Finally. Buyers are gaining power. And sellers are losing it. I have some new visuals to show what the market is doing right now. These are for Sacramento, but I suspect many areas look similar.
UPCOMING (PUBLIC) SPEAKING GIGS:
7/20/22 Beer & Stats at Out of Bounds (sign up (for real estate agents))
7/26/22 Navigating the Shift (sign up here (for real estate community))
8/11/22 Realtist meeting (details TBD)
8/15/22 YouTube Live with Matt Gouge (details TBD)
8/25/22 State of Housing Brunch & Learn (sign up (for real estate community))
Three ways we are seeing a power exchange:
1) MORE BUYERS ARE GETTING INTO CONTRACT BELOW LIST
It’s been rare to get into contract below the asking price, but we’re finally starting to see that change. Buyers can now actually get an offer accepted and take more time to shop too. Sellers would be wise to recognize buyers are pickier about getting into contract (and staying in contract). The black line represents 2022, and there has been a sharp shift away from the insanity of last year. These stats are technically looking normal at the moment, but let’s not ignore abnormal things (dropping volume).
Figuring out normal: The red line in visuals below is the pre-pandemic average so we can compare today with then. The goal is to create a benchmark to show what “normal” looked like before things got crazy.
2) BIDDING WARS ARE LESS COMMON
There are fewer bidding wars. You don’t have to offer your firstborn child to the seller. And you probably don’t need to waive all your contingencies. These visuals show a sharp transition downward where we are seeing fewer properties sell above the original list price.
Big Point: It’s important to recognize nearly 40% of sales in July (so far) have sold above the original list price. The narrative is that “everything is selling for a discount way below the asking price.” I get it. And I’m not sugarcoating here. I’m just saying every escrow is NOT experiencing the same exact trend.
3) HOMES DON’T SELL AT THE LIST PRICE VERY OFTEN
We’re seeing more homes sell at their original asking price. I mean, the number is only around 12% of sales, but it’s on the rise. Here’s the massive takeaway though. Nearly 85% of homes regularly do NOT sell at the exact list price. This tells us it is normal in real estate to negotiate up or down, or even reduce the price if needed. In other words, the list price is NOT holy and irreversible. Sellers, did you hear that? Don’t get stuck on the list price.
IF YOU HATED THE GRAPHS, YOU MIGHT LIKE THIS INSTEAD
If you’re offended over line graphs, here’s a table instead. I find some people love line graphs and others resonate with tables. Pick your poison.
ON THE NEWS: I shared some thoughts with four news stations this week on the state of the market. Busy week. Here are two of the pieces. 1) Real estate reality check: ‘The honeymoon is over’ says California housing analyst 2) Red-hot Sacramento housing market shows signs of slowing
SPEAKING: I have lots of speaking gigs coming up. Most of them are private events in offices or bigger venues for real estate professionals. Hopefully something will happen soon where I can invite the public. Here’s an image from last Friday’s event. Anyway, if you’re looking for a speaker, hit me up. I do charge for market updates because of the time involved, and I love interacting with groups of all sizes on Zoom and in person. No pressure at all.
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. I truly appreciate it.
Questions: What are you seeing happen with properties right now? Selling above or below list price? I’d love to hear your take.
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Hey Ryan, smart leap to look at how many homes sell for original list. That’s much lower than I expect is normal and lower than I expected today.
I’m seeing the same trends west of the river.
Thanks so much Joe. I’m really excited about these visuals. I hope they resonate. I’d never looked at how many have sold at the original list too, so this was a good exercise for me. Let’s keep comparing notes.
Sounds good.
OMG! Such incredibly helpful charts for someone like me who is looking to be a first time buyer this winter season and is trying to observe market trends. As of today a lot of houses are still out of reach but by September when the “% sold below original list price” dips from Sept-March I might, MIGHT see a window of hope for my family. Maybe by then Sacramento will be back to average sales stats similar to 2019. Accommodating for these huge interest rate hikes. Even though houses have seen major appreciation in the last 2 years. Wish us luck! I can’t tell you how helpful these stat updates are for my family and deciding if it is safe for us to enter the market.
Putting feelers out to get pre-approval advice.
Thanks Kayla. I just introduced these stats today, so I’m really hoping they resonate. If you end up having any pointed questions, let me know. Smart move to get pre-approved also so you know what affordability specifically looks like for you and your household. I’ll keep sharing stats and any changes happening in the market. I’m around as needed. Best wishes.
Incredible information here as always, Ryan.
Happy to help when you feel comfortable to begin your search, Kayla.
