Show- February 4, 2023

Introduction Music:

Jay Day:
Good morning WFMD listeners. This is Jay Day.

Christina Day:
And Christina Day

Jay Day:
With Real Talk Real Estate. We are now in the month of February. Who went by fast. So what's going on in the market? I mean, we see all this national news. I always like to say it's very different here locally. So you want to do some statistics?

Christina Day:
Yeah, let's talk a little bit about the market because of course that's what everybody always wants to talk about, right? No matter where you go, restaurant, bar, family gathering church, everybody's saying backyard. What's happening with the real estate market? So it is definitely a little wild out there. Right now it's middle of the year. Last year around July, things really started to slow down dramatically, and that was largely due to the interest rates going up, of course. And then in the last couple months we also had the seasonal holiday effect, which affected activity.

Jay Day:
How? Well, and it was funny because the media goes off and all this craziness and doesn't mention seasonality at all. No. But I know in our last show we talked about how the numbers were impacted by absolutely the seasonality.

Christina Day:
Absolutely. So looking at the numbers last week, we pull our numbers a about monthly. We try to get it as close to the end of the month, and it takes a little digging and researching so that we can make sure we have good numbers. So as we looked at these numbers last week we had in Frederick County, coming soon was up to 38 and that was 18 more than last month in December. Now again, that should not be a suprise. Now, December, not a lot of people were going to put their homes on the market, January, whole different story.

Jay Day:
So holidays over, now it's time to get rolling again.

Christina Day:
And for those of you who are buyers out there listening or sellers who will be buyers because you're going to need to put a roof over your head. The good news is that our phones, I can't speak to every agent in the county, but our phones have been ringing a good bit in the last couple weeks with people really starting to think about doing something. And the beauty of that is it's going to free up that gridlock that we had. If we can get some more people putting their homes on the market, then people have something to actually buy.

Jay Day:
Right? That's an important part.

Christina Day:
It's like when you're sitting in traffic on the highway and you're like, am I ever going to get home? This is the same thing. We're kind of in a gridlock situation and have been for a couple years, people reluctant to put their house on the market because they don't know where they're going to go. Now we have people really starting to put their houses on the market, so there's more to choose from, which is great. However, by no means are we anywhere close to a normal amount of inventory.

Jay Day:
Yeah, that's what I was going to say. So the actives are actually down. We were at 166 and we were at 194 before.

Christina Day:
I have thoughts on that though. So here's my thoughts and you can weigh in if you think that this might have something to do with that. So one, we're looking at these numbers at the tail end of January, which is never, it's always a month that we start to see activity increase, but we also see a ton of homes come off the market at the end of the year, people who give up and they wave their white flag. And if we look at the homes that came off the market, there was 173 homes in the last month that came off the market. And that includes that tail end. Yes. Of December, whereas the month before it was 149.

Jay Day:
Yeah, that's a big amount of people. And I mean the interesting part is I think if you look at the day is all market, the interesting thing is it wasn't even that they had been on for a long period of time and they just finally gave up. I think a lot of it, and I could be wrong, but I think a lot of it is also just not being given the proper information, setting the proper expectations and a good education and what's the purpose of your move? What is your goal? What is your end game? And instead of just, oh, I want to try and see if I can get this amount of money and not know what's going on or them to get discouraged, Hey, all my neighbors homes sold in two weeks, three weeks, what? What's going on now?

Christina Day:
Well, and if their neighbors sold a year ago, they sold in two or three days. Yeah, that's true. And they sold over asking and had no inspections and a conventional loan and an appraisal gap and everything else. So it is truly important to have somebody that you can talk to like us who is in the trenches every day, who is the people who are talking about real estate, looking at the stats, watching the market, and really understand the difference between February of last year and February of this year.

Jay Day:
Well, I mean even when we talk in general about how many homes are available, the amount of inventory, what we're seeing and hearing in the national news, it's about a three month supply of inventory

Christina Day:
And we're far below that.

Jay Day:
I almost was about to throw the number out there, but I realized you still have some more stats to get into.

Christina Day:
So the contract numbers last month we were at 173 this month. This past month we were at 225.

