Show - 8/5/23
Good morning, WFMD listeners. I'm Jay Day.
And Christina Day.
We're here with Real Talk Real Estate and it is that time of the month where we can talk about what happened the month prior. And again, remember when we get into our statistics, all the information we provide is right from the multiple list. But we do remove new construction listings as some of those are just ghost listings, not real homes. And when we're talking stats, I think it makes sense to talk more about what the real estate market is doing for resale properties or pre-owned properties, if we're going to talk in car language, just so people have an idea of what's really going on and it gives a better idea of what is happening. So do you want to start with Frederick County since,
Yeah, yeah. I mean I think Frederick County is always a good barometer because it's kind of centered in the area that we service, which is Frederick, Carroll, Howard. We go into Montgomery and PG, we cover the York, touching into York, Adams, Franklin, in PA, and then Jefferson and Berkeley and West Virginia and then down in Virginia.
Yeah, Virginia. Clark, Loudoun, Frederick County, Virginia.
So we cover a pretty broad area and Frederick is kind of the center of that geographically, which works out well. But the nice thing too about Frederick as far as looking at statistical data compared to some of the other areas, we do have a good base of activity that's based on employment that might be here, remote work, commuting to Montgomery County, commuting to Virginia, those types of areas. So I feel like it's always a hustling, bustling county as real estate goes. So coming soon, which are homes that we anticipate being on the market within a three week window of time. And actually it's funny, this week I was looking at listings for clients that I'm working with and I saw one pop up active that had not been in coming soon. And I think why do agents not take advantage of the coming soon?
It's a love-hate relationship. I mean, I know some people absolutely can't stand it in some of these MLS groups or Facebook groups about MLS. I see lots of people complaining about it,
But the problem is
I think it's a disservice not doing it.
The problem is for the folks who I was looking for, had I known that that property was coming, I could have incorporated into my search, which my search for the day, my plan for the day to show them houses was already mapped out all the time blocks were already secured, so I couldn't just toss another one in there all whilly nilly. But yeah, so coming soon, sorry for the birdwalk on that, but yeah, people used to coming soon. Let us know what's coming. We have a limited enough opportunity to get people into things. So do your sellers a service and let the public and the agent community know when you have something coming. But this current check, we had 55 homes in coming soon versus 67 last month or the month prior, which would've been June. And so the interesting thing about the coming soon numbers going down a little bit is I think that that's indicative of as we roll into the fall, people starting to think more about getting back into school and thinking a little less about making a move. So some of those traditional life situations that we saw really take a backseat and sit this out for the whole last two, three years. I think we're starting to see a little resurgence of that behavior again, which is kind of interesting.
Because at one point, and it's funny because on the podcast Tom and I would talk about it and he's like, so school timing is that impacting things? And for the longest we weren't seeing the typical shift in the expectation of what we see year over year, but now I think people are confident they're back in school. Getting back into that routine. Same thing with vacation times. It's not unusual in the summer that things slow down a little bit. And I mean there's still, when we get into what went under contract, you'll see the numbers are down a little bit, but not as much as we've seen in the past. And we're seeing also people that have short-term rentals and with some friends we have in those markets are seeing a slowdown. And I think it's just the economy is not everybody is able to afford going on those vacations.
Yeah. Well, the interesting thing about the coming soon pricing, was this current run of what is in coming soon, as of the beginning of August, was 460. And the month before, what was coming soon at the beginning of July, was 449. So it looks like the market is pushing the envelope a little bit higher on price for what they're expecting to be coming on the market.
And active. So actives are homes that are fully available on the market ready to be shown. And we are up to 141 where last time we chatted it was 127. Median price, there also has an increase of $10,000 that went up from 575 to 585. And the day as on market grew just a bit. It went from 17 to 22 days.
And it's interesting when we think about that again, the seasonality of the active homes and the seasonality of the days on market, it has always been the case with the exception of these last three unicorn years, that when we would get to summer, you would see the highest levels of inventory because all the people who put their homes on the market in the spring who failed to sell are still sitting there. Then you have all the people who are still putting their homes on the market as spring rolls into summer adding to that. So mostly what you see that days on market increase are the ones that have been sitting the longest pushing that number up. Don't be deceived by that though, because those that are priced right, show right are still disappearing in four days.
Well, not four days.
Well, I can tell you,
Well actually, so let's lay something out here because the stats that we pull, and this is a good point, I was about to correct you. I see, I'm cheating and looking at the numbers in front of me, but I was just talking with another agent about this. The way that these dates and days on market is being reported is not giving a true real number. And again, this may be getting too technical for those of you listening, but I just want to put this out there.
And we have a lot of agents who listen, so this is good information too.
