Real Estate
CALIFORNIA ASSOCIATION OF REALTORS WEEKLY MARKET MINUTE
August 22, 2022 – Housing sentiment continued to sink for both the supply side and the demand side as market’s buying
conditions remained sour.
Not only did homebuilders scale back in production as suggested by the dip in building permits, but potential homebuyers have also hit the brake hard as market uncertainty and high costs of borrowing lingered on. Closed sales for existing single-family homes have taken a beating as the market has shifted in response to the recent surge in interest rates, while pending sales suggested that the market could remain soft in August.
The pace of sales declines is expected to decelerate in the coming months, however, as rates continue to stabilize, market volatility begins to subside and supply conditions further normalize.
A bounce back in California’s employment situation, was perhaps the silver lining in last week’s news, as it hints on an economy that could remain resilient in the third quarter, despite a back-to-back decline in GDP in the first and second quarter of the year.
Rising interest rates and affordability crunch drag down July home sales and prices: Housing demand in California cooled further in July as the effects of rising interest rates and high home prices hit would-be homebuyers, dragging home sales below the annualized 300,000 benchmark level for the first time since May 2020. Existing single-family home sales totaled 295,460 in July on a seasonal adjusted annualized rate, down 14.4% from June and 31.1% from July of last year. The statewide median home price was $833,910, down 3.5% from June and up 2.8% from July 2021.
While high home prices and rising interest rates depressed housing affordability and in turn dampened demand in the midst of the peak home-buying season, buying opportunities remain in the coming months for those who have been waiting on the sideline as more listings become available, competition continues to cool off and rates begin to stabilize.
Homebuilders’ sentiment turns negative: According to the National Association of Home Builders/Wells Fargo Housing Market Index, homebuilders have become more pessimistic as their sentiment towards the housing market dropped another 6 points in August to 49. This marked the eight straight decline in the index and the first time it dipped below 50 since June 2014, excluding a very brief plunge at the start of the Pandemic. Of its three components, current sales conditions saw the largest drop by 7 points, though sales expectations in the next six months and buyer traffic also declined by 2 and 5 points, respectively. Homebuilders’ confidence has deteriorated as buyer demand continued to be diminished by affordability constraints.
Despite higher costs for land, labor, and buildering materials, about 1 in 5 builders in August reported lowering prices by about 5% in the past month in an effort to increase sales or limit cancellations.
Housing starts decline sharply in July as building material prices rise and demand for housing softens: Higher mortgage rates upend residential construction in July with total housing starts falling 9.6% from June and 8.1% from July of last year. Single-family starts declined 10.1%, and while upward revision to starts during June helped take some sting out of July’s sharp decline, single-family starts have now declined for five consecutive months. The pull-back was attributed primarily to higher mortgage rates, which have significantly worsened affordability and caused buyers to hold off on their housing demand.
With building permits declining 1.3% in the latest report, starts will likely fall further in the upcoming months.
California employment improves as hiring rebounds in July:
After a bit of a slump this spring, hiring perked back up in July. California’s employers added a nation’s best 84,800 jobs in July, marking the largest gain since February.
The job gains were broad based but the resurgence in hiring appears to have been driven by a rebound in tech hiring. The state’s unemployment rate dipped to the new low, dropping 0.3% to 3.9% – the lowest level since 1976. While this rebound in hiring is good news for California’s economy, it is also becoming more evident that the labor market is cooling off as job openings fell 212,000 in June. California’s 15.7% drop was by far the largest of any state and brought job openings back down to the lowest level since August of last year.
Don’t hesitate to call The Sierra Lifestyle Team for free evaluations of your home’s value or to tour homes on the market you have an interest in. We are here for you, and Alisa (almost) always answers her cell phone, 530-559-4871.
Real Estate
Realtor.com® Listapalooza – the best time to list – is now a national holiday, according to National Day Archives
SANTA CLARA, Calif., April 6, 2022 /PRNewswire/ — As the final countdown begins to Realtor.com® Listapalooza (April 10-16), a new national holiday, the company today released survey data that shows homeowners are gearing up to sell this Spring and Summer.
According to the report, 64% of prospective 2022 sellers anticipate doing so within the next six months, and with high expectations for making a profit.
Still, the potential uptick in newly-listed homes indicates some much-needed relief could be on the horizon for buyers – especially first-timers. Today’s sellers expect to ask for relatively affordable prices and include a higher share of millennials than last Spring, suggesting that more Americans plan to upgrade from their starter homes.
