Still doing 1400+ deals a month..but for how long?

[David Goldsmith]

Bonus season always causes a bump. The size of bonuses often determines the amplitude and duration of that bump. The amplitude wasn't as much as usual and I think mortgages rates will act as a damping factor and accelerate decay. Countering that will be usual seasonality so it will be difficult to attribute which factors are causing what.

 

[inonada]

I think the amplitude of the (say) Dec => Feb bump this year was higher than past years. Dec sales ran 23% lower than their 10-year average while Feb sales were only 15% lower. So the bump, relative to historical bumps, was larger this year.

Personally, I don’t think the blip down in mortgage rates were the major driver. They helped, but in the current environment cash is king. Looking at MND headline jumbo rates, they’ve been at 6% +/- 0.5% since September, after a fast rise from 3% a year prior. The fluctuation around 6% is small potatoes compared to the big picture. I think it was more:

1) Buyers waiting in the wings to know their bonuses. We’re in a rate environment where people will finance less, so knowing how much cash you’ll have to deploy directly into RE matters more.

2) Better price negotiability.

I think the latter will continue, but the former won’t.

 

[David Goldsmith]

I think looking at the percentage is wrong headed. The percentage was higher because the numbers were so low. The absolute number of contracts signed was low and still is low. Everyone is celebrating saying "Look! It's not nearly as shitty as it was a few months ago!"

But it still is shitty compared not just to last year, but to historical norms. And with mortgage rates rising it's not likely to be improving.

If you follow Mike Simonsen at Altos Research (who runs a data site similar to UrbanDigs) he's been consistently pointing out for the past 6 months that currently 7% mortgage rates appear to be "The Line of Death" for homebuyers, and we just passed that mark.

 

[David Goldsmith]

What's the over under on Contracts Signed for March?

Shall we put it at 1,100?

 

[inonada]

I think it’ll come in right around 1000.

 

[David Goldsmith]

I think it’ll come in right around 1000.

So down by a full third from March 2022. Slightly higher than 946 from March 2019.

 

[David Goldsmith]

I find this a little surprising for the Ides of March.

 

[David Goldsmith]

I think it’ll come in right around 1000.

What do we think now?

 

[inonada]

I don’t get to see the Market Ticker you posted on Wed. What is it showing now?