Hello everyone and Welcome to another
episode of Selling Greenville your
favorite real estate podcast here in
lovely Greenville South Carolina I'm
your host as always Stan McCune realtor
right here in the Greenville area of
South Carolina and you can find all of
my contact information in the show notes
the show description whatever it's
called in your podcast app anything real
estate-related that you need to reach
out to me for my contact information is
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download every episode download and then
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that helps so all of these little things
help and I'd appreciate if you guys
could do it so we talked last week about
how the real estate market is Shifting
and it got me thinking because I talked
about the seasonality aspect of it a
little bit but it got me thinking you
know obviously the past few years of
real estate has been way different than
any other season of real estate that
we've ever had any other period of real
estate that we've ever had it defies
all the normal rules and expectations
everything that's happened since the
pandemic has just been crazy and so
as we are shifting as the market is
Shifting we can see there's a few
possibilities that we might see in terms
of what might happen one of the
possibilities is that it overcorrects
right and this is what you hear a lot of
people get being anxious about is Will
the Market overcorrect will it shift to
a buyer Market will we go into recession
all of these types of things will it
become an unhealthy type of shift but
there's also the possibility that it
just shifts and corrects into a normal
healthy market now I don't know yet the
jury is still out on what's going to
happen if you guys are Avid
listeners of the show
you know that I am fairly optimistic
either way we know that it has to
shift in some way to return to a healthy
market so it may need to become
unhealthy in order to go back to being
healthy if that makes any sense because
it's already unhealthy you know it's
kind of like setting a bone sometimes
you have to break a bone and I'm
sorry if anyone listening is a
medical expert this is not going to be
medically precise but I know that
some sometimes you have to kind of
break a bone in order to allow the body
to heal correctly so sometimes you have
to hurt something in order to make a
a wound or whatever the case may be heal
properly that might be what needs to
happen in our Market we don't know
we're still trying to figure this out
the FED has been trying to do fed
tinkering as they always do in a way
that doesn't cause us to go in recession
but most people think that what
the FED is doing is going to cause us to
go into recession most economists most
people that study this so I'm kind of
operating under that assumption but that
being said as we hear I keep seeing
these headlines and I keep hearing
people talking about home prices are
going to go down home prices they're
going to go down 20% they're going to go
down 25% it's going to be crazy we're
already starting to see this home price
is going down people you know
starting to freak out, you
know wondering what's happening and
and I think what this is this is the
product of people treating the real
estate market like they treat the stock
market in the stock market it's only
bad for people that holds that hold
stocks unless you're shorting
stocks and whatnot you know whatever as
you guys know I'm not a financial
adviser don't take any Financial advice
from me but the what I know about
people that trade stocks generally
speaking for the average household
American that just has mutual funds or
what not they want to see the stock
market continue to go up well real
estate is kind of similar right if you
have real estate holdings you want to
see those values continue to go up but
it is different whereas the stock market
obviously has a seasonality to it
real estate is extremely seasonal in
terms of how it works and here's the
thing prior to the pandemic and I posted
a little if you follow me on
Facebook not my business page my
personal page I need to use my business
page more but nobody nobody follows me
on there so I post this to my
personal page and if you want to friend
me on Facebook to see that stuff just go
ahead and friend me on there but I
posted a little graph that shows
historically what the median sales price
in Greenville has done going all the way
back to 2007 so back to just before the
Great
Recession and every single year prior to
the pandemic including during the
recession we had prices for the year for
each individual year Peak during the
summer and then go back down now here's
the thing when they went back down at
once they hit once they bottomed out the
bottom out of for the years that weren't
in recession where they bottomed out was
still higher than where they had
bottomed out the year before and where
they peaked in the summer was a higher
Peak than where they had peaked in the
summer before so this is how
appreciation Works appreciation works
and this is what I alluded to last week
you have to look at the year-on-year
chart to really know what's happening
more than the month-on-month chart
because if you're just looking at month-
on-month home prices go up and down
right this if you guys listened last
week you already know this but if home
prices go down year on year then at that
point we're seeing a depreciative real
estate environment prices are going down
that is what we saw back during the
Great recession that is when people
start to get underwater on their
mortgages that's when foreclosure rates
start to Skyrocket that's when we see
things flip to a buyer Market now at
this point we're not seeing anything
close to that if again if you listened
last week you saw that for the month of
August prices were up year-on-year
14.8% but they were down month-on-month
but again as I said last week that is a
normal thing to happen and as I've
already alluded to prices do tend to
Peak during June July this year
perhaps August prices do tend to Peak
during those summer months and then they
recede a little bit so my question going
into all of this data right is okay so
people are going to start I know
what's going to happen people are going
to start freaking out as they see prices
going going down and you're going to
hear Rumblings of a housing market crash
all this type of type of stuff I'm I
