The housing market went from steaming to stagnant a few months ago, and now it seems to be slowing down a bit. Now that some time has passed, we’re getting more stats, so let’s crunch some numbers to show what’s happening with sales volume. By the way, I have a free download if you want to make charts like this.
UPCOMING (PUBLIC) SPEAKING GIGS:
9/08/22 SAFE CU “Stats & Mimosas” (sold out)
9/15/22 Market update in Midtown (details TBD)
10/07/22 Market update with SAR (Sign up here – On Zoom)
FREE TEMPLATE DOWNLOAD:
If you like the tables below, click here to download an Excel template to make visuals like this for your area. Just plug in the information from your MLS and the template will do the math for you. I included a longer table and a shorter one. Maybe focus on local cities or ZIP codes, or surrounding counties. Make sure you have enough data to be meaningful. I hope this helps.
A NEW MEME:
Sellers, it’s a much different market today…
SLUMPING SALES VOLUME IS THE BIG TREND:
It’s not a shocker that buyers started to back off the market when mortgage rates shot up earlier in the year. And now that we have a few months of sales under our belt, let’s take a look at actual numbers comparing May to August this year with last year. In short, most areas easily saw 20-30% fewer sales, though the trend isn’t the same everywhere. Keep in mind the numbers can be wonky when there aren’t many sales (so take some areas with a grain of salt).
NOTE: Thank you to those who asked for various areas on my social channels last week. I think I got to mostly everything. I can try to get to a few others in the comments, so don’t be afraid to ask.
SACRAMENTO COUNTY:
PLACER COUNTY:
EL DORADO COUNTY:
YOLO COUNTY:
WE NEED TIME TO SEE THE TREND:
As time goes by it’ll become more apparent how various price ranges and locations are faring in today’s market. But for now, I hope these stats will at least give a small window into demand, and maybe clues about some different price points. Or maybe they’ll prod us to investigate some areas more.
IS THE MARKET STARTING TO LEVEL OFF?
Since June we’ve seen fewer new listings in the Sacramento area, and that seems to be giving a bit of space for buyers and sellers to adjust to change. It’s as if some stats are starting to go slightly more horizontal lately instead of showing the really sharp change we saw from May to June. In other words, a sharp drop isn’t going to show up in the numbers every single month. For instance, the number of pending contracts has been somewhat flat for the past month or so instead of seeing the same steep May to June decline. Granted, we’re still WAY down from last year, but the May to June rate of change didn’t persist in August. Also, price reductions have been somewhat flat over the past few weeks. I mean, half of actives have had a price drop, so clearly, we have an overpriced market. All I’m saying is it looks like we’re starting to see price reduction growth slowing down or leveling off. Ultimately, we need time to see the trend, so let’s keep watching. Keep in mind that not all stats are leveling off. I’m just saying some of them appear to have flattened. And lastly, if rates shoot up in coming weeks, all bets are off because that could change the dynamic…
Let’s keep watching.
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: What stands out to you most? Are you seeing any differences in the market depending on price point or location? I’d love to hear your take.
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It seems to me like the inflation that we were seeing has stalled, not just in the real estate market. Slowing inflation was the goal of the fed, so I’m surprised they are not just going to give the rate hikes more time. Time will tell I guess. Let’s just sit back and enjoy the show. Ryan will have all the stats we need.
Thanks Gary. That is good news. Last month inflation leveled off, and let’s hope it starts to shrink at some point. I think we’d all like to see that happen.
I always like your detailed analysis, stats, and graphs. It appears to me that this may be more of a Regional than a National thing. I talk with several appraisers across the country on a weekly basis and have found that the highest declines have been within 100-150 miles of the East and West coasts as well as in the larger metro areas of Texas and considerably less in fly over country. In my area of East Central GA, the market has slowed but I still receive 12-20 requests or requests for bids every DAY (this does not include the 4-5 VA appraisals every week-Down from 10/week prior to April). I was on an appraiser panel at the local Realtors Association last week and agents were telling me that the Hard Stop for buyers appears to be interest rates above 5.5-6%…..and we may get there or higher by November in my opinion.
