April Real Estate Statistics: What do they mean?

We hope you’re doing well and staying safe. We received the full April 2020 market statistics from Independence Title on Wednesday, so wanted to send these out to everyone, along with our comments and interpretations.

Since local businesses are affected heavily by the COVID-19 crisis, we want to highlight a local business owner when we send these newsletters. This week, Merry Maids of West Austin asked if we would let everyone know that they are offering $50 off an initial deep cleaning service or $25 off disinfection services. If you’re interested, shoot Sarah Trivitt a text at 512-963-9390 or an email at [email protected].

The April 2020 market statistics for the Austin metropolitan area from our friends at Independence Title are available for download here. Some statistics were quite surprising (median price appreciation), while some were not surprising (drop in the number of sales.) Reconciling what seems like conflicting information is interesting, but we were able to make sense of it.

Median Sold Price increased by +4.4% in April 2020 over April 2019. We also saw Median Days on Market decrease by 5 days, or -31.3%. Likewise, median Sold Pric/SqFt increased by +2.5%. In the middle of a pandemic and recession, homes are selling faster, and for more money. How?

When we looked at past recessions, we saw that prices either stayed flat or declined slightly, but they didn’t go up. April numbers show that the number of pending properties (those that went under contract) fell by -25.7%, which indicates less buyer demand. Generally, less buyer demand means lower prices. However, sellers are also choosing to sit out, with -21.3% fewer new listings on the market in April 2020 than in 2019. This means that supply is also decreasing, and doing so at a similar rate as demand is decreasing. This phenomenon is causing inventory to stay relatively unchanged at 2.6 months. This means that our overall market is still a seller’s market, even though demand has decreased. Since we’re in a seller’s market, it’s not surprising that prices have appreciated moderately at 4.4%.

If prices are still inching up & we’re still in a seller’s market, then what has changed?

Total sales & sales volume have both declined as buyers and sellers have chosen to sit and wait. Total sales were down -25.7% in April and sales volume was down -23.1%. Fewer buyers are in the market, fewer sellers are in the market, so there are simply fewer sales.

What does this mean?

If you’re a buyer, the market is still tight. Prices will likely not come down during this recession, and if they do come down, it will be moderate. Likewise, prices could move up moderately. It’s literally harder to buy a home right now, but it’s not a bad time to buy if it makes sense for you. If you do choose to wait to buy, next year is likely fine, as well – prices could be a little higher and they likely won’t be much lower.

If you’re a seller, the market is still good. It’s likewise literally harder to sell a home right now if you’re living there, but it’s no harder to sell a home now if it’s vacant. It’s definitely not a bad time to sell, if your personal situation doesn’t make it hard. If you need to sell an occupied home, you’re also likely in good shape, though the logistics are a little tougher.

It’s important to understand that these numbers are all very high level. Different sub-markets within the Austin metro have been affected differently. Most relocation buyers have hit pause, so relocation heavy sub-markets are more sluggish. Likewise, homes in the $1.5M+ range are moving more slowly, as luxury buyers’ portfolios have generally taken a hit. Each sub-market in Austin has been affected differently, and some are dramatically different than others.

Marshmallow Test

With no exaggeration, I can say that the most anxious moment I’ve had as a parent is when I gave Beck the marshmallow test at around 4yo. “Would you like to have one marshmallow now, or two marshmallows later?”

Luckily, he picked “two marshmallows later” with only a little hesitation. It’s a no brainer if you think in “big picture” terms. It’s a huge indicator of how successful someone can be. (There are very real socioeconomic implications of the test, which are very worthy of another discussion.) For whatever reason, delayed gratification pays off bigly in life.

I’ve sort of lived by “short term pain for long term gain” my entire life. I mowed lawns until I could buy a motorcycle. I raked leaves until I could buy a sweet pair of Bo Jacksons. I ran a concession stand until I could buy other stuff. When you understand that you only need to endure very short term discomfort in order to get whatever-the-heck-you-want, life starts to make sense.

Watching people succeed and fail throughout life, this has been a constant. Those who are willing to do what’s painful generally succeed. Those who aren’t, generally don’t (or succeed at a lesser level.) At a base level, if you’re willing to look past your temporary discomfort in order to achieve, you will generally be successful.

