Sacramento Appraisal Blog

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Market Trends

Three things to expect in the housing market in January

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What’s January going to be like in 2025? What can we expect ahead for the housing market? Today, I have three quick points, and while these visuals are specific to my area, some of the language use can be used in many different markets. This is my last blog post of 2024. Thanks for being here!!!

blue background with a close-up of a rustic wood table at the bottom of the image. There is a white rectangle with black font that has the title of today's blog post.

UPCOMING SPEAKING GIGS:
12/18/24 Coldwell Banker Sierra Oaks
1/15/25 Mike & Joel Event (free online (register Eventbrite))
1/16/25 Sac Real Producers event (details TBA)
1/22/25 Windermere El Dorado Hills / Folsom (private I think)
1/24/25 PCAR Market Update (details TBA)
1/31/25 Prime Real Estate (private)
2/6/25 She Invests event (TBA)
2/11/25 MLS Meeting TBA
2/18/25 Travis Credit Union TBA
3/6/25 Yolo Association YPN Event
3/12/25 Windemere Sierra Oaks
3/20/25 HomeSmart iCare Realty (private I think)
4/10/25 Yuba-Sutter Association (details TBA)
4/15/25 Culbertson and Gray (private I think)
5/8/25 Private event (details TBA)
5/13/25 PCAR
6/5/25 Auburn Marketing Meeting
11/4/25 SAR Main Meeting

SWEET 16 BLOG PARTY IN JANUARY: YOU’RE INVITED

My blog is turning 16, so it’s a good excuse to bring people together. I’d love to have you there. If you feel connected to me, you’re invited. Please RSVP.

THREE THINGS TO EXPECT IN JANUARY

Some quick thoughts about the market in January with brand new visuals.

1) BUYER DEMAND HEATS UP IN JANUARY

Some people act surprised that the housing market heats up in January, but it’s sort of what happens every year. Check out this visual. Pending contracts hit their low in December, and start to rise again in January. Like clockwork. Of course, January is the second lowest month of pendings after December, and buyer attention picks up more in February, and then really grows in March.

Here’s a cool way to think about buyer demand through the year. Keep in mind not every county and property type are going to rigidly follow the exact regional pattern. I like to say the spring market is the hottest between the Super Bowl and Mother’s Day. What do you think of that?

2) BUYERS WAKE UP MORE THAN SELLERS AT FIRST

A good way to describe the market in early January is buyers tend to wake up before sellers. In other words, buyers are much more ready to pull the trigger, but sellers are still hibernating and planning to list later in the spring. This is why buyers often feel frustrated in early January because supply is basically leftover stuff that didn’t sell during the fall and a trickle of new listings. “Where the heck is the good stuff?” That’s the question. Look, there is no mistaking sellers start to list more after the low in December, but January is the third slowest month behind November and December. We just don’t see new listings really hit their stride until March.

3) THE TREND SHOWS UP LAST IN CLOSED SALES

If you’re hyper-focused on closed sales, you’re going to be late to the party of seeing the trend. Let me explain. Closed sales almost always bottom in January, but those sales represent properties that got into contract in December. So, the trend happened first in the pendings, and we saw it eventually in the sales about a month later. The same dynamic happens with price change, whether up or down. The change happens fist in the pendings, but it takes a month or two before seeing higher or lower prices in actual closed sales. This is why in February it feels like the market is getting hotter when we’re looking at the pendings, but closed sales from most of January probably don’t reflect February heat yet. Like I always say, sales are like historic artifacts that tell us what the market used to be like probably 30 to 60 days ago when they got into contract. What is the market like right now? Well, let’s look at actives and pendings. And eventually what we see there will show up in the sales.

I hope this was helpful.

THANK YOU

Thanks so much for reading my blog. I appreciate your insight, questions, critique, support, and all the opportunities and business you sent my way this year. I can’t wait for 2025. I’m optimistic about life and business, and I’m pushing all my chips forward again to bet on good relationships. Let’s grow together. From my family to yours, Merry Christmas and Happy Holidays. 

Questions: Any fun plans for the holidays? What are you hearing from buyers and sellers in your sphere?

