May 2, 2022

Shasta County Market Update - May 2022


Click Here to watch Josh's video blog for the month of May.


From the Desk Of Josh Barker

Hello everyone, 

I hope your spring is off to a great start and you are all enjoying the beauty of Shasta County in this season. Like the temperatures as we approach warmer months, we are seeing a rise in new construction in the area. Mortgage rates have risen and we're seeing a slight slow down in home sales. This month we will discuss some of the hottest topics trending now. If you have any additional questions, please feel free to respond to this email or contact our office at 530-222-3800

Enjoy the beginning of spring!

Josh Barker


Home Sales

Home sales for the month of April finished at 267 closings down 13% compared to the 307 closing in the month of April last year. The slow down in home sales compared to last year is largely due to rising interest rates and the transition from pandemic related purchases to a more traditional market.

Home Listings

Home listings in the month of April finished at 586 properties for sales up 25% compared to the 466 properties for sale in April of last year. The slow steady increase in home inventory is projected to continue as more homeowners make the decision to move forward with plans that were on hold during the pandemic. 

Interest Rates

30 year mortgage interest rates (currently 5.5%) have climbed steadily in recent months as the federal reserve raised interest rates while at the same time reducing the amount of mortgage backed securities they purchase. These two Federal Reserve policy actions are projected to continue as the Fed continues to take actions to reduce overall inflation in the economy. The Fed is expected to increase interest rates again this month by approximately .5% which could increase the 30 year mortgage rate to an average of 6% by the end of May. For every 1% the 30 year mortgage interest rate increases, the average borrower's purchasing power is reduced by approximately 10%.  

Rental Market

The rental market in Shasta County continues to remain extremely competitive with rental rates rising on nearly a monthly basis. In the year 2020 the average 3 bedroom home in Redding averaged $1,394 per month. In 2022 the average 3 bedroom home in Redding averages $1,783 per month, an increase of approximately 22% according to

Home Price Expectations

After last year's large home price appreciation averaging 18% according to Zillow, this year's expectations are expected to be far less.  The median sales price for a home for a home in the month of April averaged $375,000 up 7.5% compared to the median sales price of $349,000 in April of last year. Home price appreciation is beginning to cool off after a massive run during the first half of 2021 and is projected by experts to climb by an average of 6% in 2022. The two largest contributing factors to pay special attention to are rising interest rates and the overall home inventory relative to demand. These two factors will have the largest impact on future home prices. 

New Construction

After what many would consider to be a major new construction boom in Shasta County, things may be changing. In July 2018 our local market experienced a massive fire destroying over 1,600 buildings and damaging many more. Several months later, Paradise California, a small community approximately 1.5 hours south of Redding had a massive fire destroying nearly 19,000 homes. In 2019 the city of Redding received a massive hail storm damaging many roofs on Redding's east side. Collectively, these events triggered a massive construction boom that was eventually pushed into hyper drive as a result of the housing boom related to the Pandemic. To learn more about what changes may be coming to the construction industry stay tuned for our next podcast in the middle of this Month. We will be diving into the topic and you will not want to miss it!  

Below are a collection of slides that correlate with many of the topics discussed in this mid-year review. If you have any additional questions regarding this market update or have additional real estate questions please feel free to respond to this email or contact our office at 530-222-3800



Learn more about Josh Barkers 5 proven steps to selling your home by visiting 

Learn more about Josh Barker's proven ideal investment formula by visiting

Check the average value for your home instantly by visiting


Make it a great May! 

Josh Barker

P.S. You can view all of our past real estate market updates by visiting

Posted in Josh's Blog
April 14, 2022

Josh Baker Real Estate Podcast #6

🏠💰Home Value Tool➔

Frequently Asked Questions

How does balloon payment work?

Balloon payments are established dates on which the remaining balance of the loan is due in full.

Are balloon payments a good idea?

Balloon payments should be carefully considered and are not the ideal loan instrument for everyone.

Are balloon payments a good idea?

Balloon payments should be carefully considered and are not the ideal loan instrument for everyone.

How fast do mortgage interest rates change?

Mortgage interest rates change on nearly a daily basis.

What is the single most significant factor affecting the real estate market?

Availability of financing, minimum credit score requirements, and interest rates have the largest impact on the real estate market.

What happens when interest rates hike?

For every one percent the 30-year mortgage interest rate increases, the borrower's purchasing power is reduced by up to ten percent.

How does an interest rate hike affect inflation?

Rising interest rates have a negative impact on consumer demand. Over time, reduced demand can reduce inflation.

What factors affect interest rates?

Investor demand for bonds on the open market has an impact on interest rates.

Who decides the price of a home?

Property owners typically set the list price for a home. Both buyers and sellers collectively determine the final selling price for a home.

How do they determine the value of your home?

The value of a home is typically determined by reviewing national mortgage trends, local sales data, and comparable property sales over the previous 3-6 months.


The transcription is auto-generated by a program and may not be accurate to the conversation. In order to ensure you get all the information from the video properly, you must watch the video.

Joey: Let the games begin. It's Joey Gartin here with Josh Barker.

Josh: Hello, Joey. Thank you.

Joey: So there's been a lot going on this last week. Actually, it's been over the last few weeks, the same topics keep bubbling up because they are like the big rocks. I always as that term used, you hear the rocks, hear the pebbles, right?

Josh: Yeah.

Joey: Well, the rocks that are big are still big and potentially getting bigger, like interest rates are kind of moving very, very fast, and that is a major contributor to our market, whether it's up or down. And interest rates, unless you've been on an island somewhere, you probably know the interest rates have been going up very steadily.

Josh: They have, I think right now, we're at 5.5% on the average 30-year fixed mortgage, and that's up from about 2.9% in the fall of last year, so we're up to over 2% right now. That's a lot.

Joey: It's a lot. It's huge.

Josh: That's significant. Yep.

Joey: And like we said, I think we were talking about it last summertime, the time before we talked about it, that impacts the lower portion of the market much more than it does the higher, and that's your first-time buyers, that's your investors.

Josh: Yep.

Joey: Right?

Josh: Yeah.

Joey: So those are two major buyers in this market...

Josh: Well, I actually know what just happened just recently was that the interest rate on non-owner occupied, so let's say I was an owner who wanted to buy a rental, but the rates now for non-owner occupied are significantly higher than they are for an owner-occupied. So Fannie and Freddie, who purchases these mortgages, typically after they're funded, basically came out and said, "No, we're not buying them, we want the rates higher." And it's in an attempt, I think, to try to push more attention towards homeownership, and so I think that's one of the reasons they made that decision, but what used to be a pretty low, an inexpensive rate for non-owner occupied, that's gone up a lot. So if anybody who's listening to this or watching this and thinks that the rates on an investment property are the same as on the owner-occupied, that is not the case right now.

Joey: They've always been a little bit higher, just like a tiny... Your primary residence, you always get a little bit better, but...

Josh: No, this is significantly higher.

Joey: This is significant?

Josh: Yeah, and without quoting it, I would just say it would be shocking to you and you'd probably wanna check with the mortgage lender.

Joey: So that's gonna slow down. I get that kind of concept of like, "Oh, we wanna help first-time buyers more." And it's like, "Okay, well, then why not keep those interest rates a little... If you can do something with that program to where you keep first-time buyers... "

Josh: Good idea. They disincentivize somebody from using a mortgage to buy an investment property because the rates are higher for it, right?

Joey: Yeah.

Josh: So they essentially, they're doing that. They're trying to reduce the competition for what could have been an owner-occupied purchase. I'm assuming that's what they're doing, 'cause that's certainly what their net effect is on the market, is as you have less investment activity taking place as a result of those interest rates going up because it has an impact on the return on investment. So the higher the rate, the lower the return. The lower the return, the harder it is for an investor to wanna make that purchase. So it's probably working if that's what their goal was.

Joey: Now, we talked about before that one of the big differences between this market and the market that we saw in the early 2000s that collapsed was that we didn't have a huge investment before. I think you were saying it was around 10%, which is very small.

Josh: Oh yeah, no, on the last market update that we sent out to everybody, we actually talked about that in length, is that if you look at what the market was in 2003, '04, '05, 2003, 2004, 2005, and then... The peak of the market was in 2006, and then it started to show some problems, and then it started to decline pretty quickly. Understand, back then we had buyers that would walk into our office that were qualified in a 30-year fixed mortgage, who were gonna be buying a subdivision for, let's say, $300,000. But if they went to a non or to a stated income loan or a variable interest rate or a negative amortization or interest-only loan, now they can buy up to $500,000 for that home, right?

Joey: Yeah.

Josh: And so it's a completely different property, same monthly payment. And that's what was happening in 2004 and '05. It's a big reason why we had the market crash like it did, is because we had a lot of people purchasing way outside of what they really should be purchasing because those all had balloon payments to 'em. Within a few years, you were gonna have to pay the higher payment amount. Whereas today, we don't have purchases like that. Those loans are not available, they're illegal. The Dodd-Frank bill that was written years ago to clean that up, eliminated those types of transactions from being, even being available to the general public. So we don't have that today. Back then, 2005 and '06, you had the 620 and below credit score was a significant portion of the purchasing market.

Joey: Wow.

Josh: Where today, it's a very small portion of the market. So those things are different. And then back then, I think it was 40%-50% of all purchases at the peak of the market back then in 2005, '06, it was like 40%, 50% of it was speculation.

Joey: Wow.

Josh: Yeah. Whereas today, like I said, it's less than 10%. So we have a lot of good things about the market right now in terms of its stability of it. I'm not saying that we're not gonna slow down, I'm not saying that we won't see something... We might even give back some value if rates were to go crazy, but in terms of the stability of the loan itself, people buying homes today are strong credit, good down payments, sourced incomes, and sourced employment. The stability of the market now is way better than it was 15 years ago.

Joey: Yeah. So that, I mean 40%-50% speculation. I do remember people were pulling out equity to buy the second home, 30... I don't hear that very often at all. In fact, I don't hear that at all.

Josh: Yeah, I haven't heard it much either. Yeah, I haven't heard it a lot. If I have, I think I've heard 'em of paying down student loans and paying off other debts and not necessarily what they were doing back in '04, '05, '06, is that they were taking that money out and then go buy the next rental with it.

Joey: Exactly.

Josh: And we don't see that happening at all in any mentionable level today. Yeah.

Joey: So interest rates are going up, that's gonna slow the market down. Of course, we're coming out to one of the hottest markets of all time.

Josh: Yes.

Joey: Last summer was, some of the sales... But I still see, I was about to say that some of the sales I saw were very, very high, but I was looking at some of the listings and they're still even higher.

Josh: Yes.

Joey: So when you say, I feel like there's gonna be a little bit of course correction. And I've never... I've heard people, especially on social media, they'll get mad at the real estate agents when they see a home listed for a certain price and say, "Hey look, their job is to get their client the absolute most that they can."

Josh: Right.

Joey: Now, the home price is determined by the marketplace. It's not determined by the agent. That's why an agent that undervalues the house, "Oh, hey, we got three offers at 20-30 grand over." It's like, "Well, clearly you didn't assess properly," or "Well, it's been listed for 90 days and we haven't got an offer." Again, you assessed improperly in the other direction. So it's not the agent. But I do see some listings that I'm like, "Man, how did that pitch meeting go?"

Josh: Somebody got pitched, whether the buyer pitched the agent or the agent pitched the seller or the seller pitched the agent.

Joey: I'm thinking retail plus 30%, blue-chip player like myself deserves a little something extra, like $10,000 cash in a gym bag.

Josh: Everybody wants more. Well, and to your point, I think that anybody that's listening to this and owns a home or watches it, I think they would agree that they... And they know this too. Everybody feels like their home is worth more. And you want it to be. And then when you get to the reality of it, I think that I always kinda feel like sellers are ultimately the ones that decide what the price is that they list it for.

Joey: Exactly.

Josh: But it's a collection or a collaboration of what a buyer and a seller are willing to do in a deal that actually establishes the market, and that's where the market is. So there's no fault in testing the market. There's risk involved in over-pricing 'cause you could sit on the market for a longer period of time. And the attractiveness of a brand new listing starts to diminish quickly if it sits on the market for too long. So it has an impact on value. So sellers, when they come on the market, it's wise to probably try to nail the value as soon as you can. 'Cause if any... In the worst-case scenario might get competing offers selling it for a higher price anyway. Whereas if you over-price and you miss that window of being the new listing and now you're... The value of that home might begin to diminish in the eyes of a buyer, you could potentially sell for less than what it's worth or what you could have gotten if you would have priced it right out the gate. And so it's always a... Listing properties is challenging. Sellers have a... They're challenged in that. And agents are too.

Joey: It's funny the psychology of days on market. I have... 'Cause I practiced real estate at one point. And when people would say like, "Yeah, I like that house and everything. But look at the days on market. We're gonna... " It's like... Then they watched an episode of Pawn Stars and they're just like, "So hey, let's offer them 50 cents on the dollar." I'm like, "What? What?" So it's a huge psychological factor where there must be something wrong that we're missing. Why has it been in the market so long? It's like maybe it's waiting for you.

Josh: Yeah, you're right. It's interesting you say that because I think that over the years I've noticed that there's a... The days on... Well, price reductions, for example. I've had sellers over the years ask, "Well, the price reduction, is that gonna make us look desperate?" And I'm like, "No, it actually makes you look motivated." So buyers interpret price reductions as motivation. But they interpret days on the market as something's wrong with the property. And so that's been our experience of what we've observed over the years of talking with buyers and sellers. And so that's a pretty big aha, I think. So don't allow days on market to accumulate too much. And the exception of that, of course, would be is if you have an extremely unique property or you're in a very unique price point. Well, then it could take days on market to find that person. So I'm not saying it works for everybody. But for the lion's share of the inventory that gets moved through the market, it should be happening in a reasonable amount of time. And if you're sitting too long, there's probably something wrong.

Joey: And then there's two points in my mind that come out of that. Number one, the importance of a good market... I was gonna say like market analysis. Market analysis. Market overview.

Josh: Yeah, yeah.

Joey: Saying, "This is what we're seeing your home is worth." And it's not an art form. It's actually a science. It's just not everybody practices that science fully. It's like a math problem that's got about 30 variables, but most people are like, "Can we just stop at six variables?" Well, then you might sit on the market or you might have like, "Wow, that sold so fast." You were a little under market. So it's important. Market analysis of a home is super important.

Josh: It is. So what we kinda do in that regard is we'll look at the market from a national perspective first. So we'll look at the overall availability of financing. Lenders kinda refer to it as availability of credit. And then we look at the overall interest rates. Because those two things have an impact on what's happening in your county. And so then in the county, you look at what's overall happening in each price range in terms of supply relative to demand. And then we go one layer deeper, which is to look at what's selling in a particular subdivision or homes that are similar to the one that you're comparing to. And it's that holistic approach that really gives you a really good perspective on what the market's doing. And so like for example, right now, between $500,000 and $600,000, the inventory in the last 60 days has jumped dramatically. I mean, it's up almost 65%.

