Video transcript:

Hey guys, I'm Steve. And this is the Steve Volkers Group, and this is September's market data update dump. I'm gonna try to keep it at 10 minutes. We'll see Kev. I don't know. I might be able to do it this this month. I feel like some of it might be possible, but we're using obviously August data Kev puts together this big book for us from our association, and then he chops it all up and we get lots of great.

Feel free to put a comment below in the video. If you want a copy of this, if you don't have a copy, we're welcome to send it to you each month. But this month I, I got this fancy new notebook, so I'm gonna use it cab, but. The topic of this month is don't chase the market. That’s what we talked about in our meeting yesterday is don't change the market.

Right? So when you're meeting with a financial advisor, they often will tell you. You know, the markets are gonna come up, get down and up and down. And based on when you wanna retire, we need to set X amount of money away and don't chase the market right over a five year, 10 year, 20 year span. The markets are gonna come up and down and if you pull money out, when it's down and up, you're never gonna get the long term return.

So that's my thinking right now with the real estate. Is don't chase the market, make sure that you are setting pricing accordingly. Your buying power is, is figured out that we're not like trying to figure out when the bottom is when the top is you name it. So the data is showing the market is obviously declining.

It's been declining for five months straight, and we'll talk about some of the graphs that show that. And we've been talking a little bit about. Which really comes down to the affordability. I've been talking about affordability. I feel like for months, but it's really trackable now. Right? We've got five months of data showing that and some significant drops in that.

Place. So as a five month decrease has occurred that affordability conversation's there. And that's where I want to talk about that. Don't chase the market. We talked about that mostly in the listing side, not as much in the buyer side, but if you're selling your home and you're pricing it. You can't chase the market down in the crash of 2009, 2010, 2011.

We would price the house that acts right. But next month the price would go down and we would go down and would go down and we'd always be chasing down to which point we never knew when the bottom was gonna hit to start working our way back.  so this kind of notion came about then is careful not to chase it down.

Don't just price it. According to what the market is telling you today, let's make sure maybe we're down a little bit so that we can beat the market down. And I'm not saying that you should price your house too low, but at some point with the data showing, we have to be careful on pricing it too. And using old data that is no longer true.

So I want to talk about how we price things a little bit when we're talking about listing and then when you're buying, it's the same way when you're buying something it's is it reasonably priced? Why is it only getting for showings or we've, you know, road offers for 50 over with 20 appraisal gaps and still didn't get them this week.

So it really depends on the specific house, but we're seeing some trend lines that are all over. So, getting old. So I gotta take my glasses off a little bit to read here, pop 'em up or whatever. So residential sales are down still. We're down 6%. so far this month, we're down 7% for the year, so far in transactions.

So that's not volume that's transactions. You know, what, what they cost would be different, but in the amount of transactions were seven down. I thought one data point was interesting in this graph of year to date closed was comparing it with 2018. So a lot of people. compared our current market with 2018, which was sort of before these 3% interest rates before the craziness of the market run up of 19 20, 21.

And then the beginning of 22, But one big difference that you would see is where a thousand units off in sales so far this year, compared to the same timeframe in 18, what would that mean? I think that that's where we're still seeing some significant price increase because it's just an inventory situation.

We had more inventory in 18, so prices were still balancing a little bit. So we were having. 8% growth instead of that 15% growth that we were seeing almost 20% growth we were seeing in 1920 and 21. but let me get to the page that I thought was the most interesting. This is it. This is the page for me of the month. And what it is is basically median price per square foot. And what it shows me is this downward. For five months. So that means that you own a home in basically March of 22 was the peak value price per square foot of that house. So whatever that house is, a little Elra Heights house, a forest Hills house.

You, you name it. This is all the data together in. In, uh, basically swim Rick. And it's basically saying that March of this year was the top end of price per square foot for any house. And that's often one of the, the main drivers of pricing. When we price the house, we use price per square foot as one of the bigger components of, what is a home selling for.

So we've had five months of. Why have we had five months of a decline. If I scoot a couple more pages down, Kevin's got the other graph, which is average interest rate per month. So the interest rate per month. So March of 22, the interest rate at that point was 4%. But the interest rate in February was three and a half.

So anybody that would've put a deal together in March, wouldn't have closed it till April. And they would've had that three and a half interest. Then that's when we started this big jump to above 5%, almost to 6% at times interest, which is where that affordability conversation that we've been talking about happens.

So prime example, $300,000 house at 3% interest rate. back in March, would've cost you just principle and interest a thousand dollars a. 1500 total. If I add taxes and insurance in that. So a $1,500 a month payments. Yeah. For first time home buyer, if they're choosing to rent a home or buy a home, that is the same affordability, the Zach same house today though selling at 300 at a 5.8 interest rate, which is what, uh, online told me today's rate.