Pierce Blitch, III, RAA, IFAS, ASA
Thanks Pierce. Yeah, I cannot speak for all markets. I’m really talking about the Sacramento market here in this post. Technically “national” volume has taken a hit to sales volume, which supports the idea of many markets experiencing this dynamic. The trend is likely somewhat different everywhere. My sense is Sacramento has been making lists with some other markets around the country with lots of price reductions (Boise, Phoenix, etc…) Let’s keep watching and comparing notes.
For any onlookers, if you want to see what volume is doing in your market, here is a link to Redfin’s data center. You can search by county or metro area, and I might suggest looking through some of the categories – especially pending contracts and volume. This doesn’t have every area of the country, but there are many locations. https://www.redfin.com/news/data-center/
Hi Ryan. Thanks for the report and stats. Can you explain what is happening in Wilton and Galt? As Sac, El Dorado and Placer got hammered with declining sales these two rural areas weathered the storm quite well for this short time period. I live near these areas in Rancho Murieta and have some thoughts but was curious on your take.
Thanks
Hi Brad. There really aren’t many sales in Wilton, so we have to take that with a grain of salt. But it’s an area lots of people are targeting, so it’s possible demand is still strong. Wanting more space is still a big deal. When looking at El Dorado County, Camino actually had a similar dynamic with more sales this year (very uncommon to see in today’s climate). Pollock Pines was also really strong, which maybe speaks to people wanting space and acreage still despite fire insurance costs. I’d have to dig into Galt. Other than being a more affordable location compared to Elk Grove, I’m not 100% settled on an answer here. I don’t recall doing an appraisal there over the past few months, so I’m less acquainted with the market at the moment. What are your thoughts?
Camino and Pollock Pines do not make sense to me due to the fire hazard and being right off Hwy 50. Wilton and Galt make sense imo because you get more bang for your buck with space and you do not have to deal with PG&E. Also, these areas are considerably more “quiet” and do not have one or combo of more concentrated populations, homelessness, crime and traffic unlike many of the areas in these 3 counties..
Thanks Brad. Yeah, a sense of having space and more land has been a big theme over the past coupe of years. I’ll pull these stats at the end of the year maybe so we can have more context. I’m anxious to keep watching various price ranges and neighborhoods.
Good info, Ryan. Stats, as you know, are a result of last months supply, demand, and psychos of all sellers and buyers [and their agents, appraisers and lenders]. Psychology seems to lead the supply and demand changes. It’s always next month that will show this month’s changes in mindset. I got 2 buyers into escrow in August. They went a little low and may get more (due to condition). 1 seller/investor decided to continue renting (feels he missed “the high”). Another seller is being perplexed by the market.
Thanks Jay. Yep, you are right about that. Sales are always a bit crusty when it comes to the market. The best trend is going to be seen in the trenches of listings. I’m a big fan of trying to discern the psyche of buyers these days too. I think your comment underscores that there are lots of different stories right now. By the way, here’s an image from John Burns RE Consulting on deciding to rent instead of sell. I think we’ve seen a bit of that, but so far I haven’t heard of any major trend. https://twitter.com/RickPalaciosJr/status/1564292314679259136
Working on getting my pre-approval now (as a buyer) I think the hard stop is the interests rates. I am relieved that people are not bidding $10-20k over asking, there might actually be room for me now. I held out during the pandemic frenzy and kept saving for a bigger down payment. Now that sales have cooled down I might get in, in my price range but now I can afford less house for the overall list price because the interest rates just tacked on several hundred $$$ to my mortgage. And my budget did not increase- I repeat, interest rates went up.. the budgets/incomes did not!
Thanks Kayla. Yeah, this is a massive deal to have a wider gap between income and prices. The dynamic out there really has shifted. Preliminary stats for August are interesting as about 60% of sales sold below the original list price. This is a bit higher than normal, but it also speaks to so many properties being overpriced. Some of the stats are going to get weird in coming time, so I’ll be talking through how to interpret them, but the trend is simple. Buyers having been gaining power, they’re getting more credits, and they’re getting more used to paying above the list price. Granted, not everything is selling below. I’m just saying exactly what you are. Buyers have gained more power lately, and hopefully there is a better chance of making the numbers work. Good luck and let me know if you have any questions.
