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Hello everyone and Welcome to another
episode of Selling Greenville your
favorite real estate podcast here in the
upstate of South Carolina I'm your host
Stan McCune realtor right here in the
greater Greenville area as always you
can find all of my contact information
in the show notes if you need to reach
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I would appreciate that today I want
to do hopefully a short little
episode on just kind of what I'm seeing
we're in obviously a transitional
period with the market there's a lot
going on a lot of Rumblings of recession
interest rates going up although they
kind of plateaued for a little bit
but then the FED recently had
notes that were released that indicated
that yes they do and in to keep pushing
rates up so we know that that's going to
continue to happen and obviously all
of this you know and then combined
with just the costs of everything due to
inflation going up this is definitely
having an impact on the housing market
so I don't have yet the the greater
Greenville Association of realtor stats
for the month of May so we don't know
exactly how the month of May shaped up
but what I can tell you is what I'm
seeing on the ground
and I'm going to start so so this is all
anecdotal but this is based on
what I'm seeing some numbers that I've
run and then just kind of what I've been
reading just generally speaking from
others that analyze the market so
here is kind of what I'm seeing price
reductions we are seeing a lot more
price reductions than we have in a long
time and unfortunately there's not a
good way to pull this data it's it's
extreme it would be extremely tedious I
mean it would take me I don't know 5 or
6 hours to really be able to accurately
track price reductions and how they're
happening and how frequently and when
they're happening and all of that but
just anecdotally as I am just
tracking what's happening we're seeing a
lot more price reductions and that's
basically an indicator not of
prices going down again I keep hearing
people say this do you think prices will
go down or people say get ready prices
are going to go down that's not what is
happening when a price reduction happens
okay here's what I am seeing right now
we have historically well I shouldn't
say historically in recent history the
past year year and a half two years we
have seen record rates of appreciation
particularly the past year the last
time the greater Greenville Association
of Realtors produced their Market stats
was for the month of April of this year
and we saw about 20% appreciation year
on-ear April 2022 versus April 2021 that
is a tremendous amount of appreciation
so here's what happens people are they
they might not know exactly in their
mind oh it's 20% appreciation but in the
back of their mind they're kind of
operating under that assumption combined
with the fact that other you know
Realtors and and real estate
professionals they kind of have that in
the back of their mind as well and so
what happens when when the market shifts
right now and and you know it's it is
Shifting and so those numbers that
20% we may never see that for a month
ever again for the entire Market that's
a that's a tremendous number people
are just getting blindsided by that and
so they're kind of assuming oh my home
went up 20% in value the past year and
then putting it on the market for that
well in reality the market has shifted
now and maybe their home only went up
10% in value that's still a lot of
increase in value that's still a lot of
appreciation but not 20% and so they
overpriced their home because they are
basing it off of the first quarter and
perhaps even the second quarter of this
year or or early second quarter of
this year because we're still in it
but now things have changed it's not
quite you're not quite getting that type
of appreciation and so we're seeing
those price reductions happening because
sellers are banking on a level of
appreciation that is most likely over
again I'm very curious to see what what
may indicates but I'm thinking that may
is is going to be down year on-year
appreciation quite a bit from what April
was now we're particularly or I'm
particularly seeing price reductions
with companies that have been buying
up properties and doing like cosmetic
flips like big companies like open
door and offerpad and these are
companies that they they really came
onto the scene the past two years and
apparently they've been doing quite well
recently but I think that they have just
been getting lucky based on the market
because I've see the prices that they
purchase these properties for and then
they you know within a few months they
just put new carpet in there put new
paint and then put it on the market
I've been seeing what they've been
paying for these properties and they're
they're not paying a whole lot if at all
below market value but they're
anticipating within 3 months that the
property will have gone up 5% in value
and then they're banking that percent
and you know and basically hoping that
they've added a little value with the
Cosmetic stuff that they've done those
are the companies I I mean I can't
tell you how often I look at a price
reduction and it's one of those two
companies in particular open door and
offer pad and what they're doing is
is they're C they're trying to sell
their services to what we call or
they're they're basically what we call
an i buyer they're selling their
services to people that are just like
you know they just don't want to go
through the hassle of listing their home
and Open Door sends me all the time
May offering to buy my home and they'll
give me range of what they think my home
is worth and then tell me is flexible
terms all of that so they're doing
that all over the market and and I I
think that they're going to have a rough
second half of this year because we're
