Has the housing market peaked for the spring?

Has the spring market peaked? There is a good chance it has. Let’s talk about that today. This post is designed to skim by topic or digest slowly.

UPCOMING SPEAKING GIGS:
5/15/24 KW Roseville Event (open to real estate pros)
6/5/24 Marketing Mastermind (register here)
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 here)
6/21/24 Exporting data from MLS (details TBA)
7/11/24 Women Investor Event Q&A 6pm (details TBA)
9/17/24 Downtown Regional MLS Meeting Q&A 9am
9/20/24 How to Think Like an Appraiser class (details TBA)
10/18/24 Prime Real Estate (private)
10/29/24 Orangevale MLS Meeting

THE NARRATIVE VS THE MARKET

At times, there is a disconnect between what people are saying about the housing market online and the actual market. Look, peaking for the spring should help more buyers, but we don’t have a slow market right now in Sacramento either. The good stuff especially goes very quickly.

HAS THE SPRING SEASON PEAKED?

I think so. It looks like the local market has seen a peak for the spring season. This doesn’t mean the market is dull, so save your hate mail, but the temperature has changed as we’re starting to see less competition from the height of the spring season in April. I’m noticing a difference in the percentage of properties getting multiple offers (yes, our MLS tracks this). This might sound like an obscure stat, but I have to say it’s a fantastic leading indicator for the market. Every year, this is one of the ways I see the market changing before we see the trend in closed sales 30 to 60 days down the road.

QUICK UNSOLICITED ADVICE:

Listen to the market. Every year we see the housing temperature change, but my sense is some people struggle to talk about it. Look, my family has started to use the air conditioner. Do you know why? Because the weather has changed. Well, in real estate, it’s the same dynamic where buyers, sellers, and real estate professionals need to be in tune with the housing temperature. So, price it right, adjust the price if the market requires, and keep watching the stats closely.

WATCH FOR A PEAK IN PRICES

The median price typically peaks in June, so let’s be on the lookout for a seasonal peak. Prices have felt a little flat in some counties lately, so it’ll be interesting to see what stats in May and June show. I do wonder if prices have peaked a little earlier, but only time will tell. My advice? Know what normal looks like so you can build expectations and spot anything abnormal. Knowing the seasonal rhythm well is a hallmark of real estate expertise.

WATCH FOR A PEAK IN VOLUME

Volume for closed sales typically peaks in June each year. This reminds us the height of pending contracts is around May, and these properties close in June.

BRO, TELL US MORE ABOUT MULTIPLE OFFERS

Here’s more context with multiple offers. If May continues to hold around the current level, then May will be the peak of competition this year. This is very normal since the peak is typically April or May each year. Remember, the pendings of today become the sales of tomorrow, so June closed sales should start to dip lower. In other words, market competition has changed.

CONDOS AREN’T AS HOT AS DETACHED UNITS

New construction is hot. Upgraded homes are hot. And condos are…. not as hot. Single family detached volume is up 5% from one year ago, but condo volume is down 5%. In short, we have a little condo slump on our hands.

HOA FEES STAND OUT IN A BAD WAY

This weekend I had quite a few conversations about why condo volume could be down. It could be a few things. Insurance woes. Attached living with a tiny yard isn’t as appealing right now at current prices. But most of all, that HOA fee on top of the cost to afford is glaring. This graph is a HOT MESS, but I wanted to share what it looks like to have 36,000+ dots on one visual. Haha. This shows condo HOA fees in Sacramento County since 1998. I have some further research with specific HOA communities overlapped. I’m happy to push that out if there is demand. Let me know. 

A SPRING MARKET RECAP:

Here are some visuals to help show what’s been happening this spring in the Sacramento region. I’ve included topics and county stats.

VOLUME IS UP FROM ONE YEAR AGO:

It’s good news to see more sales this year. We are just still so low, and I think real estate professionals have been feeling this reality. Remember, last year was the worst year of volume on record in many decades.

NEW LISTINGS & PENDINGS ARE UP FROM LAST YEAR:

Sellers and buyers aren’t quite as frozen as last year. We are still missing about 33% of the market from the pre-2020 normal, but more is what we want to see.

INVENTORY IS UP FROM LAST YEAR, BUT STILL LOW

When we look at the months of supply, we’ve seen an uptick from last year, but it’s still quite low (and so much lower than 2007). Let’s continue to watch the number of active listings. And let’s watch some red flags as I talked about last week (unemployment, credit card debt, etc…)

WHERE IS THE MARKET HAPPENING?

Here’s a way to see how prices are dispersed throughout the region. The highest prices often get the most attention, but the bulk of the market isn’t happening above $1.5M.

Here’s another way to look at volume. Remember, prices went up last year, which helps explain why the black bars have essentially moved up this year compared to the price bucket last year.

CLOSER TO NORMAL, BUT STILL MORE COMPETITIVE

The green line represents 2024, and it’s still more competitive than the red line (pre-2020 avg). Ultimately, we are so much closer to normal so to speak, and we are very far from the 2021 trend (some people need to hear that).

MODEST PRICE UPTICK. NOTHING CRAZY:

Whether we look at the median or average sales price, we’ve seen a modest price uptick (see red line). We’ve been getting closer to the peak of prices in mid-2022, but not quite there. I’m eager to see the comparison when May stats are fully available since May 2022 marked the price peak.

OTHER VISUALS:

A few more visuals. I know, there are way too many already.

YEAR-OVER-YEAR RECAP

Some annual recap visuals. Please note smaller counties have been lumped together in sixty-day chunks. The goal is to try to tell the story in smaller areas since monthly data is too erratic. I’m experimenting, and I welcome your feedback. Thanks.

MONTH TO MONTH RECAP:

Questions: Do you think the spring market has peaked? What’s going on with condos? Anything to add? What did I miss?

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