Almost every recent conversation I’ve had about real estate has begun with “How nuts is this market?!” Whether you have been too consumed with the events of 2020 to pay much attention to real estate prices, or you are consistently glued to your preferred listing site, you might be aware that this past year in real estate has been… different. Here’s a recap of the very active market we have experienced since early 2020.
This data comes from MetrolistMLS which typically only covers Western Nevada County. The number of residential properties sold increased by almost 15% in 2020, compared with 2019. The total value of those sales increased by 28%. Median and average prices rose by over 10%, so generally speaking, the market increased in 2020. Furthermore, a greater number of higher-priced homes sold in 2020 than in 2019. In my appraisal experience in Grass Valley and Nevada City, this is likely due to people moving from urban centers like the Bay Area (more about this later). Interest rates, dipping below 2%, also factored into increased sales. My friend Ryan Lundquist who authors the Sacramento Appraiser Blog, stated that low-interest rates like the ones we have been experiencing are like rocket fuel for the real estate market. This could be why, although the number of total sales increased almost 15%, we had virtually the exact same number of all-cash sales. Bank-owned sales and short sales continue to represent a very small portion of the market. As expected, the time it takes to sell a home has considerably decreased.
The good ol’ days
Back before we all traveled around with hand sanitizer and masks over our faces, life was pretty normal, and so was the real estate market. Early 2020 had pretty similar prices compared to the past three years and the number of sales was even slightly down. This time of year is always the slowest for the real estate market.
Lockdown
Nevada County, along with the rest of California, was under Stay-At-Home orders during March and April. While there was some real estate activity, many of these transactions were in contract pre-lockdown. In a time of year when real estate in Nevada County typically starts to pick up, 2020 brought a decrease of 17% in home sales
Recovery and BOOM
By mid-May, the state of California issued guidance on Real Estate transactions. The world at large was beginning to function in the new normal of pandemic life. Real estate in Nevada County began to take off in a way we really haven’t seen before. The number of sales increased 31%. Average and median prices were up 13% and 16 %. The value of all sales was up 52%. All of this happened without an increase in homes hitting the market. In 2019, from 5/15-12/31, there were 1,318 new listings that hit the market. During that same time period, there were 1021 closed sales. This means approximately 77% of homes listed on the market were selling. This was a pretty normal activity. In 2020, from 5/15 - 12/31, there were 1365 new listings that hit the market, an increase of 4% from the year before. There were 1327 closed sales in 2020 during that time period, indicating 97% of homes listed, sold. There was a decrease in homes taken off the market (expired or withdrawn listings) of 44% in 2020 vs 2019 (5/15 - 12/31).
Prices and Demand
Average and median prices increased by 10-11% in 2020 and the average price-per-square-foot increased by 2.1%. But 2020 was not an ordinary year where the distribution of sales was typical throughout price ranges. Nevada County saw higher than normal activity at the higher end of price ranges.
The tail end in the price range above $800,000 shows a lot more activity than in years past. From my experience with buyers and sellers this year, this is due to an influx of buyers from the SF Bay Area, especially since so many can now work remotely. Buyers are capitalizing on their years of equity in higher-priced markets and buying higher-end homes in Nevada County.
This directly impacts the average and median sale price statistics. While average and median prices increased by 10-11% in 2020, the typical appreciation rate I typically see when doing appraisals in Grass Valley and Nevada City is 5-7%.
Conclusions
This is a graph where every sale in western Nevada County is plotted. The volume of sales (dots) and the sales above $750k really stand out after 5/15/2020. It’s key to understand this new market if if you are considering purchasing or selling your a home. There are implications for over-pricing your home if you are holding out for that bay area buyer. It’s also imperative for buyers to realize the market value of their home and weigh that when they consider their offer. My suggestion is always to listen to your real estate professional, whether that’s your Realtor or trusted appraiser. They can give key insight and cater to your individual needs.