May Challenge – Journaling

I’m trying a journaling challenge again and I’m committed to making it all the way through May. This time, I’m committing to journaling 5x per week (rather than every day, which is what I tried last year.) There are tons of benefits to journaling: It helps you be more reflective, it helps you be accountable to goals, and it improves memory.

Human memory is one of the deficiencies in life that makes me really angry and depressed. Life is generally amazing and most people’s brains aren’t capable of recalling all of those amazing things. This is why it’s so much fun to talk with friends – collectively, you can remember more, and it’s awesome to talk about those memories. I’m very hopeful that we’ll see technology in our lifetime that improves memory. Neuralink is a really exciting company.

I put together a template for journaling. Here’s the template and my journal entry #1 for May:

Date: May 1, 2020

Weight: 161

Diet: ~2000 calories (drank too much)

Sleep: 8+ hours

Fitness/Adventure: Walked/hiked ~4 miles

Work: Good work day yesterday. Wrote a newsletter, engaged w/ 2 marketing vendors. Feel like I have a good direction on how to improve things for the next 2-3 months.

Family: Awesome afternoon with Beck. I was holed up in the office for the entire day and didn’t see him until ~5pm. We went to “soccer practice” at 5 and he was just great. He had an awesome attitude and did great. Ali & I had separate zoom happy hours w/ friends but were able to talk and enjoy each other around that.

General: Ridiculously excited that the mountain is likely to open up today. The owner is hilarious in that he’s fighting super hard to open up in order to lose money. That guy lives to ski. Waiting on the governor to approve/disapprove the plan to open and I’m very hopeful that he opens.

Blogging Challenge Recap

My April challenge was to write 3 blog posts per week and share them on social media. Per my original post, I tried 30 day challenges last year and fizzled out on month #1 b/c I tried to bite off more than I should have.

How did I do? I wrote 12 total posts (including this one.) I missed “3 posts per week” on one week.

How did it go? I really enjoyed it. I like to write quite a bit and this forced me to think of new topics to write about.

What did I gain? This encouraged me to write a weekly newsletter, which has been well received. We repurposed those newsletters into COVID-19 specific content on the website that’s also well received and has converted leads. I put together a new piece “An Agent’s Path of Success” that I’m excited to wireframe and turn into an evergreen informational piece. All in all, I think this was a really successful challenge.

Any downsidesNot that I could see. This was a great challenge.

Will I keep it or toss it? I’m going to commit to writing no less than one blog post per week and sharing it on social media.

Real Estate Industry Disruptors

disruptor noun [ C ]: a company that changes the traditional way an industry operates, especially in a new and effective way:
If customers talk to everybody else they get the status quo. We’re the innovator; we’re the disruptor.

The term “disruptor” gets thrown around a lot in the real estate industry when describing start-ups. I do believe that the era of drunk VC money is over for the time being, but for the past 10 years, if you wanted some of that sweet, sweet, drunk VC money, you had to describe how you were going to disrupt the real estate industry for the betterment of the consumer.

I’m a natural skeptic. Any time I see a new business idea, I start trying to poke holes in it. Why won’t this work? What’s wrong with it? This has served me well to not lose money over the years, but I’ve certainly passed up good opportunities because of this mindset.

Legitimate disruptors move fast. Zuckerberg founded TheFacebook in his dorm room in 2004. By 2008, everyone in the world dropped Myspace and was on Facebook. Google had a similar trajectory. It took a few years for everyone to drop AltaVista, move to Yahoo powered by Google Search, and then straight to the source at Google.

There are a handful of companies that people would consider disruptors by default, because that’s how the press labels them. Zillow, Redfin, Opendoor, & some others I won’t name because I don’t want to cause friction with good friends.

My question is this: How long should we continue to label a company an “industry disruptor” when there’s been no disruption?