guarantee I guarantee that this will
happen but if we know that up until the
past two years it was normal for prices
to come down off of their summer Peak
before going back up again in the spring
of the next year then we we already know
that right then it's actually healthy
and normal for the market to to do this
we would expect in a healthy normal
Market that now for the remainder of
2022 we would see prices start to go
down so at what point is it unhealthy
right because it's healthy for the
prices to go down and this is what's
crazy if you look at the at the graph
it's that the past two years have not
had the seasonality to it and you know
the only thing that I can conclude from
that what I felt on the ground as a
realtor is that people couldn't just say
you know we're just going to move in the
summer because there weren't enough
houses to go around so people just had
to be open they might try to move during
the summer but then they just kept
getting out bid or they couldn't find
the house that they wanted so then
their house search bled into the into
the fall and then they still didn't find
it and then it bled into the winter and
then and then finally they were able
to get something under contract in the
winter so the seasonality of real estate
has basically not been here for two
years now and this is what's been a
great in some ways for realtors but also
has been difficult why we have been
you know working our tails off now for
two straight years in a business
where we normally kind of have a slower
season and and for any sort of job
right anyone that works in any sort of
job even sales likes to have a little
bit of a Slowdown every now and then
well we really haven't for two straight
years and that can't continue not I'm
not just saying for realtor that it
can't continue for the market Market it
can't continue there's no way that the
market can handle that type of demand
and so as I've said before demand
lowering is a good and healthy thing but
at what point at what point is it
unhealthy and I like to be ahead of the
curve and you know unfortunately the
the easiest way to determine if it's
unhealthy is once the year on-year
increase in the median sales price
reaches zero or below zero at that
point we can say okay now the real
estate market is depreciating but by the
time we're there it will have already
been happening for a while like by the
time we see the year-on-year numbers
come down that far we'll already be
behind the curve so I want to be ahead
of the curve and to try to determine
what we need to see in order to on on
more of a month-to-month basis in order
to have a sense of where we're heading
whether the the shift and the the
decrease in prices is is potentially
still normal within the range of being
normal and healthy or whether it is
potentially a something resembling a
housing market crash and and I think
that there is a way for us to do this
all right so here's basically what I did
I looked at all of these other years
that we've had a normal seasonal Peak
and then a normal seasonal drop and
basically what I reverse engineered from
that is that the normal seasonal drop
from the peak within the next few months
is for prices to come down about 10% off
of their price Peak before the end of
the year so prices Peak typically June
July perhaps August and then after
that they come down before the end of
the year at some point whether November
October November December they come down
and bottom out about 10% below their
Peak before going back up that is what
has happened in healthy during the
healthy years the years that we weren't
in recession and also weren't in the
pandemic and again I've mentioned
this before but this is for Greenville
I'm not talking about San Diego or or
Las Vegas or Phoenix or Philadelphia or
any of these other markets not even
Charlotte or Atlanta this is
specifically a Greenville podcast this
is specifically what I've seen in
Greenville I don't know if this holds
true to other markets so we can
reasonably expect for prices before the
end of
2022 to come down 10% off of their Peak
so what was their Peak right now
assuming that something odd doesn't
happen in the month of September the
peak appeared to have been in July again
that that is a very normal thing to
happen and that Peak was a median sales
price of$
37,39 so in a normal environment we
could expect to see that number come
down by a full 10% and that would still
be within the range of healthy for our
market so we could actually see before
the end of the year prices go down from
317,000 all the way down to about
285,000 285
286,000 before the end of the year and
that would just be a normal seasonal
slowdown that would not be anything
quote unquote unhealthy that would not
be anything unexpected or unusual that
would be what happens in a normal non
recession non-pandemic type of year now
one question I have when looking at this
data is actually like do prices actually
go down seasonally or is it simply that
more expensive homes aren't hitting the
market in the winter months for some
reason right and this is a hard question
to answer and and it's a little bit
Downstream from from this pod but I just
thought you guys would would find it
interesting because it was one of the
questions that I had usually this
podcast usually my episodes start with a
question that I have and I figured that
some of my listeners also had that
question and would be interested in or
maybe they don't have the question but
when I ask the question they're like oh
yeah that's interesting and and so
that's typically how my ideas for my
episodes are birthed and so one of the
questions I had is why do prices come
down 10% is a lot like that's a massive
difference and so is it just that the
more expensive houses aren't coming on
the market or do we actually see a real
decrease in values during the winter
months and and again it's a really
hard question to answer without me doing
hours upon hours of research I'm not
even I mean I I I say I'm not even sure
where I would begin I I think I do know
where I would begin and it would it
would take a very long time I'm sorry
guys I love this podcast and I love
giving you content I don't have time
to get into the data quite that deeply
right now but there is one thing that
we can look at that will kind of answer
the question kind of indirectly and it
is the percent of list price received
this is a a a number that we look at