That's $1,415 a month just for principal and interest in total it's $1,900 a month. So you're talking about a five, a 400 plus increase in monthly payment. The kicker though is the $300,000 house in March. Is the house is being listed for three 40 today, cuz agents are trying to box in the increase since March for that new value.

So a three 40 house is no longer 18, a three 40 house is gonna be close to 2100 a month. Well, that isn't necessarily affordable 2100 for the same house that would've been. 1500. So what does that have? $700 more a month for the Zach same house. At some point you see a decline. It's just, it's just nature that, Hey, we can't afford the, and then you had gas prices, you name the other things that make a inflation area was down.

They said this month. Well, great. It's down to four point. What 4.3 or 4.4 yesterday. That's not really that great for most people to have an increase in pricing of, of 8% this month, compared to last month's pricing, it still isn't up. So you got 8% of all the durable goods that we use. Plus you've got, this, this amount.

So this is where your affordability is really playing out. So, how do you take that data? And. I think that, that sometimes we, we just talk about data and agents just talk about like, okay, market's up or market's down or whatever. so don't chase the market. One thing I'm talking to my customers about is really making sure that we're pricing according to the current market status, not the market six months ago.

So we just talked about that in depth. What marches data. Proves is that, that was the highest point. And we've been sliding steady off. Uh, Kevin's favorite, I'm sorry. Ke I jumped O your favorite graph is average price over list price. And we talked about this last month that we wondered if it'd get close to the a hundred percent.

Well, we basically are there. We're at 1 0 1, right. Last month was 1 0 3, 1 0 6 1 0 6 1 0 7 1 0 5. Right. We haven't hit this 1 0 1. Since February of 21 and basically almost all of 2020, right. So it's been almost a year and a half where we have been at 1 0 5 or better right now, 1 0 1 is the number at the time.

It's current price to what it got. That doesn't mean all the price drops. Right? So we have price drops. Plus it's only getting 1% above list price. So just be careful.  so what are we doing? we're using a shorter amount of data, right? And we did this in the crash too. I don't think we're having a market crash.

We're having a market study. We're we're starting to float to where we're gonna calm down. Right. So we only, we would only want to use 90 days of data, not use six month an apprais. Use this six months. So if they are appraising your house based on six months ago, well, yeah, it was price per square foot. It was the highest it's ever gonna be.

But if they're starting to use appraisals that are only 90 days or shorter windows, which they don't have to right now, they can use six months of data, but we have to be careful. Cause the buyer's mindset is the 90 days, not the six months. Right. And. If you're pricing the house, based on this marches sales, which is very normal for an agent to use, right.

I just come up with, oh, okay. Well, here's the last six houses within a mile radius or with a half a mile radius. And this one's sold in March and this one's sold in April and this one's sold in June while that data is almost too old. Right. Or we have to just determine what is the percentage off, maybe we're using this average list price to sale price and saying, okay, well, in March we were at the highest, which was one oh 7% above list price.

So what was their original list price? And then we only want to add 1% to that list price. We don't want to add the 7% or we need to take the 7%. Right. So using that same mindset, just for fun. Uh, what was that? So if we did the three 40 house that people are sort of saying, okay, well now it's worth three 40, but three 40 times 0.07 equals 23,000.

Right? So 23,000. So three 40 minus 23,000 is gonna be, what is that? Three 17. So it really should be priced at three 15, not at three 40, right? Because you've already that, that seven percent's been sort of annihilated over the last five months. So you're not trying to capture that. You're trying to capture the early market data.

So.  don't chase the market when you're selling, make sure that you're pricing it right. To get the most activity, to sell it in that first weekend. Like you want to, maybe you get multiple offers, maybe you don't, but you want to try to get your list price, at least, right? You don't wanna have it sitting out there a week, two weeks, three weeks, and then have to drop and then drop again or get a price off of that drop don't chase.

The price drops. Just price it. buyers, they're getting more picky. Inventory is over a month. It hasn't been over a month in probably a year and a half. So the buyers are starting to say, no, I'm gonna keep my eye out. I like that house. I'd like to buy set house, but I think I could wait it out for a week to see if there's a price drop or wait it out for the other house on the market that comes this week. That might be actually pricing, not chasing the market. And they're beating that other house that just listed. So if you're that three 40 house and your neighbor lists at three 10, and you think they're undercutting the market, they're actually being smart and they're actually gonna sell their house at three 10.

And guess what? Your value just became three 10. Yep. So don't chase the market. I hope that this brings you value. I enjoy it every month and I hope that you are able to stick it out with. Figure out this data, but I'd love to hear your opinion of this data or other data that you're seeing. I've had some lenders sending me their data. It's always fun to compare different industries that are looking at their financial settings. And then how do they incorporate with ours? So this is the real estate update for September using August's data. I'm Steve, Kev is behind the camera and thanks for hanging out with us.

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