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The home price crash that hasn’t come

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Real estate prices are going to tank. We’ve been hearing that since 2020, and here we are without much change in most markets. Let’s talk about prices today, and I want to share some new visuals to talk about distressed sales.

Scroll quickly by topic or digest slowly.

UPCOMING SPEAKING GIGS:
12/18/24 Coldwell Banker Sierra Oaks
1/15/25 Mike & Joel Event (free online (register Eventbrite))
1/16/25 Sac Real Producers event (details TBA)
1/22/25 Windermere El Dorado Hills / Folsom (private I think)
1/24/25 PCAR Market Update (details TBA)
1/31/25 Prime Real Estate (private)
2/6/25 She Invests event (TBA)
2/11/25 MLS Meeting TBA
2/18/25 Travis Credit Union TBA
3/6/25 Yolo Association YPN Event
3/12/25 Windemere Sierra Oaks
3/20/25 HomeSmart iCare Realty (private I think)
4/15/25 Culbertson and Gray (private I think)
11/4/25 SAR Main Meeting

PRICES HAVEN’T DROPPED MUCH

Nationally, homes prices haven’t crashed despite so many YouTube videos saying that would happen. So, it seems crash predictions are going to be punted to next year again. The problem is sellers have been sitting back, and that’s really changed the way the market feels. To date, it’s just been too tight for a 2007 level price crash event. For instance, locally this year we’re missing about 11,000 listings from the normal number. Imagine how different the housing market would feel if we injected 11,000 more listings this year. Do you think prices would be declining? I think they would.

From a real estate friend on X:

BUT LOCAL ISN’T THE SAME AS NATIONAL

One thing to remember is there really isn’t such a thing as a national market. The so-called “national” market is comprised of thousands of local markets, and this year national price figures are up, but there are definitely some local markets that are down. Like I always say, the market isn’t doing the same thing in every location, so we want to be careful about imposing a national narrative on every local market. There isn’t such a thing as national weather, and the same is true for real estate.

DID NOVEMBER REBOUND FROM FLAT PRICES?

Local price growth has slowed, and in recent months it’s felt pretty flat. However, price metrics for November are up 4-5% for the region. Has the market rebounded? Well, three things to keep in mind:

  1. We’re now comparing today with a time last year when rates were 8%, so many stats today are simply going to look better.
  2. Square footage in the region was larger in November 2024 compared to last year, whereas the four previous months were lower. This can make a difference in the numbers.
  3. Not every county is mirroring the regional trend of being up.

SIZE MATTERS

I pull stats for nine local counties, and I’ll say it’s hit and miss with size this year. Generally speaking, in counties showing negative price metrics from last year, homes tend to be smaller this year. And in counties with positive growth, homes tend to be larger. Ultimately, I wouldn’t get overly fixated on the latest glowing month unless we start to see a trend.

“PRICES ARE GOING TO DROP BY 40%”

I haven’t seen any reputable data firm say prices are going to tank by 40% in 2025, but I’ve heard that sentiment on X (usually from anonymous accounts). Look, here’s the thing. There is nothing wrong with prices going down, and that would be healthy to create more affordability, but we don’t have enough supply right now to see a massive drop like that. With that said, the positive news for buyers this year is we’ve seen a wider gap emerge between the number of listings and sales, and that has definitely softened the market (see chart). What we want to watch closely ahead is how this gap changes. If it grows wider, that could lead to prices softening, but if it gets tighter, that could leave space for some upward growth. I’ll talk more about this next month in my annual outlook.

BRO, SURFING FORECLOSURE WAVES

I thought it would be interesting to show distressed sales in a new way. I pushed out the first graph last week, and it created quite a bit of conversation.

  • Only a few distressed sales lately
  • The carnage after 2007 was vast
  • The foreclosure market didn’t hit every area the same
  • Distressed sales were more prominent at lower prices in some neighborhoods. This reminds us the market is NOT the same at every price point.
  • Higher prices tended to be able to better weather the storm (more equity, more savings, higher income, more cash buyers, etc…).

NOTE: I chose different colors below just to mix it up

DISTRESSED SALES HARDLY EXIST

Very few distressed sales have hit the market lately. That’s what the graphs above show, and stats below show the same thing.

