The seller has been chasing the ball. I mean, prices have been going down lately and sellers are trying to find a market through markdowns. I’m not writing as a housing bull or bear, but as a statistician whose goal is objectivity. Anyway, some thoughts.
Upcoming (public) speaking gigs:
10/07/22 Market update by SAR (Sign up here – at Zoom)
10/13/22 Midtown market update (details undecided)
Expect to pay less: Before I get into the stats, I wanted to mention that most people I’m talking to right now are aware that prices are going down. In addition to… Haha. Just yesterday I spoke with two of her homeowners. Or, a few weeks ago, we got a call asking for a very quick assessment of PMI removal to ensure higher value before the price drops.Have you seen offers from open door by email recently? they are definitely low. And let’s not forget real market statistics. This is explained below.
Here is a visual from Len Kiefer to understand what I’m saying. Future price softening is expected. We’ll see how it goes of course, but for now I want to pay attention to the psychology of buyers and sellers.
The median is down 7% so far. The Sacramento area and Sacramento county have seen median prices drop about 7% since May. Median August is typically about 2% lower than its spring highs, so it’s a much bigger change than usual for this time of year. That said, mortgage rates have changed dramatically, so this isn’t all that shocking. In other words, rapid changes in rates are causing rapid changes in statistics (including prices). But to be fair, it’s a bit of an awkward situation this year as prices hit a high a month before his May (prices usually peak in his June). This means we have another month of decline to add to our stats.
Seasonal drop or new downward cycle: Is this just a seasonal decline or is it something bigger? See, the truth is you need time to see trends and understand them. We are clearly experiencing a major contraction of withdrawal. We’ve also seen sharp price declines throughout the year, so we’re at least in the midst of an intensifying seasonal decline. Do you have more? yes. But we need time to understand what the market will be. I know this can be frustrating for some of you, but remember that the future hasn’t happened yet.This is a story I wrote half a year ago price cycle if helpful.
There is still competition: The market is very different than it was at the beginning of the year, but it’s still competitive. In fact, 25% of last month’s sales exceeded the original list price, and 43% of sales in August had multiple offers. These stats are actually lower than normal but i want to mention this because sometimes i hear about price softening and i think literally everything is running out of control and being sold at deep discounts I think. It’s a mistake to impose a doomed story on the marketRemember there are many stories in real estate and no story is the same for every seller, buyer or escrow. Advice for Buyers and Sellers in today’s market.
Affordable: The market has been hit by affordability, so fewer buyers are currently able to play the game. I’m not good at math. Check out this Redfin visual to see how mortgage payments are simultaneously up 37% over last year (or about $600 more per month).
Here’s an affordable picture I put together for my local county.In Sacramento County, 27% of households can afford an average-priced home.These images are based on car statistics.
Appraisers who say they are “stable” or “declining” in their reports: The evaluation form asks the evaluator to select a box to describe the pricing situation. Is it declining, stable, or increasing? Recently, I think that some appraisers say “declining” and others say “stable”. Honestly, at this point, I’m more concerned about whether the market changes are taken into account than the box when looking at comps. In other words, we are living in the midst of change, and some appraisers are checking “stable” because it is still unclear whether this is seasonal trend inflammation or the beginning of a downtrend. increase. However, we’ve seen a clear price drop over the past few months, so if an appraiser isn’t currently adjusting comps, I’m in big trouble. Please refrain from harassing emails. However, many markets across the country are seeing more intense seasonal declines. This means that some older sales need a negative adjustment due to their lower present value.
Comment from appraiser: This is a little commentary in one of my recent evaluation reports. I’m someone who needs a few paragraphs, so this is just a small part of what I’m saying – one box isn’t enough.
“At the very least, we have to explain that the market is showing a seasonal downward shift, but if this trend persists for an extended period of time, we can call this a downward cycle. It is most reasonable to classify the seasonal price decline as blatantly worse than the normal seasonal trend. Selling cheap: The regional median is down about 7% since May to $45,000.This doesn’t mean all properties are worth $45,000 less, but buyers are more likely to pay higher prices. It is clear that they are resisting payment of
A final note on house size: Note that some of the recent price volatility has to do with small home sales. I know the diagram below is chaotic, but check out the dark blue line. This represents the monthly average area. House sizes usually peak in May or June, after which smaller homes are sold. Can you see that when the dark line goes down, so does the light blue line (Average Selling Price)? This is a good example of a reminder that price changes are also tied to what is being sold. Suffice it to say that some of the recent changes have more to do with small homes than just the market.
Now, one last thing about size: In the early days of the pandemic, the emphasis on larger homes at higher prices saw a blatant surge in home sizes. This spike basically peaked a year before him as the size started to normalize. So let’s keep observing what the size will be. Will smaller homes be seen more frequently as first-time buyers flood the market? Will they sell less at top prices? be decided.
At the end: Markets are in constant motion and we are in the midst of change. Monitor trends and be objective about your statistics. It’s really easy to get carried away with sensational stories today, so my advice is to stay statistically informed. And for my real estate friends, keep finding market players. Who has the incentive to buy, sell or invest in today’s market? The key is to identify those people and support their goals.
Thank you for being here.
question: what do you think is going on with the price?