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The tiny but growing trend of assuming the loan

February 6, 2024 By Ryan Lundquist 12 Comments

Look, assumable loans are basically eye candy in real estate because they’re so rare, but they’re actually starting to happen more. So, let’s talk about it. This post won’t go into details about requirements or how the process works, but I want to highlight this tiny but growing trend in the Sacramento region.

UPCOMING SPEAKING GIGS:
2/09/24 PCAR WCR Event (11:30am-1pm (more details))
2/13/24 Downtown Regional MLS Meeting 9am
2/19/24 Matt the Mortgage Guy YouTube Live
3/11/24 Yolo Association of Realtors (YAR only)
3/19/24 WCR Gold Country (details TBA)
3/21/24 2024 Market Update for Brent Gove Team (big event free)
3/26/24 Orangevale MLS meeting 9am
3/27/24 SAFE Credit Union Lunch & Learn (TBA)
4/11/24 Lindsay Carlisle Event (private)
4/25/24 HomeSmart iCare Realty (details TBA)
5/9/24 Empire Home Loans (details TBA)
5/15/24 Investor Meetup (details TBA)
6/11/24 Elk Grove Regional MLS Meeting 8:30am
6/13/24 Sacramento Realtist Association (details TBA)

WATCHING THE TREND & SPOTTING UNICORNS:

Loan assumptions are uncommon, but they are starting to happen more. For perspective, there were 23 reported loan assumptions in MLS in the midst of over 18,000 sales since 2023. I found these by exporting the “assumed” category under buyer financing for MLS sales. I do suspect there were more that were not reported too. All that said, half of these took place in the past 90 days, so this is something to watch while conceding they are still unicorns.

WHAT TYPES OF PROPERTIES ARE BUYERS ASSUMING?

The price point is all over the place, and these are not just starter homes. On average, units spent about four months from listing to closing, so this process has NOT been quick. Keep in mind, both VA and FHA loans can theoretically be assumed (and USDA), but the loan servicer still has to approve it. This is the hard part because approval is NOT always a given. This is why it can be such an uncertain process. I wrote more about loan assumptions here.

TELL ME MORE ABOUT THE SELLERS PLEASE

Ten of these units had an FHA loan and thirteen had a VA loan. The majority of sellers purchased in 2020 and 2021, but there were a number that bought much earlier, but they had refinanced when rates were really low a few years ago. In fact, one seller bought in 2016 and another bought in 2002.

HAVE YOU DONE A LOAN ASSUMPTION?

I’d love to hear any stories in the comments. Have you successfully done a loan assumption? Or have you tried, but it didn’t work? What made it work or not? Any insight you can share?

MORE IF RATES REMAIN HIGH

Here’s a look at buyer financing in the Sacramento region over the past ninety days. I’ll be watching this closely, and I’ll report on assumed loans in addition to everything else. If rates remain elevated, it’s possible to see more loan assumptions ahead. However, these could be more prominent during slower times of the year too. Anyway, we’ll see what happens this spring.

NOTE TO REAL ESTATE FRIENDS:

Loan assumptions are still unicorns, but today’s market requires creativity to get deals done, so this seems like something to know and watch. It’s also good to have some stats for buyers and sellers to see both rarity and that it has taken about four months. Anyway, keep your head down, keep learning, and find ways to be a part of the market that is happening. The only thing we can control is our mindset and how we show up.

ONE LAST THING:

I find when I bring up this topic, I tend to get some people bent out of shape because they think I’m saying it’s easy and common to assume a loan (sorry if you didn’t read the post). I think some would rather this topic not get brought up, but we are better off having conversations like this. In other words, let’s talk about the market that is happening – even the tiny parts.

Thanks for being here.

Questions: Any stories or insight to share? What stood out to you about the stats above? Should I keep pushing these stats out?

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

Are sellers finally starting to thaw out?