QUICK TAKEAWAYS

  • Mortgage delinquencies have remained low, but it’s something to keep a close eye on.
  • We’ve bottomed out with distressed sales, so there isn’t any place to go but up. Having more doesn’t mean 2007 though.
  • Being underwater on a mortgage is not much of an issue today due to equity, so owners can often do traditional sales to deal with financial carnage.
  • Let’s not fixate too much on REO and short sale stats because those stats don’t capture the owners who are selling right now due to distressed situations (they have equity to deal with their issues).
  • Let’s watch rising credit card and auto delinquencies.
  • Technically, short sales doubled from last year, but there were two this November compared with one last year.

The NY Fed has a great series of charts to show household debt, so check out their latest report here. And check out local delinquency rates from the CA Policy Lab.

And now local stats for anyone interested….

LOCAL STATS

Year-over-year stats. Remember, size matters here. For instance, Sacramento County had 6% larger homes this year, Nevada was 8% smaller, Placer was almost the same, and Yolo was 5% smaller in size. I may add a square footage category as I think it’s becoming more relevant for conversation. Stay tuned.

Month-to-month:

I hope this was interesting or helpful.

Questions: What’s happening with prices right now from your vantage point? Any insight or stories to share?

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Condos are having a moment

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Condos are struggling, and they’re really having a moment in today’s housing market. Let’s talk about what’s going on with volume, supply, and prices. Be sure to read my closing thoughts about housing doom and hot pockets too. 

UPCOMING SPEAKING GIGS:
12/5/24 Made 4 More Team (Exporting Data from MLS)
12/11/24 Gateway: Think Like an Appraiser (private)
12/18/24 Coldwell Banker Sierra Oaks
1/15/25 Mike & Joel Event (details TBA)
1/16/25 Sac Real Producers event (details TBA)
1/22/25 Windermere El Dorado Hills / Folsom (private I think)
1/24/25 PCAR Market Update (details TBA)
1/31/25 Prime Real Estate (private)
2/6/25 She Invests event (TBA)
2/11/25 MLS Meeting TBA
2/18/25 Travis Credit Union TBA
3/6/25 Yolo Association YPN Event
3/12/25 Windemere Sierra Oaks
4/8/25 Culbertson and Gray (private I think)
11/4/25 SAR Main Meeting

1) CONDO VOLUME IS THE LOWEST EVER

Condo volume this year has been the lowest on record over the past few decades in Sacramento County. Detached sales are stronger compared to last year, but that’s not the vibe at all with condos. What’s going on? Well, condos have had issues with rising association insurance costs, increasing HOA fees, trouble obtaining financing from lenders, and maybe even some issues with California’s new balcony law. Look, not every condo subdivision is experiencing all of these issues, but there is no mistaking many condos have legitimate headwinds.

2) CONDO HOUSING SUPPLY HAS SPIKED

Condo supply has seen a sharper spike than the rest of the market, and that’s making a difference with housing temperature in some condo neighborhoods.

And here’s a much wider view from Trendgraphix. Do you see the difference between condos and detached units?

3) PRICES ARE STARTING TO DROP

I’ve been noticing downward price pressure in some condo neighborhoods. This doesn’t mean every location is declining, but it’s been pretty clear in some recent appraisals. Check out the visuals below. What do you see? Keep in mind the decline has not been like a 2007 free fall. My advice? If you’re selling, don’t get stuck on the highest prices from 2022 and 2023. Consider properties that are actually getting into contract. Remember, sales are like historic artifacts since they tell us what the market used to be like when these units got into contract. In contrast, actives and pendings tell us what the market is like right now.

CLOSING THOUGHTS: HOT POCKETS & DOOM

I like to say the housing market is like a hot pocket taken out of the microwave too early. The temperature might not be the same everywhere. Some spots are blazing hot, others are lukewarm, and some are frozen. Well, the condo market has been frigid lately, and it’s something we need to keep watching. With that said, I think the temptation for some is to say condos are the leading indicator of doom for the entire market. I get it, but don’t ignore unique issues going on with condos that are not happening with the detached market (trouble obtaining financing and rising insurance costs for the association). I’m not sugarcoating here. I’m just saying we want to be careful about imposing condo vibes on everything else unless that’s what the stats are showing. For reference, condos have been about 6% of all sales this year in Sacramento County.

