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pending contracts

Don’t hold your breath for a Covid discount

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“Why is there not a pandemic discount? I don’t get it. The market has been going down.” Someone was angry with me recently after an estate appraisal didn’t come in low enough in his mind. The thought was prices should be dipping because we’re in a pandemic, but that hasn’t been happening.

The Truth: Lots of people expect the market to be weak right now.

The Takeaway: Let’s be careful not to impose ideas on the market about what we think should be happening. Instead, let’s look to the numbers to form our understanding. Likewise, it’s critical to be objective about the present and keep an eye on glaring uncertainties regarding the future. But let’s do this without viewing stats through a rose-colored lens or painting every conversation with a doom and gloom brush.

Anyway, that’s what’s on my mind…

———————— big monthly update below ————————

BIG MONTHLY UPDATE:

This is long on purpose. Skim or digest slowly. Your call. 

FREE MARKET UPDATE: On Monday June 22nd at 10am PST I’m giving a one-hour free market update via Zoom through the Sacramento Association of Realtors. Please sign up here.

WEEKLY VIDEO: Here’s my weekly video update to talk through the latest trends (shorter this week too). Watch below (or here).

Now some big topics…

FLAT PRICES: When we look at the latest price trends, it’s pretty flat. As you can see, the stats show modest price gains since last year. Granted, this month was more subdued than last month, so before writing home about this trend we need a few more months of data to fully understand the market. Remember, this doesn’t mean the market is dull because it’s actually quite competitive. It doesn’t mean every price range and neighborhood are flat either. But it does remind us prices haven’t been going insane despite the market feeling ultra-competitive. 

CRESTING FOR THE SEASON: Based on the next three images, it looks like the spring season has started to crest. We’re seeing a dip in prices and we’re having less multiple offers.

NEXT MONTH THOUGH: When sharing about flat prices, I’ve been tending to get reactions saying price metrics in a couple months may show an uptick again because mortgage rates have gone down lately. Look, that’s possible and we can adapt our narrative if that happens. To be fair, there’s nothing normal about life and real estate lately, so anything is possible for the future and we’re certainly experiencing some abnormal pent-up demand right now.

SALES VOLUME DOING THE LIMBO: Here’s a brand new visual to show most counties in May were down 30% or more in volume from 2019. Do you like this one? Should I keep making it?

LEARN TO MAKE A GRAPH: In case you didn’t see this on my YouTube channel, I put out a new tutorial for how to make a graph with three price metrics. This can be made for a zip code, city, county, etc… My advice? Set aside an hour in your schedule to make learning this happen. Becoming more visual changed the way I see the market and it frankly changed my career.

LOW RIDING: We had the second lowest month of sales volume for May in Sacramento County over the past twenty years.

BUT VOLUME IS ACTUALLY INCREASING: When we look at sales volume by the week instead of the month, we’re starting to see more sales close. In fact, for four weeks now we’ve seen an uptick. This change reflects pending contracts from about 4-6 weeks ago finally starting to close. I suspect in coming months we’ll keep seeing volume increase since pendings have been on fire lately.

MORE PENDINGS THAN NEW LISTINGS: For the fourth week in a row we literally had more pending contracts than new listings hit the market in the Sacramento Region. This shows buyers have been coming back to the market more quickly than sellers. Let’s remember buyers have strong incentive to get into contract quickly to lock in a historically low mortgage rate, but sellers just don’t have that same sense of urgency.

CHANGE BY THE RANGE: Here’s a look at what’s happening with different price ranges. These two images compare the change in April and May from 2019 to 2020. I don’t know that there’s anything revolutionary here, but what we want to watch over time is whether different price segments are slowing or speeding up. I think with a few more months of data we might have more to consider.

INVENTORY AT DIFFERENT PRICE POINTS: What’s happening with inventory in different price segments? Well, it’s actually pretty tight, but let’s watch above one million closely because it’s trending a little higher. Granted, it’s pretty normal to have 8-10 months of housing supply at the highest prices, but still we’ve seen more of an uptick lately.

2,651 FEWER LISTINGS SINCE THE PANDEMIC: Over the past three months there have been over 2,500 fewer listings compared to the same time last year. No wonder why it feels so competitive…

Now here are more visuals. As if this post wasn’t long enough already…. See my sharing policy for 5 ways to share my content (please don’t copy my posts verbatim).

SACRAMENTO REGION:

SACRAMENTO COUNTY:

PLACER COUNTY:

EL DORADO COUNTY:

Okay, let’s wrap this thing up.

Questions: What stands out to you about the market right now? What are buyers and sellers saying? I’d love to hear your take.

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Are buyers & sellers getting used to the pandemic?

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Quarantine. Wearing masks. Social distancing. It’s so weird that these are regular things now. The world indeed has changed over the past month and so has the housing market. Let’s talk about some new developments.

FIVE WEEKS AGO: About five weeks ago the real estate market started to have a strong reaction to the coronavirus. I look to March 12th as our day of change as that’s when things started to kick into high gear with events cancelling and sellers and buyers backing off the market.

OBSERVATIONS RIGHT NOW:

1) Pendings and listings declined heavily for a few weeks.
2) Pending contracts have begun to increase again.
3) More new listings are hitting the market.

Here’s a closer look at the numbers. These are single family detached homes without condos. I don’t include condos because they’re a different market that can water down the data. If you include them in your numbers, that’s cool.

