It’s either hot or cold. A bidding war or crickets. That’s what I’ve been hearing from real estate agents about their listings. Today I want to talk briefly about the word on the street, hot pockets, and I have some really cool stats to share. Skim quickly or digest slowly by topic.
UPCOMING (PUBLIC) SPEAKING GIGS:
7/26/23 Fairway Mortgage (free and limited space)
8/18/23 Details TBD
8/29/23 Elk Grove Regional MLS Meeting
10/23 SAR Think Like an Appraiser (TBD)
10/26/23 Orangevale MLS Meeting
WHAT ARE PEOPLE SAYING ABOUT THE MARKET?
I run stats galore, but what people say about the market is important since the stories of today turn into the stats of tomorrow. Yet, I’m careful about stories because they’re subjective. I find some people are more in touch with the market than others too. Anyway, here’s a tweet I shared. Also, thanks to Amy Winslow for the title of my blog today.
IT’S A HOT POCKETS MARKET
The housing market is like a hot pocket taken out of the microwave a tad too early. Some portions are blazing hot while others are only warm (or cold). What I mean is not all neighborhoods and price ranges have the same temperature. Moreover, we’ve hit a seasonal peak, so the hot spring temperature is cooling. I first shared this analogy in 2016 and it seems fitting today.
WHAT’S HAPPENING RIGHT NOW?
We hit a seasonal peak in June in Sacramento like we normally do, and we’re undeniably seeing a slower market. But mortgage rates are also hovering around 7%, and that can have a chilling effect on buyers. So far, I’m not seeing any sensational changes in the stats, but there are about five hundred more active listings than pendings right now. This really isn’t a high number, and it’s normal to see more new listings hit the market around this time of year, but compared to April when there were more pendings than actives, it feels way different. This is something I’ll watch closely ahead, but for now the stats look mostly like they should for the time of year with all of the metrics slowing. With that said, I’m finding some of the stories from the trenches are more inflamed than the stats, so I’m paying attention to that.
We have a price-sensitive market where so many buyers are struggling to afford historically high prices at 7% rates. At the very least, the market peaking for the year needs to motivate sellers to price reasonably, reduce the price if needed, and offer concessions to buyers if required.
WHAT TO EXPECT FOR THE REST OF THE YEAR
It’s hard to predict the second half of 2023 because what happens with mortgage rates and inflation are such big factors. The housing market could be really dull if rates increase, but it could be more competitive if rates go down. Here’s what normal looks like for the second half of the year:
– more price reductions
– lower demand
– fewer multiple offers
– more concessions to buyers
– softening prices
– longer days on market
– lower SP/OLP%
– lower sales volume
– fewer new listings
– new listings tend to have smaller square footage
– one last dash to the market in the fall before the holidays
– other (add in comments)
BUT SERIOUSLY, THE MARKET ISN’T THE SAME
I’m excited for these new stats. Do you see how the market isn’t the same by price range? If you like these images, please use them on your socials unaltered with credit of course. Thanks.
NOTE: Smaller counties tend to be all over the place since there aren’t as many data points. I recommend giving more weight to the region and Sac County.
And by special request (just once):
DON’T GET SUCKED INTO SENSATIONALISM
For anyone who wants to be a real estate expert, now is your time to shine. Understanding the seasonal trend is a huge part of being on top of the market, and my sense is every year some people freak out about the market changing because they aren’t anchored to the stats. My advice?
1) Know the season: Know how the seasonal market normally changes so you can give good advice and spot anything abnormal.
2) Paint the trend: Be careful about painting the entire market trend based on your personal experience. The properties on your desk or what you’ve looked at may or may not line up with the stats.
3) Cultivate objectivity: Get to know the numbers and cultivate objectivity. My sense is objectivity does NOT happen by accident. It’s something that has to be cultivated by knowing the stats and sticking to them when people misinterpret the trend. The market should be slowing at this time of year, and that’s something to embrace. Granted, if the market does something more than just slowing, we’ll be able to catch that by watching lots of metrics like the number of pendings, number of actives, price reductions…
4) Slowing vs crashing: I find it’s easy for the real estate doom narrative to interpret slowing as crashing. It happens every single year. Maybe it’s intentional to get clicks (gross), or maybe doom prophets are naive about the seasonal trend. Look, if prices go down and the market shows a huge dip this fall, that wouldn’t be a bad thing because we need more affordability. But let’s not look at a change in days on market or softer prices and call it a crash unless that’s what the stats are collectively showing. In real estate it’s dangerous to impose a narrative on the numbers. Not a fan of agendas.
Thanks for being here.
Questions: What stands out to you about the stats? Has it been a bidding war or crickets for you lately? I’d love to hear your take.