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This Summer Real Estate Market Report is focusing on the stats and happenings in the market from late Spring through June. It will also touch on the recent nation-wide lawsuits and NAR settlement regarding compensation and representation and how that has affected how we do real estate locally.
With most people experiencing various types of inflation, and mortgage rates staying higher than they’ve been in recent years (even with recent drops), the residential real estate market in Humboldt has found it self fluctuating through trends and changes as of late. As usual, Humboldt takes the highs and lows of the nation wide trends in stride, but still feels the effects of these and other economic changes.
A quick note on interest rates, because we will not be doing a deep dive on that here today – but there is talk that we should see rates starting to adjust downwards this Fall. So, it might be an extra busy Fall selling season – especially if the weather holds!
Moving on, there are a lot of little lessons that can be gleaned from what’s been happening, from which homes are selling fastest, and how price adjustments are more commonplace, but first let’s look at the stats.
PRICES – MEDIAN PRICE
The low and high numbers are taken from the past 12 calendar months.
COUNTY WIDE
Low 1/2024 $390K
High 6/2024 $490K (Current)
Overall, HumCo is seeing home prices stay a bit elevated, even amidst the slowing of sales (Absorption rate stats to follow). It is interesting to note that home prices do tend to be lowest in the Winter. This can mean a variety of things depending on wether or not you are buying or selling, from the overall profit you may make during a sale, to what kind of deals you can get by shopping in the Winter…
EUREKA
Low 1/2024 $355K
High 6/2024 $497K (Current)
MCKINLEYVILLE
Low 4/2024 $400K
High 12/2024 $645K
Currently $497K
FORTUNA
Low 12/2023 $300K
High 5/2024 $492K
Current 6/2024 $474K
SOUTHERN HUMBOLDT
Low 7/2023 $160K
High 3/2024 $525K
Current $327K
I’m not going to make much of what prices are doing in general right now because while overall prices do seem to be coming down slightly to help compensate for the additional costs that buyers have to take on with higher interest rates. Sellers seem to be holding fairly steady in many markets with higher price points, but Buyers are appreciative of appropriately priced properties and tend to move on those faster.
VOLUME
This statistic very clearly demonstrates the difference between the volume of properties currently on the market versus this time last year. It’s also really interesting to note that county wide, we’re up, but in Southern Humboldt, there are dramatically less properties available for sale than this time last year.
COUNTY WIDE
Low point 1/2024 1.99M
High point 6/2024 286M
7/2023 was 250M
36M more than last year this time
EUREKA
Low 9/2023 33M
High 5/2024 45M
7/2023 – 35M
(+10M more than last year this time)
SOUTHERN HUMBOLDT
Low 4/2023 40.66
High 8/2023 73M
(-20M less than last year a this time)
MCKINLEYVILLE
Low 1/2024 8.1M
High 6/24 22.6M
(+14.5M more than last year at this time)
FORTUNA
Low 8/2024 15.7M
High 10/2023 25.6M
(+5M more than last year at this time)
ABSORPTION RATE
Properties are absolutely staying on the market longer than they have been lately. Since buyers as a whole seem to be a little more cautious about making a big purchase, they are being more choosy about what property they may write an offer on, and this means that while there are plenty of buyers/sellers/properties for sale – buyers are still taking their time to find “the right place” which leads to longer times on the market, and ultimately more competition and potentially a lowering of price points.
Also, throughout what would have normally been a very busy Spring Market, many listings were sitting around without even getting many (if any) showings. The Buyers were a bit absent for a minute there, and/or were looking for super specific things before actually deciding to see a property in person.
This statistic shows how long it took before a property sold. Even though things have slowed noticeably, and even though it may be difficult to tolerate having your property on the market for a longer time (especially after the Covid heyday…) it is actually the norm right now for properties to be available for a bit of time before they’re sold.
EUREKA
Low point of the year was 9/2023 at 2.1 months
High point was 5/2024 at 3.8 months
Showing Spring market was unusually slow
MCKINLEYVILLE
Low point 1/2024 1.7 months
High point 6/2024 4.28 months
FORTUNA
Low point 8/2023 2.9 months
High point 10/2023 4.84 months
Currently at 6/2024 3.76 months
SOUTHERN HUMBOLDT
Low point 6/2024 12.26 months
High point 7/2023 26.11 months
SALE TO ORIGINAL LIST PRICE RATIO:
This statistic to indicate wether or not properties are selling for what they were listed for. We know that sale-to-list price ratio is going down whenever we see properties having price reductions. A number near 100% means that properties are being listed at appropriate prices, and that buyers agree.
EUREKA
Varied in the last year as low as 91.4% in February to as high as 99.3% in 9/2023
MCKINLEYVILLE
Low point of 91.7% in May 2023 to 100.2% in August 2024
FORTUNA
Low 85.9 12/2023
High 100.3% in 10/23
SOUTHERN HUMBOLDT
Low 68.3% 11/2023
High 95.8% in 5/2024
National Association of Realtors Settles Lawsuit
First, I’d like to link you out to some consumer end information from the National and California Association of Realtors.
First, here is an open letter from The California Association of Realtors President to anyone interested
For more details on the actual lawsuit/settlement:
The National Association of Realtors Resources:
Settlement FAQS found here
What the settlement means for buyers/sellers
The truth about the NAR settlement
Impact to California
First, understand that the assertion that Realtors in California have been price-fixing is by and large inaccurate, in that, our standard forms make it abundantly clear that commissions have ALWAYS been negotiable, on both sides and so nothing has changed with that.