Joey: Oh wow.

Josh: So yeah, a year ago we had 50-60 homes for sale in that price point by the end of March the last year. And this year, at the end of March, we had like 115.

Joey: Oh wow. The buyers have options.

Josh: Yes. And it's because of those interest rates. So when those interest rates went up, it had an impact on purchasing power by up to, at this point, about 20-25%. So, buyers that were qualified six months ago at two and three-quarter percent, they're qualified at 25% less today. And so that's starting to show up in our inventories.

Joey: That's a huge number.

Josh: It is. It is. I mean, we're still in a seller's market. Our inventories are so tight, that it's not having an impact on value at this point. But because the inventory is growing, days on market could get extended. We could expect to see... If it continues to happen like this, we could expect those prices to definitely plateau. I mean, that first shot across the bow of the Fed raising the interest rate a quarter percent and the corresponding effect of the tapering, reducing the amount of mortgages that they're purchasing now, it's starting to show up in the mortgage market. And I told our agents the other day, I said, "Make sure that our buyer clients in the market understand that what's happening with the interest rates was on purpose."

Josh: The Federal Reserve is actually making an attempt to prevent the housing market from appreciating at the speed that your milk and your eggs and everything else is going up. And they're doing everything they can to target that so they can prevent homes from getting out of reach and having it not be affordable for anybody. Do you know what I mean?

Joey: Yeah.

Josh: There's absolutely the impact of inflation. So if I were a buyer in the market right now, I'd just be grateful the rates are higher because it's that targeting that they're doing right now that's preventing those home prices from going up higher.

Joey: It's about a year ago, I was listening to... I wish I could remember the gentleman's name. I know you'd know who he is. It's like Ali Abdelaziz or something like that. He's a famous guy. Bear Stearns brought him in. And he gave an hour of talk, and he talked about some of the driving factors in the real estate market. And he talked about how after 2007, 2008, because of what happened, there was... Almost all new construction slowed down to almost zero.

Josh: Oh yeah.

Joey: And so there was this glut of people that were coming up, that were gonna be home buyers, but there was no replacement of inventory, and it was gonna hit... It was already starting to hit, but he said it was really... He laid out several factors on why, 'cause we're like, "Why is the housing market going crazy?" We're not seeing those loans where you just pull out the equity, buy the second, pull out the equity, buy the third. Something is driving it, and it was that there were a lot of people that are... Were living at home in their early, early 20s, and they're ready to buy, and there's nothing there. There's no inventory. It hit at the same time as a global pandemic... There's just a lot of factors. Like the pandemic hit it...

Josh: Yeah, and you're touching on like the family formation, even though they may not be forming a family, it's like you're getting out of the basement. And you're having more people wanting to participate in the housing market in one form or another. Because you've got one or two options when you move on when you move out of mom and dad's house. You're gonna go rent and rent with friends or rent by yourself, or you're gonna go buy a house and maybe rent a room to a friend or something. But you're gonna do one or the other. So right now we're over five million housing units short in the country just to meet the existing demand. And right now the population in the country is still growing. So either way, there's gonna be an impact. So right now, with interest rates going up, if our sales volumes drop, which I would say that's probably the safest estimate to say that sales volumes as interest rates continue to go up, if they do, which I think all the experts are saying they will, it's gonna have a corresponding effect on demand. And those buyers who don't buy that home, where are they gonna go?

Joey: They're gonna rent.

Josh: They're gonna rent. And what it's gonna happen to the rents?

Joey: They're gonna go up. They already have.

Josh: Because the demand is going to go up.

Joey: That's right.

JB: And so as the rents go up, now the cost of homeownership or the value proposition of homeownership becomes more attractive because it's like, "Hey, I'm paying $2,500 a month for rent on this place," or "I could buy a home very similar at $2,300 a month." So why don't do that? You know what I mean?

Joey: Yeah, absolutely.

Josh: When I hear all these things about this massive crash, and I'm not here to have a crystal ball, maybe there's some crazy thing that I don't see, but I don't see a headwind that puts us in a housing crash. And the reason why? 'Cause people need a place to live. Reason why? We have five million housing units short. Reason why? Family formation, people moving out of their parents' houses, people wanting to buy rentals, immigration. All of that stuff that's happening is having an additional demand on the existing housing supply.

Joey: Especially with like we talked about in California has... It lost people. We lost, for the first time, a Congressional seat, but Redding is the exception inside that rule where it's like, "No, people are leaving Los Angeles."

Josh: Correct.

Joey: They're leaving...

Josh: Big cities.

Joey: Big San Jose, but not everybody is leaving the state. A lot of them are coming into this area, and we have... It's very hard to replace inventory in the Redding area. Very, very hard.

Josh: Well, and I read an article that wasn't too long ago, I think it was a Hoover Institute if that's the one that's out of Stanford. So don't quote me on that, but I think that's where I read it at. But the number one reason for moving out of the state, and some of these people will probably think it's politics, but what it was on that report was affordability.

Joey: I was gonna say taxes or housing or something. The fact that you make $150,000 a year in San Jose and you're sharing an apartment with three other people.

Josh: That's right. That's right.

Joey: You can't buy... And that's like, "Wait, that's a good pay for an engineer in mid-20s," and so if you have a teleworking and stuff like that...

Josh: Well, and that ties back to my point of earlier with the sales team we talked about a few days ago where I said just, it's a great thing that the Federal Reserve is raising rates. They've gotta do everything they can to essentially try to prevent the housing market from inflating with this inflation we're experiencing right now. They've got to. Because you can't have housing, the value of homes goes up and then drop right away. That's a negative impact on a lot of families, right?

Joey: Yeah.

Josh: So when you're going through this major issue where you have a supply chain disruption, you have probably labor participation, access to the supply chain lines, all these things that are going on that you've gotta be careful with that are causing a lot of the inflation we have right now, you don't want that to transfer into the housing market at this point, because it's probably short-lived. 18 months from now, I would imagine supply chains are probably gonna be, I'm not saying the 100% back to what they were, but they're gonna be much better than they are today. You know what I mean? So if prices start dropping everywhere else, but now your poor house was overvalued and now it's dropped a lot, that wouldn't be good either. I think the Feds are doing a good job. I'd like to see how that impacts the market going forward, 'cause all the experts are saying the rates are gonna blow up a little bit more.

Joey: Yeah, I was thinking about of all the headwinds and tailwinds because you just... You named a lot of tailwinds. All the headwinds and tailwinds in Redding, the interest rate seems like the only real headwind, 'cause our housing inventory is still tiny.

Josh: It's still tiny.

Joey: Like how far are we off?

Josh: Well, right now we're at about 1.8 months supply of housing. It's called our absorption rate.

Joey: That's it?

Josh: Yes, and so for our listeners, what that means is that if you didn't... If no other homes came up for sale, it would take 1.8 months to sell off 100% of the existing housing inventory. Now, by definition, that is a seller's market. So anything up to three months as a seller's market. Four to five months is kind of a neutral market, and then six months and beyond is what's considered a buyer's market. And again, we're at 1.8 months supply. And not every price point's the same. That's the overall number. If you get into that price point at $500,000 to $600,000 and $600,000 to $700,000, and all those things as the price gets up in those higher ranges, that absorption rates growing. It's higher. It's a higher number than 1.8. And in some cases, it's considered to be a buyer's market. The upper-end market tends to be more of a buyer's market. Why? 'Cause the demand is lower than the supply.

Joey: Yeah. And also they're not as influenced by interest rates that you're gonna allow your cash buyers or people that are putting such large amounts down that the interest rate doesn't affect their purchasing power, like it does when you're in...

Josh: It doesn't usually affect the home they're going to buy.

Joey: Yeah, yeah.

Josh: Whether they wanna buy or not, it might. But what they buy not as much.

Joey: So housing inventory is still very low, interest rates have gone up, we've got inflation. So inflation, the interest rate is an attempt to control inflation in the housing, so the Feds doing this it just sounds so counter-intuitive from hearing a real estate broker say like higher interest rates are a good thing.

Josh: Well, if you're not thinking only about yourself. If you're looking at the next generation, you're looking at the folks, you know... I've changed now when I was like 25, 30 years old. I'm like. No, I want the rates at zero, right? Because you're trying to do everything you can to leverage and all those things, but I think as you get older, you begin to realize, you know what? There's a whole lot of other people that are impacted by all the things that happen. So I want my kids to own homes. I don't want to them to get priced on the market. I don't wanna see them have to leave the Redding area because they can't afford to live here. That's what's happened to folks in the Bay area. Let's say you grew up in Sunnyvale, California. And like a year...

Joey: You saw some change.

Josh: You saw some change.

Joey: In your life.

Josh: And a lot of your kids might have graduated from college in the Midwest somewhere, they came back to their town in Sunnyvale, and all of a sudden they can't even afford a home anymore. And so now they're saying, "Sorry, mom and dad, but I'm leaving the state." And you don't wanna put your kids in a situation where they can't afford to live where they've grown up, if that's what they wanna do. So for those reasons, I'd like to see housing... That's a selfish reason but that's what I wanna see. But I think when you look at the housing overall right now, I think you could argue that right now prices are probably still fairly priced for what you're getting... Think about the work and the effort that goes into getting to acquiring a home and building a home and all those things, I don't think we're way out of whack on value right now.

Joey: Well, it's funny 'cause the number, it's... The other day, I was listening to a couple of guys talk and they were... 'Cause it's tax time, right?

Josh: Yeah.

Joey: So people are like, "Oh, my accountant told me I need to buy... " And it was two guys talking and one of them went and bought $103,000 truck. And the other said, "I raise. I bought $119,000 truck."

Josh: Trucks for that price?

Joey: One was a... The 103,000 was a brand new GMC Denali full one tonne, cup holders.

Josh: You spend 120 grand on a vehicle like that, it better do my taxes.

Joey: That was the motivation. And they had cup holders and everything. They're really, really stacked... Windows rolled down. It was really nice. But no, but they're saying that I'm just like, "Wow, if you're willing to pay 100-plus thousand dollars for a truck, not an 18-wheeler, but just the truck that's gonna be hard to park when you go to Costco, like suddenly a house for 380,000, that's three of those trucks."

Josh: No, well, there you go, you're talking about inflation in a major way. And the dirty little secret that probably people wouldn't believe when I say this, but the federal government wants inflation, the Federal Reserve wants inflation. If you were to go right now online and look at the Federal Reserve, they will tell you in black and white, in writing, that their target inflation number is I think 2% or 2.5%, that's their target. That means that if it was at zero, they would want more inflation. And so it's just a variable that they're working with all the time, and clearly we've out shot it now for the reasons we talked about earlier in the podcast, but inflation right now, it's here to stay. And honestly, they want it.

Joey: I was just picturing Charlie Sheen as the chairman of the Feds going, "Winning!"

Josh: Well, they're winning right now. And it's scary for a lot of people, especially for those who are watching this or listening to it and they're on a fixed income. When you're seeing all of these things around you, that your services and your different supplies and your food and all the things that you need just to sustain, and your energy costs, and they're all going up, and you're on a fixed income. Those are the people I feel the most sorry for. If you're participating right now in the labor market, it's not affecting you quite as much because your wages potentially are going up, and they certainly could over time because you're participating in a labor market. Where people are on fixed incomes, that's the sad part of this story right now, and that's a big reason why we need to get that inflation cooled down a little bit. Interest rates are gonna be an attempt to that.

Josh: Federal Reserve's coming out again and said that they're very aggressively gonna raise it again. We have to wait 'til they do it, but that's what they're saying they're going to do. And all of us in every asset class is gonna be impacted by interest rates. And Warren Buffet I think says it best, that interest rates serve as gravity to value. And so when he gives the illustration, when he says, is that as the interest rate goes up, the gravity on value gets stronger and it pulls value down. Does that make sense?

Joey: Yes.

Josh: Alright, so when interest rates are extremely low, the gravity is low, and therefore everything inflates in values. That's why the stock market's been on fire for so long, that's why the housing market's been on fire for so long. It's because the rates were effectively at zero. But now that the rates are starting to move up, it serves as gravity, and it slows down that appreciation piece. And in some cases, it even pulls it down if it gets really high. So the Fed knows this, they know the power they have in their hands and they're gonna be... They're gonna be working towards it.

Joey: So what do you foresee over the... I mean we are in the, this is the time of year that listings come to market, spring. This is when people from Sunnyvale, Los Angeles, Fresno, and Bakersfield come up and check out the area. What do you see over the market for... Obviously, look deep into your crystal ball, Josh. What do you see for the next 90 to 120 days?

Josh: This market's gonna feel hot and strong and powerful, I think, until either the Federal Reserve raises interest rates significantly or we...

Joey: Again?

Josh: Again. Or we get to the end of summer. I think one of those two things, because we're in that cycle side right now, where we have our normal higher demand, where we have more people moving in from out of the area at this time of year. And we really see that strong market every year, all the way through summer, and I don't see this year being any different. The appreciation piece will be a challenge because as interest rates go up, it's gonna have an impact, like I said, like gravity, it's kind of an impact on appreciation in the market. So I'm not saying prices are gonna be anything close to what they were last year in terms of how fast they appreciate, but I think that we could expect to see some decent demand. And then I think by end of summer, the real question will be what will have that impact been on interest rates in the market.

Josh: So the long-term story I think is still strong, because people still need a place to live. We're not over-supplied like we were in 2005 and six when it comes to homes available for purchase, we're under-supplied as a nation. So I think there's better days ahead for the real estate market itself, but we're gonna have a short-term reconciliation and we gotta get through that piece.

Joey: That's what I was wondering if you saw anything in the market that you said the properties, the pricing is... You're very attuned to the market. I look at a couple of listings and go, that seems a bit, like I'm happy for you... Like my neighbors have a house listed, and I'm like, "Man, I hope you get every penny." But I feel like you... This is Fonzie jumping the shark. Like, no.

Josh: Well, and what you have to do is you have to have a short memory, I think, when it comes to value on homes. If I was to take my experience from 20 years ago selling real estate and took that experience in today in terms of value, I'd be underpricing everything, right? Yeah, so what you have to do is get back to what I talked about earlier on the podcast, which is looking at the national statistics, look at the county statistics, and then zoom into that neighborhood and look at what's going on around your neighborhood right now, that's where you're gonna arrive at the most accurate evaluations. Don't be thinking about five years ago, don't be thinking about 10 years ago, because buyers can't buy from five years ago or 10 years ago, they're dealing with what the market is today, so.

Joey: Well, Josh, thank you for your time. I hope people got value out of this, and it's still a seller's market, and if you need a real estate broker.

Josh: I'm here to help.

Joey: Awesome, thank you, sir.

Josh: Yeah, thanks a lot.

Posted in Podcasts
April 5, 2022

Shasta County Market Update - April 2022


Click Here to watch Josh's video blog for the month of April.