National-Realtor-com-Listapalooza-Week-2022
The Realtor.com® survey of 3,000 consumers, which was conducted online by HarrisX in February 2022, also asked about the experiences of recent sellers, who said determining the right time to list was the longest stage of the process.
“Our survey data illustrates the importance of helping empower homeowners to take control of the listing process, by providing information about market conditions, prices and seasonal trends, like the best dates to list your home. While sellers are expected to hold the upper hand in 2022, navigating the listing process remains a challenge – particularly for those also buying in today’s fast-paced market,” said George Ratiu, Senior Economist & Manager of Economic Research at Realtor.com®. “Homeowners who are ready to move forward with pandemic-delayed plans will find plenty of opportunity this Spring and Summer. Although accelerating inflation is leading to higher housing costs and living expenses, many buyers remain interested in finding a home. At the same time, recent housing trends suggest demand is beginning to moderate as higher mortgage rates push monthly payments out of some buyers’ budgets, underscoring the long-term need for more affordable inventory.”
Homeowners are ready to take advantage of the Spring and Summer buying seasons
Survey data suggests some relief is on the horizon for Americans grappling with one of the worst housing shortages of all-time. Almost two-thirds (64%) of prospective 2022 sellers anticipate listing a home within the next six months. Whether these sellers follow-through with their plans will be key to the forecasted 2022 inventory recovery and critical for buyers hoping to find a home before mortgage rates climb even further. In a positive sign that homeowners are serious about listing, many sellers are already getting their home ready. However, they’re doing so with great expectations of the current market, which means buyers should prepare for sellers asking for high offer prices, quick closes, waived contingencies and more.
- The majority of 2022 prospective sellers plan to list within the next six months, with 9% already listed and the remaining getting ready to list within the next 30 days (11%), 1-3 months (24%) or 4-6 months (20%).
- Compared to those who planned to list last Spring, this year’s prospective sellers have higher expectations of the hot housing market, including asking for more than their home is worth (42% vs. 29%) and refusing to pay for repairs or improvements (28% vs. 24%).
- When asked why they’re planning to list in 2022, surveyed sellers’ top reason was wanting to profit off the current market, tied with their home no longer meeting their families needs (each at 31%).
- Homeowners’ motivating factors behind moving also reflect the impact of pandemic trends, such as wanting different features after spending so much time at home (15%) and no longer needing to live near their office (14%).
Millennials are moving on up, signaling more starter homes for first-time buyers
With the oldest millennials already 40-years-old, these homeowners are playing an important role in adding to the supply of starter homes. Millennials represent nearly half (49%) of sellers who plan to list within the next six months and many anticipate selling at relatively affordable prices. This is welcome news for first-time buyers, who face fierce competition for limited available starter homes. Combined with rising affordability issues as home prices and mortgage rates climb, survey data offers some hope for first-time buyers, based on:
- More millennials plan to list within the next six months than in March 2021 (75% vs. 66%), and account for a higher share of all 2022 prospective sellers (42.0% vs. 26.0%).
- In a further sign that older millennials are moving on up from their starter homes, the share of surveyed millennials who have sold a home before was nearly as high as the overall rate (61% vs. 64%).
- Millennials have plenty of financial motivation to stick to their plans, with top reasons for selling reflecting the pressures of rising inflation and economic uncertainties. Compared to all survey respondents, higher shares of Gen Y sellers want a more affordable home (34% vs. 21%) and need the sale money ASAP (14% vs. 11%).
- In a potential sign of more starter homes coming onto the market, the majority of 2022 prospective sellers expect to list in relatively affordable price ranges: $350,000 or less (43%) and $351,000-$500,000 (22%).
Recent experiences highlight the importance of preparation, even in a seller’s market
The COVID housing market has largely favored sellers and many who recently sold were able to take advantage of bidding wars, fast closings, waived contingencies, inspections and appraisals, and more. At the same time, sellers’ experiences highlight the importance of preparation, especially as buyer demand is beginning to moderate. Even among recent sellers who found success, the majority took steps to get their home ready to list, such as making repairs, cleaning and decluttering. Additionally, although many sellers were able to list quickly, 41% said the process took longer than they originally anticipated.
- Over half (53%) of sellers spent less than a month preparing their home for listing, while another 26% said the process took 1-3 months.