Zillow was founded in 2006 with the public intention of empowering the consumer. The subtext to that was to do to real estate agents/brokers what Rich Barton (founder of Zillow) did to travel agents with his startup Expedia. I was somewhat threatened by this in 2006 and 2007 and very publicly tried to convince other agents to not send their listings to Zillow. My tiny voice didn’t work, Zillow proliferated, and everyone learned that most folks want an experienced agent to guide them through the largest purchase of their lives. Zillow shifted, started selling leads/ads to agents, and we’re in the same place with Zillow that we were in 2008. Did they disrupt the industry? No – we simply pay them a portion of our ad budget that we used to pay someone else. Some consumers search on their website along with other real estate portals. Is Zillow an industry disruptor? Not by the Cambridge Dictionary’s definition.

This is in no way a condemnation of any agent who pays for ads on Zillow. We pay for ads on Zillow.

Redfin was founded in 2004, in Seattle, with the stated goal of saving consumers money through technology & processes. There has always been a market for folks who want to save money when they buy or sell real estate. They wanted to tap into and grow this market. I personally thought this was a great business model and thought they would get significant market share. Today, 16 years later, Redfin has around 5% of the market in Seattle. Is that disruption? Not according to Cambridge.

Redfin has awesome agents that we love to work with and I think the business model has a niche market that they are serving very well. I just don’t think they’re an industry disruptor.

Opendoor was founded in 2014 with around $1.6 BILLION in funding and debt. They’re no longer operating. I don’t know if they’re permanently out of business, but it sure looks like it. Are folks still calling them an industry disruptor? Probably.

The real estate industry is not immune to disruption in any way. Listings went online in the late 90s. The average commission dropped from 6% to 5% as discounters entered the market. It was more efficient to buy/sell, so the industry changed. One could say it was “disrupted” 20 years ago by the internet.

What will be the next disruption? I wish I knew because I would invest in that idea. Anything that can reduce friction and improve an experience in a cost-effective way generally disrupts the industry it’s in. I personally think there’s a lot of room for AI in the contract to close process, but I don’t think that AI will replace humans in the real estate buying/selling process in our lifetime.

I’m extremely curious how long the market will give the publicly traded disruptors before they start valuing them on traditional metrics – P/E, etc… At that point, I think we’ll safely be able to remove the label “disruptor” from a lot of these companies, though I’m not sure when that will be.

You Can’t Out Train a Bad Diet Pt III

I meant to write this on Monday, but things have been getting in the way. Last week was somewhat predictable. I ended up hiking 51 miles last week and I logged <1500 calories every day except for Saturday. I lost exactly 2 lbs, weighing in at 160.2 lbs on Saturday morning.

My totals for the mini-challenge were:

  • Week 1: Eat whatever, hiked 60 miles, gained 0.5 lbs
  • Week 2: Plug everything into MyFitnessPal, didn’t target a caloric deficit, hiked 48 miles & lost 1.1 lbs
  • Week 3: Plugged everything into MFP, targeted <1500 calories, hiked 51 miles, & lost 2 lbs

I could keep going and try a week 4 where I don’t exercise much or at all and maintain a really strict diet, and I’m sure I would still lose weight. I don’t want to do that, though, because consistent exercise is what keeps me sane. I’ve finally learned that weight is super important in order to do things I love (hike, snowboard, climb), I can only lose or maintain weight by watching diet, & exercise is for my mind/mindset.

I still struggle with getting to an ideal weight, which is ~150lbs for me. I will progress & then plateau for a long time. COVID has made it really tough because of boredom. I’m really hoping that I can find a groove and exit COVID (whenever that may be and whatever that may look like) at 155 lbs.

Agent’s Career Path of Success

I wrote “An Agent’s Career Path of Success” over the weekend in our company culture docs and received enough positive feedback that I thought I’d share it publicly. Our company has a really robust set of documentation and I started writing Culture Docs last year as I would think of how to solve problems at a high level. These culture docs were the beginning of what became our ~100 slide Culture Code deck.