For the time being, there is still a standard practice, locally, (although said practice has never been “arranged” by Realtors and also is agreed to by the seller with our standard listing documents…) whereby Sellers tend to offer to pay commission for the Buyer’s agent, because the average Buyer is usually bringing as much cash as they have to the transaction, and the Sellers want to attract as many Buyers as possible. Most sellers had the experience, as a Buyer, where they did not have to pay a commission separately, and as a result are more prepared to offer a commission as a Seller in turn. But this is not always the case.
Because of the settlement, we are seeing people (typically consumers, media, or other people who do not work in the industry) interpret the agreement to mean that they now no longer have to pay a buyer’s commission – which is true. It’s just not newly true. It’s always been that way.
As a result, we are encountering Sellers who want to exercise this imagined new found fortune and they are listing their properties without offering all or any commission towards the Buyer’s Realtor – meaning, any Buyer interested in purchasing that property will have to come up with the funds to pay their Realtor separately or will need to ask/negotiate for the Seller to pay it.
Here are some other ways that this new settlement may affect you as a consumer.
FOR BUYERS
1 – You may notice that it isn’t as “easy” to see a house that’s on the market as it used to be. Because representation agreements have changed, there will be more paperwork on the front end of starting to look at homes. You will also see now-mandatory forms at open-houses as well. If you are just starting to look at homes, you will most likely benefit from actually shopping around for a Realtor and establishing a relationship with someone that you can understand and trust.
2 – Do not sign any agreements with Buyer’s Agents that you do not fully understand. Essentially, you should feel so comfortable with the process, the paperwork, and the Realtor that you’re considering working with, that signing paperwork is the last part of the process and should only come after you are comfortable agreeing to work with that particular Buyer’s Agent. Read any Buyer’s Agent agreement paperwork carefully, as it may obligate you to work with a particular Realtor and/or to pay a particular commission. In fact, we are now required to create these agreements, so Realtors will also not be able to do their jobs without them – but you should be fully informed, and you should be extra sure that your Realtor understands the paperwork and it’s implications, since you are basically creating a contract with them.
3 – You will be negotiating what you will pay your Realtor (unless the Seller is offering Buyer compensation) When you first start working with a Realtor/Buyer’s Agent, you will need to have a discussion with that individual about the compensation that they will expect, and what your obligations to using them as your Realtor may be. The Buyer’s agreements will be negotiable, and only you and your Buyer’s Agent can decide on what will work mutually for you both.
4 – If you’re saving up to buy a home, consider saving an additional 2-3% of your anticipated purchase price to give you more options when it comes to selecting a Buyer’s Agent and/or writing offers on a property where the Seller is not offering Buyer’s Agent compensation.
5 – Along with the other fees and expenses associated with purchasing a home, you will need to consider the commission that your Realtor is to be paid. While many Sellers in the area are continuing to offer the same or similar buyer’s agent compensation amounts as prior to the settlement, some are taking the opportunity to not offer any Buyer’s Agent commission, and these circumstances will likely play into your offer and how competitive you can be.
6 – Some loan products are likely to begin offering the option to use some of your loan funds toward a Realtor’s fee by creating a Seller credit as part of your offer. This way, if you do find your dream home, and it’s NOT offering a commission for your Realtor AND you don’t have the funds to pay for that yourself, you can incorporate it into the purchase price of the property and pay for it through your loan. Consider discussing this with your lender.
FOR SELLERS
1 – As Seller, you will have even more discussion about commissions and they will be more thoroughly discussed at the time of looking at an offer. It should be known that as commissions have always been negotiable, not much has changed in practice. However, if you decide that the new awareness of this law inspires you to make more money by only paying your Agent’s commission, or even by just doing your entire transaction yourself, you should know that at the end of the day, real estate is a financial transaction, and everything is negotiable. Even if you are not offering any commission, the Buyer may still request that you pay one. Also, each Buyer’s agreement with their individual Realtor can be different, and each offer may ask for a different amount of commission, or also possibly, none. Just be prepared to discuss commission, and incorporate it more into your calculations, when you’re estimating your proceeds from a sale of a home/property.
2 – Your Realtor should be focused on details, have experience and knowledge about the current shifts in the practice due to the settlement and be able to explain to you why the settlement happened and what it means for us as Realtors, and you as a Seller. It will add a couple more forms/paperwork… but it should not principally change the way we do business here in Humboldt.
3 – If you’re considering saving money by not offering some or all of a Buyer’s Agent Commission, do also consider the ramifications of that choice. When Buyers are working on investing in a residential property, they typically bring and use all of the financial resources that they have. Asking for them to have even more than has been historically needed, is most likely to impact Sellers in a variety of ways. It is forecasted that this new settlement and the changes in practice that most Realtors will be conforming to, will actually create a situation for Buyers where they may be tempted into using the Seller’s Realtor as a dual agent more often than they have in the past. If this is a concern to you, be sure to talk it through with your Realtor.
4 – The impact on you will be less intense than on a Buyer, but if you are considering selling sometime soon, this is a conversation you will definitely want to have up front with your Listing Agent.
If you’ve read this far, you may be interested in our recurring, online Buyer workshops, where we cover the basics and get you oriented and prepared. We have tips, tricks, resources and support for you in the process of preparing for the huge life changes of buying a home.
Click here to be on the list to be notified about the next upcoming BUYERS workshop. (That’s all you’ll get too – no spam!)
For more of a deep dive on these stats and changes in the practices of Real Estate, please feel free to give us a call and/or email us your questions. We’re always happy to talk all things “Real Estate” whenever you may need assistance.
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