Jay Day:
That's a very good number for January.

Christina Day:
That's a great number for January. And the nice thing about that, and like I said, we pulled this around the 25th of the month. So the nice thing is there's obviously been more activity to round out that month. So we're probably a week or so of additional data that would've changed the complexion of this where we would've had a little bit more sales activity. So we are coming into January with a really strong burst of energy and I can tell you conversations with our friends who have teams and brokerages around the country are all reporting the same thing. We're starting to see in some of those more high demand demographics, which would be the more affordable price points would be certain locations that have high demand. We are starting to see multiple offers. We've even had agents on our team coming back and telling me when we have our sales meetings on the daily basis, Hey, I'm in a multiple offer situation, which is crazy. Hey, I had to give advice on what to do if it doesn't appraise, which we haven't had that conversation in several months.

Jay Day:
And I mean the big thing is, and what I think also impacted that increase, if you're listening to this and you don't know what's going on with interest rates, I mean we were at over 7% at one point and one of our lenders that we work with has been quoting just under 6.6% with no points. So that right there for the affordability is a huge change. And I think what may have happened was you had some buyers waiting on the fence for prices to drop, which really technically didn't happen and rates continue to rise and all of a sudden they saw the rates start to drop and they're like, hold on, I might want to jump in now because I don't know what's going to happen with the rates. And realistically, when rates drop, you typically don't see sales prices drop. No. So I think the people that jumped in early enough, and actually it was during the holiday season, might have hit a magic little special spot because we were still, they were able to get away with doing inspections there. The multiple offers were now, as we're in end of January, February, we are definitely seeing the multiple offer situation increase.

Christina Day:
And I mean great for you guys who are selling. So there's some pieces to that too. When we look at the numbers of what is coming, what is active and what is going under contract. So the median price on our coming Soons in Frederick County is $467,000. That's actually down from $487,000 the prior month in December. And then actives we were at $439,900 in January, and that is actually up from the prior month in December of $431,000. So we are seeing the active prices push the envelope just a little bit more. The contracts are actually up a smidge too. So contract median price was $399,900. That was up from $395,000 in December. So we're seeing it tick up ever so slightly.

Jay Day:
And I think that's what we were saying is that instead of a 30 plus percent increase in value, it'll be single digits, 1%, 2%, and it's sort of showing that.

Christina Day:
Yes, exactly. Now those that sold so we had 141 sold and that sold, for those of you who might be newer to our show sold means it actually went to settlement. It's closed, somebody new owns it, now it's done. So in December there was 224 settlements and in January up through about the 25th there was 141. So if we kind of weigh out, yes, that makes sense because remember the January or the December contracts order closing in January, right? Yeah. So it'll be interesting to see what February's numbers for solds actually work out to be at the end of the day. But those sold medium price was about $390,000. That was actually down a little bit from the month before. So that was $401,000 for the median closed price in December. So just down a little bit on the close, but if we're seeing these contract numbers go

Jay Day:
Up, oh yeah, that's where

Christina Day:
Inventory reason that our sold numbers are going to also be going up.

Jay Day:
So when we look at that, if we had 200 plus homes go under a contract and we only have 160 plus homes that are on the market, that equals less than one month supply in Frederick County. Yes,

Christina Day:
Exactly.

Jay Day:
And I don't know if you mentioned it when you started, all of these statistics are Frederick County, and they do not include new construction because those are most of the time to be built homes. They're phantom listings. So we pull all that data out and look at true resale numbers to see what the actual true market situation

Christina Day:
Is. And just speaking to the new construction situation, because we actually handle a lot of new construction in not just from a listing and marketing standpoint, but we also handle new construction with buyers and we take them through was funny, I was looking at some of our sales and I think there was three relocation, new constructions back to back to back that we had had clothes that you know, and I had handled, and it was interesting to me to see that there was such a large amount of new construction that we were doing with buyers. But the interesting thing for new construction and a lot of people say, Hey, I want to build my dream home. I want to buy a lot and I want to build a dream home that is really a specialized niche. And we're very fortunate. Jay actually is very specialized in that niche and has wonderful contacts in the building community and things of that nature but it also requires specialized financing. So that is not your average ordinary mortgage

