The housing market is definitely heating up for the spring, but it still feels frozen with so many buyers and sellers sitting right now. I recently talked about sellers sitting out of the market, but today let’s look at buyers.
UPCOMING (PUBLIC) SPEAKING GIGS:
3/06/23 Matt the Mortgage Guy YouTube Live 3pm PST
3/09/23 Matt Gouge Event (sign up here)
3/10/23 PCAR Market Update Lunch & Learn
3/28/23 Downtown Regional MLS meeting
4/1/23 NAA Conference in Sacramento
4/13/23 Realtist Meeting
5/4/23 Event with UWL TBA
GOOD & BAD TIMES IN REAL ESTATE DON’T LAST
Last week I had lunch with a real estate broker who’s been in the business a long time. He said the good times never last. And neither do the bad times. I just wanted to remind everyone of this truth. I loved the way he put that.
14 YEARS OF BLOGGING
My blog turned 14 years old yesterday. It’s been a fun ride, and I’m so grateful for all the relationships that have been built. Here’s to lots of conversations ahead and getting through these awkward teen years.
HELLO SPRING VOLUME
The housing market is clearly heating up for the spring. The black line below represents 2023 weekly closed sales, and we’re starting to see an uptick for the spring season. It’s a normal trend for the time of year to see volume increase, so this line should keep moving up even though it’s still clearly down from previous years (which reminds us the market also feels frozen).
MISSING & HAPPENING
When looking at the past 60 days of closed sales compared to last year, we’re missing 42% of volume this year. It’s easy to say we’re seeing fewer sales because of fewer listings, but this is about affordability rather than not enough listings (even though new listings have been down). For friends who work in real estate, I suggest dwelling on the part of the market that IS happening. I recommend obsessing over every escrow to understand who is buying and selling in today’s market (clues for how to focus business).
Okay, 2021 did have more sales, so let’s look at the pre-pandemic average too. This makes a slight difference in the stats, but really nothing major.
SELLERS & BUYERS
Sellers, the pool of buyers shopping today is still much smaller than normal, which means it’s critical to price correctly and negotiate as needed. Don’t walk into the room like you have all the power because buyers are sensitive to paying the right price, and we’re not seeing rampant overpaying like we did in 2021 (even though some properties are getting bid up). And buyers, be patient, be comfortable with the mortgage payment, recognize competition isn’t dead, and get all the market will give you.
PENDINGS DID THE LIMBO DURING JANUARY
2023 started with low pendings, but that’s not a shocker since it’s been the trend for many months. So far, the story is the same in February with subdued pendings, though the number of pendings is picking up for the spring as the market heats up. The hope is to see pending volume tick up more substantially as affordability improves, but that’s tough with rates shooting up lately. For weekly pendings, check out Redfin data.
BUYERS HAVE BEEN SITTING SINCE THE SHIFT
January 2023 is obviously lower than the start of any other year, but check out the black line (2022). Pending contracts have been tapering since the market changed last year, so we have a clear trend of buyers holding tight. The reality is the graph for new listings looks just the same, so we have a chunk of both buyers and sellers sitting right now.
We’re seeing the seasonal market heat up right now, but the market still feels a bit frozen since we’ve been missing about 40% of buyers. The bottom line is we need affordability to improve to get back to normal levels. I feel like a broken record saying this, but it’s true.
I hope this was helpful.
Questions: What is it going to take to see more buyers? What are you seeing right now in the listings and pendings? I’d love to hear your take.