CLARK COUNTY HOUSING
MARKET
MONTHLY REPORT
The Balancing Act
You won’t read this in the paper.
WHAT WE CAN EXPECT THROUGH DEC 2020 (and beyond)
The takeaway from last month’s August report (Quick Summary)
- We concluded that the strong seller’s market would continue through the rest of 2020. A few months ago there was a brief period this might be changing but the previous momentum took over assuring the seller’s market would remain with us at least through the year.
- Homes values rose to strong new highs. The average price of a home went up 14% (21% annualized) over the first 8 months of 2020.
Now let’s take a look at the latest September Stats.
Buyer activity:
The start of school usually initiates a seasonal slowdown in buyer activity. The start of school is now behind us but the slowdown did not happen.
The holidays are nearby which usually marks a seasonal slowdown in buyer activity. We do see an 8% reduction in buyer activity for the past 2 weeks. I suspect this early seasonal adjustment is more the result of the upcoming election than anything else. The less serious buyers will be easily distracted from buying activities as it is a year of mounting political pressures as November 3 approaches ( Especially in concert with Covid). So I do not make much of the current decline in buyer activity.
Seller activity:
The graph below for listings shows they continue to fall off a cliff. It is usual to see listings gradually fall as the holidays approach, the rate of fall is unusually high and has been steady for the last 5 months. Covid has owners convinced they do not want to sell.
Conclusion:
If it were not for the election, I would say we are for sure headed for a continuation of a strong seller’s market through 2020 and beyond. This is an election year.
Everyone believes that everyone else plans to behave differently depending on how the election turns out. So what typically happens is once the election is over, everyone hesitates until early 2021 when everyone discovers that everyone is proceeding with their earlier plans and nothing will really change. Elections create baseless worry about what everyone else will do after the election and yet nothing significant changes once the election is past. Funny how that works.
So the election will create hesitation but no change. Since the holidays normally also create hesitation or distraction, the result will be the same as it normally is. Buyer and seller activity will slow and then recover in the normal manner.
That normal manner is as follows. Buyers will show up in full force in January and remain present for several months. Sellers will not show up until the spring. However, we are in the early stages of the effects of Covid19. I suspect that if there are no relief funds provided by Congress soon then we will see the delayed effects of 30+ million people out of work. It takes time for such conditions to be on full display. It took time in 2006/2007 and it will take time now. Companies do not fail right away during hard times. People do not stop paying their mortgages until they can no longer pay and renters do not get evicted during Covid while the rules forbid it. But the piper is eventually paid and then we realize how difficult things are working up to be. It could get very ugly.
Look What Home Values have done.
Last month we mentioned the average price of a home went up 14% in 2020 (annualized at 21%). The market paused a bit on that momentum in September. The average selling price slid down just a bit, from $473,000 to $468,000. At the same time, inventories continued to slide, falling from 1.3 to 1.0 in September. This is unbelievably low and will continue to put huge pressure on prices. I have no doubt that prices will continue to rise until…. (see the conclusions above.)
I suspect we are approaching the point where buyers will begin to fall off. This rate of appreciation is not sustainable. We are definitely experiencing a surge of buyers from areas that are experiencing fires. When fire season is over we may see a reduction in price pressures.
Charts and Graphs
Buyer activity/lockbox chart current to about 10 days ago. Strong activity with early declines as we enter the holiday season and the election.
TOTAL listings for September are falling fast, crazy fast and causing low inventories.
A Small Small Tip to Help Survive These Difficult Times
I have been reading for some time now these short weekly writings from Mark Manson. Have you heard of him? I am not quite sure how to describe them. What they do for me is provide some humor, understanding and support in perhaps a form of modern-day philosophy while generally free of any political or religious statements. Sometimes it is great and sometimes I am just not in the mood. I thought I would send it along just in case you liked it too. Oh, and if you are offended by a light sprinkling of bad language then it might be best to pass.
His web site is Markmanson.net.
Let me know what you think.
Want to sell but are afraid of Covid?
Washington has specific rules in place for open houses and showing of homes for sale to reduce the chances of the spread of Covid19. If you are thinking of selling, give me a call and we can talk about the specifics.
About this Report
A lot of realtors send out information to clients. It is a way to keep your realtor’s name closer to top of mind. It is good business. The newsletter might contain home maintenance tips or it might offer food recipes. 99% of the time Realtors newsletters are purchased products from national firms. Generally these are polished products. The grammar and spelling is almost always perfect and they offer a professional presentation.
My newsletters lack all of the above. My newsletter is done monthly using my limited writing skills with a heartfelt approach. Rough around the edges might be a nice way to describe them. (Have you viewed my web site yet, ckelsey.com? The same sort of thing.) My newsletters are sincere and personal updates on where the market is and where it is going based on my 30+ years in the business. I have not seen anywhere else to get such information on the Clark County real estate market each month. I present and interpret both the market stats as well as what I, as an agent, am seeing and feeling.
I have been through the 2006/2007 financial crisis. In fact, that crisis has been my motivation to continue the newsletter. I saw many elderly folks preparing for retirement over many years. A retirement to be largely financed with the equity in their home, at least, until the crisis hit. Instead of retiring, many had to keep working just to pay the bills. Others had to deal with a short sale after losing their jobs. These were hard times. Some of the hardest seen since the great depression.
The resulting hardships of that financial crisis were painful for everyone. Few were spared. I was a bit luckier than some. A partner and I were building a spec home in mid 2006. We both studied the market stats and felt the changes happening. We saw the early signs of difficulty coming. We finished the home and dropped the selling price $80,000. It sold quickly but it was several months later before we fully realized we had made the correct decision. By making the decision early, we reduced our gain and avoided a loss. A delay in action of just a few weeks would have had very different and unfortunate results.
Since that experience, I have felt an obligation to keep my clients informed. I have always felt that if clients knew what I knew, perhaps they could land in a better place just as I did in 2006. If a client knows market stats suggest risk ahead and flexibility is an option then why not minimize risk and make a purchase or sale sooner? If a client knows there are clues that interest rates or home values will be dropping soon and there is an option on timing then why not delay the purchase? I do not have a crystal ball today any more accurate than the one I used in 2006. It is not a matter of clearly seeing the future but rather a matter of reducing the risk. There is always uncertainty. I am just doing what I can to reduce the risk and minimize the uncertainty.