From the Desk Of Josh Barker

Hello everyone, 

As the first quarter of 2022 comes to an end, we certainly see changes on the horizon. Listing inventory is trending up, sales volumes are down slightly and interest rates are rising. It appears that the federal reserve is focused on attacking inflation. In the coming months we could expect to see interest rates continue to rise in an attempt to slow down the housing market and curb rapid inflation. In the second quarter we could expect to see higher housing inventories particularly in the 500k and above price ranges. The below 500k price ranges will likely continue to experience strong buyer demand and relatively tight supply. This month we will discuss some of the hottest topics trending now. If you have any additional questions, please feel free to respond to this email or contact our office at 530-222-3800

Enjoy the beginning of spring!

Josh Barker


Home Sales

Home sales in March ended at 325 down slightly compared to March of last year when homes sales finished at 327. The good news is that home sales volume continued to remain strong despite higher interest rates. The not so good news is that many of the home closings in March were based on home buyers that had already locked in interest rates prior to the federal reserve increases. Home sales in April could be a good indicator of the impact of higher interest rates. If home sales continue to remain strong it should be a testament of the impact of overall  low home inventory relative to demand. 

Home Listings

New home listings in the month of March finished at 431 new listings up from the 381 new listings in the month of March of last year a 12% increase. The overall active home inventory is also trending up averaging 527 properties for sale up 15% compared to last year. The most noticeable increase in home inventory is focused around the above 500k price range where inventories are up over 50% compared to last year.

Interest Rates

Mortgage interest rates have risen significantly over the past several months. Currently rates are averaging 4.9% up from the 2.9% available towards the end of last year. For every 1% that the interest rate increases, the borrower's purchasing power is reduced by up to 10%. As mortgage rates increase, there will likely be an impact on home sales in the 500k-700k price first. The largest factor is that home sales volumes begin to slow down significantly in these price ranges with fewer buyers to pull from in higher price ranges. The lower end of the market will likely continue to see high demand as buyers that were qualified at higher price ranges and at lower interest rates begin to purchase homes at lower price ranges with higher interest rates. Unfortunately, we will likely see "would be" previous home buyers in the lowest price ranges priced out of the market altogether as the recent mortgage rate increases push the affordability of homes out of reach.

Home Appreciation

Home appreciation in the year 2022 has been forecasted by experts to reach 7.5% on average and appears to already be trending this way. Assuming mortgage rates continue to rise as projected, home appreciation may level off by early summer. The largest factor in these appreciation projections will likely be focused on the housing supply. If home inventory grows quickly and mortgage interest rates rise quickly we could expect home prices to level off accordingly. 

Rental Market

The rental market continues to remain exceptionally strong. Vacancy rates are already stubbornly low, and with rising mortgage rates the rental market will likely grow even tighter. The benefits of home ownership continue to overshadow the prospect of renting. Although renting a home provides maximum flexibility, the down side of housing inflation and the cost of living due to higher rents is a challenge. Homeownership is not the best option for everyone but should be considered strongly when planning for the future.

Below are a collection of slides that correlate with many of the topics discussed in this mid-year review. If you have any additional questions regarding this market update or have additional real estate questions please feel free to respond to this email or contact our office at 530-222-3800






Learn more about Josh Barkers 5 proven steps to selling your home by visiting 

Learn more about Josh Barker's proven ideal investment formula by visiting

Check the average value for your home instantly by visiting


Make it a great April! 

Josh Barker

P.S. You can view all of our past real estate market updates by visiting

Posted in Josh's Blog
March 18, 2022

Josh Barker Real Estate Podcast #5

🏠💰Home Value Tool➔

Frequently Asked Questions

How much does the interest rate affect buying power?

Typically, for every 1% the 30-year mortgage rate increases, purchasing power is reduced by up to 10%.

How can I increase my buying power?

There are several ways to increase buying power. The first way is to increase monthly income and the second way is to decrease monthly expenses.

What is buying power when buying a house?

Buying power is a person's maximum financial potential for purchasing real estate utilizing conforming means. This factors cash funds available as well as the ability to borrow funds.


The transcription is auto-generated by a program and may not be accurate to the conversation. In order to ensure you get all the information from the video properly, you must watch the video.

Joey: Okay. Now it feels. Now, if I talk about the Ides of March, it feels disingenuine, you know what I mean, not if I repeat everything I said before, but...

Josh: What is it about the Ides of March for you?

Joey: Just, I don't know, I really... Augustus Caesar is one of my all-time...

Josh: Yeah.

Joey: I don't know, historical heroes, just the story, his life and his death. I don't know if a lot of people knows about his death, but to me it's an incredible story of... He found Rome in clay and he left it in marble, and he started Pax Romana, which is over 200 years of peace. So, anyway, and his uncle Julius Caesar set the stage for Augustus, so I don't know, that all... This sticks in my head, yeah.

Josh: This guy was the real. Well, anyway, okay.

Joey: So, it's the middle of March.

Josh: Yes, it is.

Joey: It's the middle of March. Interest rates just went up.

Josh: Yep.

Joey: That was not a shock, I mean they've been telling us for months and months, but there's a lot of stuff going on and interest rates are... It's not just the quarter percent that the feds raised, there are a lot of mechanics in play that interest rates are... What are they this morning if I was gonna get a home loan?

Josh: Just under 5%.

Joey: Which, not long ago they were in the twos, low threes.

Josh: Oh yeah, they were up by 2.8, 2.9 in November.

Joey: And you've been telling us how much even a half a point increase in interest rate, how much that impacts your buying power.

Josh: Yeah, so for every 1% that the interest rate goes up, it has an impact on purchasing power by up to 10%, so...

Joey: Which is huge.

Josh: It's huge. Well, yeah, over the last six months, we've seen basically a 20% hit in purchasing power for the average buyer.

Joey: Which is a major headwind.

Josh: Major headwind.

Joey: It should slow things down a bit. Now we've got a major tailwind, but even that's starting to creep up a little bit with the inventory.

Josh: Yeah, inventory, yeah. So inventory, home inventory on average in the City of Redding wherein the multiple listing service for active residential homes was like 370 two weeks ago. It's averaging about 415, 420 today, so it's slowly... It's still stubborn though, but it's slowly creeping up, but that's why the prices haven't changed because the inventory is still so darn low that we're definitely still in the seller's market. But that purchasing power piece that the buyers are running up against, you know the affordability index, they're running right into that wall right now. And so the next month or two is gonna be pretty telling on what impact that has on the market.

Joey: Especially because these are the big selling months. This is when a lot of the people from out of the area come and check out Redding.

Josh: Yep.

Joey: And I mean these are big sales months for Redding, so there's a lot of... The crystal ball is very cloudy.

Josh: Oh yeah, I mean we're kind of in that chamber of commerce weather right now, right? Between March, April, May and June 'til it starts to get really hot, and we see a lot of inventory come to market over the next 3-4 months from now. The question will be is that as they come to market, will the buyers come to market with them with the impact of interest rates?

Joey: And there's no report that you can get to go, "Oh yeah, this is how many buyers... " This is just flat out a blank space of you don't know.

Josh: Well, yes and no, 'cause not all price ranges are the same. So I think what the interest rates did yesterday moving up a quarter basis point, which was fully projected and expected, and the corresponding effect being the rates on the mortgage rates are going up, but remember, we also had tapering happening. So the federal reserve right now is reducing the amount of mortgage backed securities that they're purchasing while they're raising interest rates, and so you have the shrinking up of availability of credit and you also have rates going up. And so we're waiting to see that private market step in and start buying these mortgages. If they don't, then you're gonna start to see even more impacts on that, but not all price ranges are the same, so like our upper end, that's a more discretionary purchase for a buyer, meaning that I might buy a home at 700 or I might buy home at 800, it really depends on what the home has to offer. But a buyer at 300, normally they're buying up to every penny that they qualify for, because it has a significant impact on the type of home they might buy. You know what I mean?

Joey: Yes.

Josh: So when the rates go up, and let's say you were qualified at 400,000 yesterday or six months ago at 400,000, today that same buyer now is qualified approximately 320,000 today, that's a huge impact on purchasing power.

Joey: And other factors that are involved are things like... That we've talked before, the supply chain, just the ability to build a home, being able to replace inventory below 320,000 is very, very difficult around here. Almost impossible.

Josh: Yeah, yeah, I had lunch about three weeks ago with a builder here in town that does quite a few homes, and we were talking about the... Resupplying the lower end part of the market, and it's extremely cost-prohibitive for these builders because the cost of land acquisition, the development cost, they call it the front foot. So curb, gutter, sidewalks, sewer, electrical, all the stuff they have to do just to get a lot ready to be built on, that cost is pretty much fixed whether you build a home that's 3000 square feet or 1400 square feet, that portion of it still costs the same, those roads costed to the same, the lights costed to the same, the hydrants costed to the same, the water lines, the sewer lines, all that stuff, so they're looking at it going, "The larger the home we can build and still sell."

Joey: Try to get profit, try to make some profit.

Josh: Right. The more profitable it's gonna be and so this is where we're running into this issue that, the lower end of the market is just not being able to be resupplied properly, and that's where most people can afford. And you and I have talked about this before, I'm pretty sure, maybe... Maybe on one of the podcasts, I don't know, but if we went back to the building standards of the early 1990s for homes up to 15, 1600 square feet, and we just did that for three years, you would naturally move all of the... Not all of it, but a significant amount of construction would be moved to those smaller homes because the solar wouldn't be required anymore, some of the insulation requirements wouldn't be there, some of the building methods and standards wouldn't necessarily be there, not that the houses would fall down, none of the other houses in the 1990s are falling down today, they're still good homes.

Joey: Absolutely.

Josh: So if we went back to those standards for a period of time, only up for homes up to 1600 square feet, well now you're kind of pushing the market in that direction. So when they talk about, "We have to solve the housing issue," it's like, yeah, but you have to be willing to give something up to do that. You know what I mean?

Joey: Exactly.

Josh: You have to be willing to give up some of the perfect world scenarios that everybody wants to create to allow for some development that way, but these builders right now, they just can't do it.

Joey: Is that... Are those state, county or city requirements or what combination...

Josh: State mostly. It kind of travels down from the state, and they tell the counties, this is what you have to do, and the cities have to comply with this or they lose certain sorts of funding and things like that. It's all about... The state has leverage over local communities when it comes to funding. You know what I mean? So, "If you don't do what we want, we won't give you the money." And that's the big challenge that cities and counties have. And when you get outside of Redding, when you get outside of Shasta County, you think about the State, you think about Los Angeles and San Diego and San Francisco, those costs almost are negligible because real estate is so insanely expensive.

Joey: It's so expensive.

Josh: So they don't see... To them, they're like, "Why would we take out the need for solar and stuff like that?" That doesn't really impact a brand new home in Los Angeles County.

Joey: No.

Josh: And so they don't get it, so... Yeah. It's... But these people are moving out of LA might wanna move to another secondary market, Redding's certainly one of those. There's a lot of cities like Redding up and down the State, though, that... Instead of leaving the State, they'd stay in the State if they could find affordable housing that meets their needs. They haven't gotten serious about it, in my opinion. If they did, they would have already changed some of that stuff.

Joey: I wonder, because at the same time, you see things like... I think the city of Redding has a big program around these ADUs. They've approved these plans and they've said, "Hey, if you'll build these, they're gonna... " I don't know the exact, but they're gonna waive certain fees, there are certain costs they're gonna minimize. Now, I looked at these ADUs and the designs were pretty intricate. It was like, almost anything the city gave up in fees, it's like you're gonna spend on materials...

Josh: Yeah. So ADUs are like small little houses that you put on your existing property, but that might solve some of the housing. But think about what that means, that means it has to go on a lot that has the room, number one, to put an ADU on it. Number two, you have to have the financial capacity to actually write a check to do that, to have that second or refinance your home or whatever, so that narrows the market a little bit. And then you have, what you just said, which was the cost-benefit of actually building something like that right now because it's still pretty darn expensive. I think it's still a great solution, especially if you have parents or anything else that you wanna have move on to your property, and now the county code and the city code is gonna provide you for you to do that, I think that's great. But is it gonna solve the problem? No, but it's gonna probably contribute a little bit to some of the solution. I think if you wanna solve it though, it goes back to what I'm saying a few minutes ago, change the code for homes up to a certain square footage for the next three years, and have builders having a financial incentive to go that direction with their construction method, 'cause the State talks like they build homes. The last time I checked, the state doesn't build homes.

Joey: No.

Josh: And so what you're asking is the private sector to build homes, and in order to do that, there has to be a cost-benefit because they're not nonprofits, they're for-profit. They have to actually have a reasonable profit for the work they do or they can't do it, doesn't make sense to do it. So, we'll see.

Joey: I think about... So, when you were talking about the segments, different segments are gonna be affected by interest rates. You basically said the lower segment where people are financing to the most that they can.

Josh: Yep.

Joey: Versus somebody buying a $800,000 house, it's... So now they can only buy a $760,000 house, something like that. It's just not quite... It doesn't impact the same. So if you start... You're basically gonna pull first-time buyers, you think about people that buy at that lower end, you're pulling them out, and what you're gonna do is you're gonna make sure they're renters, because what's gonna happen is the investors, the people with money are gonna go, "Oh, okay, well, I can put in a cash offer. I didn't really care about interest rates." And so they're gonna... You wonder how much they'll back-fill in that purchase, 'cause that'll have an effect on the market as well.

Josh: It will. It's... Well, right now, what you were looking at is that affordability index. As rates move up, there's a percentage of the buying market that falls off all together. They can no longer participate because what they do qualify for with rates going up, there's no product available on the market for them to purchase as a result. So, as rates go up, we're automatically losing these people, they're automatically falling off the purchasing side of this whole equation, right?

Joey: Yes.

Josh: Then you have people that are still in the market, but the type of home that they're purchasing starts to change. In Redding, California, and a lot of people won't know our market directly, but if you take a neighborhood, let's say it's a $600,000 neighborhood. And it's a popular neighborhood, a lot of people wanna be in it, let's say you were qualified there six months ago. Well, now, because the rates went up, you can't buy in the neighborhood anymore. Now, you're gonna be purchasing in a neighborhood that's a little bit less, maybe a $500,000 neighborhood now. And so now you literally have to move to a different neighborhood because you can't afford the one that you are qualified in before, and so that's what's gonna happen in the middle market.

Josh: That upper end, again, the discretionary piece there is that a lot of people that buy homes at 800 to a million dollars, they could buy it for a million or they could buy it for 800. That part of it doesn't affect them as much. It's just which home meets their needs the most. And so as rates are moving up, it doesn't have as much of an impact as it does in the other two examples I just gave you. And that's the challenge. And so, if these folks move into the rental situation, and now we have more and more people have to move into rental properties, as a result, 'cause they can't buy, if you have not a lot of rental properties available and you have a higher demand for rental property, what happens to the rents?

Joey: Yeah, the rents go up.

Josh: They go up.

Joey: Yeah.