when we look at the market stats we
talked about it last week and it's
according to the greater Greenville
Association of Realtors the way they
calculate it it's the percentage found
when dividing a property sales price by
its most recent list price then taking
the average for all properties sold in a
given month not accounting for seller
concessions okay so without getting
too much into the Weeds on what all of
that means basically you're you're
looking at you know if a person lists a
house for $100,000 and they get
$98,000 for it then the percent of list
price received was 98% okay it's that
simple all right so what I
kind of decided that I was going to do
to look at to determine at least
indirectly do prices do homes actually
kind of lose value seasonally do does
the value of homes go down during the
winter months was to look at whether
this percent of list price received also
Peaks during the summer months because
if it also Peaks during the summer
months then that means that there's more
demand during the summer months and
people are making more competitive
offers during the summer months than
they are during the winter months well
guess what it does in fact Peak during
the summer months just like the median
sales price does and so what I gather
from that is that homes home values do
actually fluctuate on a seasonal basis
you're going to get more for your home
selling in the summer than you will
selling in the winter that's that's the
reality of the situation and it makes
sense from a from the standpoint of
demand there is much much less demand
typically in a normal Market again this
has been different the past couple of
years in fact if I look at this percent
of list price received chart for
for 2021 and
2022 it it's actually is still
seasonal but where it still does
spike in the summer but it's still so
high it doesn't matter it's still
basically the entire thing is above 100%
but it is interesting that it's still
still did in 2021 and 2022 Spike during
the Summers so there is something real
here that homes are the most valuable
because there is higher demand during
the summer months so that's again I
thought that you guys would find that
interesting so what does all of this
mean in the end what can we actually
conclude from this how can we
actually figure out or try to reverse
engineer what's happening in the market
based on all of this data what can we
expect in the upcoming months based on
all this data what I'm am expecting now
having having really gotten into this
data is I'm expecting that median price
point to retreat to below
$300,000 before the end of the year and
if it stays above
$285,000 then I'm going to say you know
what right now the market is doing
what the market should do and I would
expect the percent of list price
received to also Retreat I mean before
the pre-pandemic Norm was in like the 98
98 1.2% range it would not Shock me
if it went down to that or maybe even
a little bit lower that that wouldn't
shock me if it if it got down below 97%
that would be a point of concern but
I think if it stays above 97% which was
kind of what we saw in in healthier
types of markets I'm not super
worried about that at all again I'm not
super worried about any of these things
at the end of the day I have clients
that will benefit if we go into
recession I have obviously it's it's
a lot slower for a lot of Realtors but
I'm prepared for that too I've got money
in the bank I I have learned over the
years of real estate to make sure that I
have adequate money in reserve because
there might be lean months I learned
that the hard way when I couldn't drive
for 6 months and basically didn't make
money for 6 months so I am prepared
for all this none of this scares me and
I don't think should scare any of you
guys either the the market even if
the
market does depreciate more than 10%
we've all still gained so much value for
the real estate that we have that in my
opinion nothing nothing to complain
about but I'm expecting to see that
median sales price for Greenville
plunge below $300,000 you're going to
hear people freaking out about this
if it if we see in October November
December that number come down below 285
at that point now we can start to assume
that there's more this is no longer a
a normal kind of shift this isn't the
market returning to a normal seasonal
type of market now something more is
happening is it shifting to a buyer
Market as I've said before I'm not going
to be ready to say that unless we see a
major major shift and there will be a
lot more than just the median sales
price to indicate all of that but if we
see the median sales price like I
said go below temp go below I guess
really 90% of what the peak was then at
that point we're seeing actual actual
home prices going down at that point we
can say home prices are truly going down
right now now and then we have to
adjust our strategy accordingly at that
point then it's like okay now we're
we're going to start to see those year
on-year either flatlines or decreases in
home values so that those are numbers
that I'm looking at that I'm going to be
analyzing very closely of course you
guys will know every month or so we
go through all of this data that the
greater Greenville Association of
Realtors publishes and so we'll be
looking at this in real time as it
happens it's a roller coaster but
it's an exciting roller coaster I hope
you guys are excited to hear the content
that is all for today's show I
appreciate you guys so much for
listening it blows my mind every single
week that people listen to the show it
truly amazes me when I first started
recording it I didn't think anyone would
listen to it and literally I was just
like you know this is just something for
me to tell people it's something that
gives me some credibility I've got a a
real estate podcast and it's just like
one more thing that I can can tell
people to let them know that I'm a
credible realtor but as it is I get
hundreds of listens per week and I'm
just I'm really grateful for that so
thank you guys for listening if you
could help the show by telling more
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all of those things all of my contact
information is in the show notes if you
need help with buying a house with
selling a house anything like that let
me know I hope you guys stay safe and we
will talk again next time
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