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El Dorado County

Freakish home price growth so far in 2022

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Freakish price growth? Yes. That’s exactly what we’ve been seeing. Here we are again with what feels like a carbon copy of last year, which was our most aggressive market ever. In short, 2022 is doing its best to crush 2021. Let’s talk stats and perspective. I’d love to hear your take.

UPCOMING PUBLIC SPEAKING GIGS:

  • 3/15/2022 NARPM Luncheon (details)
  • 3/22/2022 SAFE Credit Union market update (details)
  • 4/28/2022 SAR Think Like an Appraiser (details)

WHAT IS HAPPENING?

Buyers are essentially running to the market to get in before rates spike more. On one hand affordability has declined as rates have risen substantially lately, but so far this has only created a frenzy to buy. At some point theoretically we’d expect to see demand soften due to rate increases, but we haven’t hit any sort of inflection point yet where buyers are backing off the market. That’s something to watch though with the number of purchase mortgage applications, pending contracts, and sales.

FREAKISH PRICE GROWTH:

Below I’d like to show a few examples of what price growth looks like in the Sacramento region right now. I suspect many markets across the country look something like this too.

A QUICK RECAP:

Some quick stats. Feel free to share some of these images on your social channels too. But please see my sharing policy. Thanks.

1) MASSIVE MEDIAN PRICE GROWTH:

This visual shows the median price in February in black, and this year is so far above others. It’s normal to see prices rise in February, but this is massive growth – especially in the eleventh year of this price cycle.

2) RECORD-BREAKING DOLLAR GROWTH:

This year the median price ticked up $31,000 from January to February. This is essentially the largest dollar gain we’ve seen in the Sacramento area between these two months. From a percentage standpoint this was a 5.56% increase. This isn’t the highest percentage ever, but it’s the second-highest percentage gain from 2004 (2015 saw a larger gain).

3) WEEKLY PRICE GROWTH HAS STARTED TO RAGE:

Check out the black line. That’s 2022, and it’s been raging higher. Until the last week of February it looked like the median price for the month was going to be strong, but nothing too crazy. But then stats starting coming in, and we see a much different trend. Remember, closed sales from last week really represent the market from about a month ago when these properties got into contract.

4) BUYERS PAID WAY ABOVE NORMAL:

On average buyers paid nearly $16,000 over the asking price last month. This is far above a normal February where buyers tend to pay closer to $10,000 BELOW the list price. It’s important to note February 2022 was about twice as much as February 2021. Keep in mind this is the average of every single escrow. This number doesn’t perfectly describe every single transaction. In other words, some buyers went way above this number and some went lower. The takeaway here is to know how disconnected this number is from normal rather than offer $15,764 above list price thinking that is the winning number. It might have to be way more. Or in some cases it could be less.

5) FEWER MULTIPLE OFFERS TECHNICALLY

This month there were fewer multiple offers compared to last year at the same time, but we’re actually seeing a more aggressive market today. On one hand this stat suggests the market is slightly cooler in temperature, but it doesn’t feel cooler because the offers that are being made are higher.

6) BUYERS MADE MORE AGGRESSIVE OFFERS:

This month there were fewer multiple offers compared to last year, BUT the market was more aggressive since buyers offered higher amounts above the list price to secure properties. This speaks to buyers having a fear of missing out on low mortgage rates (and anemic supply of course).

7) MORE INVENTORY IS COMING

We are seeing more listings hit the market. Typically, the market really starts to hit more of a stride in March with listings coming, so stay tuned. We won’t have enough listings, but more is better.

YEAR OVER YEAR:

Year over year stats are important to digest, but don’t forget to look at month to month stats to understand what the market is doing right now. Also, not every location and price range are going to have the same stats.

MONTH TO MONTH:

Year over year stats are important to digest, but don’t forget to look at month to month stats to understand what the market is doing right now. Keep in mind Placer County has a limited number of sales too, so I would take Placer with a grain of salt from month to month. 