Josh: Right? And so I was talking to an investor out of LA about this just the other day, they represent a large fund with a lot of investments in it, and they say what they're dealing with is what they call cap compression, meaning that their cap rates are really low. And they can't get the values out of these properties that they want for selling them. And they have some investors in those pools that, at some point they need to sell these properties. The only way to get out of that is they're gonna have to raise rents. And so I think you're gonna probably see the next year to two years, you're gonna see rents actually going up from some of these things that are going on. We have to solve the inventory issue. Bottomline, we have to get more homes out there on the market. We have to stabilize pricing. We have to get it to where people can actually get into homes. We're gonna have a serious problem.

Joey: So besides lowering the requirements to build a home, what are some other things that can be done to help replace that inventory?

Josh: Yeah. Conversations. I told our sales team about this, probably at the beginning of the month, I just said the number one issue, I think, or the number one thing that agent real estate companies can do to get involved in this problem is to have conversations with consumers. If we start talking with buyers and sellers about the benefits of owning a home or selling a home and moving on with your life to the next home, we could start to free up some of this inventory because if more property owners decided to bring their homes to the market, you'd have more buyers, then have the benefit of choosing different homes. And now you can start to create additional transactions which otherwise wouldn't exist, and we have to get this whole train moving again is really what we're talking about.

Josh: And it starts with conversations. We have to get out there in the community. Talk to people, talk about the benefits. Hey, you're thinking about moving into a larger home, why wait? What's the point of waiting? If life is short, life is precious, do you wanna spend your time in this home or would you rather spend your time in the ideal home? Either way, you're gonna spend time somewhere, and so having conversations like that.

Joey: It's like trying to time... People that try to time the stock market or something like that. When I hear these conversations, everyone's like, "Well, the interest rates are gonna do this, and then inventory is gonna do that." And you can't time that. You don't know what's gonna happen. We can see in the short term the feds have said we're gonna raise interest rates, we're slowing down the buying the market, but how far would that go and how long an affect that has. So what I heard was, if you want to do something, then do it now, versus trying to time the market and say, "Oh, well, I know next spring this is gonna happen. Or next summer that's gonna happen." You have no idea what's gonna happen.

Josh: No. And this, when we do this podcast we're jumping onto a lot of different topics. For an investor, timing is pretty important. You know what I mean? You gotta know when to buy and what to buy and how to buy and all those things, but for regular mom-and-pop homeowners, it's kinda like a scale. So you've got on one side of it you have the dollars and cents, making a good financial investment, that's one side of the scale. But the other one is, this is my life, what's gonna make our family enjoy this the most? Bedrooms and baths and square footage and location, and you know, having a home versus not having a home, and so this is the kind of the emotional component. And so whenever you're looking at a homeowner buying something, it's the scale that has an impact on which way you go and what decisions you make. So it's not always about money when it's your home, you know what I mean? It has this emotional component.

Josh: I'll give you a perfect example. My wife and I, in 2005, 2006, we felt the market was about to change. So we sold our primary residence and we actually sold off a lot of our investments, and we moved into a friend of mine's rental that was on the river. And our thought was "Hey, honey, let's just sit here, we'll let the market make some adjustments, and then once it's done doing that, we'll go back in and either build a home or buy a home." And so we did that, we moved into a friend's rental, and the market did what it did, we all know it started to go down. And we could have been wrong in that, but we just thought we were probably right.

Josh: And then what happened was, is that I was in there for like a year. Loving life, watching the market going down. I'm not participating in the market at this moment, so I'm realizing, "Hey, I'm gonna be able to go back in and buy all this stuff here, pennies on the dollar." And my wife comes to me and she says, "Hey Josh, I got a question for you, when do we get to get our new house?" "What are you talking about? The market's still going down, there's no reason to go. This is crazy, we're saving money right now by not doing anything at all." And my wife looks at me and she says, "Well, let me ask you a question. What is the happiness of your family worth to you?" And I was like, "Guess we're gonna go get a house." And so I decided to go build a house because I figured that was where the best value was at that moment, we're still actually in that house, but that was me looking at the scale and going, "Yeah, the numbers make sense to not do this, but my wife's got a good point. Happiness and the family is more important. So we're pulling the trigger."

Joey: I think we're talking about, when I heard you talk, was the difference between someone talking about their primary residence and somebody talking about using real estate as an investment vehicle.

Josh: Yeah.

Joey: You know what I mean? This is numbers. And this is... Don't try to time it if you want a bigger home. If you look at the real estate markets, like the stock market where it has these dips, but it's always climbing.

Josh: It's climbing.

Joey: So it's trying to time those dips.

Josh: If you're in a home and it goes down in value or you're in a home and it goes up in value, if you're in a home, you're gonna receive it either way, so if you're in this house and it's gonna go up in value over time, and the house you buy is gonna go up over time, where do you wanna spend your time? The ideal home while it's going up in value or this home? And the same thing is true unfortunately when it goes down. The only way out of that is if you remove yourself from the market all together and move into that rental situation that I just gave you.

Joey: But I use a car sales term, I wanna sell for retail and buy for wholesale.

Josh: Everybody does.

Joey: Come on. You know what I mean? You give me retail for mine, I'll give you wholesale for yours. Right?

Josh: And you can do that, but you have to be a pretty savvy investor because there's one thing that you can't be tied to, the outcome. Okay? Meaning that you can't fall in love with something if you're an investor, it has to stay on the black and white side of the equation, 'cause as soon as you bring the emotional component in, you stop making the right decisions on this, right?

Joey: Good call. S3: So if you're gonna move into a home, it's really hard to just see that as a black and white thing. Not that you can't do it, we've done it a few times early in our life where we bought a house fully, intentionally, didn't like it, but knew that we were just gonna fix it up and eventually sell it, move into the bigger home. So we can do that, but not everybody's doing that.

Joey: No.

Josh: You know, so you gotta make a decision and really gotta look at that scale, what's more important.

Joey: And so to shift to investors, so people that are thinking about should I release inventory I have? What are some options for them? 'Cause if you sell right now, what do you put it into, where you gonna put that money?

Josh: That's hard. Yeah, so what you can do is you can sell your property and you don't wanna pay the taxes, that's usually the biggest issue. If you've owned a rental for a while, you have the depreciation that you've probably taken off that property during that time that you have to recapture, and then you have either a short-term, if you have it less than a year or long-term, if you've had it more than year of capital gains. And capital gains is both at the federal level and at the state level. So folks, when they go to sell a rental property, if they don't exchange, there's probably going to be a significant taxable event that's going to take place. And so I'll give you an example: If you had a property, and let's just use round numbers, a property that's worth $200,000. And let's say I've owned it for 10 years, so I've depreciated it for 10 years. And let's say that I own it. You know, I bought it for a 100,000 now it's worth 200,000. Okay?

Joey: Okay.

Josh: So I've got about 100,000 of actual profit there too. When I go to sell that property, I get to deduct the fees for selling it. And then I get to, you know, take the acquisition cost. And then you add in depreciation that you've already taken. So I don't wanna complicate this conversation, but let's just say that you have a profit when that's all said and done, 75,000 of profit that now is taxable. Now I have my long term capital gain, depending on your tax brackets. That'll impact this a little bit, but let's just say for a round number it's 35% on 75 grand. Right? I don't know what the exact number is on that, but...

Joey: About 23,000.

Josh: Okay. Somewhere in there. Right. So let's just say you have maybe 50 grand left over now that I get to go invest when and I go sell this property. Right? Which, okay, it's something. And let's go, you put it in the market at 3% or 4% somewhere, I don't know, somewhere. So that's kind of what people could look at as an option. There's other options that are out there too though, where like you can go into, what's called like a DST. It's like a Delaware statutory trust. It's a situation where you take your sale and you exchange into this company. And then you avoid having to pay any capital gains at that time. And so now you have that full profit of a 100,000. That's still getting you maybe 3- 4% return. Does that make sense?

Joey: So what is the DST, does it hold other real estates? Is it real estate to real estate?

Josh: Yeah, they're like a fund, a big one, and you have to be a qualified investor for that, meaning that you have to have a net worth of a million dollars or more, and then also, or at least an income of 200,000 for an individual. I think it's like 300,000 if you're married or something. So it's something, you know, anybody on this would have to just check it out. But these are new things that are becoming available. These are instruments that are becoming available where you can actually sell a rental property. And now you can take the... Exchange it then into a DST. And these are companies that own large, large... That own large amounts of real estate. And then they, you know, they run the performance, it's publicly traded stuff. So it's not like, you know, you're not selling it to your cousin Vinny or anything like that.

Josh: These are legitimate companies and they have to show you performance and everything else. And then, you know, their returns are, you know, 3-4%. You get the appreciation side of it over time. And normally your exits anywhere from, you know, five years on the short end to maybe 10 years on the long end, depending on what you're doing. But the point in this conversation is, is that if I did that, if I exchanged, I get to keep that full 100,000 a profit working for me. If I were to not exchange well, then I might only have about 50,000 right? To go and invest to have working for me.

Joey: Exactly.

Josh: And that's the difference between those two. And then, you know, then there's the normal exchange, which is, you know, you gotta find another property and exchange into it.

Joey: Now both of those are probably like just tax-deferred. Right? Meaning you don't have to pay taxes now. So you're effectively getting a 0% interest loan from the government, 'cause they're like, okay, you owe us 25,000 taxes, but we're gonna wait, you know, wait. And so you just keep going with it, like you said, 10 years.

Josh: Yeah.

Joey: So they've... And you're earning 3-4% on the money that you would've had to have given the government.

Josh: Right.

Joey: So it's kinda like a zero-interest loan. I mean, when you it's... You know?

Josh: Yeah. But there is one caveat to it.

Joey: Okay. There's always a caveat, Josh.

Josh: It's true, let's say you're a married couple and we have that investment and I pass away, now I get to... Now that cost basis gets reset. And so it creates this kind of interesting situation where you get to avoid some of the taxes, because now that depreciation that you already took when it gets reset, the cost basis gets reset. You almost get to start the depreciation piece over again. So, I mean, I'm not the expert on this stuff. I don't want to claim to be. So anybody listening to this, go talk to a CPA about what I'm saying right now because they'll take you in the weeds much deeper than I want to. But it's, but yeah, there's some reasons why people continue to exchange up into bigger and bigger properties because what they're doing essentially is they're moving out that depreciation, they're increasing the amount of write-offs they get as a result of doing that. So there's a strategy behind it.

Joey: There was a couple of builders years ago, I remember when I first got into real estate and they were building homes and then they kept 1031 up and both of them independent of each other, 1031 into they built apartment complexes. And there's a lot of rules and intricacies here. But the idea was that they just kept deferring the taxes. You know, this is all legal, where they just kept rolling the money over and over and over until finally they rolled it into an entity that they said, "Well, I'll never sell that."

Josh: Right.

Joey: And effectively what had happened was instead of all those times paying taxes.

Josh: Yeah.

Joey: They got a 0% effective interest loan...

Josh: Yeah.

Joey: From the government to build really large units. And I think one of them did like five fourplexes 'cause there's... 'Cause what we're talking about is 1031 exchanges.

Josh: Yeah.

Joey: And then the DST is another option and there's, I think there's are some more options. You and I were talking about some.

Josh: Like tenants in common and stuff like that. Of which I'm not a huge fan of, because of the cash, you know, the capital call that you might have on it. And remember like tenants in common is another option, and those were very popular over the last 10, 15 years. But the problem with them is, is that let's say you have a group of like 5-7 people that are in this tenant in common. Right? You pretty much all have to agree on whatever it needs to be done. So let's say that the roof is failing and the choice is to patch it or replace it, right? Well, you gotta get on the same page on that. And so a lot of times tenant in common turn into these deferred maintenance nightmares.

Joey: Yeah.

Josh: Because you can't get anybody to agree to take care of the property the way it needs to be taken care of. And so it starts to go down in condition, therefore in value, and you know, at the end of the day, it's tough. You know, that's a big reason why my wife and I, we've never had tenants in common with anybody because we don't like to have somebody else dictating what we can and can't do with our property. But like those DSTs, you're signing off, I mean you might as well kind of have the idea that you're giving it away to a mutual fund, so to speak, 'cause you're not, you don't have any management over it. You have decision making over it.

Josh: They give you pro-forma based on what they think the returns will be on your investment, and then what the potential for appreciation is over time and you're done... That's it. And that's not for everybody either. And in exchange, you've gotta... You're under a time clock, right? So you exchange... It's gonna go fast, you're gonna have to sell your property, you got 45 days to identify, and you have a total of 180 days to close, so you gotta move forward with it so...

Joey: I think one of the big X factors in all of this right now is because I was just talking to a buddy of mine who has a... He was... There is a project in town that is an approved, I think apartment complex and the land, and he was talking about wanting to sell what he had and move into that project, but the problem was the ability to finish that project in a time that would meet those 1031, so normally... He might have been able to pull that off but with supply chains the way things are it's... You know what, we're sitting here... There's a lot of options. A lot of cloudiness.

Josh: Oh yeah, it's brutal man. I would never recommend trying to do construction and exchange again. I've done it before, but we didn't... It was in 2007 on Hempstead. My wife and I did a reverse exchange where we sold some buildings, we bought a raw piece of property and built two buildings on it in six months.

Joey: Impressive.

Josh: On a reverse exchange.

Joey: Impressive.

Josh: Well, I feel bad for the exchange company because he was the one that had to write the checks on all the draws. It turned into this logistical nightmare for the Exchange Company, I can't believe the work they did for us. It was incredible. We still refer to them to this day because I feel like I still owe them for all that work they did. They were just incredible. But that's... The time constraints that are involved in construction on exchanges is just... It's so many elements now that are out of your control, I would have never have done what I did actually, if I would have known what I was gonna have to go through to do it, I would never have done it again. It's scary.

Joey: And certainly not in today's market where supply chains are still fluctuating, things are still a little bit...

Josh: Yeah.

Joey: But the bottom line is, you have options.

Josh: You do.

Joey: There are plenty of options out there.

Josh: Yep, absolutely. So to sum it up, essentially, the Federal Reserve, did raise the interest rate by a quarter percent yesterday, corresponding effect was rates went up, and we're probably looking at rates right below 5% now, and it might go up higher than that. The Fed also though, did say that they expected to maybe raise rates again multiple times this year, so we're looking at a higher rate environment. The buyers that are affected that we talked about as rates go up purchasing power is affected, so we're gonna be seeing some of that play out, but in any case, for our listeners today, we're just trying to be consistent with giving you guys some good content and... Any other thoughts on that, Joey?

Joey: No, thank you so much, Josh. There's a lot going on and people have questions and hopefully, we were able to answer some of those questions. You were able to answer some of those questions for them. And thank you for that.

Josh: Yeah, thank you.

Posted in Podcasts
March 1, 2022

Shasta County Market Update - March 2022


Click Here to watch Josh's video blog for the month of March.


From the Desk Of Josh Barker

First and foremost, I hope that all of you are off to a great start to your month. Home sales have cooled slightly in February and inventory is showing signs of stabilizing and growing. This month we will dive into some of the hottest topics trending now. If you have any questions regarding this report feel free to respond to this email, or contact our office at 530-222-3800


Home Inventory

Home inventory in the month of February finished the month with an average of 493 homes for sale up 3% from last year. In addition, the number of listings coming to market in the month of February grew 7% compared to last year. The slow growth in home inventory has been anticipated as more home owners make the decision to sell their homes this year compared to last year and as home sales continue to cool off compared to the buying frenzy of last year's market.

