I have two things on my mind today. Scott Peterson’s house hit the market. And price growth has been raging so far in 2022. Let’s talk about this.
Think Like an Appraiser Class: I’m teaching my favorite class on April 28 from 9am-12pm. We’ll talk through choosing comps, making adjustments, and lots of practical scenarios. Hope to see you there.
SCOTT PETERSON’S HOUSE IS ON THE MARKET
Last week Scott Peterson‘s old house listed for sale again, and it’s always a wonder how a house with a history might be perceived. If you don’t remember, about twenty years ago Mr. Peterson was charged with killing his wife and unborn child. The disappearance of Laci Peterson was national news.
History of sales: This property was purchased by Scott and Laci in 2000, sold toward the top of the market in 2005, sold as a foreclosure in 2007, and then sold as a short sale in 2013.
Price position: My observation is this house has had a fairly similar price position through the years despite the history. Right now, the property is listed for sale at $459,888, which is an extremely aggressive price point in Modesto. In fact, last month on average, properties between $400,000 and $500,000 sold 4.5% above their original list price. In short, this house isn’t going to be for everyone, but a house with some history or baggage doesn’t always automatically sell for a discount either. I wrote fame and real estate a few years back. Would you buy this house? Why or why not?
I shared some thoughts about this property with CBS 13 a few days ago.
RAPID PRICE GROWTH IN 2022:
Switching gears, we’ve seen explosive price growth so far in 2022. It’s been like a slap in the face to buyers (sorry, an Oscars reference). Seriously though, despite mortgage rate increases, the market has been moving really fast. A better way to put it would be to say BECAUSE of rate increases, buyers have been running to the market. Stay tuned for an exhaustive market update out next week. I’ll definitely talk more then about market temperature (something that is always changing).
Massive growth in our eleventh year: Look at the growth between January and March. This is our eleventh year of price growth, and we’ve seen really strong growth despite prices already being so high. In terms of the dollar amount, this was a record-breaking two-month stretch to see the median price up about $60,000 in the region from January to March. The percentage growth was also stunning. The market was legitimately slowing down through 2019, so had the trend persisted, it’s likely we would have been talking about 5% growth so far this year instead of just over 10%.
Be careful: This does NOT mean every house is worth 10% more since January. It would be a massive mistake to arbitrarily apply this regional metric to your house. My advice? Be infatuated with neighborhood comps instead of county or regional price metrics. In other words, price reasonably according to the comps – NOT price metrics like these. Keep in mind, not all zip codes and counties have risen by the same amount either. For instance, Sacramento County’s median is up 7.1% ($37,000) since January.
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.
Questions: Would you buy Scott Peterson’s old house? Why or why not? What do you think of the price growth we’ve been seeing lately?
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Hey Ryan,
Crazy numbers for the region. Will be interesting to see when interest rate increases put a damper on appreciation and market activity.
I wouldn’t buy the Peterson home because we’re still talking about it. I wouldn’t want the hassle of discussing it for the rest of my life.
Indeed. Let’s keep watching, Joe. There is so much to talk about. The market is profoundly lopsided, and it would be so good to see a more healthy level of growth. I hear you on the house. I would feel similar. I would want to know how many selfies and photos happen too. That would be important for me. I recall Brandon Turner of Bigger Pockets who purchased a duplex where Kurt Cobain was born. Now that would be cool. I would turn one side into an Airbnb with a Nirvana theme… But that’s a different example of fame.
I like your term “profoundly lopsided.” Very descriptive.
On the flip side of your Kurt Cobain example, I wouldn’t want to own the house where Cobain OD’d.
I actually drove by that house when taking the family to Seattle a number of years back. It’s a cool place with a small park next door. But yeah, there is a major history here. The park bench had Nirvana songs written on it. I remember seeing, “Come as you are.”
CAN YOU POST/SEND ME THE SAME GRAPHS ON THE HIGHER PRICE RANGE, SPECIFICLY $650K-$1.5k, OR THAT RANGE.
Hi Charllis. If I’m ever hired full-time to crunch numbers, then absolutely. For now, that’s not possible. Here is a tool from Altos Research though to maybe parse the market. There is a little check box where you can segment by prices and look at things like price reductions, inventory, days on market, etc… I don’t know that they actually show closed sales though. Anyway, maybe poke around there to see if you find anything interesting. https://altos.re/r/4f2bdd89-3d00-44f2-aed1-bf6f9d033b45?data=price_decreased_percent&segments=true
Also, here is a Redfin tool to help poke around with some of the metrics. I suggest searching by MSA (Sacramento). https://www.redfin.com/news/data-center/
Hello. Thanks again for the fabulous insight. Is your ‘how to think like an appraiser’ class available to take remotely? The registration fee is very reasonable, and I’d love to tune in.
Hi Elizabeth. Thanks for the kind words. The class unfortunately is only in-person. I’ve been hesitant to do this one remote because of the length (three hours). My sense is it’s just too long, though I could be wrong on that. For now I plan to keep this live. But backing up, I’m not sure if the facility has capabilities of remote broadcasting though anyway.
When Will Smith’s house comes on the market, will there be an open house for all to see? I know Will would take an offer from Chris Rock very seriously, but would he take same offer from The Rock just as seriously? I bet not.
And that’s the big question, Gary. Haha.
I can see the flowery listing for Wills beach house. Come and unwind at this tranquil oasis amidst the chaos of LA. Fall asleep to to the gentle sound of waves slapping against the rocks.
It’s going to take a bit for Will Smith to live this down.
I seriously think Realtors should not be paid on commission. There’s too much incentive to give bad advice about price when higher prices benefit their own pocket.
At the very least, given the market today, commission percentages should be lowered. That would give sellers & buyers more room to reasonably negotiate price.
Thanks Linda. I guess we would have to ask whether the commission is what drives the market, and if a commission at x% or y% would make a meaningful difference in the negotiation. Keep in mind, in a downward market, Realtors are able to get the price down. It’s just today’s market has been far too lopsided. It’s been unreal to have over 12 months in a row of properties selling above their asking price on average. This does not happen ever (besides this past year). I worry about unhealthy dynamics of paying over asking, waiving contingencies, waiving appraisals, etc…
Ryan: Do you have a values breakdown for the homes that have sold with financing (rather than cash sales) ? Anything would be an enlightenment !!.
Hi Truett. I do. Thanks for asking. Here’s the latest in the region. I actually pushed out some stats a few days ago to recap the first quarter. I’ll post some visuals next week most likely.
Q1 2022: Sacramento Region (Sac, Placer, Yolo, El Dorado)
– Conventional (70.4%)
– FHA (8.1%)
– VA (3.9%)
– Cash (15.2%)
– Other (2.4%)
Great post, Ryan. In this market, I wouldn’t think the past history of the Peterson house would have any effect on its saleability, however, I could be wrong. This goes to show you that whatever defects a property has, whether it be property specific or location-specific, are relative to the type of market we are in. If people had more choices they may think twice about the defect and how it might impact their lives but with inventory being so slim now it may not even matter to most people.
I just checked and this property went pending in only six days with multiple offers. MLS states there were 11 offers. This is what I thought would happen. Sometimes people think stigma is going to show up everywhere, but like I said, this property has actually had a very similar price position for years (even the first time it sold after the murder).