So I had a little bit of a disagreement with the MLS. I reached out to them, I questioned how they pull days on market. So what I would think what you do is the home goes under contract, when you're updating the multiple lists. It asks you what day did it go under contract. So the MLS only counts, and again, I don't know why they asked for that date if they don't count it. Let's say for example, the home goes on the market Friday, it goes under a contract Saturday, but the MLS doesn't get updated until Monday because the administrative staff isn't in until Monday. They count the day that you updated the MLS, not the date that you put as the contract date. So that is not really giving you information that is accurate. And I tried to tell them, hey, we put the real date in here.
Well, and also the way we count days in a contract, the day it got signed is day zero. The following day is day one, once 24 hours has lapsed. And so they're not following that rule either they're counting the day you went on the market as one day and then the next day is day two. So their math is different than the way that the contract rates and their math is also, like you said, not based on the contract, it's based on when the things get updated. But I can tell you from our own internal sales, if we go on the market on a Friday, we are under contract typically on Monday. If we go on the market on Thursday, we are typically under contract by Sunday night, Monday morning. So we are looking at four-ish days of a home that is priced right, shows right, and gets the appropriate marketing exposure, putting them in coming soon. If the seller is open to it, doing open houses, things like that, creating demand. And we're seeing results. When you don't see results, it typically ties back to things like your home. Is it in some sort of an odd location? Is there something about it that would turn the majority of people off? Does it show well? Do you have it staged appropriately? Is it being properly marketed and is your pricing keeping with where it really should be?
Yeah, that's one of the things with the lower inventory, and I think you mentioned the last show, lots of agents are falling out of the business. What wasn't discussed was, and you brought it up in there, is with them having less sales, their income has dropped. So they may not have the same amount of money to utilize in marketing at home. So it is really important to make sure that it is being marketed in every way possible. And even though the market is still very good because of limited inventory, very good compared to excellent or okay, could cost you thousands of dollars because you're not getting the maximum exposure or it could cost you terms that you may not be happy with.
Absolutely. Absolutely. So that contract activity was up as well or down as well. So we had 302 contracts for the month of July and we had 341 the month before. So that's a significant difference. A little more than 10%.
But the pricing also had a little bit of a, actually not really a little bit, had a nice drop unfortunately. I don't mean nice in a nice way, but it went from 485 to 452.5 and based on how the MLS calculates dates. It was a median days on market of 6. So still under a week
Now. One of the things that tells me though is the more affordably priced homes are the ones that are selling quicker and more likely to go under contract. So it's not that the pricing itself is necessarily going down across the board because we do see the active prices going up. We see the coming soon prices going up,
And wait till you see,
The solds went up as well.
And here's where that comes into play. Last month, the ones that would've settled or went under contract, those were people that we were seeing a lot of rates with a seven in front of it. And I think that had an impact where the month before we had a lot more sixes, not as many sevens. And I think that explains why when we look at what's sold in the last 30 days, it went from 314 to 296, but the price went from 451 to 465.5. And again, we're seeing the other change on the other side, but again, that's, and the median days on market for those as well was six. So the bottom line, you price your home properly and it will sell within a week.
When we look at those that sold above list, those that sold at list, the ones that sold above and at, so at or better, there was 80% plus of the marketplace that actually sold, it was like 82% sold at or above list. And those were in the mid fours. That 450, 460 range is where those were priced. So again, the more affordable price point your home happens to fall in, so whatever demographic pricing wise you fall in, you do have a good chance of having more competing interests. And that's just because there's just more buyers out there who can actually afford that and feel good about that number. If you have something that's a good move-in ready. Now the interesting one was those that sold below list, there was only about 18% of those in the marketplace, but the medium price on those was 530. So you can see that higher price point. And for Frederick County, I wouldn't necessarily call 530 a higher price point these days, but
Right. Yeah, that's a higher price point for a townhouse.
Right? Right. I mean, literally. So it's interesting though to see that, and we did see a decline in the amount of homes that had closing help. Now, I think that is one of the largest indicators of how strong the market is or is not is when you see closing help being applied. That means that sellers were feeling the pressure to go ahead and offer that, include that, accept that. Whereas in a really strong demand, you're going to see less of that.
Well, and Frederick County, Maryland was the outlier on that. Let me just throw some quick stats for the ones with seller help. Carroll County, almost 26% of the homes had a seller providing buyer closing help. Washington County, 32%.
Adams County almost 21%. Franklin County, 28%. And then we go to Jefferson County, 28% Berkeley County, almost 38%.
Wow. That's a lot.
So Frederick was really the only one holding strong of not having that expectation of seller help. And the interesting thing is when I was pulling these stats, I thought the numbers were going to be low all around because we haven't seen it on in our transactions.
