market stats

Changing housing temperature

August 29, 2022 By Ryan Lundquist 26 Comments

The housing market went from steaming to stagnant a few months ago, and now it seems to be slowing down a bit. Now that some time has passed, we’re getting more stats, so let’s crunch some numbers to show what’s happening with sales volume. By the way, I have a free download if you want to make charts like this.

dark brown rustic aged barn wood planks background. There is a white rectangle in the middle of the image with black text that reads, "Changing housing temperature."

UPCOMING (PUBLIC) SPEAKING GIGS:
9/08/22 SAFE CU “Stats & Mimosas” (sold out)
9/15/22 Market update in Midtown (details TBD)
10/07/22 Market update with SAR (Sign up here – On Zoom)

FREE TEMPLATE DOWNLOAD:

If you like the tables below, click here to download an Excel template to make visuals like this for your area. Just plug in the information from your MLS and the template will do the math for you. I included a longer table and a shorter one. Maybe focus on local cities or ZIP codes, or surrounding counties. Make sure you have enough data to be meaningful. I hope this helps.

A NEW MEME:

Sellers, it’s a much different market today…

A meme with a car making a fast right turn. The left turn says "2021 and the right turn says "negotiate." Then above the car it says "2022." The idea is it's a much different market today where sellers have to negotiate.

SLUMPING SALES VOLUME IS THE BIG TREND:

It’s not a shocker that buyers started to back off the market when mortgage rates shot up earlier in the year. And now that we have a few months of sales under our belt, let’s take a look at actual numbers comparing May to August this year with last year. In short, most areas easily saw 20-30% fewer sales, though the trend isn’t the same everywhere. Keep in mind the numbers can be wonky when there aren’t many sales (so take some areas with a grain of salt).

NOTE: Thank you to those who asked for various areas on my social channels last week. I think I got to mostly everything. I can try to get to a few others in the comments, so don’t be afraid to ask.

SACRAMENTO COUNTY:

A table to show sales volume in Sacramento County between May and August 2021 and the same time period this year (listed by cities and CDPs).

A table with Sacramento County volume changes from May to June 2022 (neighborhoods and a few ZIP codes)

PLACER COUNTY:

A table to show Placer County volume this year compared to last year (May to August)

EL DORADO COUNTY:

A table to show El Dorado County volume last year compared to this year (May to August)

YOLO COUNTY:

A table to show Yolo County sales volume between May to August (last year compared to this year)

WE NEED TIME TO SEE THE TREND:

As time goes by it’ll become more apparent how various price ranges and locations are faring in today’s market. But for now, I hope these stats will at least give a small window into demand, and maybe clues about some different price points. Or maybe they’ll prod us to investigate some areas more.

IS THE MARKET STARTING TO LEVEL OFF?

Since June we’ve seen fewer new listings in the Sacramento area, and that seems to be giving a bit of space for buyers and sellers to adjust to change. It’s as if some stats are starting to go slightly more horizontal lately instead of showing the really sharp change we saw from May to June. In other words, a sharp drop isn’t going to show up in the numbers every single month. For instance, the number of pending contracts has been somewhat flat for the past month or so instead of seeing the same steep May to June decline. Granted, we’re still WAY down from last year, but the May to June rate of change didn’t persist in August. Also, price reductions have been somewhat flat over the past few weeks. I mean, half of actives have had a price drop, so clearly, we have an overpriced market. All I’m saying is it looks like we’re starting to see price reduction growth slowing down or leveling off. Ultimately, we need time to see the trend, so let’s keep watching. Keep in mind that not all stats are leveling off. I’m just saying some of them appear to have flattened. And lastly, if rates shoot up in coming weeks, all bets are off because that could change the dynamic…

Let’s keep watching.

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.

Questions: What stands out to you most? Are you seeing any differences in the market depending on price point or location? I’d love to hear your take.

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A sharp change in the housing market

July 6, 2022 By Ryan Lundquist 24 Comments

A quick change in rates has led to a quick change in the housing market. We didn’t see much difference right away in the stats, but we are finally getting some good numbers now. Let me show you what I mean.

A blue background with today's blog title about sharp change. And there is also a wooden table on the lower 1/3 of the image.

UPCOMING (PUBLIC) SPEAKING GIGS:
7/15/2022 Lunch & Learn Market Update (sign up (for real estate agents))
7/20/2022 Beer & Stats at Out of Bounds (sign up (for real estate agents))
7/26/2022 Navigating the Shift (sign up here (for real estate community))

BEER NEWS:

I just finished two years without alcohol. I gave up alcohol for health reasons, and it’s been a good experience. I’ll be adding another year now, so if anyone wants to join, let me know.

