DIABLO LIFE

DIABLO LIFE discusses the Tri-Valley Real Estate Market as well as other things that are important to those of us that reside here.

You’ll find our blog to be a wealth of information, covering everything from local market statistics and home values to community happenings. That’s because we care about our community and want to help you find your place in it. Please reach out if you have any questions at all. We’d love to talk with you!

Oct. 12, 2022

Where Are People Moving in 2022?

It’s important to understand the current demographic and migration trends shaping the country. These trends impact our local housing demand, which impacts construction, which will go on to shape availability and affordability for years to come.

Population Growth Is Decreasing Nationwide

Annual Percent Change in the U.S. Population: 1900-2021

In 2021, the U.S. population grew just 0.1%, the slowest growth rate since the nation was founded. While the population continues to increase every year, the rate of that increase has been slowing for years. One third of states saw their population decline in 2021, with losses greatest in Washington, D.C. (-2.9%), New York (-1.58%), Illinois (-0.89%), Hawaii (-0.71%), and California (-0.66%). The states that added the most residents were Idaho (2.88%), Utah (1.72%), Montana (1.66%), and Arizona (1.72%). 

Still, on the whole, nationwide growth has slowed — although due to the continued inventory shortage, this isn’t expected to have a significant impact on home prices. Last year, Freddie Mac estimated the United States would need to build 3.8 million additional housing units to meet current demand, up significantly from the 2.5 million estimated in 2018. After inventory dropped to record lows during the pandemic, experts are now predicting it will take years to recover.

17 States Lost Population Over the Past Year

Income growth has a greater impact on home prices than population growth. A 2003 study compared U.S. housing prices and income growth rates since 1985 and found that nearly all housing price increases across 40 states were the result of income growth. Personal income rose by 3.1% in 2021, after accounting for inflation. So even if the U.S. population starts to decline, we’re unlikely to see demand and supply level out any time soon.

Several Generations Are Approaching an Inflection Point

Boomers Are Aging Into Retirement

By 2030, all members of the boomer generation will be over 65 — meaning that one in five Americans will be eligible for retirement. And based on two surveys from Freddie Mac, 66% of retirees expect to age in place, rather than following the once-common pattern of downsizing or moving into a nursing home. This could have serious implications for a housing market already facing significantly low supply. Baby boomers, who make up 22% of the population, currently own 44% of the nation’s real estate wealth and live in more than 25% of the nation’s owner-occupied homes. But if this generation sticks to its guns about aging in place, it could be years before these homes are released back to the market.

Millennials Are Entering Prime Home Buying Age

For the past five years, millennials have made up the largest percentage of home purchase applications. In 2021, millennials comprised 37% of all home buyers, making up the fastest-growing segment of buyers nationwide. With the largest cohort of millennials entering prime home buying age, this number is expected to increase. At the same time, while nearly 90% of millennial renters want to buy a home, 67% of them would have to save for two decades to afford a 20% down payment. Millennials have more student debt than previous generations, and many dealt with suppressed incomes after the 2008 financial crisis. The number of higher income millennials in the rental market continues to increase. So while many millennials are approaching prime home buying age, in this environment — with both high housing costs and high inflation — we may see lower millennial demand than originally anticipated.

Share of Buyers and Sellers by Generation

Americans Are Gravitating to Places With Lower Housing Costs

The Push Toward the Suburbs Continues

The pandemic prompted a wave of outmigration from the nation’s cities, as newly minted remote workers sought larger living spaces. In fact, the first two years of the pandemic saw a nearly threefold increase in urban deconcentration. The areas seeing the highest outmigration have been coastal, high-cost markets like the Bay Area, Los Angeles, and New York, and those losses were greater during the second year of the pandemic than they were during the first.

But two years in, with restrictions loosened, many companies are calling workers back to the office full-time. According to a study by Microsoft, nearly 50% of leaders who have been operating remote companies during the pandemic want their workforces to return to in-person work full-time within the next year.

For the time being, moves away from city centers toward more suburban or rural environments remain elevated, and cities have not yet reclaimed their historic population losses. This could be because, while many CEOs are talking about a permanent return to office, several companies including Apple have delayed the move in response to employee backlash. Another factor is that, due to inflation and rising housing prices, many who left the cities for the suburbs can no longer afford to move back. And signs indicate that the
popularity of the suburbs may be at its peak, with growth in single-family home construction beginning to slow in large suburbs across the country.

