Finally. We’ve seen a massive change with housing inventory. But is it because sellers are rushing to list their homes? Nope. That’s not the culprit. Let’s talk about supply and some things on my mind about today’s market.
UPCOMING (PUBLIC) SPEAKING GIGS:
7/26/22 Navigating the Shift (sign up here (for real estate community))
8/11/22 Realtist meeting (sign up here starting 7/27/22)
8/15/22 YouTube Live with Matt Gouge (details TBD)
8/25/22 State of Housing Brunch & Learn (sign up (for real estate community))
FIVE THINGS ABOUT TODAY’S HOUSING MARKET
1) The spike in housing supply is NOT due to sellers:
In a short period of time, we went from having three weeks of supply in the Sacramento region to ten weeks. What is causing this change? It’s easy to pin this on sellers rushing to list, but that’s NOT the case. This is actually about fewer buyers getting into contract. We’ve seen close to two thousand fewer sales since May, which means listings that normally would’ve sold are still on the market. In other words, the spike in supply came from weakening demand rather than more listings hitting the market.
SUPPLY PROJECTION: 2.5 months of supply is a projection based on what volume looks like it will be by the end of July. This means the number will be more solid in two weeks once most sales for the month have closed in MLS. A range would be 2.2 months to 2.5 months if we wanted to go wider. I pulled these stats yesterday, and today my projection is 2.38 months for the region. Just a heads-up.
Not kidding about fewer listings: Since the pandemic we’ve been seeing a subdued number of new listings, and there has NOT been a spike lately either (see blue line).
Seriously, this is about buyers: If you don’t believe me about fewer sales, take a look at the black line (2022). Sales volume has taken a nosedive over the past few months, which has been the x-factor in adding to the pile of available listings. Remember, housing supply can grow from sellers listing more often or even buyers purchasing fewer homes.
2) Dating advice or real estate advice?
It seems like lots of housing advice sounds like dating advice lately.
– Be patient.
– Be realistic.
– You have one shot to make a first impression.
– Go all out with your best foot forward.
– It’s tough out there right now.
– It’s different today. Not like what it used to be.
– It can take time to find the right person.
Sorry if that was cringe. Here are price drops to make up for it.
3) Buyers aren’t getting appraisal waivers very often:
Getting an appraisal waiver from the lender during a purchase probably isn’t going to happen. It’s just not that common for lenders to let the purchase go through without an appraisal. It looks like fewer than ten percent of purchase loans are getting an appraisal waiver. Please note a lender’s appraisal waiver is not the same thing as a buyer removing the appraisal contingency.
4) New construction volume is doing the limbo:
June was a brutal month for new construction sales in the Sacramento region. Per North State BIA data, volume was down 58% from last June and more akin to 2014 levels. This is a bigger hit than the resale market, which was down closer to 25% in volume last month.
5) No price range is immune from the trend:
No price point is immune from the sting of higher mortgage rates. Stats from the California Association of Realtors show all price ranges in June in the state saw fewer pending contracts. Of course, not all neighborhoods and property types are going to have the exact same temperature, but there is no mistaking an impact throughout the entire market. Or like the saying goes, all ships rise and fall with the tide.
Thanks for being here. I truly appreciate it.
Questions: What stood out most to you? Any advice you would add to the list? I’d love to hear your take.