FIVE THINGS TO WATCH IN TODAY’S MARKET:

We’ve seen quick change in the stats lately. Check out how steep the line is between May and June in some of the visuals below. This is what I mean by “sharp” change. Let’s keep watching while staying objective.

1) PRICE GROWTH IS SLOWING

Price stats aren’t as sexy as they used to be. This visual doesn’t necessarily look sensational, but instead of being up 15-20% from last year, prices in most counties are now “only” up about 6-7% instead. In short, we are seeing price growth slow down. Right now, the growth actually looks somewhat normal at 6-7%, but let’s keep watching this line to get a sense of the direction of prices. In a normal year we should see prices soften for the next few months and then flatten out for the rest of the year.

This chart shows the median price from 2016 onward from January to December each year. This year the median price has started to crest about one month early.

2) BUYERS ARE FINALLY PAYING BELOW THE LIST PRICE

For seventeen months in a row buyers paid at or above the list price on average. This is profoundly atypical, but it’s been our normal for so long that I think we’ve gotten used to it. This visual shows buyers in June 2022 on average paid about one percent below the original list price (or $7,254 less on average). Look at how sharp the change was from the previous month. For now, the stat is actually very normal compared to 2018 and 2019, but let’s keep watching to see where the line goes in months ahead.

A line graph to show the dollar amount buyers are paying in relation to the original list price in the Sacramento region from 2018 onward. This line goes up and down depending on the time of year. Right now it's going down due to softening demand.

3) FEWER PENDING CONTRACTS ARE HAPPENING

One of the bigger ways we are seeing a shift in the market is with the number of pending contracts dipping for three months in a row. In most local counties in June, we were down a whopping 25% in volume from last year at the same time. On the positive side, this means 75% of pendings are still happening, but there is no ignoring the reality that we had over 1,600 fewer pending contracts over the past few months compared to last year. The black line below represents 2022, and this June was the lowest year in recent time. This isn’t a big surprise because mortgage rates doubling in a short period of time has given affordability a beatdown. This means fewer buyers are able or willing to play the game right now.

A line graph to show pending contracts from January to December each year from 2016. The line for 2022 is way below other years, which shows there has been a drop in pending contracts.

4) A SHARP INCREASE IN LISTINGS

Here’s the number of active listings on July 1st each year in the Sacramento region. I know this is only one day, but the monthly trend actually looks very similar. We’ve seen a quick rise in the number of available listings lately. We’re much higher than last year, but still lower than normal. We are missing about 800 listings from the normal trend. This rise in listings here isn’t so much about sellers choosing to list their homes. The real culprit has to do with fewer pendings, which means the pile of active listings has grown quickly.

A bar chart to show July listings in the Sacramento region from 2014 onward

5) LOTS OF PROPERTIES STILL SELL ABOVE THE LIST PRICE:

It’s easy to say everything is selling below the list price, but that’s fiction. In truth, almost 53% of sales last month sold above the list price, so it’s safe to say about half the market went above the original list price. Of course, this is a sharp change from last year when 76% of sales sold above the list price, so we’ve clearly moved beyond that honeymoon market. And I know, it would be helpful to have more years on this visual, but I don’t have that (yet).

A line graph to show the percentage of homes that sold above the list price in the Sacramento region from November 2020 through today. This line goes up and down depending on the season of the year.

6) OTHER VISUALS:

Okay, here are some other visuals in case that’s your thing. The stats are finally showing some bigger changes. I remember someone arguing with me in April that the market hadn’t shown much of a temperature change. The truth is the market did change, but we didn’t see change in the stats…. yet.

A line graph to show pending contracts from January to December each year from 2016. The line for 2022 is way below other years, which shows there has been a drop in pending contracts.

OKAY, ONE MORE:

May to June median price change: This last visual shows median price change from May to June from 2004 onward. This is a bit geeky, but it’s atypical to see the median price dip between May and June. I mean, it happens, but typically this takes place when the market is declining or in a year where there was dullness in the marketplace. For this year, keep in mind the 2022 real estate season crested early, so we are now comparing subdued stats today to heightened stats last year. I’m not sugarcoating at all here. It’s just key to know what we are comparing and how that makes a difference with the numbers.

On a related noted, for many in real estate prices are sacred, but I don’t take that view. Markets go up and down. That’s just what happens. Thus, my role here is to tell the story of the market without any bias. I’m not here to protect prices or promote doom. I want to sling the straight dope and help convey what is happening.