I wrote the “career path of success” to try and answer a common question I get from our successful agents: “What’s next?” Most people are happiest when they have opportunity to advance. When agents are new, they just want to sell enough homes to be secure. After agents become secure in their business and move beyond that security to a level of success, they naturally wonder “What comes next?”


https://app.tettra.co/teams/bramlett/pages/agents-career-path-of-success

An Agent’s Career Path of Success
While there are many career paths to success, this is a proven path to success that is filled with success. When agents begin in the business, it’s very scary but exciting. As agents find success, they naturally question “What’s next?” This is a proven career path that you can look forward to. Bear in mind that moving to the next phase is your choice. If you don’t want to manage people, an assistant & team is not necessary for your success. Many agents are much happier without management headaches. Each phase listed here is a profitable level of success and no phase is “more successful” than the previous (with exception, perhaps, of “new agent”.) Do what makes you happy. 🙂

New Buyer’s Agent – Establish Your Business

  • Goal: Hustle
  • You have plentiful time and you need to fill your pipeline.
  • Meet as many potential buyers in real life as possible. Set appointments.
  • Work a very broad geographic area.
  • Begin to build your SOI as you close transactions.
  • Career Transaction Goal: 25
  • SOI Transaction Goal: +20%

Experienced Buyer’s Agent – Build Efficiencies & Learn Processes

  • Goal: Work Smarter
  • Learn to time block & set reasonable boundaries.
  • Implement proven processes and systems.
  • Pre-qualify buyers prior to meeting them.
  • Begin to refine your geographic service area.
  • Learn the listing presentation & process.
  • Continue to build your SOI and close more referral transactions.
  • Career Transaction Goal: 50+
  • SOI Transaction Goal: +50%

Learn to List – Become a Great Listing Agent

  • Goal: Close More Seller Transactions
  • Go to as many listing appointments as possible.
  • Take any listing in order to learn and perfect the process.
  • Continue to work qualified buyers in your geographic service area.
  • Continue to build your SOI and close more referral transactions.
  • Career Seller Transaction Goal: 50
  • SOI Transaction Goal: +75%

Leverage Others & Systems – Hire an Assistant or Virtual Assistant

  • Goals: Earn Your Time Back
  • Identify the “$15/hour” tasks you need to offload.
  • Build a schedule for your assistant.
  • Identify systems that you will use to manage your assistant.
  • Interview many applicants.
  • Hire slow, fire fast.
  • Continue to build your SOI and close more referral transactions.

Grow Beyond Yourself – Build a Team

  • Goals: Refine Your Market & Leverage Your SOI
  • Identify the buyer transactions that you should offload.
  • Give yourself time back with minimal revenue loss.
  • Establish expectations for a buyer’s agent.
  • Interview many applicants.
  • Hire slow, fire fast.
  • Start with one buyer’s agent and make sure that agent is successful before considering hiring a second.
  • Continue to build your SOI and close more referral transactions with your team.

You Can’t Out Train a Bad Diet Pt II

Two weeks ago, I hiked 60 miles, ate/drank whatever I felt like, and gained 1/2 lb. Last week, I hiked 48 miles & journaled (most) all of my meals, but didn’t shoot for a caloric deficit, only relying on the fact that journaling does make me more conscious about my diet. I weighed 163.3 at the start of the week and finished at 162.2 lbs. This week, I’m going to target <1500 calories/day. I’ll continue to hike and do bodyweight exercises but will worry more about diet than exercise.

I know what will happen, if I’m disciplined. When I watch my diet and exercise moderately, I can lose ~2 lbs per week. Drinking alcohol generally sets me way back b/c the loose inhibitions that come with alcohol usually mean a busted day of counting calories, along w/ the empty alcohol calories. So, the key to success will be minimal alcohol along with a disciplined diet.

Skiing vs Snowboarding

I started skiing when I was a kid and went once/year until college. After that, I went periodically, but not a ton. I tried snowboarding for 3 days at 17 and had the typical “fell a ton and hated it” experience. I picked up a snowboard again in my mid twenties and have ridden ever since. I wouldn’t say I’m an awesome snowboarder, but I can ride pretty much anything on a resort or that you can hike to at a resort. I can certainly say that snowboarding is one of my favorite things in the world to do.

Beck started skiing at 3 (that was a mistake in hindsight) and I put on skis for 5 days this year to ski with him. It was a ton of fun and I could surprisingly ski everything lift accessed at the resort. I skied 52 Trees, which is one of the steepest runs in CO and didn’t look good, but got down it proficiently without scraping sideways too much.

