I heard the best description of the market this week. It made me chuckle, and I hope you like it too. I mean, how can you go wrong when relating the housing market to nachos? I also have some emerging trends to talk about below.
UPCOMING SPEAKING GIGS:
3/19/24 WCR Gold Country (details here)
3/21/24 2024 Market Update for Brent Gove Team (big event free)
3/26/24 Orangevale MLS meeting 9am
4/11/24 Lindsay Carlisle Event (private)
4/25/24 HomeSmart iCare Realty (details TBA)
4/26/24 Prime Real Estate (private)
5/9/24 Empire Home Loans (details TBA)
5/15/24 Investor Meetup (details TBA)
6/6/24 Golden 1 Credit Union (details TBA)
6/11/24 Elk Grove Regional MLS Meeting 8:30am
6/13/24 Sacramento Realtist Association (details TBA)
THE PERFECT MARKET DESCRIPTION:
Nadia Melzer said this on my Facebook business page, “The housing market is like sharing a plate of nachos. The good chips are being picked up quickly, while the unappealing ones are being left behind.” This is just SO good because it’s true. Another way to describe today is to say it’s either multiple offers or crickets. I find the good stuff so to speak is going very quickly with strong competition, but anything that’s overpriced is just sitting since buyers are picky about condition, location, and price. Anyway, pick your poison for market descriptions. All I’m saying is this one is a winner.
DEEP HOUSING MARKET THOUGHTS
Scroll quickly by topic or digest slowly.
BRO, IT FEELS LIKE SPRING AROUND HERE
The market is doing spring things in the stats. We can clearly see the temperature heating up when we look at numbers from January to February, but overall, I’m describing February as a bit flat or lackluster. What I mean is the number of pendings felt a little flat in February, which I think was a reflection of rates ticking up in January. The theme for the year is “more in 2024,” and what we want to see are more new listings, more pendings, and more sales. So far, this is exactly what we’ve seen through the first two months, but February wasn’t quite as glowing as January.
NEW HOMES ARE FLEXING BIG IN THE MIRROR
New construction is flexing. It’s been a very strong start to the year in terms of volume. In fact, per North State BIA stats, it was the strongest February since 2005. I have a graph back that far if anyone wants to see (email me).
In contrast, this is what the resale market looks like for existing homes. Big difference, right? Thankfully we’ve seen more sales compared to last year, but it’s still dramatically lower for older units (which is the bulk of the market).
YOU’VE GOT A FASTER CAR IN 2024
It’s taking less time to sell this year compared to last year, and we’re seeing a definitive seasonal heating in the days on market stats. We’re actually still moving faster today (green line) than normal (red line). But it’s nowhere close to the speed of 2021 (orange line). Okay, way too many colors.
PEAK MONTH VIBES IN FEBRUARY
This visual shows the height of spring each year with the percentage of sales with multiple offers. The peak of multiple offers typically happens in April or May. Well, this February, 55% of units had multiple offers, and that’s basically what the height was for a normal pre-2020 spring market. Yet, we saw this in February. This is why I really understand when people are saying things like, “Bro, it feels like 2021.” Well, not so much with the stats, but it’s been way hotter than normal for a February.
NOT 2021 & NOT NORMAL EITHER
This is a chaotic and cool way to look at the percentage of units selling above and below the original price. Check out the green line for 2024 compared to red (normal) and orange (2021). This shows us we are still more competitive than normal, but we’re still not anywhere close to the chaos of 2021.
RECAPPING VOLUME IN 9 COUNTIES:
The market isn’t the same everywhere, and it’s important to keep tabs on different locations and price ranges (while being careful not to form perspective based on only one month). By the way, I corrected this visual. I accidentally included January figures for Placer County yesterday, and that painted a way different trend. Sorry about that. This is correct.
HOT GRAPH SPRING
I’ve made this visual for two months in a row, and I kind of like it. Do you? I think it’s interesting to see how today compares to 2021, 2007, and the pre-2020 normal.