January 30, 2024 By Ryan Lundquist 26 Comments

Frozen. Stuck in place. Not moving. That pretty much describes sellers. But in 2024 there’s a flicker of hope as sellers have thawed out just a bit. I’ll explain what I mean below, and I suspect many markets around the country are experiencing a similar trend. Any thoughts?

UPCOMING (PUBLIC) SPEAKING GIGS:
01/31/24 Joel Wright & Mike Gobbi Event 9am (on Zoom here)
02/01/24 Gateway Event (private)
2/09/24 PCAR WCR Event (11:30am-1pm (more details))
2/13/24 Downtown Regional MLS Meeting 9am
2/21/24 Matt the Mortgage Guy YouTube Live
3/11/24 Yolo Association of Realtors (YAR only)
3/21/24 2024 Market Update for Brent Gove Team (big event free)
3/26/24 Orangevale MLS meeting 9am
3/27/24 SAFE Credit Union Lunch & Learn (TBA)
4/11/24 Lindsay Carlisle Event (private)
4/25/24 HomeSmart iCare Realty (details TBA)
5/9/24 Empire Home Loans (details TBA)
6/11/24 Elk Grove Regional MLS Meeting 8:30am
6/13/24 Sacramento Realtist Association (details TBA)

MORE NEW LISTINGS IN JANUARY 2024:

A few days ago, we officially surpassed the number of new listings in January from one year ago in Sacramento. By the end of the month, we should have about 10-15% more new listings compared to January 2023. Granted, the number of new listings today is still anemic, but more is the direction we want to go. So, while this is statistically minor, it feels like really positive news. Check out a reel I did on Instagram to explain this.

“MORE IN 2024” IS THE THEME:

In my 2024 outlook, one thing I mentioned is we aren’t going to be anywhere close to normal for the number of sales or new listings, but the hope is to see more. Well, January showed us more new listings, more pendings, and probably more sales (the verdict is still out on sales, but I’m pretty sure we’ll beat January 2023 in the region).

BRO, SELLERS ARE NOT FLOODING THE MARKET:

When sharing about more new listings, some people think sellers are flooding the market, but that’s not the vibe. If it was, I’d say so. This image is a helpful way to think about the trend. Remember, having more doesn’t automatically mean a flood. I find a similar dynamic with the narrative on bank-owned sales today. There are definitely more this year, but it’s a tiny amount below 1% of all sales locally. Nonetheless, sometimes people see more and create a narrative about a flood of foreclosures.

CELEBRATING A SECOND-PLACE TROPHY

Okay, some real talk. Last January was the worst January in decades for the number of new listings, and this January is going to be the second worst. Look, I’m not trying to sound negative, but I want to give context to what I mean by more new listings this year. Ultimately, sellers are still frozen, but they’ve thawed out slightly from 2023 levels. The green bars help show the pre-2020 normal, and we’re nowhere close (still about 38% or so below that level).

BUT WHAT’S HAPPENING WITH BUYERS?

I’m glad you asked. We’ve actually seen more pending contracts in January 2024 compared to January 2023, so we don’t have a situation with vastly more supply compared to demand. This is something we can watch closely over the spring, but right now we don’t have a lopsided market where supply is far outweighing demand locally.

HELLO REAL ESTATE PROFESSIONALS:

Friends, this is really good news because it’s volume that pays the bills in real estate. I realize this isn’t a huge change, but more is absolutely the direction we want to go. This is also good for buyers and sellers because it’s healthy in the housing market when more people are participating.

THIS IS NOT ABOUT FEAR, BUT LIFESTYLE

Someone told me sellers are afraid of future price declines, so they’re listing their homes. Look, that’s fine if true, but I disagree. The word fear doesn’t typify the bulk of sellers I’m talking to right now. I find sellers today are mostly listing for lifestyle reasons such as inheriting a property, moving out of state, job transfer, moving up, moving down, divorce, etc… Fear is not the overarching theme or motivator. If it was, I’d be the first to say so.