already seeing a bunch of price
reductions and I think that they're
going to get caught with their pants
down when the market shifts I mean Maybe
not maybe they they are smart people and
they're ahead of the game but just
based on what I'm seeing I have a
suspicion that those profit margins that
they have been making
the past year or so are going to shrink
tremendously they're probably going to
have some some major layoffs and and
the like in the second half of this
year I'm also seeing and this is the
the first time I've seen this in a long
time so this is when I got an email
about this and my my eyes popped out of
my head I was like okay now I know that
the market is is definitely shifting
Builders are lowering their prices and
offering realtor incentives so you
know Builders will offer Realtors a
commission traditionally it has been 3%
as the market has gotten hotter they've
shaved that off in a slow Market they
will offer 3% plus bonuses plus realtor
bonuses well we've not seen that in a
long time with a few unique
exceptions but recently we have been
seeing that I have seen Builders
sending me emails builders that have
been some of the
chinesta some bonuses and whatnot while
lowering their prices that is a big
shift that you know again I've not
seen that in quite some time so to me
that's a major indicator okay we're
entering into into a new phase here
and honestly it's a phase that I
welcome I'm tired
of Builders being chiny not just with
Realtors but but also with with my
clients it's it's you know they don't
have any motivation in a very hot Market
to do a good job because they can do
whatever they want to do so all of
these things I think are positive
developments overall so what are we
seeing and what am I seeing specifically
on the ground in terms of with my buyer
clients still and with my sellers
still
multiple offer situations on desirable
properties and that's at every price
point but it's particularly in the under
$300,000 price point because almost
anything that is in like TurnKey
condition that's below
$300,000 is highly desirable right now
there's just not enough inventory in
that in that segment of the market
and so we're still seeing a bunch of
multiple offer situations when it comes
to those types of properties and
properties well above 300,000 again if
they're good properties they're going to
get multiple offers and this is what
people don't understand this was during
the Great Recession as well I was not a
realtor during the Great Recession
but I was trying to buy my first house
during the Great Recession and I
experienced firsthand there were tons of
multiple offer situations during the
worst time of the worst recession of my
lifetime and so there there are
always going to be those C circumstances
for certain properties right now
we're still seeing on a lot of
properties now where it's different is
where there used to be you know half
a year ago there might be 20 offers on a
given property now we're seeing more
like five or six and so the multiple
offer number I should say the number
of offers being received is lower and
so what that then means is that there
are other properties that would have
gotten three four five offers on them
are now not going into multiple offer
situations they're just getting the one
offer and that's it I actually saw a
situation the past week I predicted this
I predicted that we would be you
know going into a period where there
would be multiple homes that came on the
market all at the same time that would
that would kind of fit the same criteria
for what buyers are looking for and
buyers would all gravitate towards the
one home and leave the other exposed and
then that would be an opportunity for
someone to be like you know what the
home that everyone else is going towards
and creating a multiple offer situation
on I can get this home without out a
multiple offer situation because
everyone else is is competing for this
other one I I saw that exact scenario
play out this past week and so these
are the types of things that buyers need
to be aware of is going to happen and
that needs to you need to be able to
adapt your strategy as a real estate
buyer in this market now I looked at
the number of closings that we had for
May I wanted to see what what's going on
in terms of like how many of these are
cash how many of these are financed of
the ones that are financed what type of
financing are people getting because
that's an important detail I I my gut
told me there was a lot of cash still
floating around in the market but
that was something that I wanted to
verify and sure enough I was right of
all the closings in the month of May
which was in so I should clarify I
went into MLS I selected the residential
button and or the residential option and
I just left It Wide Open so that will
include single family homes condos
mobile homes and a handful of other
similar properties but I didn't want
to differentiate between all of those I
just kind of wanted to keep it
open-ended and that's what I looked
at with those parameters we had
1,562 properties that were sold in the
month of May of those
26% were bought cash 26% over a quarter
huge number absolutely huge number that
means if you get a multiple offer
situation more than likely one of those
offers is going to be cash right because
if you get four
offers you I mean in theory at least
a quarter of them are going to be cash
because a quarter of closings are cash
that's a little simplistic way of
thinking about it if you're a
mathematician you're probably trying to
gouge out your eyes right now but that's
a very simple way for me to think
about it could be again if you're a
mathematician you're probably thinking
there might be multiple cash offers
because they can only accept one offer
at a time yes and you would be right
so that's why I think you know generally
speaking probably even higher than a
quarter of offers are cash so that's
