definitely some people who predicted the market to start tanking, but that is absolutely not the market we have for the time being. It’s on steroids…. still.
Great post Ryan! Being from the Dallas area and I long time Cowboys fan, if someone had a camera on me during the game, I might have become a meme too! Thanks for sharing your thoughts and stats. Always great! I’m also looking forward to Ozark Season 4!
Yeah, that was a heartbreaking loss. There were a few shots of people looking just like this woman, though she had the best expression. Hope you’re well. Thanks as always for pitching in.
Ryan, your MLS seems to have more metrics for agents to input such as the number of offers a listing had before it sold. Our MLS does not have this option but I wish it did. Ultimately the more information the MLS offers for the agent to input the more we can learn about the market.
It seems like most MLS systems don’t have this feature. Then again maybe there is a feature but nobody is exporting data too. In 2016 our MLS added a multiple offers field and I’m really grateful. Like you said, the more information, the better.