An Instagram reel I made:

View this post on Instagram

A post shared by Ryan Lundquist (@sacappraiser)

WE NEED TIME TO SEE THE TREND:

This looks like a trend, but let’s see what happens in February and throughout the spring. In other words, I think it’s premature to say, “Sellers have thawed out completely, and we’re only going to see an increase from here on out.” Hopefully that’s the case. Now let’s see what the market does.

Thanks for being here.

Questions: What are you hearing from sellers right now? And what are you hearing from buyers? What stands out to you above?

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The housing market has ’80s vibes

January 23, 2024 By Ryan Lundquist 24 Comments

The housing market has ’80s vibes. The ’90s are back for clothing, but it’s the early 1980s when it comes to housing narratives. Today, I want to show some headlines from over forty years ago, and I’d love to hear your take.

A meme of John Cusack holding a boombox above his head playing, "In Your Eyes" by Peter Gabriel. This is from the 1989 movie, Say Anything. The middle of the image says, "1980's housing vibes."

NEW MEME:

A Jason Kelce meme that I shared during the game on Sunday.

THANK YOU TO THE SACRAMENTO BEE

I got permission from The Sacramento Bee to use these images. I found the headlines through the Sac Library archives. I am a digital subscriber to The Sacramento Bee, and I appreciate what they do (please subscribe).

YO MAMA’S HOUSING SHORTAGE:

Did you think the housing shortage narrative was new? Nope. I can’t say exactly when this began, but it’s been around for many decades. In other words, it’s not just my shortage, but it’s my mom’s too. Check out this headline from November 1980 in The Sacramento Bee.

Source: SacBee today / archives

OOPS, THE FED DID IT AGAIN:

This headline from May 1980 could be written about today’s market. Here’s the formula. The Fed increases rates sharply, that changes affordability, and we see sales volume slump. However, new construction back then really struggled, but today in light of so many sellers sitting in the existing market, builders have been thriving. And yes, the “oops” mention is a Britney Spears reference. Sorry.

Source: SacBee today / archives

BUYING A HOUSE FOR 11 RASPBERRIES:

This is a viral bit from a few years ago that fits perfectly today. There are deep emotions when it comes to affordability because we’re talking about people’s lives. This isn’t just an academic conversation with stats. This is very personal, and that’s why different generations need to work to understand each other.

LIKE, TOTALLY INSERT MILLENNIALS OR GEN Z:

Look, Baby Boomers ended up winning big-time, but isn’t it interesting to see how it wasn’t a walk in the park for Boomers at the time? Check out the highlighted portion below. Frankly, this piece could be repackaged today, but instead of “Boom Babies,” we could insert “Millennials” or “Gen Z.” By the way, I’m Gen X. Not that I need to say this, but I imagine some are wondering. Technically, I’m a younger Gen X as I missed being a Millennial by five years. But forget about me because that’s what people do about Gen X.

Source: SacBee today / archives

RECYCLING HOUSING NARRATIVES:

This article from December 1981 mentions inflation, dropping sales volume, younger adults having to live at home longer possibly, and so many of the things we’re talking about today. All too familiar. Isn’t it wild how these narratives from yesteryear have been recycled? Like I said, ’80s vibes.

Source: SacBee today / archives

LOWER, BUT NOT A PIECE OF CAKE

Back in 1981, the median price finally went above $100,000 in California, and it’s mind-blowing to even think about that since the median home price in California was $819,740 last month (CAR). However, it wasn’t easy to buy a house back then due to high rates, and I think that gets lost in translation sometimes as we talk about housing dynamics. By the way, I’m not trying to diminish the problem of affordability today (see more on that below). I just wonder sometimes if we only look back to the “good old days” thinking it was a cinch for buyers. With that said, if you brag, “I paid $56,000 for my house in 1982, and I’m so glad I did,” that’s a tough thing to hear today for many young people who feel hopeless. Not cool to do. But young people aren’t off the hook either because too many Boomers are unfairly labeled as just one thing. Anyway, I’m getting off topic, but it’s good to evaluate how we’re showing up.