The Southeast Remains Popular

Beyond moving from the cities to suburbs, Americans continue to demonstrate a preference for lower-cost of-living states. The Southeast, in particular, is seeing a significant influx of new residents. According to an annual study from the moving company PODS, these are the metro areas seeing the most people moving in and out:

Recent data from Redfin shows Miami and Sacramento as popular migration destinations, with New York City, San Francisco, and Los Angeles as the top three places people are moving away from. According to a different annual study, this one from the moving company United Van Lines, these are the states seeing the most people moving in and out:

Metro-level Map of Pre- and Post-pandemic Homebuyer Net Migration

Fewer People Are Moving in General

According to the U.S. Census Bureau, just 8.4% of the population moved in 2021 — the lowest percentage since 1948. While the pandemic may be partially to blame, both the volume and percentage of Americans moving each year has been falling for decades. Those who did move last year largely did so for housing reasons. Last year, for inter-county moves, more movers cited moving for housing-related reasons than for employment-related reasons — from 2005 to 2020, employment consistently won out. Also, while fewer moves occurred in 2021, more of those moves were across state lines than the previous year.

Seventy Years of Moves

Americans Moving

Only 8.4% of Americans moved in 2021, the lowest number on record. This trend of fewer Americans moving each year can be explained by a few factors:

  • Increased adoption of technology has allowed more people not only to work remotely, but to connect with their families even when they live apart.
  • The average American’s purchasing power has barely moved in 35 years. Since 1965, home prices have jumped 118% (after adjusting for inflation), while income has increased just 15%.
  • We now have more dual-earner households, and it’s harder to pick up and move to a new home when you have to consider the impact on two people’s careers.
  • The population is aging, and older people tend to move less frequently than younger people.

The recent rise in inflation could mean we see even fewer moves next year. When Freddie Mac surveyed consumers in June 2022, 96% of respondents indicated that price increases have impacted their household spending, leading many to save less money and delay essential repairs to their property. And 36% of respondents said they are significantly less likely to buy a home now due to inflation than they were a year prior. Moving might no longer be affordable for many — unless the move is to a lower-cost-of-living area or less expensive home. Data from Redfin shows that the share of homebuyers looking to relocate jumped to a record-high in July 2022, indicating we could see another year of fewer moves overall, but with a higher percentage of those moves across city and state lines. It’s important to note that renters are included in this statistic. When you look at home sales in isolation, numbers have actually been increasing for the past decade.

Key Takeaways

Per capita income growth is positively correlated with price increases. States seeing large increases in personal income are more likely to see housing price increases than those just experiencing an influx in population. The Southeast remains popular for inter-state movers, many of whom are leaving coastal cities in search of more space and a lower cost of living. The “silver tsunami” — in which older Americans free up a big chunk of the housing stock — is unlikely to hit in earnest for another decade or two. The largest cohort of millennials is entering prime home buying age, but many are financially unable to purchase. Are you wondering how the current trends will effect your real estate goals? Contact our experts at Arrive Real Estate Group for a free property evaluation and learn why so many have chosen to Arrive With Us!

Posted in Market Updates
July 29, 2022

Fed Rates Increase, What Happens Next?

Repeat after me: The Fed doesn’t directly hike or cut mortgage rates. 

Some quick housekeeping before we dig into the headline: mortgage rates are slightly higher so far this week. The increases were in place on Monday. Tuesday started stronger, but most lenders pulled back to Monday’s levels after bonds lost ground throughout the day. Bond prices/yields are the most important input for mortgage rates. With that in mind, we’re even more equipped to talk about the Fed announcement today. There’s a common misconception that the Fed “sets” (or hikes/cuts) mortgage rates directly. Even among people who know better, there is often a belief that changes in the Fed Funds Rate (the thing the Fed actually hikes/cuts) translate in some direct way to changes in mortgage rates.

No… The Fed meets 8 times a year to discuss changes in monetary policy. Apart from emergency, unscheduled meetings, these represent the 8 chances the Fed has to hike or cut the Fed Funds Rate.

What is the Fed Funds Rate?