Here is a look at new listings. There has not been a dramatic uptick, but we are seeing more new listings compared to a month ago (the first week we had sheltering in place). 

SOME CLOSING THOUGHTS:

1) Goodbye cliches, hello experts: In a market like today it forces us to place our cliches, canned statements, predictions, and positive or doomy narratives aside. We simply must look to the numbers to understand the market. When trends change it creates opportunities for experts to arise. It also creates opportunity for credibility to be destroyed by making predictions that don’t come true and getting swept up in every single sensational headline.

2) Other markets too: This dynamic of the market seeming to hit a bottom a few weeks ago is something that is happening in some other areas across the country too as reported by Mike DelPrete in his email yesterday (a must follow). I’ll talk about this more in my weekly video at the end of this week. Please know I’m not saying prices or other metrics have bottomed out. I’m only saying it looks like listings and pendings (for now) have begun to increase again.

3) The future: We still don’t know the future, so I’d exercise caution in saying definitively the market has begun a recovery or rebound and will move forward from this point onward. We need time to see how everything shakes out and we’re still living in the midst of so many unknown factors that could sway the market in many ways. The reality is what we say about the market could be different next week based on new data.

4) Getting used to the pandemic: For now it looks like buyers and sellers have started to get a little more used to this pandemic market, which is evidenced by more pending contracts and an increase of listings lately. It’s possible some of this could be attributed to real estate agents being deemed essential too. Will this continue? Is this a trend we’ll see more in coming weeks? To be determined. 

GRAPHS: I plan to make a tutorial soon on how to make a few of the graphs I’ve been posting. Appraiser colleagues, I haven’t forgotten.

I hope this was helpful.

Okay, moving on:

RESOURCES:

New market video: Here is a fresh market update video. This is 25 minutes and perfect for the background while working. Check it out below or here.

 

Interview with The Appraiser Coach: I did an interview with Dustin Harris to talk about not waiting for sales to see pandemic data. Watch below (or here).

Interview with Brad: I did a Facebook Live Q&A with Brad L’Engle last week to talk shop. Enjoy here if you wish (you don’t need Facebook to watch). 

I hope this was interesting or helpful. Thanks for being here.

Questions: What do you make of the stats above? What are you hearing in escrows from buyers and sellers? If you’re not local, what are you seeing happen in your market?

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Buying an island, uncertainty, & pendings

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If you’ve ever wanted to buy an island to feel like a king or queen, here’s your chance. This just might be perfect for social distancing too, right?

I wanted to start out on a light note today because news has been so heavy lately. Anyway, this 18-acre parcel is located in Stockton, CA and it’s listed for sale at $40,000. I’m guessing it’s going to get bid up, but we’ll see. The listing says the zoning is AG40 and you can use it for boating, camping, fishing, etc… Photos shared with permission by Realtor Monte Morris. WATCH video here.

I jokingly verbally offered $500 for this island, but I was laughed off. Haha.

Quick advice about land: If you ever do buy a big (or small) chunk of land, be sure you call the city or county to verify what zoning allows for the particular parcel. What can you do with it? Or in real estate terms, what is the highest and best use? I would definitely not rely on the zoning listed in Tax Records either as that might not be correct. I would 100% find out details such as allowable uses, whether it is buildable, how often it is underwater, etc…

Okay, now to market stuff.

Uncertainty in 2020: I put out a new video called Uncertainty in Real Estate to talk through recent trends and all the uncertainty we’re feeling right now. I unpack where we’ve been in 2020 and some of the things to consider right now during the COVID-19 pandemic. It’s about 30 minutes, so maybe listen in the background while working (or self-quarantining). Start the video at 12:00 if you want to get to more focused pandemic thoughts.

A new pending visual: Here is a new graph I’m going to be updating as often as I can. Do you like it? This visual only goes through the 12th of March so it doesn’t capture this past weekend yet. My sense is we need to wait about a week or maybe more until all data are present before trying to see the trend. Otherwise if we post too soon it can actually be misleading.

The market is still alive: Over the past weekend we saw strong pendings in the Sacramento Region. Pendings were just about the same as the previous weekend, but down slightly. I heard lots of stories about multiple offers too and technically 55% of all pendings had more than one offer according to MLS stats. As of today MLS shows 192 pending sales in the region compared to 210 the previous weekend. When I made this graph yesterday MLS showed 178 pendings, but I didn’t feel like updating this chart again. Yeah, call me lazy. For now pending sales have been higher in 2020 compared to last year, but the x-factor is what happens from this point forward.

UPDATED:

SPIKE IN CANCELLED LISTINGS: I just ran cancellations and it looks like there has been a spike in recent days. This is something to watch. Keep in mind some sellers will absolutely be taking their homes off the market. Some won’t. I wouldn’t make this the primary data point for what the market is doing, but it is a telling factor. Stay tuned. I’ll have more visuals soon. Per MLS “Cancellation of a listing means that the listing agreement is cancelled”. 3:00pm 3/18/2020

SPIKE IN HOLD STATUS: There has been a huge spike in properties on “hold” in MLS. This status basically means homes are removed from the market and they can be placed back Per MLS “Hold means that the listing contract is still valid, but the seller has requested that the marketing be temporarily suspended.” 3:45pm 3/18/2020

I hope that was interesting or helpful.

Questions: Would you buy this island? What are you seeing out there in the market right now?

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