Anyway, I hope my explanation for May to June change makes sense. I’m happy to talk about that more in the comments. We need a few more months to understand price trends more definitively.

A bar chart to show May to June growth in the Sacramento region

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.

Questions: What stands out to you the most above? What did I miss? Anything else to add?

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

Home prices are insane (so is the rental market)

May 12, 2021 By Ryan Lundquist 17 Comments

Prices growth has been insane lately and that’s pretty much how the rental market feels too. Let’s talk about this and a few other things. Enjoy.

NOTE: Scroll down for the big market update

Three Things:

1) THE ASTERISK IN THE ROOM:

Home price stats are truly crazy right now across the country. It’s mind-blowing to see prices up 15-20% from one year ago, but there’s also an asterisk. Last year stats were starting to sag during the beginning of the pandemic due to buyers backing off the market. So when we compare today’s ultra hot numbers with last year’s lackluster figures it’s important to account for these sagging stats when talking about the market. I know, that sounds super anal, but it’s important.

2) THE RENTAL MARKET IS NUTS:

In the real estate space we often get so lost in talking about home prices that we simply don’t talk enough about rents. Here are a few things on my mind:

A) Lots of rentals: In California about 45% of homes are not owner occupied. That’s nearly one out of every two homes (duh, thanks bro). This is good to remember as we often focus on buyers and sellers while ignoring the other half of the population. And in case you wondered, the most recently published homeownership rate in the United States is 65.6% as of Q4 2020.

B) Hefty rent growth: Rents have seen a dramatic increase lately in many markets across the country and that’s something to watch. My advice? If you work in real estate, talk to local property managers and find some big data companies to follow. In the Sacramento region, for instance, Yardi Matrix reports 8% rent growth from one year ago.

(props to Steven Thomas for the idea on the nuts image)

C) Feeling the rental shortage big-time: The rental market is extremely tight as we are feeling over a decade of not enough new construction in the midst of population growth. Thus when trying to rent we are seeing multiple rental offers on almost every listing and some would-be tenants are even trying to get creative by offering incentives to the landlord such as a year’s worth of rent at one time. Of course some sellers are wondering, “Where am I going to find a place to buy or even rent?” Also, every time I log on Facebook I see another real estate agent post saying, “I have a client who needs a rental in (insert city) up to (insert dollar amount).” Ultimately we often focus so heavily on having a shortage of properties for buyers to buy, but the rental market is suffering from a lack of available units too.

3) WHEN POLITICIANS SHARE HOUSING DATA:

Okay, I have an important non-partisan take involving a viral real estate example. Here goes. This week two mayoral candidates in New York were asked if they knew what the median price was in Brooklyn, and they said $100,000, which was $800,000 too low. Look, one guy said he misunderstood the question and there’s grace for being imperfect if that’s what happened. But here’s the bottom line regardless of political affiliation. If you’re running for office you’re going to look out-of-touch if you’re off by that much. And then you’re going to get dragged online by people who definitely know the cost of housing.

My unsolicited advice? If you’re trying to get elected, you need to be in touch with home and rent prices enough to understand what constituents are dealing with right now. Or if you’re just trying to win a debate, at least be prepared to answer this question with stats from this century. Look, most citizens don’t expect candidates to be real estate experts, but there is an expectation of having enough understanding to shape policy in the midst of a glaring housing shortage. That’s the big issue. If you don’t even know the numbers, how can we expect you to create policy to deal with the issues? By the way, if you don’t know where to look for data, find a local Realtor association in your county or state – or scour online for professionals and data firms who know their stuff.

NOTE: I almost never mention politics, but this is such a vivid example to show the importance of accurate housing data. Moreover, we’re in a severe housing shortage and our politicians need to up their game, so I’m good with speaking up in a non-partisan way. Please no red or blue comments.

Anything to add?

———————- (skim or digest slowly) ———————–

BIG MARKET UPDATE

For those interested, here’s a big Sacramento market update:

THE SHORT VERSION:

Here is a highlight reel to talk through some of the bigger themes right now. In short, the stats are sensational and we’ve seen rapid appreciation in recent months. See comments below on slowing down though….

LONGER VERSION (SORT OF):

The good news is I finally had my second vaccine shot, but the bad news is I lost two days of work this week because I felt awful (yeah, it was Moderna). In short, my market update is going to be a little on the brief side today in terms of having fewer images. Please check my social channels in coming weeks for stats. I can’t wait to share more on Facebook, Twitter, and LinkedIn. Oh, and sometimes Instagram.