Jay Day:
And you have to have a fair amount of cash down to get things rolling. You're not going to get away with 0% down three and a half percent down your minimum, 20 plus percent. And if you buy the lot, and it's a little different than if you're dealing with a track builder, the track builders are, you can do FHA, VA, all that

Christina Day:
Other stuff. You can walk in with your 0% down or three and a half percent down. Now new construction. And one of the other reasons why we take those out of our statistics is because one new construction values different than resale values. So that actually would throw off our values on what you as sellers in the community can truly expect because new construction is typically 10% to 15% higher from an appraisal situation. So you could have, for example, we always use lingo because that's actually where we live but in Lingore, they're building new construction or have been building new construction for quite some time, but there's also homes that have been there for decades. So if you were to take a similar square footage of a resale home that is, let's say 20 years old and it's in the same pocket as a section that has new construction of similar size and finishes, they're going to value differently by about 10% to 15%.

Jay Day:
Oh yeah. And I mean even Lake Linganore mentioning that with all the different villages, you have to break all that out because every area has specific price points that it happens in and true the same thing. Some of the older homes over in Aspen, for example, a lot of those are foresighted, solid brick, no siding, no, all these things make a difference in that area. But let's talk about another interesting, some stats about what's sold for how many sold for under list, how many sold at list, how many sold above list.

Christina Day:
So above list price was 46 of those homes and they averaged a price of $360,000. So that is a median of $360,000. And that medium price of $360,000 as you can tell is a little bit, or I'd say a good bit about 10% below where we are with our actives. So that would indicate that the lower priced inventory that we have is what is moving at above list. It's more competitive, which speaks to what we just said, certain higher demand demographics are getting those multiple offers and the escalating offers, things like that. And that is actually down a little bit from the prior month, which was median of $3 87,000. The days on market was the same though. For those that sold above list, it was approximately eight days and that made up about a third of the homes that sold. So about a third of the homes sold above list.
All right. Those homes that sold above list were a little bit below the median price point below list was 53 homes. The medium price on those was $415,000. That was also down a little bit from four 20 and the days on market was 30. Now that was a little more than a third of the inventory that sold below list. And you can tell those were a little higher priced homes and they had been on the market a little longer, so three weeks longer basically they were on for a month. So one of the things we like to talk about when it comes to pricing and strategy, and I hear sellers, we sit at the kitchen table and we have this conversation and there's many ways to skin the cat. So a lot of sellers are saying, I want to list higher that way I have room to come down.

Jay Day:
Not, well, it's, it's one way to do it.

Christina Day:
It is one way to do it. Then other sellers go, what do you think? Yeah.

Jay Day:
And I recently, I've had a lot of, well, I'm not the expert that I, what are your numbers? Which

Christina Day:
By the way, we appreciate that. Yeah. So

Jay Day:
However, the ego doesn't need it. It's always important to know what number is going to make you happy, what number is going to get you to where you need to be. And then our job is to say if that is realistic and attainable,

Christina Day:
And that's the thing. So what happens is we have the number that makes sense and that number comes from the comparable sales and things that are happening around you and understanding what the market trend is. If we look at these numbers and we go, well, the market trend for things that went under contract and sold was actually lower than the prior month, then it doesn't benefit us to price too high. If we look at it and we see that it's increasing and the things that have gone under contract and the things that have sold are actually increasing, then yes, you can push the envelope, but we have to look back in time and we have to say, what is under contract and how does that compare month over month?