Home Sales

Home sales in the month of February finished at 206 closings down an eye catching 21% compared to the 262 closings in February of last year. The decline in home sales was predicted as fewer pandemic related purchases such as work from home options and second home purchases cooled off. February marks the fifth consecutive month of year over year reductions in home closings. Most experts predict this trend to continue when compared to last year's number of home sales.

Median Sales Price

The median sales price for a home in Shasta County is currently resting at $369,500 for the month of February up over 13% compared to February of last year when the median sales rested at $325,000. The median sales price for a home is projected to rise as the number of homes for sales relative to demand remains stubbornly low. Current reports reveal that the decline in home inventory has stopped and is slowly beginning to grow. Many home buyers hope this trend continues.

Interest Rates

Mortgage interest rates have climbed significantly in recent months with the current rate averaging 4% for a 30 year fixed loan. As recently as November of 2021 a home buyer was averaging 2.9% for a 30 year fixed loan. For every 1% that the 30 year mortgage interest rate increases, a borrower's purchasing power is reduced by an average of 10%. The federal reserve has stated that they intend to raise rates this month in an effort to cool off the fast paced inflation in the economy. The Fed's actions are expected to translate into higher mortgage rates in the future.

Rental Market

The rental market in Shasta County continues to remain tight with rents climbing an average of 16% over the past year. The average 3 bedroom, 2 bath home, with a 2 car garage, is currently collecting an average rent of $1,800 per month according to The recent jump in rents is largely a reflection of the current housing shortage and will likely continue as builders and city leaders work to increase the housing supply in the long term.

Below are a collection of slides that correlate with many of the topics discussed in this mid-year review. If you have any additional questions regarding this market update or have additional real estate questions please feel free to respond to this email or contact our office at 530-222-3800






Learn more about Josh Barkers 5 proven steps to selling your home by visiting 

Learn more about Josh Barker's proven ideal investment formula by visiting

Check the average value for your home instantly by visiting


Make it a great March! 

Josh Barker

P.S. You can view all of our past real estate market updates by visiting

Posted in Josh's Blog
Feb. 18, 2022

Josh Barker Real Estate Podcast Episode #4

🏠💰Home Value Tool➔

Frequently Asked Questions

What are interest rates for homes right now?

Mortgage interest rates have been going up over the past several months. For example, December 2021 average 3% for a 30 year fixed mortgage and increased to an average of 4.25% by February 2022. A one percent increase in the mortgage interest over 30 years decreases a borrower's purchasing power by an average of 10%.

What causes interest rates to rise?

Mortgage interest rates are impacted by multiple factors. Two of the most common are the demand for purchasing mortgage backed securities and the interest rate set by the Federal Reserve.

What happens to house prices when inflation rises?

Inflation "The increased cost of goods or services" is largely created as a result of demand overwhelming the existing supply of goods or services. Raising interest rates is a measure taken by the federal reserve in an effort to reduce demand.

Is right now a good time to sell your home?

When selling your home, timing can have an impact on the price your home is sold for and how long it may take. Ideally, the best time to sell your home is when demand is high and you have a plan for what to do with the proceeds from the sale.


The transcription is auto-generated by a program and may not be accurate to the conversation. In order to ensure you get all the information from the video properly, you must watch the video.

Joey: It's February of 2022.

Josh: Yes, it is.

Joey: And like some big stuff is going on. We were looking at interest rates right before we started recording.

Josh: Yep.

Joey: And they jumped a little bit.

Josh: They did. Yep.

Joey: I mean, quite a bit.

Josh: Yeah, we were kinda waiting for that one, right?

Joey: I don't think we expected it to be quite that much though.

Josh: Well then... Yeah, I wouldn't say that fast, but the federal reserve last year, they already said that they were going to be tapering. Reducing the amount of mortgage-backed securities that they were purchasing. And knowing that they've announced they're gonna be raising interest rates this year. So, I think everybody kind of anticipated that the long-term interest rates for mortgages were just gonna go up, but last 90 days, it's jumped a lot. We had a client we talked to then early December, locked in around 2.8% on a mortgage, and now today, just before this podcast, I just checked, and it was like 4.5% for a 30-year mortgage.

Joey: And that isn't even the feds increasing the rate yet, that's simply them slowing down buying the mortgage back

Josh: Securities.

Joey: Securities.

Josh: That's right.

Joey: So we haven't got to the...

Josh: We haven't even got to the interest rate portion yet.

Joey: Yeah.

Josh: Yeah, the interest rate portion has a lot more to do with inflation because we just have the numbers that came out a few weeks ago. What was it? Was it 7.5% inflation I think is what the federal reserve announced, as what the inflation numbers were? Kinda sent the stock market in a little bit of a tizzy for a few days there.

Joey: Yeah, so... And I understand the interest rates is... The idea of increasing interest rates is to try to slow down inflation.

Josh: Yeah.

Joey: Right? And I don't know, that's a whole... Economics is one of those sciences that's like... It's just incredibly subjective.

Josh: It is.

Joey: It's not like chemistry where you're like, no, that's... "Water is H20".

Josh: Yeah.

Joey: Economics, they will argue all day...

Josh: Yep.

Joey: What does what to what?

Josh: Yep.

Joey: So the bottom line is that's a major headwind. Sticking with the vocabulary that we've used so far.

Josh: Sure.

Joey: That interest rates going up slows the market down.

Josh: Oh yeah, they'll... Definitely. I mean, that part of that spy design right? So you've got two different things working. I mean, this podcast is more around real estate, but in reality, the federal reserve isn't just looking at real estate, it's looking at the entire economy and saying, "Okay. Well, the numbers are pretty bad". The inflationary rate is right now at 7.5%, so they have a choice to make, right? So you've got demand that's exceeding supply and supply... The big reason why supply isn't where it needs to be is that you have the supply chain disruptions, which we're pretty explainable with COVID the way it was. But also because they can't catch up. Then the debt man right now is over-running supply, you're seeing inflationary prices across the board. Fed has to make a decision, it's like, "Well, do we raise rates and reduce demand, which could put us in recession, right? Or do we let this economy continue to burn pretty hot?" And I mean if... I'm not a betting man, but if I had to bet, I would bet they're gonna let this economy continue to burn pretty hot. I think they... They'll either raise rates a little bit, I'm sure. But I think ideally, if they had the choice between some inflation in the market, that's higher than historic norms or a recession, 'cause that's kind of the two choices you have as the Fed. I think they're gonna let it burn a little bit. I think they are gonna let it run hot.

Joey: So with inflation going up and interest rates... Interest rates, obviously, they are gonna go up again.

Josh: Yeah.

Joey: Because they have to. They have to... They said they're gonna raise the rate.

Josh: Yeah.

Joey: What does that have to do with the Redding real estate market? What effect is that gonna have? Like sellers and...

Josh: Sure. Well, for our listeners on this, I think the one thing to realize is that for every 1% that the mortgage interest rate increases, it has an impact on purchasing power by up to 10%. And so there's some real impact around buyers' ability to purchase the same homes as rates go up. So let's say you're qualified for a home in a particular neighborhood right now, and let's say that the average neighborhood price is 350, right? Well, if the rate goes up 1%, well, you may not be able to buy in that neighborhood anymore. You might be looking to buy in a neighborhood that's around 275 or 300 or something. So that's the actual real cost of interest rates going up for people, because most people buy homes based on what they can afford for a monthly payment. And so as rates go up, the loan amount they qualify for goes down, and it has an impact on the type of home that they get to purchase. And that's... If you're trying to bring this into a practical conversation or in real estate, that's where the impact is. Because people typically, they have an amount that they have budgeted for the mortgage payment, and that amount is not gonna change based on rates. What's gonna change is what they can buy without a payment. You know what I'm saying?

Joey: Completely, I'm immediately thinking that's gonna affect the lower end of the market way more than the mid to higher end of the market.

Josh: Probably. Probably, because people on the lower end tend to be more at their max monthly payment when they go to purchase that first home. They figure out what the lender says, "Yep, you're qualified up to X", and they're gonna probably push it as close to that as they can because they want the very best home they can get in that price point. Whereas if you get into the upper end, it's more of a discretionary decision as to what size of home you want, what's the payment gonna be, because you're not usually running up against your max payment in the upper end, you usually have more reserves than that. So... Yeah, I agree with you. I think that it's gonna... It's gonna play out more on the up... On the lower end, it's gonna have a much more meaningful impact.

Joey: Now that's obviously a big headwind, but we've got some big tailwind still going in Redding...

Josh: We do.

Joey: For example, how many permits were pulled we were talking about...

Josh: Oh man.

Joey: In the last 12 months...

Josh: Yes. Yeah.

Joey: In the city of Redding...

Josh: Yep.

Joey: It's a tiny number.

Josh: It is. So there was a report that just came out recently, so in the city of Redding, there's roughly 2500 paper lots approved in the City of Redding. Those are lots that are ready to be developed, right? And last year we had roughly 200 permits pulled to build a new home in the City of Redding.

Joey: Less than 10% of them.

Josh: Yes.

Joey: Way less.

Josh: Oh man. And so you have this really low amount of new inventory coming to the market in the City of Redding. If you look at the actual home inventory right now for single-family residential homes right now, 300 and roughly 80 properties that are actually for sale right now in the entire Shasta County multiple listing service. And we have over...

Joey: That's pretty low.

Josh: Oh, it's super low. And we have over 200 selling each month, right? So probably this month, we don't have the numbers for February, 'cause we're in the middle of it, but let's say it's 260 or so homes, that are gonna be sold this month, that means that it is just over a one month supply of homes. And for our listeners, what that means is like if no other homes came up for sale, we only have 1.2 weeks or 1.1 weeks of inventory before there is no homes for sale. That's how tight it is. And so it's definitely still a seller's market. And now you have inflation, you have a really low supply of homes available for sale now. And you have even fewer homes coming as new inventory coming to the market. Everything's pointing on that tailwind. Everything's pointing towards appreciation still this year. And we'll probably see a lot of it in that first six months of the year.

Joey: I was gonna say those numbers that we talked about, the tailwinds, to me, seem like they would far exceed the headwinds. The headwinds are probably gonna affect other markets, big time, especially the larger cities in California. I think it might even drive more of this real speculation here. But it depends on how many people are moving here versus how many people living here are buying homes.

Josh: Yep, yep. So some of our demand is coming off the... Is backing off a little bit. So when you run our sales reports right now, you can see that our demand has started to slow down a little bit over the last six months. It's just been slowly coming back to a...

Joey: Well, they're still white-hot. I mean, it was so crazy last summer.

Josh: It was. And a lot of that was because with the pandemic, you had a lot of people that had the opportunity to work from home or decided to buy a second home and had some other options available to them. So they could move into where they wanted to. And Redding was a great place to go. And especially if you were in Sacramento or the city of San Francisco or Southern California, whatever, Redding kinda tends to be a good place to go. So we had some additional buyer demand. And a lot of those types of transactions have slowed way down now. And so now we're starting to see our actual monthly sales volumes drop compared to last year. And it's been like that for several months now, where it's been like that. But the inventory is still just so low that homes are still selling quickly. Buyer demand is still pretty strong relative to the supply. And that's why I still think if I was betting on anything, I'd say that I think the tailwinds of the market right now are gonna push and overcome the headwinds. And we'll see appreciation again this year.

Joey: Plus we're gonna see... Right now, if you are thinking about selling, some of the things that are poised for this year are a couple of more interest rate hikes. And so you can get ahead of those, sticking with us, get ahead of those headwinds.

Josh: Yeah.

Joey: It's like where there's a sailor. Just go, "No, you're not using this right." Bad analogies. But inventory is so low right now. And the interest... I just wonder how quickly those interest rates impact purchases. You were looking at that number this morning. So there's a bunch of people that were shopping, did they lock in their rate? Hopefully...

Josh: Well, I was gonna say, it can hit you immediately. So if you're one of those buyers that was right on the edge of qualifying for that loan amount, okay, based on what your monthly payment you could afford was. And you're right on that border. And now the rates go up, let's say a quarter point last night. And you didn't lock your loan, you might be in a situation where you can't buy that home today.

Joey: Oh, wow.

Josh: One of the things that we're doing right now is that as we're working with buyers, we're educating them on the fact that the feds are gonna likely raise rates again in March. And we're anticipating that there'll be a higher rate environment than what it is today. So be in really close contact with your lender. Be ready to lock that loan as soon as you and your lender agree that it's the right time to do it. And don't put yourself in a situation where you are qualified today and now you're not qualified tomorrow. And these are conversations that a lot of buyers should be having with their agents. They should be having them with their lenders. And when we know, everybody's telling us rates are moving up. And so if you're the guy that doesn't lock, or you're the girl that doesn't lock right now, that's a pretty big risk to take. So I'd be looking at it.

Joey: And as far as sellers go, if you wanted to sell it, there's nothing really you can do about it other than... This is a good time to enter the market. Because the inventory is still low. And the feds haven't increased the interest rate yet. So, okay, it's not as the interest rate isn't as good today as it was yesterday. But it could be a lot better than it is tomorrow. So it's kind of like... The idea is... I don't know what kind of seller would be like, "You know what? I'm just gonna sit this one out and wait it out." It's like, "I don't think that's how this is gonna work."

Josh: Well, it's tough. Right now, if you're a homeowner and you're thinking about when's the right time to sell, well, probably the best time to sell is before the buyer demand starts to decrease faster than the supply is coming up.

Joey: Yeah.

Josh: It's hard to time it.

Joey: Catch the tailwind.

Josh: Yeah, exactly. Be on the tailwind side of it, so that you have competing offers or have some better options in terms of who you sell your home to for down payments and quality of the loan and all that stuff. But what I would think is, is that what most of the experts are saying right now is they're projecting anywhere around five and a half or so appreciation nationally this year.

Joey: And that's nationally.

Josh: That's nationally. Yeah, so different markets are gonna perform differently. That's just the national average. So let's say the Redding average is between 5% and 8% between now and summer. Because that's typically when we do appreciate here. We appreciate coming out of February, March is when we start to appreciate it. And we start to plateau out somewhere around mid-summer in terms of appreciation for that cycle, kind of flattens out for a few months. And then it might get back a few points before the end of the year. And then it starts the cycle over again. That's just kind of the way our market's always been.

Joey: Well, the weather... I mean, the weather right now, anybody that's gonna visit Redding right now and think like, "Oh my goodness, this is... " Before like, "Hey, come back in August."

Josh: Yep. Oh yeah.

Joey: "It's gonna be a little bit warmer. The grass isn't gonna be quite as green."

Josh: I think it's a real good idea. I see people that move up to Idaho, they go up to Montana or whatever. And I've seen a few folks that have come back from that too. 'Cause after you do a winter there or two, you realize, well, the things you don't have to deal with living in California at least in the valley anyway, of California, that it's pretty convenient. When you have to factor in for shoveling out your driveway and the sidewalk to get to your front door as a part of your normal day, and you're not used to it, 'cause you're from California, you sometimes decide that's not the best thing for you.

