Pandemic Boomtowns... BUSTED?


Pandemic Boomtowns... BUSTED?

Today we're going to talk about the pandemic boomtown's Busted, but there's a lot more to it, right?


The feds just testified again and we went up half a basis point. What is that going to mean? What's the economy looking like? What's the real estate market looking at, like on the whole, and specifically, I have some new charts. We don't have to look at boring old spreadsheets anymore. We're looking at charts today because I'm learning how to incorporate more stuff that might be more interesting to you.

So without, without, uh, further ado, let's get moving. First off, today's rates are, Fairly low. 6.28. And when I say 6.28, what does that mean? It means that's the called rate, right? That's what people say that they're going to, they're going to, um, Start with, or depending on if it's a conventional or jumbo, right? So you look at all these different types of rates or loans, 30-year fixed is 6.33 fixed in year fixed, 15-year fixed is fif 5.75.

A 30-year fixed VA is 5.82, so it's even more aggressive. The same thing with F H A, right?  and what people are doing right now is they're going with the five one arm or seven arms or what have you, and buying it down even further because it just, makes sense because right now a 30 year fully amortized standard conventional loan is 6.33.

Now if you're six points if you're o a jumbo, which just increased or will increase to over a million dollars, 5.7. , right? So when I look at these numbers, I'm just looking at 6.33 and I think even that number went up earlier today. Cause I was at 6.28, maybe that just went up just now because the feds raised the interest rates, right?

So now our policy is 4.25 and 4.5. That means there's going to be a little bit of money on top of that for the lenders to sell, sell you the money.


 Gas is coming down even though it's not where it's supposed to be. Cause I think we were at like three and a quarter on a really good day and three 50 a gallon on bad days.

Um, the highest that I saw was Chevron Elm Winchester, which is always one of the tops. Top most expensive gas station in Santa Clara County, especially San Jose, and it's the one that's right there by Winchester Mystery House. This guy right here, right across the freeway from two 80. So you know, vote with your wallet guys.

Okay, so we're looking at these now. I'm going to kind of flip back and forth from these charts to the exciting spreadsheet that I talk about every week, mostly because I wanna show you that the numbers are kind of jiving. But when, when I talk about these numbers here, this is just San Jose, and when I look at these numbers right here, this is all of Santa Clara.

So all 14 or 15 cities, condos, townhouses, and single-family homes, depending, right? So depending on the. . So one of the most important things I wanted to show you is, oh, not that I wanted to show you this thing right here. This was on my thumbnail, one of my thumbnails for Facebook. But this looks very crazy, right?

Like this is the market. Oh my god, it's crazy. But this is just how much, um, how many houses have been sold over bid, over list price. , and that's kind of coming into correctness, right? Because I, I've been following this number for the last few weeks, and last week we saw 25.8% of the houses that sold, or, um, 16 out of the hundred 62 homes sell over list price.

U.S. Metros Where Price Growth Is Decelerating Fastest Source

Ranked by biggest declines in price per square foot YoY, Feb. 2022 to Oct. 2022

U.S. metro area

Year-over-year change in price per square foot, February 2022

Year-over-year change in price per square foot, October 2022

Drop in year-over-year change in price per square foot, February 2022 to October 2022

Austin, TX



-23 ppts

Phoenix, AZ



-23 ppts

San Jose, CA



-22 ppts

Las Vegas, NV



-21 ppts

Boise, ID



-20 ppts

Oakland, CA



-20 ppts

Sacramento, CA



-20 ppts

Riverside, CA



-19 ppts

Colorado Springs, CO



-19 ppts

Seattle, WA



-19 ppts

And if you look back at here, you're looking at about 25%.  20, 25%. Right? So the numbers are pretty correct. Now, this is a very, very staggered up and down. It looks scary, but it's not because that's just how the market is. Right? In the winter it comes in, and we slow down. We're supposed to be on vacation, but I'm not.

It's crazy. Um, So same thing here. Sales price to the original list and price percentage are the same things, but over the fall you've seen houses come in way under list price. So if you have a house that's been on market for 25, or 30 days, The seller's, more than likely going to take a lower, lower offer. But if you put it on market at, you know, in five days and you drop it down 200 per $200,000 off the list price, the seller's going to hold on.

Inventory shrinking

And we've seen that happen a few times. So March 22, we saw the top of the market, April. Started coming down, started coming down, and now we're seeing fewer and fewer homes sell over less price. The average right now is 98.33% or a hundred 0.46 over the last six months running. Last year we were at 112, so if you look over here, it's about 116, 115 for all Santa Clara County for our specific search, it's about 112 or 108 on average as a running total

week over week, year over year. All right, so this is kind of fun to look at. These are all new numbers, new things, new exciting things. And every time I jump on, I'm going to try to do something once. A day, but who knows? Right? All right, so these numbers right here are pretty important. I'm hearing a lot of people, a lot of.

Videos. I'm seeing a lot of posts and TikTok and YouTube people complaining. It was different in my day when we bought a house. I didn't buy a house in 1982. I was still in high school, but I wanted to get you, you know, 20, 40 years difference so that you can kind of see where we were. Right? In 1982,, the average income was $20,000.

Okay. Today the average income is 68,000. Really? It's 68 in change. I don't know why I picked that number up, but that's what It's about, right? Right. These aren't exact numbers and the, I never will tell you that they're exact numbers. The average home that median price of a home in the United States in 1982 was $69,000.