Not much at all. No.
And when I saw those numbers, I actually went back, I'm like, did I put something wrong? I re-ran them and I was like, wow, this is really insane that those numbers are so high because we're really not seeing that.
Yeah, I think I had one that had it as something that came in on the initial offer. And interestingly enough, those folks, when we had priced the house, we knew we had priced it a little aggressively. We were trying to get everything we could out of it. And it was once we had lowered it a little bit that the offer did come in, it came in at a full price and it came in with closing help. So a little bit less net. And of course my seller was happy with that because they knew they had tested the market, they felt good about what they were getting because they knew that nothing higher was actually a reality. But that was probably one of the few ones I've had with that. The other time, you see closing help come into play. And just for a frame of reference, if you're listening and you don't know what closing help is or what seller paid closing help is, it's when contractually the seller is giving money to the buyer to help them pay for the costs associated with acquiring the home. It's not paying their down payment, but it is paying part of the closing costs and the prepaids, and that's comprised of transfer recordation, tax, lender's fees. It also includes prepaid homeowner's insurance, escrow for your homeowner's insurance, prepaid taxes, escrow for your taxes, and then of course also title insurance and things of that nature, title fees. So we are in an area where those costs run higher than they do in other parts of the country. And quite frankly, Maryland is more than, let's say West Virginia.
The West Virginia numbers are pretty nice,
And we're also more than Pennsylvania. So when you start adding up what the county charges and what the state charges, it can add up pretty quickly, and that makes for a buyer coming in, they need their down payment and then they also need this additional money of closing costs. And it's not a flat percentage because there are fixed fees. Those fixed fees are a different percentage based on the price. There are some things that are percentage based and there are some things that are fixed fee based.
Well, and it was interesting. I had one of my listings in Martinsburg, we had multiple offers, and then the sellers, they followed our suggestion and continued to allow the home to be shown and we're taking backups. And I got a backup and I sent it over to them. I had a feeling what their response was going to be, and that one had closing help. It had a ton of inspections, and the response was, are you joking? This is horrible. I was like, well, I can't say that. Are you telling me that you want me to let the other side know that you have rejected this as a backup offer? And they were like, yeah, but looking at this, I mean at first I was a little shocked, like, wow, I'm surprised the agent was really pressing me on this as a backup. But if she was looking at the stats and saw 38% of the people were given help in Berkeley County.
I'm just going to go out on a limb and I'm going to say most people are not looking at the stats and making assumptions that they're going to get that through. Most people when they write offers like that are just following their client's instruction and not thinking about giving good quality advice on how to win the day. But I was going to say with the closing help, the other time that we do see it come into play is when there are repair items that might've come up and instead of the seller doing the repairs, they offer a credit so that the buyer can do that later. And that's been a very common practice over the years, and it's actually very much a win-win for everybody. Seller doesn't have to deal with the hassle of hiring somebody and getting them in there while they're trying to pack and everything else. And the buyer maintains the control over who they choose to do the work after the fact and feel good about the repair work that got done.
Yeah, that's true.
So I always tend to think that there's a win in having it be a credit if it can be worked out that way. When I'm working with a buyer, I feel like it's a win because it allows them the control of choosing who they want and having the work done the way they want and not at the, I mean, if the seller's going to do it, it's probably going to be at the bare minimum of what it needs to be to make it pass for what the issue was. If it's replacing a water heater, for example, well, I think I'd rather have the credit and go get whatever kind of water heater I want, even if it means I'm putting a couple thousand into it, that kind of thing. I don't want just a basic water heater. I want a tankless. Right. By the way, guys, those tankless water heaters are pretty great. So yeah, I mean the market is busy. We've actually been very busy. So I don't know what you're seeing on the national news or what you're hearing from your people you know who are in real estate or buying or selling. It is busy. It is competitive, and so you have to make sure that you're getting good quality information and that you can trust the information that you're dealing with and that it's local information.
Yeah, I mean, so Frederick County, we are still at well under a month's supply of inventory, meaning if nothing new came on the market and what was out there was out there and it stayed, and we had the buyers take that up, we'd be out of it in less than half a month. Now, Carroll County, we're in the same situation. We are still under a month's supply. Washington County, when I'm looking at the numbers here, and again, I'm just going to give a little bit of supply and demand. We are almost at a month's supply. We're really, really getting close with Washington County. When we go out to Pennsylvania, we are under a month's supply in Adams, and actually Franklin, we are getting close to a month, but we're still under. Then we go to Jefferson County in West Virginia. When we look in Jefferson County, we are still under and Berkeley County, we are still under a month's supply.