OTHER VISUALS:

As if anyone really wanted more…

MARKET STATS: I’ll have lots of market stats out this week on my social channels, so watch Twitter, Instagram, LinkedIn, and Facebook.

Thanks for being here.

SHARING POLICY: I welcome you to share some of these images on your social channels or in a newsletter. In case it helps, here are 6 ways to share my content (not copy verbatim). Thanks.

Questions: What are you seeing out there in the market?

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

Home prices & mortgage rates are soaring

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There are lots of big questions in life. Are you playing Wordle? Did you like the Super Bowl halftime show? And what are rising mortgage rates going to do to the housing market? Let’s talk about this.

A wordle example with housing words

Okay, really quick. Yes, I play Wordle almost every day. And yes, I liked the halftime show. What about you?

UPCOMING PUBLIC SPEAKING GIGS:

  • 2/18/2022 WCR El Dorado market update (details)
  • 2/25/2022 Placer Assn of Realtors market update (details)
  • 3/15/2022 NARPM Luncheon (details)
  • 3/22/2022 SAFE Credit Union market update (details)
  • 4/28/2022 SAR Think Like an Appraiser (details)

My take on mortgage rates: For now, buyers have been sprinting to the market to get in before rates rise. This has created an auction-like feel in the home-hunting trenches. Thus, for the time being the hot housing temperature has not been dampened by rate increases. But as we saw clearly in 2018, there was a point where buyers backed off when rates rose between 4.5-5.0%. So, rate increases do matter. The struggle is we’re having fewer sellers list their homes, so even with rate increases, supply is just so diminished that there is more upward price pressure present today. All that said, we can’t expect for the housing temperature to stay exactly the same if affordability keeps declining through rate increases and inflation. Again, we haven’t hit any sort of inflection point where buyers pull back, but we need to keep an eye on what happens with rates because absurdly low rates have been a huge driver in creating the market we’ve had these past two years.

A non-scientific Twitter poll I did a few days ago: 

A poll on Twitter to ask what people thought of rising mortage rates. 33% said rates going up would affect the housing market whereas 41% said no, and 24% some maybe.

What do you think? I’d love to hear your take.

Thanks for being here.

—–——– BIG MARKET UPDATE FOR THOSE INTERESTED ———––

This image says "Caution" and it's yellow and black. Then it says "big monthly market update below." Skim or digest slowly.

QUICK SUMMARY:

Is the market more or less aggressive compared to last year at the same time? So far, the housing market in Sacramento is slightly less aggressive when considering January stats. But let’s remember we are now comparing this year with an absolutely insane market from January 2021. Anyway, the stats show today’s market is profoundly elevated from a normal January, but it’s also slightly “slower” than last January. Stay tuned to see how the stats evolve in coming months. And remember, our housing narrative changes as stats change.

Dude, volume was down? Let me address something since people keep asking. Sales volume in January 2022 was down about 5% from one year ago. It’s easy to look at this and say the market is starting to struggle, but this January was actually fairly normal when we consider the past few years. It’s just that 2021 was elevated because we basically didn’t have a fall season in 2020, which led to more sales than usual.

A quick recap:

Some visuals eh…

SHARING POLICY: I welcome you to share some of these images on your social channels or in a newsletter. In case it helps, here are 6 ways to share my content (not copy verbatim). Thanks.

MOVING ON UP:

The black line is the weekly median price. This is a weekly view before monthly stats come out for February. Do you see the rise? Yep, prices are going up (not a shocker). Moreover, when looking at pending contracts, we are seeing a higher percentage of multiple offers compared to January, so clearly the market is getting hotter (normal for the spring).

Weekly medina price line graph

Here are a couple of monthly visuals too. The second one shows the preliminary median price for February. This year we are on the cusp of breaking $600,000 for the median price. We’ll see.

YEAR OVER YEAR:

Year over year stats are important to digest, but don’t forget to look at month to month stats to understand what the market is doing right now.