NOTE: Adjusting these prices for inflation doesn’t come anywhere close to today’s prices. $100K adjusted for inflation is $346K.

Source: SacBee today / archives

Anyway, I hope this was interesting. I got intrigued poking around old articles, and I hope you enjoyed checking this out too.

A FEW CLOSING THOUGHTS

1) Affordability today is no joke: I’m not diminishing the reality of a lack of affordability today, and I hope to not get destroyed in the comments from people who think that is my intent. There is no sugarcoating the cost of buying and renting in 2024. Last year, we were missing about 40% of local buyers from the pre-2020 normal, and a lack of affordability was the big culprit.

2) Every generation struggles: I know it might sound a bit off to say this, but one encouraging layer here is seeing previous generations struggled too. I think it’s easy to feel alone in the struggle to afford, but there is something maybe mildly comforting about seeing that affordability has not always come easily through the decades. In other words, you are not alone. The truth is it’s easy to feel overwhelmed with housing headlines today, but many of these narratives have existed in the past too (I still think it’s more challenging to make it work today though).

3) There is hope: History tends to rhyme, and one thing about housing markets is they are always changing. As a broker friend told me last year, “the good markets don’t last, and neither do the bad ones” (Nick Brooks). I think that’s spot on for real estate professionals, and it’s true for buyers and sellers. In short, right now we’re in a tough part of the housing cycle because the market feels very broken with sellers sitting back, but it won’t always be like this. I can’t promise the future, but I can look to the past and say there is an ebb and flow to affordability, sales volume, and homes prices. And sometimes things end up working out even when it seems there is not a pathway to financial progress or homeownership.

Thanks for being here. And thank you again SacBee for the permission.

Questions: What stands out to you most about the headlines above? Do you think we’re going to be recycling headlines today for future generations also? I’d love to hear your take.

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The spring housing market is waking up & random stats

January 17, 2024 By Ryan Lundquist 16 Comments

The spring market is awake. Today I want to talk about some trends I’m seeing, debunk a myth, and share some super random stats involving pickleball, Starbucks, and other stuff (sorry). Haha.

THE SPRING MARKET IS WAKING UP

The market typically starts to wake up in January, and then we really see things kick into high gear by March when more new listings and more pendings really start to happen. But right now, we’re seeing an uptick in new listings, more bidding wars, and buyers pouncing on the good stuff so to speak. Keep in mind it takes a couple of months before today’s pendings start to close, so there is a lag in seeing a hotter market in the sales data.

THIS IS NOT 2021 THOUGH:

Let me clarify that this is NOT the insanely hot housing market we had in 2021, so let’s keep things in perspective here.

NEW LISTINGS COULD OUTPACE LAST JANUARY

New listings are starting to increase as the spring market takes off. Basically, they’ve been flirting with January 2023 levels, and as of now it looks like they could just outpace last year (we’ll know for sure in two weeks). Keep in mind, January 2023 was the lowest January ever, so we are NOT seeing sellers rush the market today. Yet, more new listings are exactly what we want to see happen. I mentioned in my 2024 outlook that this year is poised to be far from normal with the number of sales and listings, but the hope is to see more.

A HOUSING MARKET MYTH:

The summer has the hottest temperature, but summer is NOT the hottest time in the housing market like so many sellers believe. Locally, we see prices usually peak in June, it starts to take longer to sell in the summer for the rest of the year, and the number of new listings and pending contracts usually climax in May. In short, by mid-summer, we’ve basically peaked for the year statistically. On that note, sellers should list whenever they want. No pressure from me. Yes, demand is at the height during the spring, but sellers aren’t always ready to list then. My advice? Do what you need to do. You can sell in any season as long as you are priced for the market.

