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6 ways buyers have changed since the housing bubble

September 25, 2018 By Ryan Lundquist 16 Comments

There’s lots of focus on how home prices have changed since the previous “bubble”, but let’s talk about how buyers have changed. Here’s some observations. What else have you noticed?

1) More picky: During the previous housing “bubble” buyers seemed so desperate to purchase that they pulled the trigger on about anything, but they’re much more discerning these days. Of course let’s remember underwriting has changed dramatically though too. In the past many properties flew through the loan process without hardly any scrutiny, but lenders today are incredibly strict, which has certainly propelled a more picky feeling in the market.

2) More patient: Despite a housing shortage buyers aren’t willing to pull the trigger on junk. They’re simply more patient for the right house and they want to make an informed purchase (and even feel like they’re getting a good deal where possible too).

3) More informed: Just as the “bubble” began to pop we had companies like Zillow and Redfin coming to the forefront. Well, now they are household names and buyers are basically obsessed. Seriously, buyers scour these sites day and night, and they know about every single new listing, price reduction, and sale. This doesn’t mean buyers don’t make value mistakes still, but it does mean they are more informed than EVER about prices. At the same time, guess who is not looking at Zillow as much? Sellers. This is a huge issue because it means sellers are not as in tune with the market these days, which means they’re prone to overprice.

4) Financial mistakes: Buyers remember the pain of financial turmoil in the past, so they’re sensitive to repeating mistakes. For instance, I talked with a buyer considering purchasing the highest-priced listing in a neighborhood, but he’s concerned we’re at the top of the market. This buyer asked, “If a buy right now and the market turns, would it be possible I’d have to hold on to the house for 10 years before values come back?”

5) Higher expectations about condition: These days buyers have higher expectations about homes being in good condition. In other words they are much more picky about properties that are not in “move-in” shape or upgraded. Wait, there aren’t granite counters? What the? There could be many reasons for this, but I think heightened investor flipping activity played a huge role. In a fairly short period of time investors had a gluttonous real estate feast by purchasing an avalanche of bank-owned homes, rehabbing them, and selling them. This helped quickly upgrade the housing stock, and also widen the price gap in some areas. What I mean is values used to be very tight together as you can see in the graph below, but now the price spectrum is simply wider since buyers are willing to pay more for rehabbed homes in today’s market. I’m not saying this dynamic is in every neighborhood, but I definitely see it in quite a few areas.

6) Less cash-out refinances: Everyone and their Mom had a boat before the “bubble” burst because people were using their house like an ATM to buy toys. Well, today we don’t have that dynamic (image from Leonard Kiefer). Home owners are clearly cashing out less, which makes them sound financially wise, but let’s realize lending guidelines have changed to make it more difficult to ATM your house. Moreover, many owners are sitting on 3% interest rates, so why the heck would they trade pulling out cash for a much higher rate?

NOTE: I updated this post with “more informed” above after Peter left a stellar comment (thanks). This is such a big point. I can’t believe I didn’t mention it while writing this, but it didn’t come to mind at the moment. The irony is I’ve been talking about this in other posts and in person so much lately. Ha. Well, it’s fixed now.

I hope that was interesting or helpful.

MARKET UPDATE VIDEO: A few days back I did a screencast to talk through trends. Lots of people are wondering if the market is tanking or softening, so I wanted to pitch in two cents. Well, the video is actually 20 minutes (there’s lots to say). Anyway, give it a view if you’d like here (or below).

SPEAKING GIGS: If you’re around, I’m doing a blogging class on October 11th at SAR. I’ll be speaking at the AI’s 2018 Fall Conference in San Francisco on October 19th and AppraiserFest in San Antonio on Nov 1-3.

Questions: What else do you think has changed about buyers since the “bubble” burst? Any stories to share? 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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Filed Under: Resources Tagged With: appraisers in Sacramento, buyers picky about condition, buyers picky about upgrades, change in buyers, change since housing bubble, finicky buyers, granite counters, higher expectations, House Appraiser, Housing Bubble, informed buyers, patient buyers, picky buyers, price sensitive market, quartz counters, Redfin, Sacramento Home Appraisal, trend graph, unrealistic sellers, wider market in sacramento, Zillow

Declining property value, but increasing land value?