Joey: Well, we had a couple of friends that left in the last year. And they went east. And we were talking to 'em. And they were both in different locations like it's just these snowstorms keep hitting.

Josh: Oh yeah.

Joey: Yeah, it's not...

Josh: Every place has its thing.

Joey: Something.

Josh: For us, we have hot summers, man.

Joey: Yeah.

Josh: I'd rather be in Montana in the summer. Now, that's for sure. But in the winter, I like California. I'll take it any day of the week.

Joey: So thinking about the market, thinking about these headwinds, are there any other headwinds coming down the pipe besides interest rates going up and them trying to control inflation?

Josh: Well, it's interesting. Because when I think about that, I go, "Well... " I'm always thinking about the demand and the supply piece. Because it always tends to be where the story is gonna go, right. And right now, there's a lot of contributing factors to why our supply is low. Part of it is the supply chain disruption. So we can't re-supply the market with new homes. But another part that we haven't talked about in this podcast recently, anyway, is that. You have these large hedge funds that have been buying up homes nationally, and that has really had an impact on the overall inventory. We had Zillow, they bought, what, 500,000 homes or something like that. It was an insane number.

Joey: I'm sure Hathaway is big into it.

Josh: They were buying... There were so many companies that were participating and buying them and some of them are buying them through that iBuyer program, and they had their intention of flipping 'em, for higher prices. But we had some of them like... I don't want to mention any names, but there's some hedge funds out there, that are actually buying these and actually holding them as rentals. And so they're removing these properties from the housing supply for buyers to choose from, and I think now it's beginning to show up in our numbers nationally, I think this is a big contributing factor to where the inventory has been eaten up so badly. You already had a pandemic, you already had a supply chain disruption, now add to that hedge funds buying up the existing inventory and that really starts to explain where this problem is.

Josh: If those companies at some point decide 'cause they're holding them now, if those companies at some point decide that the best investment is to liquidate them, that could quickly re-supply the market and have an impact on value. And it wouldn't necessarily be because they voluntarily did it, it could be because the Federal government goes in and says, Okay, well, we're gonna carve out a new tax implication for companies that do this particular activity, and that itself could have a change on who wants to hold inventory like that. So there's gonna be some interesting things we're all gonna learn about what happened in the last couple of years with inventory over the next year or two, I think there'll be some lessons that'll be learned from it, then there might be some policy that comes out of it too.

Joey: I was just thinking, I know the formula for why a company would come in and buy a thousand homes. The thoughts would be, okay, well, because they think the market's gonna appreciate at such a rate that and they have a physical asset versus stocks or something like that. And then, okay, what... And like you said, there's oh... Especially there's tax implications, maybe they do it because they're like, no, we're gonna actually have rentals, this is gonna be... It's not just the appreciation, but also like the equivalent of dividends. We're gonna collect rent. So I'm thinking, well, what is the motivation then for them to start letting go of this inventory other than the government coming in and changing tax...

Josh: Well, you'd have a couple of things. You've got... If you feel like you're at the end of an appreciation cycle and now it's time to take the profits from that investment, that might be a reason to start liquidating some of those. If you wanted to diversify that portfolio beyond what it is now, then maybe you would liquidate a percentage of those and reallocate that investment somewhere else. So there's a lot of different reasons why they could do it, I just... What it concerns me is that at any time one particular entity has a whole lot of inventory at their discretion to dump to the market, that's something that everybody should be paying attention to.

Joey: Do you have any numbers? Do those entities exist, so to speak, in Redding, are they... Is there... Do we have any numbers that show that kind of stuff? Is this an LA thing...

Josh: I would say other places in California. Yeah, so for our listeners that are in Redding going, how much of that's done here? No, nothing and nothing in comparison to the areas that I'm thinking about, but it does have an indirect impact on us, and that's because it actually, those investors that may have otherwise been buying in those areas because now they have appreciated, they might be looking at areas like Redding, so now you have people that might be looking at other places to invest because those other places that they were investing in aren't as profitable as they used to be. So it does move investment activity to different areas when you have participation from large companies that come in. So for example, if a hedge fund came into Sacramento and bought everything. Well, then if you wanted to buy something you wouldn't buy in Sacramento. You'd probably be on the outskirts of Sacramento. You know what I mean? And then if that supply then was resupplied back to Sacramento, well, then everybody starts coming back. So it's just... You just see a large manipulation in home inventory being impacted by these hedge fund companies that are coming in. It's concerning for me, for sure, but who am I? But I look at it and I go, whew, that's something that we all have to watch going forward, 'cause it could happen here. So what's happening somewhere else could certainly come to Redding.

Joey: What I was thinking about when you were talking, I was thinking about the two movies, one Margin Call, and The Big Short, both movies, I think one was a play and the other was a book based on mortgage-backed securities and how they just over-extended themselves. Now, we've talked about that before on the show. Just talked about the factors that are driving now are not really the same factors at all. There's a couple of things are going on, but back then you had people that were non-owner occupied, it took up a huge percentage versus now. And so these were people that were super extended with mortgage on top of mortgage on top of mortgage. I don't even hear anything like that, and in the past, you've said the numbers look like maybe 10% investors, which is actually a small number.

Josh: Very small number.

Joey: So, I'm just... I guess, my mind is like is something... Should we be concerned at all?

Josh: I don't think so. I don't think we need to be concerned about those hedge fund examples here. I think it plays into the bigger national narrative that we have low housing inventory across the entire country, and it wasn't helpful that hedge funds went in and started buying up these properties too, 'cause that just ate away at that inventory as well. Nationally, right now, we don't have enough homes and what I mean is that there's more people who would like to own a home or be able to live in a home than we have available. We don't have tons of new construction sitting up and down the state of California right now and certainly not in Redding, California, where there are all these new homes sitting there with nobody to buy them. That's not the case.

Joey: No, at all.

Josh: Every contractor I'm talking to you right now, they're a little nervous about the economy right now, and they're a little nervous about inflation, they're a little bit nervous about buyer demand, but everything's telling them that they're gonna be okay because the buyers right now are just lining up saying, we want another house, we need another house, and they're trying to get these builders to build. And so if you're a builder right now, you've got all the signals telling you currently, it's okay, go build some more houses, there's plenty of buyer demand. But a lot of them are also being thoughtful of the fact, "Hey, we've got some inflationary pressures and depending on how aggressive the Fed does get with interest rates, that could slow this whole thing down", but like I said at the beginning of our podcast today, anyway, I'm not a betting man, but if I had to bet, and if the Feds left with two choices of deal with some inflation that exceeds the norms, or put the country into a recession, I have a feeling they're gonna let this inflationary period continue to run. It may not be running at 7 1/2%, when they raise the rates a few times, maybe it levels off at 5%, or 6%, but I think they might rather have that for a little while, than have the recession that would be required to bring that demand back down.

Joey: 'Cause... I don't know if you know the answer to this, but I think they say a healthy inflation runs like 2 1/2%, or something like that?

Josh: Yeah, but I mean, that's still pretty... I mean, yes, that's correct.

Joey: Isn't what they say?

Josh: Yep, that's my understanding of it too.

Joey: And then, would do you think housing appreciation should track that, and maybe even be exceeded by it a little bit?

Josh: It's the best way to be. Oh, it's usually... I mean, if you can have housing around 2%-3%, which never lasts for very long, but if you could average that, it'd be wonderful because in theory, it's tracking with inflation for wages, and things like that, and you don't wanna be volatile in the housing market because this is homeowners, they need to have the flexibility. You start manipulating the housing market, and people stop buying. [chuckle] And if they stop buying, well, then you don't have that investment infrastructure that the country really gets to enjoy, because so many of our citizens in our country own homes. Well, that's a built-in security for the country, really. And so you don't wanna see that get disrupted like that, because then you could see neighborhoods, and cities literally just get changed overnight, based on policy, so... But I think that if we look at what inflation is now, the good news is that the supply chains at some point... Let's say in the next 24 months supply chain start to catch up. If we're running at 5%, or 6% inflation after the Fed makes a few moves on the interest rate, and we're still running kinda hot on inflation, but then all of a sudden the supply chain starts catching up, well, now all of the products that are available are meeting the demand, and we'll start to see inflation start to cool off. I think that's an easier solution than pushing us into recession, then having to print money to get us out of it.

Joey: I can give a perfect example of this. I don't know if I talked about this on a previous one, but I have a friend who has a roofing company, and about a year and a half ago, plywood OSB, whatever you wanna call it, the four-foot by eight-foot sheets, it was running around $35.

Josh: Oh, man.

Joey: And then it went up to like $120, $130 within a short period of time, like six months, and then fast forward three months later, it's back down to like $35, and I think it's like 40 something, but it was... The supply chain got disrupted.

Josh: Yeah. Lumber just went up again just recently, so it's just... It's manipulated right now. You've got a lot of participation, and it's gonna be interesting to see where this goes in the future.

Joey: I am shocked at how delicate the national level market can be. About a year ago, I heard... I can't remember the gentleman's name. He's one of these famous economist investors. He's... You would know him. But he was talking about why the housing market was gonna appreciate so much, and he was talking about how after 2008 we so over-corrected by not building...

Josh: Yes.

Joey: That there was this massive glut of people that need to buy a home, back to what you said a little bit ago, and I was like, "What?" And it hit so hard. I mean, it hit... He called it, and said it's gonna continue for a while, and whether... And that's all he's really saying, is you have this massive tailwind of supply will not meet... Demand will far exceed supply, right?

Josh: Yep. Totally agree.

Joey: And then on top of that, you have a supply chain that gets disrupted, so you can't even try to replenish supply fast enough. So all of those factors feel like, "Yeah, don't worry, interest rates are gonna go up, and that's you're not gonna be able to afford as much," but if you are worried that the market's gonna come way back down, there's just no inventory.

Josh: There's just not enough inventory. Yeah. That's where I kinda feel like that's the safety factor, or the safety net in this whole thing, is that the inventory right now has been so depleted, it's gonna take so much time to rebuild that inventory, relative to the demand we currently have. That to see this massive crash, or anything like that, it's just extremely unlikely right now. There's just no signs out there for it.

Joey: How long do you think it would take for signs like that to... I don't know, these are some...

Josh: Well, I think you'd have to have risky loans. Negative amortization loans, balloon payments, people that don't qualify for homes buying homes, I mean, a lot of the stuff we saw in 2006, '7, '8, '9, and '10, alright? All of that was based on really bad mortgage practice, where today, people are buying up 15-year, and 30-year fixed loans, and if they can afford the home today, in theory, if they don't lose their job, they can afford the home tomorrow, so we have some really stable real estate markets as well, even though they feel higher than they were a few years ago in terms of price, because of the supply chain, because of the inventory, because of the demand, because of our population growth, I still think we're probably even slightly undervalued when you reflect all of that.

Joey: When you guys do your market overview, when someone says, "Hey, I want to sell my house, how much should I get for my house... Do you take in those factors, those economic factors? Is it just sales, compared to inventory, or do you use those kinds of factors to come up with the ultimate price to hit the market?

Josh: Oh, no, we factor all of it, man. I mean, it's you gotta look at the national market, what's it doing, interest rates, availability of financing, then you look at the county, what price range are performing, how long... What's the average days on market, what's the buyer demand look like? And then you zoom in to the neighborhood that you're in, and the homes you're competing against, and it's that holistic approach that really gets the value, so... But any case, man, I know we're running up on a hard time, but... Anything else?

Joey: No, I'm... Thank you. What I heard was although interest rates are up, very optimistic on the market, very, very low inventory. If you're thinking about selling, now is a great time to hit the market, and get that spring rush, 'cause we are gonna get an influx of people coming up to Redding when the weather... When the grass, the soccer grass is nice and all that, so...

Josh: It's coming. That's right.

Joey: Thank you, Josh. I appreciate your time, man.

Josh: No, thank you too. I appreciate it.

Posted in Podcasts
Feb. 1, 2022

Shasta County Market Update - February 2022


Click Here to watch Josh's video blog for the month of February.


From the Desk Of Josh Barker

First and foremost, I hope that all of you are having a great start to your year! We need the rain but this Chamber of Commerce weather has been amazing. If you live out of town, come visit us soon! This month's report focuses on the hottest topics trending now in the local market. As always, if you have any additional questions please feel free to respond to this email or contact us here at the office at  530-222-3800. We are here to help!


Home Sales

Home sales in the month of January 2022 finished at 213 down 6% compared to 226 closings in the month of January last year. The continued deceleration in home sales is largely a result of fewer out of town purchases related to the pandemic. In the early stages of the pandemic "out of town'' buyers with work from home options, as well as second home purchases, were more common. The majority of these types of transactions have now taken place and home sales volumes are beginning to return to a new normal.

Active Inventory

Active home listings in the month of January finished at 499 listings for sale down 4% compared to the 521 listings available in January of last year. Surprisingly, current active inventory is higher than the 466 listings available for sale in March of last year. If this trend continues, we could expect to see higher home inventory in 2022 when compared to last year. This is welcomed news for many as the current options to purchase are limited.

Mortgage Rates

Mortgage interest rates took a hit last month when they climbed by an average of 0.5% from an average of 3.375% in early December to an average of 3.875% at the end of January. The initial increase in mortgage rates has largely been the result of the federal reserve reducing the amount of bond purchases also referred to as tapering. The federal reserve has stated they intend to continue to decelerate bond purchases significantly in the coming months. This policy action combined with the anticipated rate increases projected this year will likely send mortgage interest rates higher in the future.

Mortgage Forbearance

The number of homeowners in a mortgage forbearance due to the pandemic is improving dramatically with nearly 4 out of 5 homeowners participating in the program transitioning out of the program. Some have chosen to sell the property and recapture some equity while others have been able to reinstate an existing mortgage or refinance. All good signs for what could have been a much larger problem. Foreclosures are projected to increase slightly in the short term as non performing loans are worked through the system but the long term forecast is very promising.

Home Price Expectations

Home price expectations are top of mind for many home buyers and sellers in the local market. Inflation, potential interest rate hikes and supply chain disruptions are collectively creating uncertainty in the real estate market. However, the single largest contributing factor to home prices in 2022 will likely be the supply of homes for sale relative to demand. Pent up seller demand reaching the market combined with higher interest rates impacting purchasing power could certainly decelerate appreciation in the market. According to Zillow, last year's appreciation exceeded 18 percent locally while this year's projections are averaging 5.5% based on the average of major economists. Keep in mind that 0-3 months supply of homes for sale is considered a seller's market while 4-6 months supply is considered a neutral market. The current supply of homes for sale is equal to 1.65 months indicating the local market is currently classified as a seller's market.


Below are a collection of slides that correlate with many of the topics discussed in this mid-year review. If you have any additional questions regarding this market update or have additional real estate questions please feel free to respond to this email or contact our office at 530-222-3800





Learn more about Josh Barkers 5 proven steps to selling your home by visiting 

Learn more about Josh Barker's proven ideal investment formula by visiting

Check the average value for your home instantly by visiting


Make it a great February! 