And keep in mind, a month's supply is very much a seller's market. Three to six months is getting more to a normalized market, and anything over six would be considered a buyer's market. So it is definitely still seller centric. So sellers, a couple things to talk about with you is what's holding you back? And we all know what's holding you back. What's holding you back is 70% of you have an interest rate that's under 4%, and I get that, right? I do. And that's one of the constrictions of the market. However, we have seen that continually over the last few years. Prices continued to tick up. They have not dropped dramatically. Everybody was talking about, oh, I'm going to wait for the market to crash. We haven't seen that yet. We still have a constriction on inventory. So long as we have a constriction on inventory, we are also still going to have a demand and demand drives price. So those economists down in DC who think that they're doing a good thing by raising the rates, that's almost hurt more than helped when it comes to real estate.
Yeah, and a lot of people don't understand this. The raising the rates is pretty much put the brakes on people borrowing money and spending, that's what they're trying to do to stop inflation. So it's almost like a way to try to make it, it's almost like you're driving a stick shift and you're trying to be careful to not make it totally,
You don't want to squeal wheels. You don't want to slide down the hill.
But they need to try to temper things down. And the traditional way of doing that is you make it where people aren't going to be able to borrow as much money and things like that. But yeah, we have not seen that change here. Now, other markets and other states, they are starting to see things change a bit right here outside of Washington DC. And again, I still think it's because of our location that we're not being impacted as much with price reductions and things like that as they are in other areas.
Yeah. Well, I was talking to a good friend of ours this week who's down on the east coast, lower southern side beach area, and he was saying that their market has shifted dramatically, but that's also because they are a seasonal home area as well as a retirement area. So what their pain point is, is that they have the people who were selling their homes up north and moving there for retirement are not doing that now. They're constricted because they're not selling their homes and getting rid of their low interest rates as quickly. And then there's a lack of inventory, so they're not finding things that they could move to. So there's that. Then it's also more of a seasonal type environment there with vacation properties and second homes. And with the interest rates being what they are, people are not buying second homes and investment properties as much as they used to. And add to that, the Airbnb, VRBO market is down by about 60% on bookings. So if you were looking at it as a return on investment and everybody clammed to buy Airbnb and VRBO over the last couple of years because travel was so restricted and it became a great way to invest in property, make money off of property, have something that you could use yourself, but now people can travel more freely around the world if they're traveling. And secondarily, we have economic constraints that tie back to grocery prices, gas prices, electric bill prices, and the cost to borrow money on your credit card, and now they're not vacationing as much locally.
Yeah. Well, and it's interesting because I didn't even get a chance to tell you this. I always like to surprise you.
We got an email from our property manager in Florida basically saying, hey, the market is shifting dramatically here. You had X amount of dollars as your minimum nightly rate. Is there any way I can make an adjustment to Y because we have nothing. We're seeing things that are renting at Y per night or actually starting to get a little bit of movement. And I was like, yes, let's turn that. Let's take it back just a little bit and see if we can actually get some income coming in from that because she's like, she said, if you don't want it, it's fine, but I need to, my job is to keep you updated on what we're seeing down here and we're seeing if you're below this number, those are getting rented. Anything above this number per night, nothing is happening.
And that's part of the challenge, right, for sellers and for landlords and trying to figure out what is going to be the number to make you move. But the seasonal markets are definitely being affected. So sellers, the one thing I do want to point out though is if the interest rate is what's holding you back, keep in mind the interest rate is going to change. And so long as we have this constricted market, and as long as we continue on the trend, the prices are still going to go up. So waiting theoretically is just going to cost you more in-house. Maybe not more in interest, but definitely more in-house. And depending on your financial situation and your tax situation, the interest could be a decent write-off for you and it could be re-financeable in the near future.
Yeah, we have no control over what happens with interest rates.
I don't see them going to the crazy numbers. I mean, four is not so crazy. The two and a halfs and 2.75.
That'll never happen again.
Well, you can never say never.
I'll put money on it. You want to put money on it?
Yeah, yeah. Let's gamble. Let's do it. I wouldn't say never because you just don't know. The world has had so many different interesting things going on. I don't think anything is really predictable anymore. I really don't.
You expect this or that and you just don't know. But the big thing is if you're listening to the show and you have questions about anything we've talked about or if you just are curious what's going on, how could this work for me? I don't know what to do. I hear this, I hear this from you, I hear this from that person. What is really happening? You can always reach out to us at 866-702-9038. Again, 866-702-9038, or you can visit us at dayhometeam.com. That's dayhometeam.com and no obligation. We'll chat with you. We'll try and help you out. And thank you for tuning in. I'm Jay Day.
And Christina today
With Real Talk Real Estate. We'll be back at you next month.