It’s a bump. Do you feel it? The housing market has been waking up in 2023, and we’re starting to see an uptick in lots of different stats. Let’s talk about it. This post is designed to skim quickly or digest slowly.
UPCOMING (PUBLIC) SPEAKING GIGS:
3/10/23 PCAR Market Update Lunch & Learn
3/24/23 How to Think Like an Appraiser (at SAR)
3/28/23 Downtown Regional MLS meeting
4/1/23 NAA Conference in Sacramento
4/13/23 Realtist Meeting
5/4/23 Event with UWL TBA
A SPRING BUMP IS UPON US
It’s normal to see more attention on the housing market in the spring – even during a downward year. I have lots of price recap images to share below, but check out these two (weekly and monthly). Not every local county looks like this, but the region did show a price bump from January to February.
BUT NOW RATES ARE 7%
Lots of stats from February reflect properties that got into contract in January when rates were 6%. Thus, the real tell for the spring trend will be stats ahead over the next two months that show what 7% rates do to the market.
DOOM VS ROSY
These days many people embrace either a housing doom narrative or a rosy one, but let’s try to let the stats form our understanding instead of imposing one big idea on the market. Ultimately, housing stats are like life. Not everything fits into one neat little box or ideology. Moreover, markets are often a mixture of lots of different trends, so not everything is going to be totally dark or glowing.
HOT POCKET VIBES
Sales volume is ticking up right now for the spring, but it’s also subdued from a normal level. This is why I’m describing the market as heating up for the spring, but still frozen (like a hot pocket taken out of the microwave too early).
MISSING 40% OF BUYERS STILL
Over the past 90 days, there were about 2,200 fewer sales compared to last year and even the pre-pandemic normal. The truth is we’ve seen some of the worst volume on record lately. It’s no joke. Let’s not forget over 3,300 sales closed though. I think sometimes the part of the market that is happening gets lost or ignored in the midst of sensational stats.
GET READY FOR SUPER SENSATIONAL STATS
Some of the stats look bonkers right now. Days on market was freakishly low last year, and now it’s basically a bit above the normal trend, which ends up creating a sensational comparison. I can picture it now, “Dude, the median days on market grew by 428%.” Okay, technically true, but very sensational.
IT’S GETTING TIGHT (ESPECIALLY AT THE BOTTOM HALF)
In January and February there were about 2,000 fewer new listings compared to last year (and 2,500 from the pre-pandemic normal). In short, the market is starting to feel tight because we’ve seen sellers sitting out to a greater extent these past few months. Here’s a look at listings and sales to give some clues into what competition feels like at various price ranges. It’s true that we don’t need a huge amount of supply to see the market decline, but having anemic new listings certainly makes things more competitive. Imagine what the market would feel like right now with 2,000 more active listings…
MULTIPLE OFFERS ARE GROWING
It’s not a shocker to see more multiple offers in both recent sales and current pendings. It’s still nowhere close to the same level of competition in early 2022 though. Do you see that uptick lately? That’s what early spring should look like. Remember, it’s normal to see multiple offers, but not normal to see the freakish levels from 2021 and 2022.
BUYERS ARE GETTING CONCESSIONS:
49% of transactions in Sacramento County last month had some form of a concession to the buyer (credit for repairs, credit for closing costs, rate buydowns, etc…). Placer County was more like 43%. This is good news for buyers, and it also speaks to sellers doing a better job listening.
DON’T GET CARRIED AWAY WITH A HOT NARRATIVE:
There are many metrics that show the market is heating up for the spring, but the trend right now is nothing like 2021 or 2022. In short, whenever someone says, “It’s 2021 all over again,” a puppy dies. Okay, that’s probably not true, but all I’m saying is statistically speaking it’s not 2021.
BUT SERIOUSLY, PROPERTIES ARE STARTING TO GO QUICKLY:
Half the pendings over the past two weeks went in fifteen days or fewer. These stats will eventually show up in closed sales in March and April.