Sac Region housing stats

Sac County - Jan 2022 housing stats

Placer County housing stats

El Dorado - Jan 2022 housing stats

Yolo County Housing stats

STILL SELLING ABOVE THE LIST PRICE:

Not everything sells above the list price. It almost offends some people to say that, but it’s the truth. I know it feels like literally everything is selling above the list price, but that’s not the story the stats tell. Think about it this way. There are always price reductions because not all properties are priced correctly, right? So, this means not everything is going to sell above the list price. Anyway, the key here is to ask what normal looks like. In January we should’ve seen properties selling about 3-4% below their list price, but instead we were just above the list price on average. Here is a quick discussion on my Facebook page about what normal looks like for January compared to what we have right now.

HOW IS THE MARKET DISTRIBUTED?

This visual shows how prices are distributed throughout the market. Do you dig this one?

FRESH AFFORDABILITY IMAGES:

There is no mistaking prices have risen and the housing market is becoming more difficult to afford, but stats still show buyers are getting it done when we look at sales volume being more or less normal. This is not to gloss over the reality of some buyers being priced out of the market. I’m just saying statistically sales are still happening at strong levels. But back to affordability, here is a look at the latest affordability stats. The 39% figure means 39% of households can afford the median price (per CAR stats).

MULTIPLE OFFERS:

We’ve started to see multiple offers increase again, which is normal for the spring season. In short, multiple bids are lower than last January, but they’re far elevated beyond normal. And pendings are getting a higher percentage than January already, so this line on the right is poised to tick up.

OTHER VISUALS:

As if anyone really wanted more…

MARKET STATS: I’ll have lots of market stats out this week on my social channels, so watch Twitter, Instagram, LinkedIn, and Facebook.

Thanks for being here.

SHARING POLICY: I welcome you to share some of these images on your social channels or in a newsletter. In case it helps, here are 6 ways to share my content (not copy verbatim). Thanks.

Questions: What are you seeing out there in the market?

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

The most aggressive housing market ever?

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Was last year the most aggressive housing market we’ve ever had? I’m going to go out on a limb and say HECK YES based on the stats. But what do you think, whether you’re local or in a different market?

A picture of a road in the desert with the caption question, "Most aggressive housing market ever?"

January public speaking gigs:

Post outline (since this is longer):

1) Records were broken
2) Sacramento region recap
3) Sacramento County recap
4) Placer County recap
5) El Dorado County recap
6) Yolo County recap

STATS: Annual stats include the entire year (Jan to Dec). These stats are not just a comparison of Dec 2020 with Dec 2021.

1) RECORDS WERE BROKEN:

A) Fastest-moving market ever: This is no surprise to stressed buyers and a stressed real estate community, but we had the fastest-moving market ever in the region. It took an average of 17 days to get into contract, which is the lowest annual number on record. The wild part is the median days on market was only 7, which means half the market got into contract in a week or less.

This visual shows a line graph of days on market and median days on market from 2000 to 2021.

B) Highest dollar growth ever: Prices increased more than ever this year in terms of dollars. The median price increased by $90,000 and the average sales price was up about $99,000. These are both records. The stunning part is this took place in our tenth year of price growth in this cycle.

What about percentage growth? Percentage growth was NOT a record even though price metrics were up about 20%. The truth is we’ve seen this type of percentage growth before, though when prices were lower it was so much easier to see higher percentages. This is why noting the dollar amount is so important. All that said, let’s remember part of the glowing numbers here has to do with more sales at higher prices (which pads the stats).

C) 18 months of less than one month of supply: Since July 2020 we’ve had less than one month of housing supply in the Sacramento region. There has never been a stretch this long. It wasn’t even this bad during 2013 when investment funds were gutting the market. Having one month of inventory means if no other listings came to the market we would only have enough for one month’s worth of buyers.

A line graph to show the months of supply over the past 2 years (this helps show we've had 18 months of supply under one month

D) Highest percentage of multiple offers ever: In April we reached the highest percentage of multiple offers we’ve seen in the region at 76%. It’s easy to say 100% of sales are getting bid up with multiple offers, but that’s not true. Check out how disconnected a figure like 76% is from normal though. The real shocker though is 57% of sales in DECEMBER had multiple offers, which is higher than any other SPRING market besides 2021. Read that again. By the way, this stat has only been available for five years (though it’s likely April 2021 was the highest ever still). We can debate in the comments or cage fight if needed.