a that's a huge number conventional
loans which is kind of generally
speaking Loosely speaking the most
attractive loan product that people see
was 55 and a half% of closings FHA
was
10.3% VA was
6.1% USDA which is the rural loan
program is
1.28% so FHA VA USDA those are all kind
of t at the hip those are very similar
loan programs those accounted for
let's see here 10 16 about
18% so that's rough those are those are
generally speaking what first-time home
buyers are using that is a a rough
percentage and I compared this to April
just to see and in April the cash number
went up but the conventional number
stayed the same and this is another
thing that I said in a previous podcast
is that the cash buyers generally
speaking are competing with the
firsttime home buyers so the cash
percentage went up in April it was up to
27.6% nuts but the FHA VA and USDA
numbers they all went down so the cash
buyers are just plucking homes straight
straight away from the firsttime
home buyers generally speaking I also
kind of did a deep dive I was curious
okay of the cash sales like what are the
price points that we're seeing the most
cash sales at because I feel like this
is an important detail and not
unsurprisingly it is right in the spot
where we're seeing the most number of
homes listed so you might think okay
the most cash sales are going to be for
very cheap homes okay yes but the very
cheap homes are basically non-existent
right now so of homes that were Z to
$100,000 that sold for that price that
that only made up 7.14 % of the cash
sales so again we're not talking of all
sales we're just talking about the
percentage of cash sales
7.14% of cash sales were to properties
below 100,000 in value Adder below
100,000 in value for those between
$100,001 and
$200,000 that made up
8.23% okay getting a little bit higher
now here's the highest one out of all
between $200,000 and $1 and
$300,000 in sold price that is where the
largest of the cash transactions the
largest number of them were in that
range 200 to 300 not surprising that is
where the hottest that that's where
everyone's competing right now because
those are if you get below 200,000
generally speaking and and again I'm
speaking generally but generally
speaking those are either properties
that are fixer uppers right now or
they're in very rural areas or just
transitional areas whatever you might
say if you go over 300,000 now you're
over the the median price point for our
area so the 200 to 300,000 price point
is a sweet spot 25.3 7% of all cash
transactions the month of May were in
that sweet spot and then between
$3,001 and 400,000 we saw
2.18% so 46 a half%
of all cash transactions were between
200,000 and 400,000 so that is that
tells you everything if you're looking
for a house in that price point you're
going to be competing with a lot of cash
buyers you need to be aware of that
we get I I continued between $400,000
one and 500,000 that only made 12 81% of
all cash transactions for the month
of May and then 500,000 plus
was
15.27% of all cash transactions so I
think what we're seeing here is is again
in that $ 200 to $400,000 price point
we're seeing those are a lot of
investors right that's that's where the
investors are competing right now and
and by the way the way I pulled this
really it it did not include multif
family we still don't have a whole lot
of multif family on the
market but this is was primarily
unless something was listed kind of
incorrectly this would have been pretty
much exclusively single family we're
seeing a lot of investors targeting
single family properties right now
because there's nothing else for them to
do they need somewhere to sync their
cash they don't like the fact that
they're losing all of this value to a
to inflation and so they need a safe
place to put it so as I said before
cash is directly competing with
first-time home buyers if you listen to
this podcast you already know that if
you're a first-time home buyer U you
have to keep that in mind and that's
something that I try to work with my
first-time home buyers to to craft our
strategy okay here's how here's how
we're going to approach this because
it's still a very tough Market to be a
first-time home buyer in I'll say
this there's more uncertainty in the
market than I have seen since the very
onset of the pandemic it's fun for me to
go back and listen to some of my
episodes I don't well I I don't really
like to listen to my own episodes
because I I like most people I hate to
hear my voice but listening to
those episodes that I recorded right
during the heart of the onset of the
pandemic you know between you know
March April May June of 2020 I I did
not know what was going to happen nobody
knew what was going to happen is the
housing market going to crash are we
going to go into recession you know what
what exactly is happening here and the
what nobody anticipated was that the
market would absolutely go nuts and
become the craziest sellers Market of
our lifetime and so there was a ton
of uncertainty and very few people got
it right what what actually happened it
was just not predictable and I see the
market right now like that in in no
other way I I should say it's not
been like that it's not been this
uncertain since back then since very
early in 2020 but we're seeing tons of
uncertainty nobody knows what's going to
happen I read tons and tons of Articles
study tons and tons of data both in our
local market but also Nationwide and
everyone's guessing the past few weeks I
have seen two different articles in
Fortune magazine that completely
contradict each other about our area
here in the Southeast one said that our
region this region here in the Southeast
Carolina Georgia Etc had a very low
chance basically a 0% chance of seeing
home price
depreciation and then I saw just a few
days ago another article from Fortune
magazine that said that our region this