IT’S ALL ABOUT THE FIRST WEEK
Properties that sold above their original list price tended to get bid up during the first week. Not a huge shocker. Of course, some properties are being priced too low to generate interest, so don’t think of this as buyers paying 10% over market value. Nope. But if you price 10% too low, you’ll likely get bid up. By the way, whenever I hear about properties with 15 offers, the price is almost always somewhere around $450,000 (and likely priced low).
BRO, REDUCE THE PRICE ALREADY
The market isn’t so overpriced like it was during the fall, but there is still a need for price reductions. Here’s a look at price drops among recent pending contracts. This is proof price reductions work. The real takeaway is to see a good chunk of price drops below $500,000. While this is an incredibly hot price range, it’s also proof buyers won’t pay any amount.
Okay, I’ve said enough. Probably too much. A few last recap images for anyone interested.
MARKET RECAP VISUALS
Year-over-year stats don’t tell the full story of the market right now. Someone might say, “No biggie, we’re down 8% from last year.” That’s technically true, but it fails to recognize that eight percent from one year ago is NOT the same thing as eight percent from the height of spring in 2022.
YEAR-OVER-YEAR
MONTH-TO-MONTH
OTHER VISUALS:
I hope this was helpful.
MARKET STATS: I’ll have lots of market stats out this week on my social channels, so watch Twitter, Instagram, LinkedIn, and Facebook.
Questions: What are you seeing right now in the trenches of escrow? I’d love to hear your take.
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Love that Days on Market/Final Sale Price scatter graph. Is that new?
Thanks Joe. Yeah, it’s newer. I think I’ve taken it for a test drive a few times on social channels. Haven’t really pushed it out too much though. One part I really like is seeing offers accepted BELOW the original price immediately too. The temptation is to only focus on bidding up, but there is some other perspective here too.
Lots of great stats as usual Ryan. Thank you for your hard work on this.
Thanks Gary. I appreciate it.
Okay so my world ain’t Sac Town. Just appraised the same property recently, “as is” and under hypothetical condition if expanded. As is about 3,000sf, expanded to 5500sf. Custom home on acreage, not a horse ranch. You got the picture. The smaller house mkt steady, relatively speaking since April/May 2022, inflection point down here. The bigger house market decline at over $2k per day. So yep mkt bifurcation. Now funny look over Your chart with sales volume. 2007 was last point that low. So if that is interesting data point wonder what balance of 2023 will bring. Right now Nobody I mean Nobody knows what is coming. The Fed is driving the bus right now and from what I can tell they have already had a few moving violations. I have a feeling if higher and longer is true, we are in for an interesting end of 3rd quarter and 4th quarter 2023. Grab your Stetson folks this could be interesting.
Thanks Brad. The market declined rapidly locally, and now it’s sort of figuring out what to do in the spring. I’m much more interested in what comes after the spring though personally. And you are right about the future. Everyone has ideas, but we’re going to have to wait and see. Just yesterday I saw a Jerome Powell quote stating, “If — *and I stress that no decision has been made on this* — if the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes.”
By the way, I don’t recall many people in January predicting that rates would be 7% right now… And I’m not sure anyone predicted The Sacramento Kings would be tied for second place right now either. 🙂
Will be interesting to see what impact Silicone Valley Bank failure has on your area and Ca. Could be a lot of folks whose money may be not available. Keep an eye and mark the calendar as a point of reference. Like I said previously The Fed has had a few moving violations and now one more to add. Will see what happens.
It seems like all the big banks are not doing too well from what I have seen.
I need to read up on that. Just saw the headline yesterday (or maybe this morning). Thanks Brad.
Jerome Powell driving tha Fed Reserve bus like he’s Sandra Bullock tryna to keep bus from blowing up if the speed drops below 50 mph. It’s just collateral damage for Jerome how many industries, jobs, and portfolios he smashes along the way. It’s necessary for his bomb plot movie.
