January 2020 Market Update
I hope everyone had happy holidays and is ready for a new year and a new decade. It’s been a while since my last blog post and so much has happened. October brought us power shutoffs, November bought us snow, and December (hopefully) bought you warming spirits and time with family and friends. The October PG&E Public Safety Power Shutoffs (PSPS) significantly impacted almost all businesses in western Nevada County. My office had 6 power shutoffs over a 5-week span. Mortgage lenders require utilities to be operable during appraisal inspections, so my business drastically felt the impact of the power shutoffs. The question raised most often from family and friends during the holiday season was: “How are the power shutoffs, combined with the difficulty in getting fire insurance, impacting the local real estate market?” I thought it would be prudent to take an in-depth look at the market to see exactly whats going on.
One thing to keep in mind is that real estate markets rarely see an immediate impact to change. There are a few factors that can immediately impact the market, but typically it takes a long time for factors to change things long term. If unemployment jumps overnight to 10% (like it did in 2010), people lose the ability to pay their mortgage and before foreclosures hit the market, the sales volume decreases dramatically. When a wildfire rolls through a community destroying 90% of housing, the market is immediately impacted. On the other hand, most factors like approval of multiple new housing projects take a long time for their impact to be felt on inventory and prices. The power shutoffs were the center of everyone’s life in October, but even today, that feeling might have subsided (or blacked-out) a little.
Over the past decade Nevada County saw a steady increase in sales from 2010-2012 with a slight decrease in 2013-2014. The past 5 years have seen an overall stable trend for yearly sales with 2019 setting a high in sales at 1,539 which is 128.3 sales per month.
The yearly average and median price trend shows at the bottom of the market in 2011-2012 and a steady recovery from 2012-2018. The yearly average sale price increased between 4.5%-21.2% per year between 2012-2018. In 2019, the average sale price decreased by -0.5% from 2018. The yearly median sale price shows a similar trend increased between 4.1%-22.2% per year between 2012-2018. In 2019, the median sale price increased by 2.5% from 2018. This shows the market has stabilized.
Marketing times show a similar downward trend and have stabilized since 2017. In 2019, both average Days On Market (DOM) and Combined DOM slightly increased. The average DOM for 2019 was 58.2 days which is considered fast. Compare that with 2011 when the average DOM was 91% higher (111.0 days).
In 2019, monthly sales mostly mirrored the previous year, with the exception of October. As mentioned before, the power outages had a pretty significant affect on sales. November rebounded in a big way with 140 sales. Nevada County typically only sees that type of volume in the summer months of June and July.
A closer look at the 4th Quarter of 2018 vs 2019 and you can see that sales were down 15% in 2019. But sales bounced back in November, up 40% over 2018. Looking at the entire quarter, in 2019 the number of sales were up 7.8% and the average sale prices (0.5%) and DOM (4.3%) slightly increased over 2018.
Both the Average Monthly Sale Price and Median Monthly Sales Price graphs mirror each other for 2018 and 2019. The Average Monthly Sale Price graph shows a slight seasonality where slightly higher priced homes tend to sell during the summer months.
The Average DOM graph shows that seasonality even more drastically. In the summer months, homes sell faster than homes that sell during the winter.
I’ve been analyzing all homes for sale on the first day of the month and over the past six months and I’ve noticed an interesting trend. The overall number of listings has decreased as expected in the winter months. The average days on market of those listings has increased by 57%. Again this shows the seasonality affecting homes for sale. If you list your house for sale during the winter, expect it to sit on the market much longer than it would during the summer.
Conclusions
To summarize the 2020 January market update in one word: Stability. The Nevada County market has seen a very stable trend over the past two years. The market saw a rapid change from depreciation and the housing market crash bottoming out in 2011-2012 and a rapid recovery from 2012-2017. This data supports my daily appraisals in Grass Valley and Nevada City where I analyze the competitive market segment to each individual home. The past two years have been overall stable.
Individual Markets
Here’s a glimpse into each individual market in western Nevada County. Many areas have a very low volume of sales and trends can be inaccurate and misleading. For most individual markets, its best to concentrate on the trend throughout the county.
Grass Valley
Nevada City
Alta Sierra
Lake of the Pines
Lake Wildwood
Penn Valley
South County - McCourtney
Peardale - Chicago Park
Rough and Ready
Smartsville - Big Oak Valley
North San Juan
High Country - Washington
DISCLAIMER: All information presented in the Nevada County Appraisal Blog is meant for educational purposes only and is NOT intended for any other use. This information is not considered an appraisal and does not support any specific value opinion or eliminate the need for an appraisal for a specific property. Please give us a call at 530-632-3428 to order an appraisal for an accurate opinion of value for a specific property.