The average house today, the median price today is 39 or it's 3 79. So as you know, if you've been following me, this is a number that comes in from Fred, are St. Louis Fed and they talk about the numbers that are on average, right? So, again, these aren't exact numbers here. This is just what I'm pulling.

Then I found something here. So if you look at it. I guess my parents' day, they were going to be first-timers, first-time home buyers. Um, they would have an average income of $20,000 or three and a half, or it would cost three and a half times to buy a house. Or the average house costs three and a half times their income.

Today across the United States, the very general number is 5.6. So say five and a half times the. To buy our house, so it's not that far of a spread. I did want to show and point out that on the coasts, You know, you go to New York, you go to dc, you go anywhere that's a little more expensive and you're going to pay a lot more.

For example, the average house today in the Bay Area is $1.5 million. The average income is $120,000, and it takes 12 and a half times for you to buy a. 12 and a half times your income to buy a housing fair or not. That's just the way it is, mostly because of upward pressure, there are a lot more people wanting to live on the coasts.

and that's why you go to Middle America. You go to Kansas. I was just talking to a buddy of mine who lives over, over in Olathe, and you know, you can pick up a house for 50, $60,000. You can also buy a house in Florida for 50, $60,000. It's not going to be the nicest house. Matter of fact, it's probably going to be leaning over and we're going to get into that in a minute.

But for the most part, San Jose's holding their right. We are seeing a contraction in prices. And if you look over here, you're going to see, uh, let me see, I can get back here. One four. Yep. Right here. Perfect. So if you're looking here, you can see that this is the price of overbidding for Year-over-year appreciation.

In 2000, there was 32% Appreciation. . During the pandemic boom, we saw 9%, 18%, and nine per nine and one-half percent. That's the year to date. So when you say that it's contracting, it's contracting over last year? Not over the last few years. Right, because if you look at this, these are house trends, not townhouses or condos.

During the Great Depression, we saw it drop by about 40%. During the pandemic, it dropped down

15% maybe, and then it shot back up and now it's coming back down, which is okay. That's not a big deal. , but I've told you over the years, if you talk to me about real estate, I'm told, I've been telling people, you're going to see bigger and bigger and bigger wags, and don't be afraid that this is going to happen.

Right? So you saw it go all the way up to almost $2 million, the average price for a house in Santa Clara County, and now it's back down to 1.6 or whatever that is. It's one point. Five here right now. And that's a running average over a year. Sure. I'm sure that's why that matters. So, okay, there's the numbers there and it kind of jives into the whole story of everything, right?

We are kind of seeing a contraction, but we're not seeing the market can collapse. We're not seeing the is evaporate, especially not in certain areas. If you look at all these in column sea here, right? All the numbers in red mean that then that's the inventory that I've been looking at for that specific town or city over the last six or seven months.

It's a running total that has gone down from last week. Okay. Coral is going up from last week in inventory, but that's because of a few things. We'll go then to that in a little bit, right? Jacksonville's going down. All the other towns are, and cities are going down metro, major metropolitan areas.

Inventory is going down. Does that mean people are buying houses? Yes, but it also means on normal, on a normal up and down of the market. It's the season that people stop selling houses. Stop putting houses on market. See these? That's the monthly sales volume. That's how many people buy houses. So they hold off until the winter until the spring to start buying again.

Inventory across the US

And where is it? Yep. See mid-winter, mid-winter, mid, almost like clockwork, right? Mid-winter. December, December, and what year? What month is it? Oh yeah. Okay, so there you go. Now let's talk about Cape Coral. Well, I'm sure you guys remember back in October we had a little storm that happened, and a lot of these houses that are for sale right now are hurricane damage.

I don't know why they put these, um, actually I gotta go back in here. Let me do this right. I'm going to do this right. Okay. That's kind of cool.

I wish I opened that up and saved it. So there are a lot of homes here that are being built, right? Like this one is. Storm damaged. I think that's the big thing, right? A lot of these houses, you're going to see underpriced because they're storm damaged. Well, not right now. Let's see. Relevant lowest price. There you go.

And unfortunately, they package in mobiles with single-family homes. I don't understand why this guy is right here, I have no idea why anybody would wanna buy something like that on still.

There it is. These same two houses right here, same street, just a couple of doors down, right? Three bedroom, two bath, 1100 square feet, three bedroom, two bath, 1100 square feet. It's about the same thing. Now, look at 1500 square foot lots. So anyway, if you go into this, you're going to see that they cut out all the dry.

but also property suffered hurricane damage, full repairs are needed, yadda, yadda, yadda. It's not that the market's crashing out there, it's just that people have done. They're like, I'm just going to sell this house. I'm done. I'm not going to move back. But also, the numbers are going up because there's a rare phenomenon called snowbird.

And they like to go to warm places this winter. And so people come down from Chicago and Michigan and you know, Idaho and Ohio, and they get out of the snow and they move down and buy houses in Florida. So it's natural to see homes go for sale. Or that's the selling season for them to sell in the winter in Cape Coral.

So there you go. That's one of the two reasons. Hurricane damage and snowbirds. All right, let's see. I'm going to,

Come back and I'll show you more of these charts, explain them a little bit, and then also talk a little bit more about the news. I'm going to start doing that, try to do it daily, but I can't promise cuz you know, things happen with this thing and I think I might be doing it in the morning so that you can watch it during your lunchtime and not have to catch me.

Vito Scarnecchia

Realtor®, Broker, Veteran, Dad

DRE#: 01407676



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