The 1990s are back in style. Big pants, Nirvana t-shirts, and Doc Martens. And even the housing market feels a bit like the ’90s. Let’s talk about it.
UPCOMING SPEAKING GIGS:
10/18/24 Prime Real Estate (private)
10/22/24 Culbertson and Gray Group (private (I think))
10/23/24 SAFE Credit Union (details TBA)
10/29/24 Orangevale MLS Meeting
11/7/2024 Think Like an Appraiser (3 hours) TBA
11/19/24 Downtown Regional MLS Meeting Q&A 9am
ME IN THE ’90s
Okay, before we jump into real estate, let me introduce you to what I used to look like back then. Do you smell the Obsession cologne? And can you tell by my tan that I played water polo in high school? Haha.
PURCHASE APPLICATIONS ARE SO MID-’90s
Purchase application volume is at levels last seen in the mid-’90s when movies like Clueless and Braveheart were playing. And Leonardo DiCaprio’s girlfriend wasn’t even born yet. That’s sobering stuff, but the positive news is we’ve seen a slight uptick in purchase applications lately. My advice? Watch application volume by the week because it will be a leading indicator for demand in the housing market. Oh, and don’t base your self-esteem on this data.
SALES VOLUME IS SO MID-’90s
The number of closed sales nationally is at levels seen in the mid-’90s (and the Great Recession). For anyone who works in real estate, I recommend being realistic about a smaller pool of buyers existing today, and to continue to plan for low volume ahead. You might not hear this at a real estate guru seminar, but I think it’s best to expect low volume and rejoice if something else happens. The hope is to see an uptick in volume in 2025, but the truth is it’s going to be hard to return to normal levels without a sharper change to affordability. Nationally, there are many projections that volume in 2024 will end lower than 2023 for the United States. Locally, we’re ahead of last year by 265 sales, so the next few months will be critical to see how it pans out.
A REALLY GOOD WAY TO DESCRIBE THE MARKET
One of the best ways to describe the market in 2024 is sellers have come back more than buyers so far. This is true in Sacramento and many locations. The reality is there is a wider gap this year between the number of new listings and closed sales. In other words, supply has grown faster than demand, and that’s why the market isn’t as competitive compared to one year ago. Yet, both listings and sales are still far below normal levels. In fact, locally we’re missing about ten thousand listings this year from the pre-2020 normal number. That’s just wild (and sobering) to think about. One other thing. I wonder if we’ve forgotten what the market feels like when there are more listings and not a freakishly low amount like 2023.
IS THERE A SLIGHT CHANGE IN BUYER DEMAND?
Mike Simonsen has been talking about a slight uptick in purchase applications and pending contracts. Look, this is NOT a huge amount, so don’t write home yet. Let’s just watch to see if this is an inflection point or a nothing burger. This is what it’s like to follow real estate. We collect data, remain objective, try to interpret what we’re seeing in real time, keep things in context, sift sensationalism, and let time show us the trend. Know what I’m saying?
MORE PENDINGS IN SEPTEMBER LOCALLY
September was a solid month of pending contracts in the Sacramento region (compared to last year). This is good to see, but let’s remember there were five Mondays in September, and Monday is a big day for the number of pending contracts. All I’m saying is we want to be aware that monthly data can sometimes show extra or less depending on the day the month started or ended. With that said, I’ve been asking the real estate community if there is a change in demand, and it’s a mixed bag. Some people report maybe slightly more demand, but many are saying no change (or it’s hard to see if there is any change). In short, time will show us if the increase in pendings here is about the market or an extra Monday. Does that make sense?
Thanks for being here.
Questions: What are you seeing with buyers right now? Any change to demand? What is your favorite band from the ’90s or something you hope doesn’t come back in style?
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