The Fed Funds Rate is a target set by the Fed for interest charged by big banks to lend money to each other on an overnight basis. It has several policy tools that ensure the target is reliably hit within a quarter of a percent margin (one reason that the Fed communicates rate targets in 0.25% windows). In other words, the Fed “decides” (for lack of a better term) what the shortest-term loans will cost. From there, the market decides what longer term loans will cost. Where as the Fed Funds Rate pertains to loans that last 24 hours or less, the average mortgage lasts 3-10 years depending on the housing and mortgage environments at any given moment in history. The only potential exception for the Fed setting mortgage rates directly would be certain lines of credit that are based on the PRIME rate (which does change with the Fed’s hikes/cuts). This is a vast minority of the mortgage market and nothing to do with the dominant 30yr fixed loan. So why do rates sometimes react so much to Fed announcements?

The Fed may not set mortgage rates directly, but they can still say/do things that have a tremendous impact on all manner of interest rates. One of the most notable examples is that of QE or Quantitative Easing. This was/is the Fed’s policy of buying Treasuries and Mortgage-Backed Securities in large amounts in an attempt to promote its policy goals. Changes to QE policies–especially when they’re unexpected–have a far greater impact on long-term rates than the short-term Fed Funds Rate. I thought you said the Fed Funds Rate didn’t matter, but you just implied it had an impact? What gives?!

Yes, the Fed Funds Rate absolutely has an impact on longer-term rates like mortgages. And yes, the Fed definitely hikes/cuts the Fed Funds Rate. But the catch has to do with timing. Recall that the Fed only meets 8 times a year but that the market is trading every millisecond. Traders aren’t going to wait for the Fed to actually pull the trigger on a rate hike if they can be reasonably sure it’s coming. Indeed there are entire groups of market securities devoted to betting on the Fed Funds Rate in the future (incidentally named “Fed Funds Futures”). These futures typically price-in most upcoming Fed rate hikes/cuts with near 100% accuracy. This hasn’t always been the case, but it is more and more common in this age of tremendously transparent speeches from Fed members. For instance, if 7 out of 7 Fed speakers over the past month have all mentioned that they’re leaning toward a 0.75 hike to the Fed Funds Rate, it’s essentially guaranteed and the bond market has long since changed accordingly. Because the market can show up to the party so far in advance of the Fed itself, it’s not uncommon to see mortgage rates move in the opposite direction of the Fed on the day the Fed actually makes its move. 

Still have questions regarding rates and the housing market? Contact me today and let me explain how the rates and the shifting market align with your real estate goals.

Posted in Economic Updates
June 13, 2022

Summer Cooling

The market is changing. The past two years have seen a continual decrease in inventory with sky high prices. But the Covid-era market is beginning to cool just a bit.

 
The good news is that the market should be able to handle this. Inventory is drastically lower from even just one year ago. Average sales prices are up $300K to $600K from a year ago.
 
People will always have a reason to buy and sell. First time homebuyers who were once priced out of the market may return. Empty nesters can purchase their single story house and then sell their home with stairs.
 
All of this and we haven't even mentioned that in a "normal" market, summer typically marks the beginning of a seasonal slow down! Unsure how the changes in the real estate market affect you? Contact us today for a free property evaluation!

 

Posted in Market Updates
April 22, 2022

Market Monday - 4/18/22

Is the real estate market FINALLY starting to SLOW?!
 That is the question everyone is asking. We are starting to see homes sit on the market a little longer, some not even receiving any offers in the first week of being listed. Is this the result of interest rates rapidly increasing? Or is this a bump in the spring market as many buyers have been traveling for spring break or celebrating religious holidays? It is too soon to tell if this is the start of a BIG change to come.
#marketmonday #eastbayrealestate #trivalleyrealestate #skeochgroup
Posted in Market Updates
March 7, 2022

117% Over Asking Price!

Many experts have predicted home sales will remain strong in 2022 with prices increasing another 10%, but look at these numbers! Last week, the average home continued to sell for well over asking:
Pleasanton: 114%
Dublin: 116%
Livermore: 118%
Alamo: 111%
Danville: 117%
San Ramon: 116%
Walnut Creek: 114%
And in Danville, that 117% meant the average sales price was nearly $400,000 OVER the list price. Anyone ready to sell?!?! And buyers, take note, make sure you are looking at homes well below your max to allow you room to compete. Need more tips for this hot market? Contact me today to see how I might help you achieve your goals, even in today's market.
#eastbayrealestate #trivalleyrealestate #danvillerealestate #alamorealestate
Posted in Market Updates
Feb. 5, 2022