- Forty-one percent of recent sellers said getting their home ready to list took longer than they expected. Determining the right time to enter the market took longer than any step of the home prep process, with 38% of respondents reporting that this decision took more than 3 months.
- Among steps successful sellers took to prepare their home for listing, top responses included repairs and updates (59%) and cleaning and decluttering (67%). While minor cosmetic updates were the top repair sellers made before listing, at 53% of respondents, nearly as many fully repainted interiors and replaced flooring (47% each).
- The majority (80%) of recent sellers sold at or above their asking price. Other top benefits of the competitive market included: buyers forgoing repair concessions (28%), offers within a week (27%), and waived contingencies like inspections (25%).
Methodology
This Realtor.com® survey was conducted online within the United States from February 16-18, 2022 among 3,000 adults in the United States by HarrisX. The sampling margin of error of this poll is plus or minus 1.8 percentage points. The results reflect a nationally representative sample of U.S. adults. Results were weighted for age by gender, region, race/ethnicity, and income where necessary to align them with their actual proportions in the population.
About Realtor.com®
Realtor.com® makes buying, selling, renting and living in homes easier and more rewarding for everyone. Realtor.com®pioneered the world of digital real estate more than 25 years ago, and today through its website and mobile apps offers a marketplace where people can learn about their options, trust in the transparency of information provided to them, and get services and resources that are personalized to their needs. Using proprietary data science and machine learning technology, Realtor.com® pairs buyers and sellers with local agents in their market, helping take the guesswork out of buying and selling a home. For professionals, Realtor.com® is a trusted provider of consumer connections and branding solutions that help them succeed in today’s on-demand world. Realtor.com® is operated by News Corp [Nasdaq: NWS, NWSA] [ASX: NWS, NWSLV] subsidiary Move, Inc. For more information, visit Realtor.com®.
SOURCE Realtor.com
Real Estate
October 2021
Home buyers are bidding up home prices as they compete for homes.
But appraisals don’t always agree with the offer the seller finally accepts. Some homes are appraised below the agreed-upon sales price, which could upend a deal.
Twenty-three percent of contracts were delayed due to appraisal issues, according to the latest REALTORS® Confidence Index Survey, based on a survey of real estate professionals’ transactions. About 12% of transactions were then terminated due to appraisal issues.
“I don’t remember any time where the frequency of buyers being willing to pay so much more than the market data was this high,” Shawn Telford, chief appraiser at CoreLogic, told The Wall Street Journal.
Many buyers are stretching their budgets to win a bidding war.
But mortgage lenders will usually only offer a loan amount for the appraised value of a home. When a home appraises too low, parties must come back to the negotiation table. Sellers may need to agree to lower the price or buyers may have to come up with more money on their own. If all else fails, the deal may fall through.
Appraisers usually factor in recent closed and pending sales to determine the value of a home.
But a sale can close in a month or two after going under contract. In a fast-moving market, some home sellers complain that appraisals aren’t keeping pace.
Appraisers told The Wall Street Journal that they have a thorough assessment for valuating a home that goes beyond what just a buyer is willing to pay during a bidding war.
They want to protect buyers from overpaying, Joan Trice, president of the Collateral Risk Network, told the Journal. The Collateral Risk Network is an organization for both appraisers and lenders.
“In a frenzied market, it is harder to nail down what value is,” Jonathan Miller, chief executive of Miller Samuel Inc., an appraisal firm, told The Wall Street Journal. “Just because the appraiser doesn’t agree with the purchase price, whatever the reason, doesn’t mean they’re wrong.”
Some buyers are waiving appraisals to make their offer in a bidding war stand out even more to a home seller.
But that is lessening somewhat: Twenty-five percent of buyers waived their appraisal contingency clause in August, down slightly from 27% in July.
Source: “Soaring Home Prices Are Roiling Appraisals and Upending Sales,” The Wall Street Journal (Oct. 10, 2021) [Log-in required.] and “REALTORS® Confidence Index Survey: August 2021,” National Association of REALTROS®
On the other hand, the highest premiums on home purchases are found on May 23 and May 27, both at 17.4%; May 20 at 16.6%; May 16 at 15.6%; and May 19 at 15.4%.
Don’t hesitate to call The Sierra Lifestyle Team for evaluations of your home’s value or to tour homes on the market you have interest in. We are here for you, and Alisa (almost) always answers her cell phone, 530-559-4871.