BIDDING WARS ARE PICKING UP:

Do you see the dotted line on the right side of the graph? That’s the percentage of multiple offers based on what I’m seeing in pending contracts so far. This shows us demand is heating up for the spring as the percentage of multiple offers has increased. Keep in mind, the percentage of sales with multiple offers tends to peak in April or May each year, which complements my point about the summer NOT being the hottest market. Also, these are closed sales, so the percentage of multiple offers technically peaks in the pendings in March or April before these properties close in April or May.

PENDINGS ARE LIFTING OFF THE GROUND:

We’re starting to see the number of pendings tick up as the year begins, and here’s a cool way to look at pendings so far. For instance, 61.1% of pendings so far have been below $600K. My advice? For anyone who works in real estate, be in touch with where the action is happening, and position yourself for that. And sellers, be aware that not all price points are going to have the same temperature or number of buyers (overpricing can happen in any range).

Here’s a way to look at the number of pendings so far in the region for the month of January only. We’re hovering around half the number from last year. Keep in mind it takes a little extra time for pendings to be counted since properties need to be exposed on the market before getting into contract.

WATCH THE GAP:

All that said, I’m going to be watching new listings vs pendings closely ahead. If the gap starts to widen with notably more new listings than pendings, that can soften the market. Only time will tell.

Anyway, those are just a few things on my mind about 2024. Let’s keep in touch, and please let me know what you’re seeing out there.

RANDOM STUFF

As promised, here’s some random stuff. I can’t help myself. This is what tickles my funny bone, and I’m also intrigued with real estate marketing.

HONEY, STOP THE CAR:

Just for fun. Here’s how many times the phrase, “Honey, stop the car,” has been used in our local MLS. Haha. On a serious note, this was barely used last year, and I’m concerned. Could we see a 2024 rebound? Fingers crossed.

PICKLEBALL IS ALL THE RAGE:

The sport of pickleball has grown in popularity, so it’s no surprise we’re seeing more mentions in MLS. Honestly, what’s stunning though is to see so many mentions in 2023 despite 40% fewer sales last year. Here’s a pickleball post and interview I did a few months back.

STARBUCKS MENTIONS IN REAL ESTATE LISTINGS:

Is Starbucks a selling point? At what price range? The number of mentions has really grown through the years. Keep in mind volume was quite low in 2022 and 2023, which likely explains the drop.

THE SHE-SHED HOUSING MARKET INDEX:

Should we be concerned? “She Shed” wasn’t mentioned as much this last year. Granted, volume was down 40%, so we have to take 2023 with a grain of salt, but what does this mean? Haha.

ELEVATORS ARE ON THE RISE (THAT WAS A DAD JOKE):

A reporter called me recently to talk about elevators. What a random story idea, but his article ended up being interesting. Anyway, mentions of elevators have increased through the years in MLS. Granted, elevators are super rare, but we do see them show up in some high-end sales, and we’re also seeing some builders install them in various neighborhoods (Crocker Village, some in Midtown, etc..). I even spotted an owner who installed one in a tract neighborhood in Rancho Cordova (Anatolia). Where have you seen them?

TRADER JOE’S

And here’s a scatter graph to show Trader Joe’s mentions. Do you shop there? We do. My family shops at multiple stores because it seems impossible to get everything all at one place at a reasonable price. But backing up, if I was an agent, I’d love to be the first person to ever mention something. You know, start a trend. But maybe that’s why I shouldn’t be an agent. Haha. 🙂

LADY BIRD HAS ONLY BEEN MENTIONED THREE TIMES:

A few years ago, the movie Lady Bird came out, and it was set in Sacramento. Some people on social media at the time would say stuff like, “Bro, every Realtor is mentioning Lady Bird in their listings,” but that’s actually not true. I was only able to locate a total of three listings ever that used the phrase, Lady Bird. Technically, there are four, but one listing is located on a street in Elk Grove called Lady Bird, and it mentions the street name in the listing (which doesn’t count as a movie mention). Just wanted to clear that up. And on a related note, here’s something I wrote about fame and real estate.

Thanks for being here.

Questions: What are you seeing in the market right now in 2024? Anything stand out to you above? I’d love to hear your take.

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

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