SUBTLE SLOWING? Price stats have been on fire lately and they’re poised to continue being hot, though I’m starting to hear things like, “I’m getting 8 offers instead of 12” or “My buyers are having a slightly easier time getting into contract.” This makes sense as we have a few hundred extra listings on any given day now compared to a few months ago (we still don’t have enough listings).

In short, the market typically starts showing seasonal slowing around this time of year, so let’s watch for typical signs of slowing in the midst of a market that still feels like an auction. Look, I’m not saying the housing trend is slow or dull, so please save your hate mail. All I’m saying is in the midst of glowing stats let’s keep our antennas up and look for a change in the stats or sentiment among buyers.

What are you seeing out there?

NOTE: I included 90 days of sales for El Dorado County and Yolo County because both areas have few monthly sales. In short, if you use only one month of data stats are going to bounce ALL over the place and not be meaningful. These are both brand new visuals though. I’m thinking about doing them every month if I get enough positive feedback.

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 rental market? What about the resale market? What would you say to those politicians? I’d love to hear your take.

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

The housing market feels like a crazy auction

March 16, 2021 By Ryan Lundquist 18 Comments

This market is just crazy. Today I have two quick things on my mind and then for anyone interested I have lots of visuals to highlight the Sacramento market.

TWO THINGS:

1) This market feels like an auction: The market feels like an auction where buyers are making really aggressive bids with the hope of winning due to being the highest. Throughout the country we are seeing offers in many markets that are totally disconnected from a reasonable value. On that note someone asked if appraisals need to change so buyers have a better chance of getting deals done in this crazy environment. Nope. The appraiser’s role is to reflect the market, which very likely might not be the highest bidder. Don’t get me wrong, there are many things that need changing in the appraisal profession, but it’s not the appraiser’s job to fix an irrational dynamic in today’s market.

2) Do higher rates matter? I’ve heard the sentiment quite a bit that rising rates really don’t matter. The idea is the market is so hot and nothing can cool it. But I feel like the housing market could say, “Hold my beer.”

Here are a few considerations:

A) No difference yet: Higher rates haven’t slowed down buyers. If anything locally the market has become more aggressive. For reference, purchase mortgage applications increased from the previous week nationally.

B) Still too low: Rates around 3% are freakishly low and that’s just not high enough to alter the market. But what about 3.5%? Or 4.0%? Can you imagine a time when higher rates would matter?

C) Watch mortgage applications: The MBA reported a 43% dip in refinance application volume last week, so clearly borrowers have pumped the brakes a bit. The purchase market is up 2% from last year, but it looks like mortgage applications decelerated last week per Freddie Mac economist Len Kiefer.

D) Rosy narratives & sensitive to rate changes: Over the years the real estate market has become very sensitive to rate changes. I think of 2018 when rates shot up closer to 4.5% and buyers backed off the market. Do you remember the headlines about how dark real estate felt? I share this because recent history reminds us rate changes can make a difference in whether buyers engage or not. My advice? Don’t embrace a rosy narrative to think higher rates cannot change things. They can. Maybe not yet. But let’s not downplay how meaningful low rates have been in creating the market we have right now. Know what I’m saying?

NOTE: Props to a conversation with Ann O’Rourke last week that influenced the auction analogy above.

———————- (skim or digest slowly) ———————–

BIG MARKET UPDATE

For those interested, here’s a big Sacramento market update:

THE SHORT VERSION:

Here is a highlight reel to talk through some of the bigger themes right now. In short, the stats are stunning and this is likely the most competitive market we’ve ever had. Demand is simply excessive while supply is anemic.

QUICK RECAPS:

I’m thinking about doing these charts every month. Do you like them?

NOTE: I’m not going to do Yolo or El Dorado County charts because there aren’t enough sales. Stats would be ALL over the place year over year.

THE LONGER VERSION (organized by county):

1) Sacramento Region
2) Sacramento County
3) Placer County
4) El Dorado County

I welcome you to share some of these images on your social or in a newsletter. Please use this stuff. In case it helps, here are 5 ways to share my content (not copy verbatim). Thanks.

1) SACRAMENTO REGION:

2) SACRAMENTO COUNTY:

3) PLACER COUNTY:

4) EL DORADO COUNTY:

Other visuals: Not that you needed more, but check out my social media in coming days and weeks for extra visuals. I am posting daily stuff on Facebook, Twitter, and LinkedIn. Oh, and sometimes Instagram.

Thanks for being here.

Questions: What else would you add about my two quick topics above? What stands out to you about the market lately? 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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