Thank god I learned how to do polynomial graphs.
What does that mean? I wasn’t sure how to take this, but I’m stoked for your skills. On a side note, I really love tables like this because people like to interact with actual numbers. And it’s easy to read. I think these are busy of course, but they are golden for conversation. I’ve found over the years that tables tend to work best to help stimulate conversation.
Great post as usual Ryan! Good to see the information about Galt and Wilton since that’s what we were feeling . . . not exactly in sync with everywhere else but still not “business as usual” (what is that anymore, right?). I’ll anxiously await further information for those areas, along with all the other valuable stats and insights.
Thanks Melissa. This is exactly why it’s so important to consider that the market isn’t going to be the same in every location. I have an upcoming appraisal for a lawyer in Galt, and I can’t wait to dig in more when that happens. I’ll let you know if I see anything interesting. I’ll also likely follow up on a post like this when the year ends so we can look at a bigger set of data. Please keep me posted with anything you’re seeing. But back to Galt, I see days on market has increased, the SP/OLP% has declined, and the months of supply is up. So it’s not like there hasn’t been an effect. Hmm…
Love the meme…you’re always so clever! Always appreciate the information you provide. Thanks!
Thanks Janet. I’m always trying to keep it fun. This is how my mind works. Hope you are well. Thanks for your encouragement.
Hi Ryan, couple of things, did you see the Blackrock announcement that they had acquired $30B in funding to buy homes (I heard this on National Real Estate Post). That was a scary thought as that could be 75,000 homes nationwide if you look at the higher avg price and divide it into $30B. Then they said, never mind we aren’t going to move forward. So, either they are a little crazy or their crystal ball is saying that things maybe heading a little bit lower.
Now that said how is this for interesting.
city of Murrieta, # of active listings 2020 (207), 2021 (223) and 2022 (347). up 55%. other cities down my way the same thing. The custom homes are also feeling the impact as I have seen custom home markets on acreage with over 65% red arrows, showing the listings have been dropped and dropped significantly 10 to 30% in some cases. So, I think Fed Powell is getting his wish. Just hope he doesn’t drive this car to fast over the cliff……… Thanks for your stats and making me think about my neck of the woods and how to show what is going on down south. Best Regards My Friend.
Hi Brad. Thanks for the commentary. I didn’t see the Blackrock news, but I did see news break last week about Blackstone pulling out of 38 markets across the country. To be fair though, it’s said these markets represent about 5% of their residential real estate activity, so they are still active. I’ll have to look into the other story. In light of uncertainty, I get the hesitation by both big and small players.
Thanks for the stats too. It sounds very similar to the dynamic here, though our percentages are even higher. But the x-factor here is a drop in the number of sales happening. It’s not that sellers have started to list more. It’s that buyers have stepped back. In other words, it’s supply created by weaker demand.
It’s been a wild ride. The housing market does feel like a sacrifice on the Fed alter right now.
Great stats as always Ryan. I use them all the time when talking with clients. Interesting out the outlying areas like Somerset and Grizzly Flat have the highest numbers for decrease in sales and then there is Rocklin, go figure. I think the outlying areas always get hit the hardest, when times are good people think yes I want to live in the country but when times are tough and with the cost of fire insurance it makes it extra hard or the sellers have to be open to a reasonable price to make up for the cost of insurance and gas.
Thanks Kathi. I know, Rocklin was a bit surprising. It’s understandable to see a huge percentage when we are talking about 20-50 sales, but Rocklin has lots of sales. It’s going to be interesting to keep gauging the stats and looking to where the market goes in terms of seeing which sellers are selling and which buyers are buying. From preliminary stats, there are stronger volume numbers in areas with lower prices that first-time buyers often target too. But that’s generally speaking. Land Park numbers were also really strong. And places like Camino and Wilton were basically on par with last year.
Hey Ryan, i noticed for the elk grove area you had 95624 and 95757 zip codes but not 95758. is there data you can provide for that zip code as well? thanks
Hey there. 95758 had 34% fewer sales this year compared to last year (May to September 6th for each respective year). There were essentially about 100 fewer sales this year compared to last year at the same time.