There’s a hilariously running debate about which sport is better. I think there’s a place for both. I read somewhere that “skiing is the most efficient way to get around a mountain, but nothing beats snowboarding in powder.” That pretty much sums it up. I was shocked at how much better I could help Beck around and go uphill on skis – it’s night and day vs a snowboard. Moguls are meant for skis, without question. Riding moguls is just a chore.

I’m really happy that I picked up skis again and I’ll definitely continue to ski. When there’s not fresh pow to be found, skiing is better. When there’s powder, though, I’ll always grab a board.

 

COVID-19 & Austin Real Estate: Market Statistics & Leading Indicators

This is our newsletter for tomorrow, April 17. Before the crisis, we sent one newsletter per month that included basic YOY statistics for the previous month, commentary on those stats, and interesting news. Since COVID began, we’ve been sending a post a week, as there is a lot of interesting news, statistics, and content. We’ve received good feedback and we’ll continue writing and sending these as long we think it’s relevant and interesting.

I wrote on this topic last week in a more conversational tone and then rewrote this for the newsletter. The April blogging challenge has been positive in that it’s helping me identify what’s truly relevant & interesting, and it’s helping me dig into those topics more deeply.

April 17th Newsletter:

We hope that you and your loved ones are staying safe during the ongoing crisis. We’re reaching out today to discuss the recently released March 2020 Austin real estate market statistics and leading indicators.

Our friends at Independence Title released the March 2020 market statistics this week that are available for download here. Independence provides a valuable resource in these statistics and we always look forward to receiving them.

This month, we are looking past the traditional metrics – median/average sold price, days on market, etc – because these are lagging indicators. Almost all properties sold in March were under contract in February or earlier. This means that the properties sold and closed in March do not have a sales price affected by the COVID-19 crisis. We did take note that pending contracts in March 2020 were down -8.4% over March 2019. We believe that this is the beginning of a downward trend that will trend back upwards at some point in the future (and hopefully soon!)

If we discount lagging indicators, then which leading indicators do we follow?

We watch pending contracts very closely, but those generally lag behind earlier economic indicators. The Consumer Confidence Index & University of Michigan’s Consumer Sentiment research are both leading indicators of the US economy that are regarded as two of the most accurate leading indicators. US Consumer Confidence is at 71, currently. The low during the 2008 financial crisis was 55.3. It was at 101 in February 2020.

As a company, we monitor & track hyper-local metrics. We measure and track local Austin market metrics, which are lagging indicators. When there are more homes under contract & sold, and when prices go up, we know that the market has already performed better. This is helpful to monitor when the market it isn’t in flux. However, it’s better to monitor leading indicators in order to know before sales data begins to turn. National leading indicators like the CCI report only once per month and don’t measure consumer sentiment at the local level. However, there are local indicators that we track in order to know when the market changes as early as possible:

  • Consultation & Showing Inquiries: We measure the year over year volume of inbound inquiries to view properties and/or to speak with agents about purchases or sales. When these begin trending up, we will know that the market is improving. Right now, our post-COVID qualified web inquiries are down more than 41%.
  • Web Traffic: We have a highly trafficked website with years of data. When site traffic declines (year over year) we know the market is slowing and when it begins to trend upwards, we know that it’s improving. We analyze our web traffic overall, as well as organic & paid traffic, in order to identify trends. Our overall post-COVID traffic is down 47% and targeted search traffic is down 76%.
  • New Purchase Applications: When buyers begin to shop for properties, they apply for loans. When there is more buyer activity, more buyers apply for loans, and vice versa. We stay in close contact with our preferred lenders to monitor this activity. Our lender partners have reported that new purchase applications were down 32% in March.

Well isn’t that depressing! Why send this email?

We’re not sending this email to point out how bad things are. There has never been a recession that didn’t reverse course and most recessions are short. We strongly believe that objectively monitoring and measuring leading indicators will help us know as soon as possible when the Austin market begins to recover. Traditional market statistics are fantastic, but in times of crisis, leading indicators become more important.

We fully expect to share positive news about leading indicators in the near future, and we will happily and expeditiously do so!