Buying When Inventory is Low

Housing inventory was at its lowest point of the year over the holidays. While properties went pending quickly with multiple offers, there weren't many to choose from. Not to worry, new homes are coming to the market daily and many more are being prepped to come soon! The competition among buyers remains fierce with properties continuing to sell well over their asking price. 
Buyers, if properties are still setting record prices, how do you know what price to offer? Looking at recent sales will help but working with a well connected agent is crucial. Find someone who can help make your offer competitive by a) learning what terms the seller is looking for and b) understands the buyers you are competing against. #eastbayrealestate #trivalleyrealestate
Posted in Buying Strategies
Jan. 16, 2022

Don't Wait To Sell

Reprint of post by Lauren Sommer, Realtor®, Arrive Real Estate Group

Did you know that historically, about 40% of annual home sales occur between April and July? However, this year is expected to be much different than the norm. Don’t wait to sell, get ahead of the competition now. Here are five reasons to list your house now rather than waiting until the spring.

1. Buyers Are Ready To Purchase NOW

A recent home for sale in Danville received 38 offers in less than a week on the market. Yes, you read that correctly, 38 offers. End of the year bonuses and performance raises are in. Interest rates are still low. Buyers are not waiting for the spring, they are ready to buy now.

2. Other Sellers Plan To List Earlier This Year

If you’re looking for the best price and the ability to negotiate the terms of the sale of your house, listing before this competition hits the market makes sense. A recent study by realtor.com reveals that, unlike in previous years, sellers plan to list their homes this winter instead of waiting until spring or summer. The study shows that 65% of sellers plan to sell their home in the first half of 2022 and 19% already have or are planning to put it on the market this winter. Not ready to move until summer? Try to negotiate a rent back to allow you so sell your home now but move later.

3. Newly Constructed Homes Are Nearing Completion

In 2020, there were over 979,000 new single-family housing units authorized by building permits. Many of those homes have yet to be built because of labor shortages and supply chain bottlenecks brought on by the pandemic. Many, however, will be completed in 2022. That will create additional competition when you sell your house. Beating these newly constructed homes to the market is something you should consider to ensure your house gets as much attention from interested buyers as possible.

4. Plan For Your Future

If you’re thinking about moving into a larger, more expensive home, consider doing it now. Prices are projected to appreciate by 5-10% over the next year. That means it will cost you more, both in down payment and mortgage payment, if you wait as prices and rates continue rise. The same thing can be said if you are looking to retire. Buying that retirement house now can leave you with more money in your pocket down the road.

5. Make a Change Now

Consider why you’re thinking of selling in the first place and determine whether it’s worth waiting. Is waiting more important than being closer to family now? Is waiting more important than your health? Is waiting more important than having the space you truly need? Many people think changing schools midyear is not ideal but it can actually be the opposite. Starting a new school as soon as you move provides kids the chance to make friends before summer. Once summer comes, it can be difficult to meet new people as your interactions may be more limited.

Bottom Line

Take time to think about your goals and priorities as we begin 2022 and consider what’s most important to act on now. If you’ve been debating whether or not to sell your house and are curious about market conditions in your area, contact me today. I am happy to help you decide the best time to put your house on the market.

Posted in Selling Strategies
Dec. 12, 2021

Fallen Heroes Event - Danville - Nov 13, 2021

Our thanks to all of those that came out to support Active Charity in raising funds for  on Saturday, November 13th. A wild auction, fantastic music from Jeff Ricketts and The Dirt Road Band, a highly energized crowd, along with a surprise donation from members of the Hayward Police Department contributed to an extremely successful event. 

Special thanks to sponsors: Active Charity, Front Line Heavy Equipment, C&J Fencing, Skeoch GroupService Champions Heating and Air Conditioning NorCalStifel Financial Corp. and Primos Pizzeria. 

Posted in Community
Dec. 1, 2021

Market Report 12-1-21

My last blog post indicated that the real estate market tends to slow for the holidays. That said, it is surprising to see the number of homes sold during a week shortened by the Thanksgiving holiday.
Are you ready to buy or sell? Don't think you have to wait until the spring! Now could be the best time to make a real estate move!
Posted in Market Updates
Nov. 18, 2021

Market Monday - 11/15/21

As we have discussed, in a typical year, the real estate market tends to slow for the holidays. But what does that mean for you?
Sellers: Low inventory and less competition from other sellers. The average days on market fell in almost every East Bay city last week.
Buyers: Less competition from other buyers. Many of the the average sales prices reported last week took a slight drop from where they were the previous week.
Are you ready to buy or sell? Don't think you have to wait until the spring! Now could be the best time to make your real estate dreams come true!
Posted in Market Updates