Real Estate
Market Observations 
Market Update Nevada County September 2021
September 2021 is a Seller’s market*
Home For Sale in September 2021: 271 units.
• Up 17.3% compared to last month
• 0% compared to last year
Home Closed in September 2021: 125 units.
• Down 10.1% compared to last month
• Down 35.9% compared to last year
Home Placed under Contract in September 2021: 145 units.
• Up 5.8% compared to last month
• Down 2% compared to last year
*Buyer’s market: more than 6 months of inventory based on closed sales
Seller’s market: less than 3 months of inventory based on closed sales
Neutral market: 3 – 6 months of inventory based on closed sales
September 2021 Average Sold Price per Square Footage is Appreciating*
Average Sold Price per Square Footage in September 2021: $309
• Up 1.3% compared to last month
• Up 17.5% compared to last year
*Based on 6 month trend – Appreciating/Depreciating/Neutral
September 2021 Average Continuous Days on Market trend Remains Steady*
Continuous Days on Market in September 2021: 28
• Up 16.7% compared to last month
• Down 48.1% compared to last year
September 2021 Sold/Original List Price Ratio is Falling*
Sold/Original List Price % in September 2021:98%
• Down 1% compared to last month
• 0% compared to last year
*Based on 6 month trend – Rising/Falling/Remains Steady
September 2021 Average For Sale Price is Depreciating*
Average For Sale Price (in thousand) in September 2021: $731
• Down 0.1% compared to last month
• Down 0.9% compared to last year
September 2021 Average Sold Price is Neutral*
Average Sold Price (in thousand) in September 2021:$627
• Up 3.6% compared to last month
• Up 9.8% compared to last year
*Based on 6 month trend – Appreciating/Depreciating/Neutral
September 2021 is a Seller’s market*
Months of Inventory based on Closed Sales in September 2021: 2.2
• Up 30.1% compared to last month
• Up 57.6% compared to last year
*Buyer’s market: more than 6 months of inventory based on closed sales
Seller’s market: less than 3 months of inventory based on closed sales
Neutral market: 3 – 6 months of inventory based on closed sales
Don’t hesitate to call The Sierra Lifestyle Team for evaluations of your home’s value or to tour homes on the market you have interest in. We are here for you, and Alisa (almost) always answers her cell phone, 530-559-4871
Real Estate
April 14, 2021
Buying what is considered a second home before purchasing the more conventional first is beginning to appeal to some renters.
Those in metro areas are watching the red hot housing market and may be interested in a place of their own. With remote work trending, they can take advantage of the opportunity to spread out and buy a small getaway home with a vacation-first mentality, Apartment Therapy reports.
These second-home buyers may be drawn to country cottages or mountain cabins while they continue to rent apartments in the city.
They may search for their second home in a less competitive market than their current one, too.
© Cheryl Casey – Fotolia.com
Jamie Manning, founder of the real estate blog Exposed Brick DC, told Apartment Therapy that she and her husband didn’t expect to purchase a vacation home in Charlottesville, Va., before ever buying their first property in the Washington, D.C., area. “[We] see this as a true second home, somewhere we can spend weekends and possibly work remotely during the week,” Manning told the publication. “This idea had been on our radar because real estate costs are so high in D.C. that we felt buying here may not be realistic. We have been diligent and saved and were anxious to make some kind of real estate investment. We were craving a change of scenery and a different pace of life.”
Low interest rates may be attracting some renters to the thought of buying, but they may be priced out of their own area as many markets have seen escalating home prices over the past year.
A second home could offer these first timers a financial benefit and investment while they continue to rent in the city, financial analysts say. For example, Lisa Greene-Lewis, a certified public accountant, says that you can deduct mortgage interest on a vacation home similarly to a primary residence and deduct property taxes up to the cap. Some buyers may also decide to rent out their secondary home as a form of supplemental income.
“A lot of people were excited to purchase getaways during the pandemic because of limited travel options,” John Coleman, a real estate pro who works with many first-time home buyers, told Apartment Therapy. “Buying and renting out on Airbnb has been very lucrative for some, and it will be interesting to see if that can hold up moving forward.”
Source:
“Buying a ‘Second Home’ First Might Be the Best Real Estate Move of 2021,” Apartment Therapy (April 13, 2021) and “Should You Buy a Second Home as Your First Home?” The Mortgage Source (2021)
Another driver of interest in Nevada County…Just need MORE inventory!