I hope this was interesting or helpful.

Questions: What have you been seeing happen with condos? What’s happening with prices? Any insight or stories to share? Did I miss anything?

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Making Thanksgiving dinner awkward with housing conversations

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Turkey with a side of real estate? Yes please. Or maybe not. Here are some topics to potentially bring up at the Thanksgiving table if you need a little spice. I also have two new graphs that I’m excited to share.

UPCOMING SPEAKING GIGS:
12/5/24 Made 4 More Team (Exporting Data from MLS)
12/11/24 Gateway: Think Like an Appraiser (private)
12/18/24 Coldwell Banker Sierra Oaks
1/15/25 Mike & Joel Event (details TBA)
1/16/25 Sac Real Producers event (details TBA)
1/24/25 PCAR Market Update (details TBA)
2/6/25 She Invests event (TBA)
2/11/25 MLS Meeting TBA
2/18/25 Travis Credit Union TBA
3/6/25 Yolo Association YPN Event
3/12/25 Windemere Sierra Oaks
4/8/25 Culbertson and Gray (private I think)
11/4/25 SAR Main Meeting

OVER FOUR THOUSAND BLESSINGS TO COUNT

This year we’ve seen 3,346 more new listings hit the Sacramento region compared to last year, which is welcome news that sellers aren’t as frozen as the previous year. Additionally, we’ve had 707 more closed sales, which is also nice to see. And yeah, I realize these numbers are far below normal levels, but let’s rejoice in having more. In 2024, it’s all about the small wins and a focus on the market that is happening instead of what is missing. Stats represent Sac, Placer, Yolo, and El Dorado (Jan to Oct).

PASS THE GRAVY & HOUSING CONVERSATIONS

Some housing topics to spice up Thanksgiving dinner…

1) Mortgage rate predictions for 2025
2) Growth in housing supply in 2024
3) Do “Live Laugh Love” signs increase your home’s value?
4) Why the iBuyer model hasn’t lived up to the hype
5) Selling Sunset vs reality
6) Unemployment and credit card debt rising
7) Do listings with the word “nestled” sell faster?
8) Can Zillow smell if 20 cats live there?
9) Buyer hypersensitivity about price, condition, & location
10) Concessions builders are offering
11) Would you buy a house formally used as a marijuana grow?
12) Will cottage cheese ceiling texture ever come back?
13) Modest price growth in 2024
14) Is gray everything finally done?
15) Should you light candles during an open house?
16) The ’80s & ’90s housing market vs today
17) Bitcoin or real estate?
18) Dating the rate
19) Growth of “pickleball” in real estate listings
20) Expectations for the rest of the year and spring 2025

AND TWO QUICK GRAPHS

I’m excited to introduce two brand new visuals. Imagine how different the housing market would feel if we were getting a normal number of listings (gray line).

And check out sales (black) compared to new listings (blue). Sales have been lower in recent years, but do you see a larger gap between sales and listings this year? That’s why it hasn’t been as competitive. But it’s also normal to see a wider gap, so I wonder at times if we’ve forgotten what it feels like to have more listings. Are we so used to years like 2020, 2021, and even 2023 that it’s been a struggle to adjust to 2024?

THANK YOU

On a serious note, I’m incredibly grateful for all the conversations we’ve had this year, and I cannot say thank you enough for the business you’ve sent my way. I don’t take for granted the opportunities you’ve given me with speaking too. On a personal note, I’ve really tried to focus on being more intentional about building friendships this year, so I find myself more fulfilled. I do have the itch to put together one last pool table event before the year is up too, so stay tuned on my socials. Anyway, from my household to yours, Happy Thanksgiving!!!

Thanks for being here.

Questions: Which housing topics are you going to bring up at Thanksgiving (haha)? Any special plans this week?

If you liked this post, subscribe by email (or RSS). Thanks for being here.

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