December 8, 2010 By Ryan Lundquist 1 Comment

This is a graph I put together that places all sales in a particular community in California against the Assessor’s land value for a specific property. The goal of this research was to display the overall trend for property value in a particular neighborhood through the Fall of 2008 (red line), while simultaneously viewing the Assessor’s land value (black squares). This one graph is not the end-all solution to convince the Assessor to lower assessed value for this property, but coupled with some other data and comparable properties, the graph serves its purpose well.

Do property value trends and land trends seem out of sync? Why did the Assessor persist to increase land value over time through 2008 despite an obvious turn downward in property value?  

This is an example of some of the appraisal consulting work I do. At times I am hired by property owners or other parties to assist them in research that might include graphs or data, but not a value opinion. Honestly, I really like this type of work because it is interesting and very intricate.

Call me at 916.595.3735 if you have any questions or a need for appraisal consulting or appraisal work.

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Filed Under: Appraisal Stuff, Market Trends, Resources Tagged With: Appraisal Consulting, appraiser in Sacramento, Lundquist Appraisal Company, Market Trends, Property Consultant, Real Estate Appraisal, Real Estate Appraisal Consulting, trend graph

Comparing 2 and 3-bedroom units in the Arden Manor neighborhood of Sacramento

December 2, 2010 By Ryan Lundquist Leave a Comment

I’ve spent a good deal of time appraising in the Arden Manor neighborhood through the years, but recently while I was doing some research, I thought it might be interesting to put together a visual demonstration of sales to see if a graph might show what I see regularly in the trenches of appraisal work. Is there a value difference between 2-bedroom and 3-bedroom homes in the Arden Manor neighborhood of Sacramento?

Generally speaking, 2-bedroom units usually sell less than 3-bedroom units, but one thing we should be careful of in real estate is making absolute statements such as “2-bedrooms ALWAYS sell less than 3-bedrooms.” It’s just not true across the board, and in the case of Arden Manor, though I’d say it’s generally true that 2-bedroom units sell toward the lower end of the market range, there are some very clear examples above of two-bedroom houses competing at similar or higher levels to 3-bedroom houses. This makes sense of course because there are so many factors beyond just bedroom count to consider in real estate (location, condition, upgrades, layout, design, quality of construction…).

If you live in the Arden Manor Neighborhood, I’d be curious to hear your thoughts about the area. What do you like about Arden Manor and/or Arden-Arcade? Have you seen any change over the past ten years from real estate boom to bust?

Keep me posted if you have questions, insight, or a need for my appraisal services. Call 916.595.3735, comment below or contact me via email (ryan@LundquistCompany.com).

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Filed Under: Appraisal Stuff, Market Trends, Resources Tagged With: Arden Manor Neighborhood, Arden Manor real estate trends, Arden-Arcade, Arden-Arcade real estate appraiser, comparing 2 and 3 bedrooms, comparison of bedrooms in Arden Manor, decline of property value in Arden Manor, Lundquist Appraisal Company, Market Value, real estate appraiser in Arden-Arcade, Scatter Graph, trend graph

Three years of sales in the Rosemont Area of Sacramento & thoughts on graphs

December 1, 2010 By Ryan Lundquist 2 Comments

I’m doing some market research right now in the Rosemont area of Sacramento. As an FYI, I thought locals might like to see all Rosemont sales graphed out over the past three years. There is a pretty clear trend downward when considering the entire spectrum of time, right?

The first graph contains all Rosemont sales with no parameters, whereas the second graph depicts only sales between 1300-1700 square feet built between 1950-1990. You can see how the second graph trims off some of the top and bottom of the market. If I were to continue to include graphs in this post, you’d see the data getting tighter and tighter as I narrow down the parameters on my data. This tightening phenomenon really helps to illuminuate the beginning part of my appraisal process in researching the big picture in a neighborhood, and then slowly breaking down the data into chunks more similar to the house I am appraising. The more research I do, the more I narrow down a realistic market value for a property.

Let me know if you have questions or any real estate appraisal needs. I do appraisals for estate settlement, bankruptcy, divorce, second opinions of value, investment, loans, and more. Call me at 916.595.3735 or email me.

By the way, if you live in the Rosemont area of Sacramento, what do you like most about the neighborhood?

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Filed Under: Appraisal Stuff, Market Trends Tagged With: Appraiser in Rosemont, home appraiser in Rosemont, house appraiser in Rosemont, Lundquist Appraisal Company, Rosemont Area of Sacramento, Rosemont Real Estate, Rosemont real estate appraiser, Sacramento Real Estate, trend graph

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