Josh Barker

P.S. You can view all of our past real estate market updates by visiting

Posted in Josh's Blog
Jan. 17, 2022

Josh Barker Real Estate Podcast Episode #3

🏠💰Home Value Tool➔

Frequently Asked Questions

Is the housing market going to crash in 2022?

The housing market in the first quarter of 2022 appears stable. The headwind of potentially higher interest rates may be taken over slightly by the tailwinds of low inventory. Next, the amount of investor speculation in the Shasta County market is relatively low. Lastly, the dominant type of financing in the local market is 15 to 30 year fixed loans. It is unlikely that the real estate market will experience a crash in 2022.

Are financing rates going up?

Mortgage interest rates increased an average of 1/2 percent between December 15, 2021, and January 15, 2022. The federal reserve has reported that they intend to raise interest rates 3 times in 2022 which could translate into higher mortgage interest rates in 2022.

Is it worth fixing your home before selling it?

The majority of home sellers that chose to fix a home up before selling state that the number one improvements they plan to perform before selling are flooring and paint updates.


The transcription is auto-generated by a program and may not be accurate to the conversation. In order to ensure you get all the information from the video properly, you must watch the video.

Joey: So I'm here with Josh Barker again, again, right? Episode number three.

Josh: Yeah.

Joey: We were just off-camera, we were talking about the market and some of the headwinds and tailwinds that are in play right now in January of 2022...

Josh: Yeah.

Joey: And what kind of effect that's gonna have over the next few months? Because real estate is very seasonal...

Josh: It is.

Joey: It always slows down in the wintertime, it picks up in the spring...

Josh: Yup.

Joey: But it's picking up a little faster than it normally does, right? You were telling me that it's a little faster than this time last year or the year before.

Josh: It is, yeah, we're getting more calls right now in January than we typically get in January in previous years. So, I think there's that pent-up seller demand that we had talked about before, where you had people.Obviously, because of the pandemic that decided to stay put. You had the eviction moratorium that was, you know, keeping the inventory down and even the foreclosure moratorium, and so, now you're starting to see people say, Okay, we're done, we've waited as long as we can wait, it's time to get moving on. And so, we're starting to see a pretty significant uptick in the number of appointments that we're going on, that people wanna sell their homes, yeah.

Joey: And there's a couple of factors that we were talking about that we thought, you know, people should know about sellers or potential sellers should know about, like number one is, the feds have said that they wanna raise interest rates three times in 2022, right?

Josh: Yeah. Yeah.

Joey: And as we learned in our first episode, that's a headwind.

Josh: Yup.

Joey: It's not an immediate headwind, meaning they raise interest rates on a Friday and Monday, the market comes down, but it is one of those things that it reduces the buyer's ability to how much they can spend.

Josh: Yup.

Joey: And so thus, it has an effect, the headwind on the seller price, right?

Josh: Yeah, you're right, absolutely.

Joey: Now, the big question would be, is how big of a headwind? You've said like a half a percent reduces, was it like 5%?

Josh: Yeah, for every 1%, the interest rate goes up, it could have an impact on purchasing power by about 10%. Yeah.

Joey: Okay, so that's one, but we do have quite a few people moving here. Redding is still very affordable when you put it on the scale of California.

Josh: Sure.

Joey: So you've got these headwinds and tailwinds hitting each other, and we're not sure how much they're gonna affect, but interest rates are a headwind, so wanting to go to market before interest rates increase, I mean, theoretically that would...

Josh: Yeah.

Joey: Garner you more for your home, right?

Josh: Yeah, and for this video for some of our listeners right now, one of the more significant things that's been happening over the last month since our last podcast was interest rates did jump. So, pretty much starting around December 14th, 15th, we started to see rates start to creep up. And a big part of that is the interest rates haven't even gone up yet from the Federal Reserve standpoint, they haven't raised those yet, but the reason why is because the Federal Reserve at the same time that they're saying they're gonna raise interest rates, they've also said they wanna reduce the purchases of bonds. And so, by them tapering and purchasing fewer bonds, that's actually moving the interest rate up now, so just that activity alone has moved the interest rate up one-half a percent on average over the last 30 days.

Josh: And so for those who were already in the purchasing process, they probably realized real quick from their lenders, hopefully, that they needed to lock their loans, but also for refinances, if you didn't lock your loan, you're probably not as happy with that rate today, 'cause the rates did move up. Now, all of that's happened prior to the interest rates that are supposed to go up, the first one will likely be in March. Federal Reserve said, they wanna raise the rates three times in 2022. I just read another report the other day that said maybe four times. They're still trying to deal with that massive inflation, that the whole economy is dealing with. So the first rate increase would likely be in March, and then each quarter thereafter, you could expect that it's a strong consideration by the Fed. I think that first one in March is for sure. And so when they do it, it's every time they raise, it's usually about a quarter percent, which translates right into an increase of almost a quarter percent of the mortgage market too.

Joey: So, you don't know what's exactly how the market is gonna go, but the idea is that if you know a headwind is coming and you are thinking about selling, now might be a great time to reach out, find out, Hey, what is my home worth in the current market, and see if that sits well with you.

Josh: Yes. I mean, look at that and also 'cause we have clients that are thinking about doing some remodeling too before they actually come to market. And actually, that's more concerning for me than anything because in some cases, homes do need to be updated a little bit before they go to market, there's plenty of instances where I would say that's a good move, but there's a lot of instances where it's not. And right now what we know the interest rates are highly likely to be going up significantly in the short term if it took you 90 days or 120 days or 180 days to finish a remodel on the home, and your goal would be because it would help you get more money for your house, if the interest rate goes up half a percent during that time then whatever you thought you were gonna get in the benefit on the market, it might be eroded away by the rise of the interest rates.

Josh: And so, I think people need to slow down and just really have a professional come out, meet with them and really walk through that scenario and see what is the right thing to do? You know, if you're siting on a house right now with pink countertops, then yeah, maybe you're gonna have to do a little bit of an update, but if you got white tile, you might wanna let that go.

Joey: Yeah, because you know it's kind of a cliche, but the 90-day project becomes a 180-day project real quick.

Josh: Yeah.

Joey: And the 180 days is six months, now we're talking July, that's two potential Fed rate increases, 'cause you see it quarterly, so that's March and that would probably put us in June.

Josh: Yup.

Joey: So you just kinda have to think about that and it's not just the contractors, we're short on labor, but also supply chains. We just remodeled our house.

Josh: Yeah.

Joey: And we were shocked. It's just every little, Oh yeah, we don't have that title, or no, that paint's gonna be... And you know, has this rippling, this domino effect where you're trying to line up these contractors, you're trying to get materials, and it just doesn't. It's always kinda been that way. I think that's always been a thing, like, what contractor comes in under budget and ahead of schedule, it almost never happens.

Josh: Hard, yeah.

Joey: And no dig on them, we're in an unusual time. So, before you dump $30,000, $40,000, $50,000 grand into a home, 'cause you think you're gonna make so much more, you need to talk to a professional and say, hey, if I put $50,000 grand into this, would I guarantee to get more than $50,000 grand?

Josh: Yup.

Joey: And even then if it's... You put $50,000 grand in something to get $60,000 grand out, you're putting a lot of money in play for...

Josh: A lot of money in play. And it's a pretty big risk, right?

Joey: Yeah, big risk.

Josh: So, I think you're right. I think it's pretty wise, I think to slow down, and a lot of people think that you gotta get your home ready before you have the agent come out and I just don't think that would be wise right now. I think it would be better to have the agent come out and then evaluate what your options are, do we do an upgrade? Do we not do an upgrade? How soon do we bring it to the market? Understanding that there are some significant factors that might have an impact on the market going forward. I mean, I don't wanna paint a doom and gloom though, I mean, that the...

Joey: No, I don't think it is.

Josh: No, I don't either. Most of the reports that I'm reading right now are averaging around 4% and 5% appreciation this year, so you know, we still have a low inventory market that we're currently in, and so, it's highly likely that interest rate or that the... Even with interest rates going up the pricing of homes will still likely go up a little bit, just it's very unlikely it'll be like it was over the last 18 months.

Joey: Well, that's like the hottest 18 months the markets have ever seen, I mean, that's kinda crazy.

Josh: Yeah, yeah, definitely one of the hottest.

Joey: Yeah.

Josh: So, something to be just I would just slow down and have somebody come out, take a look at it, get a good feel for what your options are, do what you have to do, but try to avoid doing anything that might be discretionary in nature.

Joey: Yeah, and one of the big X factors is how many people are gonna move to Redding? 'Cause, that's driving a lot of the purchases. Like you said before, we don't have a high investor. When the market wasn't good in the early 2000s, it was because there was this large percentage of homeowners who were investors.

Josh: Yup.

Joey: Secondary and tertiary homes.

Josh: Yup.

Joey: Now, we're not seeing that. I think you said it was around 10%, which is very small.

Josh: Yeah, yeah, and it's a tough number to track too, right? So, all the lenders that I talk to, that do a lot of the origination for obviously for the financing up here, and a lot of the brokers that I speak with on a regular basis, I mean, we're pretty much all on the same page, that it's about 10% or less of all purchases in the county right now, or what we call investor, meaning non-owner-occupied kind of investments. So, to your question initially of that, what does demand looks like? It's not gonna be what it was. I mean, 18 months ago, when the pandemic first hit, you had a whole lot of people that were disrupted, so they could work from home, they were looking for other places to maybe live, because they could live anywhere and work from any location, and so, we started attracting some people from Sacramento, the Bay Area and Southern California, and I think that was a great thing obviously for us, but it probably gave us a little bit more additional demand than we may have otherwise had, obviously.

Josh: I do think it's helped us though, because I think we've become more popular and a little bit more known to the rest of the state, so even though our volume of people moving in from out of the area might go down a little bit here in the next year compared to 18 months ago, or over the last 18 months, I still think it'll be higher than it would have been if it had not been a pandemic. You know what that means? 'Cause, we're becoming known now. I mean, I would say that in a lot of circles, Redding is being brought up now.

Joey: And going back to that whole headwind, tailwind, that's a huge tailwind. People moving into the area, that's...

Josh: Low inventory relative to demand is definitely a tailwind.

Joey: Yeah.

Josh: Right? So you've got the headwind of interest rates, right? Rates going up is a headwind that we have to overcome. You have the tailwind of low inventory relative to demand that's pushing pricing up, and where those two intersect and reconcile is where you're either gonna have an appreciation or market flatter going down, and I would say the tailwind is still a little stronger than the headwind, but the headwind is getting stronger.

Joey: I would think that the other big questionable headwind/tailwind is you talked about the forbearance market, it's still very, very cloudy on how that's gonna get handled because there were quite a few people that were not paying their mortgage, they were getting the moratorium, and we're not really seeing how quickly their...

Josh: Process to enter into the market.

Joey: Yeah. Are they getting refinanced through their banks, are they saying, You know what, I bought this house five years ago, I'm sitting on a ton of equity in five years, we still don't know what that's gonna look like, and that's gonna be potentially either a large tailwind, meaning, nope, the forbearance is very, very low or it's gonna be a headwind, meaning, suddenly there's a lot of inventory that hits the market all at once.

Josh: Yeah, I don't know if it's gonna hit all at once. I think it's gonna spread out. I mean, to get to the point on that. I think we definitely have some distressed properties that are in the market still that a lot of it was created because of the pandemic. You had the disruption in employment and the ability to pay, and maybe even for some landlords, it was a disruption in their cash flow, and their rentals and 'cause their tenants weren't paying and they, therefore, weren't able to make their payments on their mortgages. So, either they were gonna have a loan modification provided by their bank or refinanced based on a couple of options that may have been available. Or they're gonna sell the property in one manner or another. So, right now, you can assume that a lot of those folks do have equity, even if it's thin equity, they probably still have some equity.

Josh: So I think you could see those properties if they were to get ahead of it and do it quickly, they could expect to see those homes sell on the market as a normal sale, which would be great. If you're behind on your mortgage and you can't find a way to modify the loan or refinance it, then gosh, consider selling it and putting a little bit of cash in your pocket.

Joey: Versus losing it.

Josh: Versus losing it. Absolutely. And so, I think we're gonna see some of that. I don't know if it's gonna all come at the exact same time, but right now we're sitting in just under 600 homes for sale, and a healthy market's like about 1000 to 1100 based on current sales volume, so we need a lot of inventory this spring. And I'm hopeful that that happens, but right now it appears that we're gonna see more inventory this year than we did last year, for sure.

Joey: Are there any other factors right now that sellers should be... The variables that they should be weighing. We talked about interest rates coming, a potential increase in inventory, do a forbearance market, should you be putting money in the home? Are you really gonna get that money back? Are you gonna hit the market? The two interest rates. Is there another big factor that a seller should be thinking about right now?

Josh: Well, the spring rush is what comes to mind. So, normally we see our inventories really start to grow significantly by late March, early April, you start to see the inventory grow, and we call that our spring rush. And if a client or a seller has the ability to get to the market prior to the spring rush, what they could possibly enjoy is less competition and a buyer who's trying with some urgency to get into a home before the interest rates get pushed up too much. And so, there's some opportunity, I think that sits there for those who can come to the market a little bit earlier. But timing-wise, it's all relative too though, so if you're buying and selling in the same market, let's say the market gets a little softer in June, okay? If you're selling your home in a little softer market, but you're also buying in the same market, but you're buying is a little softer as well, so it kinda works its way out. But if you wanted to sell and liquidate an asset or move and if you do it before the spring rush, I think you're probably gonna enjoy a little bit of a shorter market time. Maybe a little bit higher buyer demand, because rates are being pushed and buyers wanna take advantage of the lower rate while they can. So I think there's an opportunity in that.

Joey: Is there anything that you would think... 'Cause you talked about in 2022, the numbers look like maybe about a 4% to 5%, and that's what we should see as far as to increase in value across the board.

Josh: Yeah, they did, like the Mortgage Bankers Association, National Association of Realtors. There's like a collection of different... It's like five or six companies that all came and gave their opinion on what the appreciation was gonna look like this year, in the average between 4% and 6%, that was the total range that it was.

Joey: For the entire market, and that's the.

Josh: Yeah.

Joey: People gotta understand that there are segments within the market.

Josh: There is.

Joey: And so there's gonna be segments that probably see a much greater than that, and there might even be segments that are either stale or there's a glut of inventory or something, or there's just not a lot of buyers. Because one of the things I think is when I looked at the segments that sold, definitely the middle range climbs at a much higher than the high range.

Josh: It does.

Joey: Because there's such a limited number of buyers.

Josh: That's right.

Joey: And so if you are sitting at the higher end of the range, you may not... I don't think you felt that would be a good report, maybe for one of our future podcasts, if I don't know if we could get that, but kinda show like appreciation by segments.

