We’ve been waiting for the Fed to cut rates, and it FINALLY happened today. That’s positive news, but let’s unpack what that means. Also, let’s talk about the problem of days on market. Any thoughts?
UPCOMING SPEAKING GIGS:
10/18/24 Prime Real Estate (private)
10/23/24 SAFE Credit Union (details TBA)
10/29/24 Orangevale MLS Meeting
11/19/24 Downtown Regional MLS Meeting Q&A 9am
THE FED CUT vs MORTGAGE RATES
I think some buyers and sellers are excited to hear that the Fed finally cut rates this week, but the cut to the Fed Funds Rate is for things like credit cards and auto payments – not 30-year mortgage rates. However, there is a close relationship between the Fed Funds Rate and mortgage rates, so I think folks in real estate are hoping for mortgage rates to dip also.
GEN Z TRANSLATION (sorry)
I ran the paragraph above through a Gen Z generator: A lot of buyers and sellers are vibing with the fact that the Fed finally slashed rates this week, but like, that’s just for stuff like credit cards and car payments, not 30-year mortgage rates. Still, mortgage rates are kinda linked to the Fed Funds Rate, so real estate peeps are lowkey hoping for those rates to go down too.
LET’S COMPARE THESE TWO RATES
I hope this graph will be useful. And if you’re confused, talk to your favorite loan officer to help clarify. In short, the Fed cut the orange (not the black). And let’s keep watching what actual mortgage rates do now…
“THE SLOW DANCE SINCE 1971”
And while we’re on the subject of rates, here’s the 10-year treasury yield, which has a very close relationship with the 30-year fixed mortgage rate. As Logan Mohtashami would say, it’s been a “slow dance since 1971” between these two.
2024 VIBES ARE NOT 2021 VIBES
I think this meme says it all. Is that what you’re seeing in the market? Please keep sharing perspective. Also, note I have a captcha on comments now since I got 16,000 spam comments while I took time off, and this is helping me solve the issue (not a perfect solution though yet).
YOU AREN’T THE PROBLEM (HOPEFULLY)
“I’m glad it’s not just me.” I heard that a few times this week after pushing out some stats for days on market. A few agents reached out to say it was nice to see other people have listings on the market for 60+ days too. Yeah, you’re not alone because MANY properties are taking much longer to get into contract. Friends, it’s not 2021 any longer where stuff is selling in lightning speed, so we need to keep adjusting expectations. Check out the disparity between listings and sales though. My advice? Figure out what it takes to be a sale instead of a stale listing. Look to the neighborhood comps to understand the dynamics of why buyers are moving quickly or avoiding listings. And sellers, price accordingly. Don’t get stuck in the past like Uncle Rico.
THE MARKET IS DIFFERENT BY LOCATION
I think this really brings home the point that the market is NOT the same in every location. Here’s median days on market, which represents what half the market has done in September (average is higher). Remember, it takes longer to sell in some areas, and some of that is due to higher prices needing more time on the market. On that note, don’t expect Sacramento County dynamics when listing in Placer County. Know what I’m saying?
NOTE: If there is interest, I can do average bar charts too.
TARGETING THE MEDIAN?
The market has a “weird” vibe like I talked about last week because some stuff is going very quickly while other properties sit. My advice is to aim for median days on market where possible. What do you think of that? The median stats below represent what literally half of all properties have done in September. In my mind, this is a great target to sell within this timeframe instead of overpricing and enduring multiple price drops. Of course, higher-priced homes could easily need more time on the market, so don’t be rigid about the overall median here. And some properties moving quickly have a condition and location advantage. Yet, price tends to be able to solve everything, so pricing reasonably is the key. In other words, buyers are often turned off by cosmetic fixers, so don’t price a fixer like it’s updated or even average.
I hope this was interesting or helpful.
Questions: What are you hearing from consumers about rates? What stands out to you about the stats? I’d love to hear your take.
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