Jay Day:
Well, one of the things, and I know you are talking about a whole bunch of different stuff now, things, but what I really want to hit on, because I've, with a lot of the calls that I've had recently, and I've started taking some more calls personally, and I want to make sure that anyone who's listened to the show gets this. It seems like sometimes the sellers are afraid to tell us a number. We have an idea based on the stats. It's not that you're doing our job for us. And it's also not that we want a slow, lower number. We're not going to tell you what your number is. And I'll give a perfect example. I had one recently in West Virginia, and I sent them the comparables and I said, now after looking at all of this and looking at the photos, where do you think the house would sell?
And there was a long pause and I just sat there and waited for an answer. And they said, well, that's why we called you because we don't know. And I said, no, no, no. You had an idea before you even reached out. Everybody has a rough idea. And then forget that idea. Now look at what you saw and what sold and what's available, what do you think? And they came in and I'm just going to give a number, and was the house needs work? They came in at $95,000. And I said, oh, okay. Well, I was thinking it's going to sell between $95,000 and $110,000. So it's not like if we have a higher number, we're going to go with your lower number or change our number. In our mind, we're very ethical. This is not a, we just want to know where you are so that you have an idea and we can try and figure out can we make this work or not? But I think a lot of people just think, oh, I'm not going to tell the agent my number because then they don't have to.

Christina Day:
Well, and quite honestly to that point, I mean, there are agents who will say, what's your number? And then that's the number they listed at. Not everybody is going to have the cantaloupes to say, well, yeah, I hear that that's the number you want. However, these are the indicators as to what we will actually get.

Jay Day:
So the funnier part was I said, so what did you think? Once they started opening up more, I said, now what did you think before I sent you those? And they were like, oh, we were thinking probably $140,000. And I said, oh, so what made you change your mind? And they said, well, based on what's sold and what's available, there's one that's available that's better than ours. It's $125,000. And I said, okay, so what price are you comfortable with pricing the home at? And again, it's not a us dictating and telling you what you need to do. No, our goal is always to be very upfront, very honest, and Hey, here's the data. How are you going to analyze it? Already know how I've analyzed it, already know what my numbers are. I have a range. There's no pinpoint specific price of like this is it.
This is the magic bullet that's going to get it done. It's a range. And then we sort of talk over strategy on that one specifically, we ended up coming up with doing the strategy was to price it at a $100,000, and the reason was for bracketing so that it hit multiple searches. And they were super pumped to know that that was even an option. They had no idea. They were thinking, oh, let's do the car, do cars. Every car. You look at a price for it's $49,990. Oh my god, that drives me crazy. But anyway,

Christina Day:
Because that $10 makes a difference.

Jay Day:
Yeah, I digress as usual.

Christina Day:
Well, and it's interesting. So on that pricing conversation, the pricing is so important, positioning yourself properly, especially as we are in this, what I would consider to be a very turbulent market, and why I think of it as a very turbulent market is if you listen to us on a monthly basis, which we hope you do, and if by any chance take notes, which I would love for you to do you will see that the market goes up, it goes down, it goes up, it goes down, it goes up, it goes down. The number of sales is continuing, it's constantly fluctuating. And the median numbers are constantly fluctuating. The amount of activity we see constantly fluctuating and for so many reasons.

Jay Day:
Well, and that's why we only do this show monthly, but we do talk a lot about what's going on in the market on our podcast. And you can go to Wfre site to get that, or you can go to our site day home team.com and we do weekly updates with the podcast, sort of letting everybody know what's going on because it is ever-changing, constantly evolving. And we break it down by area too. So today we've been focused on Frederick County, but if you really live in Carroll County, if you live in Washington County, if you live in West Virginia or Pennsylvania or Northern Virginia, we can give you all those statistics. And we do show a lot more of that on our website as opposed to 30 minutes isn't enough to give all the information for all the areas.

Christina Day:
That's all we talk about. You guys would be we, we'd put you right back to sleep on the morning show.

Jay Day:
Yeah. And our goal is we know that these numbers can get monotonous. It can be a little dry, a little boring, but hey, it's crucial.

Christina Day:
You just hurt my soul a little bit on that.

Jay Day:
Well, sometimes people, the numbers, there are people that are like, is it up or down? I don't need to know

Christina Day:
How the soup is made. I just want to know that it tastes good. Yeah.

Jay Day:
But the reason for this show, and one of the reason, one of our reasons is to give you real information, real time, and to not give you a line of bs. And that's what we're here for, to give it to you straight.

Christina Day:
It would be great to tell you what you want to hear all the time, but that's just not going to be helpful to anybody. No. So sold at list price, that was the last category of sold. So we had below had above, and then we have sold at, and so 42 homes sold at list price. The median on those was $404,000. That was actually up from $375,000 which means that priced in the right price point got a sale and they had a pretty successful sale. That's a nice, strong number. $404,000 that is right in line with the median on the contract activity that we have.