area Carolina's Georgia Etc has one
of the highest chances of seeing home
prices go down to see actual
depreciation in our market so even
within single Publications they're
having articles coming out that
completely contradict each other that
are all looking at the same data and
coming to very different conclusions
my belief because that's why you're
listening right you're listening to hear
my opinion my belief is that we will
see a big reduction in appreciation
which like I said before it has been in
the 15 to 20% range which is nuts
right we we've never seen that for the
entire Market Market and it's not
healthy for the entire Market that's not
sustainable so I see a big reduction in
that number but do I see it going below
0% in other words do I see homes
depreciating in value so a home that in
June of 2021 was worth $300,000 and
in June of 2022 well let's push it out
let's say in October of 2022 am I going
to see a home that in October of 2021
was worth $300,000 and then in October
of
2022 is worth $ 290,000 I do not think
we're going to see that not not yet not
yet maybe in the future but it's it's
too soon there's just there's still too
much pent up demand all of that has to
has to get through the pipeline before
we start seeing home prices go down
and we have to start seeing some for
foreclosures happen as well foreclosure
rates are still at record lows and I I
really don't see how people are going to
all of a sudden start foreclosing unless
they start losing their jobs that is the
one scenario where I can see it
happening but then we had one of the
highest rates of cash purchases and
people putting large down payments which
means that even if the market retracts
they still have enough equity in their
home that they could sell it and not
foreclose so to me I'm I'm very
skeptical about the the theory that
we're going to see home values
depreciate
what I think we're going to see is
something closer to what what we had pre
pandemic in the 2019 is time which
feels like an eternity ago which was
still a sellers Market we had four to
five months of inventory based on how
Greenville tracks it and our
appreciation was was modest but
comfortable it was 3 to 7% year onye
generally speaking so in any given month
your home went up in value 3% 5% 7%
something like that only the hottest
markets like those in West Greenville
ever saw 20% year- on-year gains and and
we've we've talked about that in
other episodes but but Market wide we
were seeing 3 to 7% gains not the 15 to
20% that we're seeing now I think we're
going to return to
that before we ever start talking about
returning to something below 0%
appreciation and I've said this
before but I'm gonna say it again going
from 15 to 20% year on-year appreciation
to 3 to 7% is going to feel like a big
slowdown and it is that is a big big
slow down but that's still not a buyer's
market a lot would have to happen for
us to flip to a buyer's market and
that's still not really prices going
down that's prices slowing down that is
a big difference I hear people say
prices are going to go down no prices
are going to slow down that's what I
believe I could be wrong like I said
everyone's guessing here we're all
looking at the same data and coming to
different conclusions even within the
same news Publications so we'll have
to wait it out but this is my prediction
specifically for our area here in the
upstate so long story short I'm still
skeptical that absent a recession or a
major war event that we're going to see
a buyer's market in the next one and a
half to two years I just the data
just I just can't see it I just don't
see how that could happen unless we had
a major recession or a war event bigger
than than what's happening in Ukraine
right something that involved
invasions of you know major allies
with the US and Europe something like
that or or something that involved
the us directly
being in conflict that directly impacted
us here at home that's what I think
it would take for us to see a buyer
Market happen in the upstate within the
next two years now outside of two years
all bets are off that's just way too
far in the future to predict what's
going to happen once all this demand
Cycles through and once we kind of see
the Fallout from all of these interest
rate hikes from all the inflation's
going to happen from the midterm
elections that are coming up and and
then the continuation with what happens
in Ukraine and all of that I think
you know generally speaking it it takes
about a year from the time people start
to go into foreclosure for for
foreclosures to start hitting the market
and so and and I don't we have very
low rates of foreclosures right now so
it's like okay if all of if if kind of
the worst case scenario happens on
multiple levels economically and then a
year from now people start going into
forclosure a year after that then
we'll start seeing a lot of foreclosures
hitting the market at that point we
could see something that that resembles
a buyer's market because the
foreclosures usually are a major driver
of that but we'll have to see that's
that's a long ways out and the right
here and the right now what we are
seeing is still very a sellers Market
but a shifting sellers Market people
need to be prepared for that sellers
need to be ready don't expect that your
your home went up 20% in value if you're
selling for this s this summer it did
not go up 20% in value most likely
you're on year if you try to sell in
July or in August or whatever the case
may be we're going to see those year
on-year rates of appreciation go down
but you're still going to make money
you're still going to make plenty of
money if you sell don't worry
it will be just fine it'll just be a
little bit more comfortable hopefully
for buyers in this market so that's all
I have for today's episode I hope you
guys enjoyed it just a reminder
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