E) One year of paying at or above the list price: Every month this year buyers paid at or above the list price. I know, this sounds a bit dull or obvious, but it’s truly sensational. Take a look at the image to show how far off the orange line (2021) is from the rest of the pack. In a competitive year we might see a few months where buyers on average pay at or above the list price, but last year this happened ALL YEAR LONG. Even in December buyers on average paid right at the list price. In a normal year we should’ve seen 3% or more below the list price in December. Keep in mind we did see seasonal slowing for the second half of the year, but it didn’t feel like slowing to many since the market basically “slowed” to a really elevated level.

NOTE: This is the average. There are many examples of buyers paying well above the asking price and even 15% of buyers last month paid below.

F) More million dollar sales than ever: This past year 7% of sales were above one million dollars and that’s the highest percentage on record. Well, I should say this is the highest percentage without adjusting for inflation, so there is an asterisk here. If someone wants to adjust for inflation, please do so. Also, there were twice as many million dollar sales compared to 2020.

CONCLUSION: In short, the stats are insane. Can you see why I’m saying it was our most aggressive year ever? You don’t need to agree with me, but if you disagree, I’d love to hear why. Also, I don’t have stats for 1853 during the Gold Rush, so I’m really just talking about recent history.

Any thoughts?

——————— huge market recap below ———————

THE SHORT VERSION:

The market in 2021? Prices went way up, housing supply was anemic, volume was slightly higher in most counties compared to the previous year, and properties sold as fast as they ever have. Most of the year the market really felt like an auction due to supply and demand being so lopsided. We have a supply problem with sparse listings and we have a demand problem fueld in large part by mortgage rates around 3%. When looking at the past two years it’s apparent the market sped up again after years of slower growth. Ultimately while the stats are glowing, how many think having another year or two of growth like seems sustainable? I’m guessing few hands went up since affordability has been declining and mortgage rates are presumably going to rise. Anyway, enjoy an offensive amount of visuals and feel free to share some images too.

Thanks for reading my sharing policy so we’re on the same page.

THE LONGER VERSION:

I’ve outlined lots of recap stats below by county and I hope you find these useful. Keep in mind these are ANNUAL visuals that compare a year’s worth of sales to the previous year. This is why some of the visuals don’t have a normal up and down rhythm during the spring and fall. What do you see though? What stands out to you?

2) SACRAMENTO REGION (Sac, Placer, Yolo, El Dorado)

3) SACRAMENTO COUNTY:

4) PLACER COUNTY:

5) EL DORADO COUNTY:

6) YOLO COUNTY:

Thanks for being here.

SHARING POLICY: I welcome you to share some of these images on your social channels or in a newsletter. In case it helps, here are 6 ways to share my content (not copy verbatim). Thanks.

Questions: What stands out to you the most above? What are you seeing out there in the market?

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

Foreclosures for Christmas & housing on steroids

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Are you getting into the holiday spirit? I’m not there yet, but I’m hoping to find my way there. I mean, I did see the Foo Fighters play this week and that was incredible. But it didn’t really catapult me into holiday cheer either. Anyway, I’m open to ideas if you have some. For now here are three things on mind:

This visual shows a holiday wrapped gift and some decorations with a caption the same as the blog post title

1) ‘Tis the season for foreclosure press releases:

In the next week we’re going to start seeing press releases about foreclosures being delayed for the holidays. This is a nice gesture, but the truth is foreclosure is going to be unwrapped as a New Year’s gift instead. Even in Sacramento County we see bank-owned sales spike in the first quarter. Thankfully distressed sales aren’t common these days as there were only six bank-owned sales in the region last month (one quarter of one percent of sales).

2) Is this what a slow housing market feels like?