I’m betting that this winter we will see some real power for buyers, but as always, we have to wait and see. If I was a buyer who was not also selling a house, I would continue to wait. If I had a house to sell before I could buy another, then it doesn’t really matter, just buy and sell in the same market.
Agreed. We need time to fully understand the trend and see how the future unfolds. For now buyers are poised to gain power during the fall, but if something unforeseen happens to interrupt the trend, then that changes things. And yeah, not everyone has the same story. I was just talking with someone today about this. Some buyers are waiting, some are engaging, some are nervous, some are excited, some need to get into contract right away for a host of reasons…
Hi Ryan, hope all is well with you and your family. I am glad prices are going down. My crude guess is that all the trillions of liquidity poured into the economy sloshed into stock buy-backs and real estate. I also think there will be a price to pay for our society. I spoke to a woman in her early 30s the other day. She despaired about having or adopting a child because she and her husband, though both professionals, could not afford more than a one bedroom apartment. I know that to some people, the real estate market is just a game. But for a great many Americans, especially young folks, real estate determines the quality and possibilities of their lives. I hope we find a sustainable normal where the real estate market becomes bland again. Best, Ricardo
Thanks Ricardo. Having more balance sure would be nice. We tend to not have bland in California. It seems like we have extremes.
I’m a residential real estate appraiser in central NC. I’m only recently “really” reading and considering the implications” of your articles. And I am very impressed by your charts. In your 09-20-2022 changing-markets article, I was particularly interested in the Avg Price and Avg Sq Footage chart. I know you are the guru of charts. I am curious about the methods by which you gather the data and how to display it. I know you often reference Redfin, and their articles and charts are outstanding too. Still, as far as North Carolina goes, they focus on Raleigh and Charlotte, and my market area is the Winston Salem area. I’m 70 miles from Charlotte and 100 miles from Raleigh. Do you offer any classes or have any suggestions?
Hi Don. Thanks for the kind words. I really appreciate you reaching out too. As far as that chart, it’s a matter of comparing the average sales price and the average square footage, and once a month I simply collect those metrics and then put them into a spreadsheet to make this visual. There is very likely a way you can get many years worth of data at one time by exporting lots of information from MLS, but I happen to collect this every month, so it’s a matter of simple input once a month. This can be done manually by exporting all MLS sales into an Excel file or it can also be done through MLS itself in my area through use of a statistics tab. But this is basically a bar chart for the average price, and then I added a secondary axis (line) for the average square footage.
I don’t have classes, but I do have suggestions for how to start tracking some stats – whether that’s for personal use or sharing online. I’m a massive fan of paying attention and pushing out data on a consistent basis. I am profoundly curious too, so I’m constantly taking time to explore issues and figure out how to understand and talk about trends. I have some graph tutorials at this link, though I’m not sure if any of those examples would really interest you or not. https://sacramentoappraisalblog.com/graphs/
If you are interested in figuring out how to pull some basic stats in your area and starting reporting on them though, I would love to see you do that. If that’s the case, I suggest starting really simple. Don’t try to hit a home run every time you get up to bat. Otherwise it’s easy to strike out. Just get on base. If that’s where you are at though, at the link above, check out the price chart template (first video (and then come up with something like the second data table I suggest using)). And the very last video at this link is an intro into pulling neighborhood stats. In that video I show how I can pull stats on the neighborhood level, but similar principles can exist for entire zip codes or counties. If there is demand for an updated video, I might do that at some point.
Anyway, I’m rambling. You might have zero interest in sharing stats. There is tremendous value in simply understanding the market personally, and if that’s your interest, that’s awesome too.
Keep me posted with any follow-up. Glad to help where I can.
NO, I appreciate all that you’ve shared and said. I like being able to provide facts to my clients, many of whom are homeowners. And I have taken on a new role; new for me, I am the co-chair for our MLS’s Appraiser-Broker-Lender Forum. The folks have already asked me to take the lead appraiser seat next year. I’ve been asked to join the MLS forum as well. From what I understand, there’s only ever been one appraiser in the MLS’s coveted forum; I’ve pushed for two. On the plus side, I’ve been able to get the MLS to change how it views the “Coming-Soon-No-Show” DOM. Before, the agents would not have to include the CSNS days in their total DOM. I shared and showed how that was wrong (Me, little ole’ Don Schaffer). I told them that the CSNS was a teaser and that while agents might not have been able to show the property, every agent and the potential buyer got to see what it looked like in the MLS photos for up to 14-days ahead of when the listing became showable. Now DOM starts when CSNS starts.
This is awesome Don. Congratulations on being intentional to connect with the real estate community and make a difference. This is great to hear!!