Jay Day:
Now, I want to point this out because we haven't really drilled into it in the past calls. That doesn't mean that they were priced from the beginning. True. These numbers are from the last price it was at when it went under contract or last list price to what it sold for. So it doesn't mean that they might

Christina Day:
Have had to reduce to get to the right price. Correct, yes.

Jay Day:
And so, sorry, just wanted to add that caveat.

Christina Day:
And what will also validate what you're saying is for those that sold at list, they were 16 days on the market. So that would indicate that on a median level, median being right in the middle on a median perspective, that they actually said, okay, I'm either priced right already, or I'm going to reduce it in a timely fashion so that I am priced and I get this home sold under three weeks during the holiday season.
Yeah. Yeah. I mean, that's roughly two weeks during the holiday season. And the nice thing when you do act quickly and promptly, then you don't what we call trail the market. So in July, we saw things start to slow down in July, we saw values start to soften in many areas and many demographics from a number standpoint, price standpoint, house style standpoint, specific communities, things like that. So we did see a softening of those numbers. And if you are trailing the market, what that means is you priced a little too high above the market. So think of the appropriate prices right in the middle on a scale, you priced a little above it as the market is softening, it's coming down the scale and you're making reductions, feeling like you're doing all the things that you should be doing, but you're still just above the mark where you need to be,

Jay Day:
Which turns into a knot sale, or you end up accepting something less because, and it took longer. Yeah,

Christina Day:
It takes longer. You're never, you're still not going to get your higher number, but you're trailing along with a softening market. And you know what that creates?

Jay Day:
What's that?

Christina Day:
A really upset seller.

Jay Day:
Yeah. Well, and again, it's just because the right conversations are not happening from the beginning.

Christina Day:
And sometimes those right conversations do happen, but the problem is that their number in their mind, where they're truly fixated that they feel like they need to be is outside of what is okay. Right. What's going to actually work and pull through and make it happen. So the last category from a statistical standpoint that I like to look at are homes that sold with seller help. So what does that mean, Jay?

Jay Day:
So homes that sold with seller help, that means that the seller gave some type of monetary concession to offset closing costs that the buyer would typically have to pay that. Did I say that in?

Christina Day:
I think you did. I think that was pretty clear. So this is something that we didn't see much of over the last three years, and we are starting to see more of that now. In fact, 39% of the homes that had sold, so 55 of them gave some sort of seller help. Now, this is not the reduction to the price number. No. This is, I'm going to deduct a certain amount from my bottom line in order to help this buyer bring enough money to the closing table. And there's a number of reasons I think that we're seeing this increase. One, understand that three years ago or more seller help was a perfectly normal expectation. Yes. And the conversation we would've had with you is your house is going to be priced here. If it's priced right, you're going to get within about three to 5% of that price. If we're fortunate it goes up, if it's normal, it'll be just within that ballpark, it might come down. So a 3% to 5% range around your price point is what we were really targeting as a perfectly acceptable contract that might be full price with 3% in closing help to help that buyer bring the money that they need in order to buy your home.

Jay Day:
Well, and the funny thing is, and I've been doing this since the dawn of time, well, I can't say since I started because I'm sure I had to learn it at some point. But when it comes to seller help, if we're selling specifically, I mean, when you're in a specific neighborhood because we do have a lot of neighborhoods here in Frederick County. So what we would do is I'd say, okay, so you live in, or you're selling your house in Urbana or Villages of Urbana. Okay, no problem. What we're going to do is I'm going to show you every townhome that's sold in the villages of Urbana over the last 90 days, and of those 50% of them gave closing help. So it works out really well that they can tell, here's where we are, here's your percentage of possibly needing to do closing help, and here was the average of what it was. So we're not winging it. We're giving you true stats.

Christina Day:
All right. Well, it looks like we are. We're running out of time.

Jay Day:
All right. So thanks for tuning in. We'll be back next month with Real Talk Real Estate. I'm Jay Day

Christina Day:
And Christina Day.