This is supposed to be the slowest time of the year in real estate and there is no mistaking the market has softened from the spring, but it’s still really competitive. This is exactly what I’m hearing from the real estate community and it’s the story stats are telling. As I unpack numbers, I want to reiterate my advice last week to buckle up for the beginning of next year. I’m telling you, we’re poised to begin 2022 at a really competitive spot – especially if this is what the slowest time of year feels like.

3) Speaking gigs in January:

Here are two events I’m doing next month. I’ll have two or three others also, but I haven’t seen details released yet.

Big 2022 market update at SAR: I’m doing a market talk on January 18th from 9-10:30am. Hope to see you there. Sign up here.

Top producer panel: I’m doing a market update at Granite Bay Country Club on January 12th and here is the most random promo video. I didn’t write this script, but I did play along. Haha. 

I hope you’re finding joy during this holiday season.

Thanks for being here.

—–——– BIG MARKET UPDATE FOR THOSE INTERESTED ———––

This image says "Caution" and it's yellow and black. Then it says "big monthly market update below." Skim or digest slowly.

QUICK SUMMARY:

Between November and December we tend to see the housing market hit its slowest point of the year, but it doesn’t really feel like that right now in the trenches. I mean, on one hand we definitely have less demand as some buyers are sitting out because the holidays are upon us. But for buyers playing the market it’s ultra-competitive. There is a smidgen of hope as buyers have slightly more power than the spring, but the market is still more elevated than usual for the time of year.

A quick recap:

This image summarizes other visuals in this report. It is a bullet point list of recent market stats in the Sacramento region. There are about 15 bullet points.

Some visuals eh…

SEASONAL MARKET ON STEROIDS:

That’s a really good way to describe the market right now. Statistics are showing clear seasonality, but the market is still way more competitive than it normally is at this time of year.

YEAR OVER YEAR:

Year over year stats are important to digest, but don’t forget to look at month to month stats to understand what the market is doing right now.

A recap of the Sacramento region year over year

MONTH TO MONTH:

Stats from October to November were somewhat flat. I mean, technically prices rose, but I wouldn’t make too much of that. At this time of year stats bounce around all over the place. In other words, when the market starts to slow at the beginning of summer we don’t always see a dramatic decline each month. Sometimes the numbers are up and sometimes they’re down month to month. Ultimately what I’m trying to say is don’t write home and talk about the market showing a price increase from October to November.

WHAT THE…. STILL SELLING ABOVE THE LIST PRICE:

Two years ago properties on average sold about three percent below their original list price at this time of year because that’s what tends to happen during a slower fall season. But last month properties on average sold at 100.27% of their original list price. This might sound incredibly minor to say homes sold 0.27% above their asking price on average, but compared to a normal trend, homes really should be selling a few percent below their list price. In short, this is bananas.

On average properties sold $1,671 above their original list price. Remember, this only represents the average. It does not perfectly describe every escrow because clearly some sold way above that amount, some sold at list price, and some sold below. The bigger issue is if we had a normal market properties on average should be selling about $15,000 or so below the asking price.

Being that only 13% of sales sold below the list price last month, that’s a sign the market is not overpriced as a whole. It is true that sellers who list too high are going to have properties that sit (seriously). It’s just stats show this is not what every seller is doing.

HOW IS THE MARKET DISTRIBUTED?

I’m glad you asked. This is a cool visual I’ve been making for a few months. It shows how prices are distributed throughout the market. Do you dig this one?

STRONG SALES VOLUME:

There is no mistaking prices have risen and the housing market is becoming more difficult to afford, but stats still show buyers are getting it done. This is not to gloss over the reality of some buyers being priced out of the market. I’m just saying statistically sales are happening at strong levels. Here is what sales volume looks like right now in various counties.

OTHER VISUALS:

As if anyone really wanted more…

MARKET STATS: I’ll have lots of market stats out this week on my social channels, so watch Twitter, Instagram, LinkedIn, and Facebook.

Thanks for being here.

SHARING POLICY: I welcome you to share some of these images on your social channels or in a newsletter. In case it helps, here are 6 ways to share my content (not copy verbatim). Thanks.

Questions: What are you seeing out there in the market?

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

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