LARGER HOMES ARE SELLING
We’re starting to see larger homes sell in the region this spring. This is a normal trend, and it’s a good reminder that part of prices going up actually comes down to larger units selling. In other words, it’s not just a change in buyer demand driving higher prices.
YES, PRICES ARE TICKING UP
In mid-January, I wrote about the spring market waking up, and a few people said things like, “Dude, it’s January, what are you smoking?” But here we are seeing a change in February closed sales due in large part to the properties that got into contract in January. In other words, the market started to change in January, but it took a month for the trend to show up in the sales.
INFLATION FEELS LIKE THIS
One of the reasons why it’s challenging to predict real estate too far out is we don’t know exactly what is going to happen with mortgage rates and inflation. My advice? Talk about the future, but have enough humility to recognize there are forces at play that can change the housing dynamic. Also, do you like my new GIF? Or is this way too middle school?
RECAPPING NINE COUNTIES
I post these stats every month on the stats tab on the navigation bar.
Don’t be rigid: Median price and average price change doesn’t translate rigidly. In other words, it would be a mistake to think your value is up X% since the median is up that much. Maybe. Maybe not. Look to the comps.
Smaller counties are erratic: I’m not crazy about some of the price stats in the smaller counties since there just aren’t enough sales to be meaningful. I was hesitant about pushing these stats out, but I decided to anyway. Smaller counties are grouped in 60-day chunks since stats are erratic with only 30 days. I might even try 90 days instead.
JANUARY TO FEBRUARY VIBES:
Like I mentioned above, price change here does NOT mean your value went up by 5% in one month. Look to the comps.
Thanks for being here.
Questions: Do you eat nachos? What do you think of using nachos to describe the market? What are you seeing out there?
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Can we say the market is like a half order of nachos? It’s hard figuring out prices for homes right now because of lack of sales, same as it’s been the last two years.
The karate meme works for me but I’m stuck on age 13.
Good seeing you Monday.
Haha. The analogy is now getting more complicated. I hear you on that though. And glad we’re both stuck in the past… 🙂 Thanks Joe. Great to see you.
I asked Chat for an analogy like the nacho analogy and this is what it came up with, “The market can be compared to the dating scene, with some properties being hot commodities that receive multiple offers (like popular singles), while others struggle to attract attention.” The nacho is better. LOL.
Haha. That’s pretty funny though. Thanks for sharing, Gary.
I seem to recall that no matter how bad the nachos were they eventually all got eaten, even if it was fake guacamole. Yep, multiple offers on some, the good nachos but I still see stuff (I almost used a bad word) being bought and for pricing that doesn’t fit.
I have gotten to the point where my trend charts are 3 years old, 2 years old, 1 year old and 6 months old. I am finding that a market going down on the 1- and 2-year chart now shows life in the 6-month chart. So, I guess the last chips with the fake guacamole is still okay for those are starving or have had one too many flavored brownies (yep read into what you want).
In the appraising side of things, I feel like I am estimating market insanity versus value. Still trying to figure out how a condition adjustment 4 years ago was $20,000 is now $120,000. Been speaking with a bunch of agents lately trying to understand the general buyer mentality. Man has it changed. Y’all have fun out there in Real Estate land.
Haha. Solid point. They do eventually end up all eaten. In short, there has to be something seriously wrong if the plate is not clean by the end. On a related note, while I’m always glad to share nachos, I think it’s nacho sin to take the very best chip when someone offers. Take a good one, but not the best one on the plate. Interesting housing feedback. Let’s keep comparing notes. I think today’s market is complex, and it’s not so easy to see the trend without ample data. It’s a real problem. I find myself being asked every week about comp selection in particular.
I love the nacho analogy. I’m continually taking out buyers who are definitely hungry, but not hungry enough to eat the less desirable chips. Hoping nacbo inventory continues to increase this spring. I may have a middle schoolers humor level, but thought the inflation GIF was hilarious!
Haha. Yes. Thanks Michael. You know, this is like dating. People want connection, but they aren’t so desperate that they’re going to settle for anyone… Cheers to middle school!!! In truth, I hated middle school. It was an awkward time in life. I would never want to go back. But that’s a different blog post.