Home buyers don’t have much – if any – control over the process, which leads to frustration and disappointment. They don’t have any way to cause more homes to list for sale, and the only way to eliminate the competition is to out-bid them, which can be even more harrowing.
One solution is for buyers to expand their parameters, but that’s not easy and can lead to another ailment that a client described yesterday as “frozen in indecision”.
Just when you want to give up……it looks like others might have beaten you to it!
Showings throughout the state are lower than they were during the first week of January!
It’s been mentioned that not every agent uses this service, but it is such a large sample size that the trend should be a decent indicator of buyer sentiment – they’re exhausted.
Sure, active listings are half of what they were at this time last year, but the showings are 260% different!
Just like with selling, when is the best time to be a buyer? When no one else is!
We already know what’s going to happen with sales in 2022 – they will be the same as this year, with a possible adjustment of +/- 10%.
But the rest of 2021 could get wacky!
It looks like the competition is dwindling, and any seller who comes to market around the holidays has to be motivated! Buyers – stay in the hunt!
Speaking of other states, how is the cooldown playing out elsewhere? Nevada and Texas are holding up, but towards the end of May, Arizona and Florida started to taper like we did here – and Arizona has been sliding all selling season (maybe due to lack of inventory?):
California is at the 0% line today, which is the same amount of showings as in the first week of January. Arizona and Florida are well under that!
For the last year, real estate has been hot around the world. When California gets cooking, so do all the neighboring states. And when America gets cooking, other markets around the world benefit too.
There are varying degrees of hot, but we can say that real estate markets everywhere have been operating at their peak capacity.
We’ve had a year of full-tilt frenzy and sales were SPECTACULAR!
But yesterday we got the first headline from Doomer Diana that should be a marker:
Thankfully, not many people will read her article where she states that higher prices and rates are the cause of the ‘fizzle’, which is a knee-jerk reaction. She and others will blame the buyers for any slowdown.
Good thing she didn’t see the the graph at the top that has showings lower than in June, 2019, and you remember how that ended (the San Diego Case-Shiller flat-lined for the second half of 2019).
It will be common to blame the buyers. But for the first time ever, our real estate market is having a critical shortage of homes for sale when the demand is exceedingly high. There were 500 people who visited a $1,700,000 Carmel Valley house over the weekend. Demand is not our problem, it is the lack of supply.
We have another disrupter who is providing a service you didn’t know you needed until now.
Traditionally, a buyer’s agent accompanies their clients to show them the homes for sale, and to give expert advice about each house while on site. But other real estate companies – who don’t appreciate that valuable service – have dumbed it down by just paying door-openers that allow buyers into the house, but leave them on their own to figure out the rest.
A new company has taken it one step further, and is providing an Uber-like service where random agents can get paid for opening doors for other agents.
The company charges $39, and pays $24 of it to the door-opening agent – who agrees to not offer advice to the buyers, and to direct them back to the agent who paid the $39 showing fee.
This year’s orange line has plateaued. It’s been in the 70% range all month, meaning there has been 70% more showings each week than there were during the first week of the year.
Even though it’s twice as much, it mirrors the 2019 trend that the spring selling season is underway, and I think we can assume that every buyer who is thinking about moving in 2021 is out looking at homes.
The buyer pool is full, and engaged. Sellers, no need to wait!
We talk a lot about homeowners being rate-locked into their homes as rates have increased. It's true that 93% of outstanding mortgages were locked in below 6% as of Q2 2022. But 42% of owned homes have no mortgage associated with them, making them immune from the lock-in effect.