I like the reference the old “Speed” movie. My buddy Dennis Hopper in a rebound.
This is such a golden word picture. If I use it in a presentation, I will absolutely cite you as the source. Too good. And yes, it does feel like this.
Hi Ryan,
I don’t know how long it must take you to compile all this information, but I sure do appreciate it. I’m thankful that my SoCal Inland Empire market usually corresponds nicely with yours. I envy appraisers in your market who can cite so much great information so easily!
To me, the residential market has never corrected for one year and continued upward. I believe we’re in for a multi-year correction. We shall see. Thanks for making it plain!
Thank you so much Dan. I love getting to do this, and I resonate with your comment too because I really like seeing what others push out there about different markets. Sometimes the trend can be so similar. I just wish more appraisers would flex market data online. And yes, a one-year correction does not fit the pattern of history.
Just to clarify for any onlookers, we are seeing what I’m calling a spring bump right now. I think it’s a mistake to look at this normative bump and say the market has rebounded. I always like to remind people we had a spring bump in 2006, 2007, and a tiny one in 2008. To me this is actually fascinating because it shows the power of seasonality and how difficult it is to remove seasonality – even when the market has been declining.
This is fascinating information Ryan. Thanks for telling the story of your market in such detail! I am seeing multiple offers in my areas as well. Just had a duplex in Oakland that had 15 offers; however the agents almost always price properties in this market way under the price they are looking for. My appraiser friend says he has seen the same thing in this area but he does a lot more volume there. Take care!
Hi Ryan,
I am with Joe “Love that Days on Market/Final Sale Price scatter graph. ”
Thank you for showing us meaningful stats. My market in Sonoma County has far less volume which makes it more difficult to pull trends.
Your insights, data and sense of humor make your blog posts a must read for me.
Thank you!
That’s so nice of you to say. Thank you very much Debbi. I”m so glad this one is resonating. Maybe I’ll need to formally introduce this visual by showing a few counties and maybe some neighborhoods. Hmm…
Thank you Andy. Yeah, I hear the Bay Area regularly prices like that too. That’s definitely one thing I don’t want to see more of in Sacramento. Haha. But yeah, when something has that many offers, we have to ask if it’s the market or the marketing.
Something for agents to look out for, lots of good comps from September and October of last year will be falling off the charts for appraisal soon. So be wary because there is a price bump going on we still have to get it appraised. I’m seeing some pendings that are priced at the high from last September and got multiple offers, so I’m speculating they are above asking.
Thank you George. This time of year can be awkward in any given year since the market heats up, but we don’t really see it in closed sales for a bit. But it seems especially awkward this year since we had such intense market change last year. I’m starting to see the bump show up in my stats as well as some of my visuals too. I’m anxious to see what comes ahead.
As always, your blog is enlightening. The stats are reflecting exactly what my team and I are experiencing East Sac , Land Park and nearby areas. Thanks for your great work!
Ed, that’s a huge compliment, and I really appreciate it. Please keep me posted if you’re ever seeing anything interesting out there. And you are welcome. This is a real joy for me to get to do. I feel so lucky.
You are spot on for Placer County. Just lost a lower asking offer on an under $500K home out of 4 total. It was strong otherwise. Thanks so much for all the summaries after stats. Love them.
Thank you so much Lori. Please keep me posted with anything you’re seeing in the trenches. I feel like the market is at such an interesting spot with notably fewer listings hitting the market right now. I expected that we would have a spring bump because that’s what normal happens (even during down years), but this dynamic just tightens things right now. Thanks for the kind words.
I really like the Days on market/Final sale price scatter graph too! Single best tool, in my opinion, to show seller’s the power of pricing it right .
Thanks Karen. Right on. This confirms I’ll have to push out some more specific data with a few neighborhoods or ZIP codes.