Josh: Yeah, we could probably take a sub-division and say, Okay, in this subdivision it's improved. The average selling prices went from here to here over the last 12 months, and then take a higher price subdivision and compare from this year over the last year. You could identify that. We've done it a few times actually. We used to do it like with Coral Ridge, which is a subdivision here in town, and it's a lower price point, and then we put it up against White Hawk, which is a higher price point.

Joey: Oh, yeah. One of the highest.

Josh: And one of the higher ones in the market. Yeah. And so when we compared the two, we saw that Coral Ridge did appreciate at a much more significant number than White Hawk did. And to your point, it was because the buyer demand and the lower price range was higher and it pushed appreciation in that market faster. And I think we're gonna see something like that again too, where who's gonna supply the market first is really what's interesting in this, right? So, as we go on these appointments right now, we're trying to figure out, okay, who's coming to the market at a higher number? Is it the lower end that's coming in faster, or is it the upper end that's coming in faster?

Josh: And we haven't seen a ton of upper end yet. And I think that's coming, I think they're gonna be here in the spring. I think that's when you're gonna start to see the higher-end inventory really start to hit the market by country properties, for example. Those tend to sell for a little bit of a higher price, but they all start coming to the market as soon as those trees start to bloom. As soon as there's a little bit of green on those trees, that's when you start to see a country property come to the market at a high volume, and it's because it's with yellow flowers and trees are budding out and then everything looks great and country property starts to hit the market, and that has a saturation effect on what's available to purchase.

Joey: And I wonder what the ratio of... 'Cause we talked about. You talked about the ideal inventory being 1000 to 1100. I wonder what that is per segment too because you don't see a lot of home selling in that higher... So you kinda wanna beat the I guess, it depends on when the buyer hits the market too.

Josh: Well, it's this year too, I mean, last 18 months, we saw more homes sell in the upper end than we've seen in a long time, a really long time. And the question is, can we do it again in 2022? Are we gonna see some of those upper-end properties selling at the same volume that they did last year? And I suspect probably not, not at the same volume, but there will still be some more sales than I think we were experiencing three or four years ago. You know, again, Redding's beginning to become a little bit more popular, things are... Gosh, I'm just blown away by some of the positive conversations that I'm hearing from friends of mine that live in the Bay Area in Southern California, and when they talk about Redding, it's a pretty optimistic vibe right now.

Joey: Well, we've talked about a few things, there's several projects that are going on, construction that's going on. The airport is expanding.

Josh: Yup.

Joey: It's got three airlines, they keep adding flights, direct flights. And talking to Megan of Shasta EDC, she was talking about how they would like to add more and more flights...

Josh: Right.

Joey: Major different markets, Denver, Portland, Phoenix, all these different things, and it just depends on volume...

Josh: Yeah, you need demand too, right?

Joey: Yeah.

Josh: You gotta have people who wanna fly there.

Joey: Exactly. So there's a lot of factors that... That's... I've been bullish on Redding for a while now...

Josh: Yeah.

Joey: It's been several years.

Josh: Yeah.

Joey: And just seeing the rest of the state and seeing how congested they are. I just went to Sacramento a couple of weeks ago, and was just blown away...

Josh: Oh, yeah.

Joey: Like, how congested Roseville and Citrus Heights and Rockland... You know, I used to think of those areas and they were the out... They are... It's bumper to bumper. And I think why would... It's just... To live so tight.

Josh: If you don't have to drive into work every day, you know, at a facility somewhere, which obviously would have made a big impact on where you could live. If you have flexibility though, oh, man, I think Redding's got some really good appealing things to it. And you and I know what those are, but like the trail systems are incredible and they're focused on improving the trail systems. I'm watching people walking around everywhere. We've had like Chamber of Commerce fly there the last week and a half where it's just been like, "You gotta be kidding me. This is January and I'm enjoying these days that we're getting to enjoy." It's fantastic.

Joey: On a side note, my aunt lives in... I was raised in Alaska. My aunt lives in Palmer, Alaska, and a couple of weeks ago she called and it was, I think, five degrees and they were having hurricane-level winds that they'd never had.

Josh: Right.

Joey: And she was just complaining to me. And I said, "Oh, I know exactly how you feel. I went walking today, it was 54, but it felt like 52. It really did. I had to put a scarf on and she hung up. But my wife and I went walking this weekend, it was like these harsh Redding winters, they're just...

Josh: Oh, I know. Yeah.

Joey: I think it broke 70... Really truly broke 70 degrees in January, so this weather will bring people as well.

Josh: Oh, that's great man, yeah.

Joey: So the bottom line is, there are several factors every year, there's constantly headwinds and tailwinds. We know for sure some of the headwinds coming and a potential increase in forbearance inventory on interest rates going up at least once, and they've chimed three times. So we know those headwinds are coming. The big question mark is, the tailwinds, how strong will they be? Will they overcome the headwinds? If so, by how much? And when you should bring your property to market?

Josh: Yup.

Joey: You know? And so, the bottom line is, get involved with an expert, call somebody on Josh Barker real estate on the team. Have them come out, assess whether or not you should be putting $50,000 grand into that? Like, are you really gonna get that money back?

Josh: Yeah.

Joey: And are you going to get to market in time to maybe get that spring... What was the term you used?

Josh: Spring rush.

Joey: The spring rush.

Josh: Yeah.

Joey: So all that's coming and it's speculation, but that's how that works.

Josh: Yeah, it is, and I think you're exactly right. I would just echo that our inventories are still hovering around that 600. For those of you who are shopping for a home right now just be encouraged, there's gonna be some more opportunities, I think, going into the spring, so that's a good thing. But as that inventory grows, it's gonna have a little bit more pressure on homeowners. Market times are gonna go a little longer, the amount of buyer demand might go down a little bit. Keep in mind that interest rates right now, they've already bumped to half a percent in the last 30 days. So if you weren't paying attention, you may have missed that. And that's before the Federal Reserve starts raising rates. Like we said, it's probably gonna start raising in March and we're going each quarter thereafter if they stay with the plan they've announced, subject to change, and if you're thinking about doing a remodel, like you said, yeah, be careful. It could take longer and be more money than you thought. So, really evaluate what can you get today, and is that sufficient to reach the goals you have versus taking this risk of putting a massive amount of improvements into your home, only to find out that because of the market dynamics changing, you didn't gain much from it. So, those are the things I think we just gotta watch out for.

Joey: Well, if you think about this, this is kinda like a mindset of, "Okay, can you time the market perfectly?" Right? So if you time the market perfectly, congratulations, you're awesome. Okay, you did. Then you have to look if you do not time it perfectly one direction versus the other direction, if you say, "Well, I sold my house. If I would have just waited a few more months I would have got a few thousand versus I waited too long and there was. The interest rates went up, there was a glut of inventory and suddenly I... " You know what I mean? You didn't lose money, you didn't have it on the front, but you did lose money that you didn't get on the other side.

Josh: Yeah. No, and we're obviously probably in the ninth inning for significant appreciation in this cycle. I don't think anybody's really arguing with that, I mean we could still see some appreciation because our inventories are still low. And until we start to re-supply that existing inventory or the replenished inventory to a meaningful level, we're probably not gonna see too much of a negative in terms of appreciation. But it's just not the thing to echo would be, it's not gonna be a significant loss over the last 18 months. If that's what your expectation of real estate is, maybe let down this year.

Joey: Do you... I hate to hit you with a question out of left field here, but do you have any idea on how long homes are sitting in inventory now versus maybe when they were at the height of the market?

Josh: Yeah, we were sitting right around 98 days from start to finish. And then that's a 45-day Escrow, so it's just over a 45-day market period on average.

Joey: Which is not that long.

Josh: It's not that long.

Joey: It goes fast.

Josh: It is, yeah. Over the last 20 years, we remember when it was like 180 days on average before homes sold, it was brutal. But homes that are priced accurately out the gate, in price ranges where people typically shop, you could expect them to sell in as early as two weeks, in some cases with competing offers. So, still a great market to sell in. I certainly don't wanna downplay that.

Joey: I think that'd be great next time we meet, if we can show some numbers on the segments, how fast a segment moves, what kind of appreciation a segment saw, I think that will clear things up. Because I think a lot of people see the market as the market, right?

Josh: Right.

Joey: Everything went up 10%.

Josh: Some percent. Yeah, and it's not.

Joey: And it always takes 90 days and you go, if the higher end probably sits a little bit longer than the lower end, and it didn't appreciate percentage-wise as much as the lower end. And so that has a big burn. So if you're sitting at the higher end now might be a time to get a professional involved and find out so that you can get those numbers and you can see what kind of... How long should you be on the inventory, how much inventory... Because inventory is your competition.

Josh: Yeah.

Joey: That's the other big thing is, there isn't a lot of competition at that space, but it's relevant or it's relative to how much or how many buyers there are.

Josh: Oh yeah. Well, it's supply and demand economics 101. It's... If you follow that principle you probably will be going in the right direction, you know, for sure. So, yeah.

Joey: So the bottom line is, give Josh and his team a call, they can come out assess, no obligation, let you know, get a professional's opinion on what you can and should do.

Josh: Absolutely, yeah, and I would totally recommend that. I mean, most people are gonna interview two or three agents, and I think it's wise to do that. Compare services, compare strategies, and make a decision at that point you think works best for you.

Joey: 'Cause it's not all the same.

Josh: It's not all the same.

Joey: The marketing plan really, really matters, right?

Josh: It does. It does.

Joey: The marketing plan should reflect what the market looks like, right? I know you do a lot of marketing outside of the area.

Josh: We do.

Joey: Because there's a lot of buyers coming from outside of the area. And so, the marketing plan should probably extend past the county line.

Josh: Absolutely. No, I totally agree with that.

Joey: Well, thank you for your time, Josh. Until next time.

Josh: Thank you.

Joey: If anybody has any questions, they can give you a call.

Josh: Sounds great, Joey, thank you.

Joey: Thank you, Josh.

Posted in Podcasts
Jan. 3, 2022

Shasta County Market Update - January 2022


Click Here to watch Josh's video blog for the month of January.


From the Desk Of Josh Barker

First and foremost we hope that all of you had an amazing holiday season. The year 2021 for Shasta County Real Estate served as a transformational year for home values. The supply of homes was stripped away in early months and buyer demand grew massively due to migration pattern shifts and abnormally low interest rates. The year 2022 real estate will experience some additional changes as interest rates will likely rise, home inventory grows and the number of home sales each month finds a new normal. If you have any questions, please do not hesitate to reach out by responding to this email or contact us at the office at 530-222-3800


Home Sales

Home sales in the month of December finished at 265 down 23% compared to 343 sold in the month of December of last year. The reduction in home sales is largely due to the slow down in out of area purchases and overall higher home prices putting pressure on many home buyers. 

Active Inventory

The number of homes active for sale has continued to grow, finishing the year at 588 up nearly 20% from the 465 homes available in March of 2021. Inventory has continued to grow slowly in recent months as home sales have started to cool off, the eviction moratorium expired and the foreclosure forbearance was lifted. 

Pent Up Seller Demand

Many home sellers understandably chose to hold off listing their homes during the first phases of the pandemic. This trend is beginning to change as a larger number of homeowners are reportedly making plans to sell their homes this year. 

Rising Interest Rates

Interest rates are projected to rise this year. The federal Reserve has stated that they intend to raise interest rates 3 separate times in 2022. This is largely due to the current high inflation and the unusually low rate environment that was created to stimulate the economy during the initial phases of the pandemic. For every 1% the interest rises, the purchasing power of a home buyer is diminished by nearly 10%. The anticipated rise in interest rates will likely have an impact on both affordability and the desire of existing homeowners to refinance. 

Sellers Market

Although home sales have slowed and inventory has grown, it continues to remain a sellers market. The absorption rate (number of homes sold relative to demand) is currently resting at 1.92 months supply. Traditionally 0-3 months supply of homes for sale is classified as a sellers market, 4-6 months supply is considered a neutral market and 6+ months supply is considered a buyers market. Currently, accurately priced homes can expect to sell in as little as 2 weeks or less and in some cases receive multiple offers. 

Home Buying Forecast

Traditionally the housing market in Shasta County tends to cool off during the holidays and begins to pick up speed in mid February as more homes come to market. Home Shoppers could expect to find the greatest number of home buying options this spring as the number of listings coming to market increases and country properties come to the market for sale. The largest challenge may be securing a home purchase before the anticipated interest rate increases.      


Below are a collection of slides that correlate with many of the topics discussed in this mid-year review. If you have any additional questions regarding this market update or have additional real estate questions please feel free to respond to this email or contact our office at 530-222-3800





Learn more about Josh Barkers 5 proven steps to selling your home by visiting 

Learn more about Josh Barker's proven ideal investment formula by visiting

Check the average value for your home instantly by visiting


Make it a great January! 

Josh Barker

P.S. You can view all of our past real estate market updates by visiting

Posted in Josh's Blog
Dec. 8, 2021

Josh Barker Real Estate Podcast Episode #2

🏠💰Home Value Tool➔

Frequently Asked Questions

Is it better to buy established or build?

There are Pros and Cons to both buildings or buying existing homes. Building a home can increase the chances of receiving exactly what you want with less maintenance in the first 10 years. However, the process can take longer than expected and the cost can be higher. Purchasing an existing home may cause you to compromise on a few items but can typically be accomplished faster and with less work involved. Many believe the best compromise is to purchase a new existing home from a reputable home builder.

What does a 7.5% cap rate mean?

Utilizing the capitalization rate value is a great method for evaluating an income property as it takes into account the property’s operational expenses as well as its current vacancy rate. In addition, the Cap Rate value can reveal whether the income property has the ability to pay off a mortgage or not. Cap Rate = Annual NOI / Market Value

How long does it really take to build a house?

The typical home build period in Shasta County can average 6-8 months. The process can be extended depending upon the amount of land development involved and engineering that may be required to facilitate the build.


The transcription is auto-generated by a program and may not be accurate to the conversation. In order to ensure you get all the information from the video properly, you must watch the video.

Joey: Joey Gartin here with Josh Barker. Again, laughing off-screen before rolling. It's bad stuff, man.

Josh: Keeping it real here. Yeah, keeping it real.

Joey: So last time we got together...

Josh: Yep.

Joey: The big topic was Zillow. The fact that Zillow had stopped their purchasing of homes, they were laying off a quarter of their employees, and what impact did that have. And you said, "Hey, not really because they weren't buying anything here."

Josh: Exactly.

Joey: So I kind of segued into, "Okay, well, how much inventory do we have? What does the market look like?" And one of the topics that arise in that is, we don't see a lot of new construction, or at least, I guess that's very subjective, I don't see a lot of new construction for inventory. Why is that?

Josh: Well, I think what you're probably getting to there is like there's no meaningful level of construction that makes everybody go, "Wow, everybody's building everywhere," and it's really a loaded question because it's really a question of, is it the chicken before the egg, or the egg before the chicken, kind of thing, where if we build a lot of new additional homes to add to the housing inventory, do we have enough people to buy those homes that the contractors can keep building them quickly? Or is it a situation where if we build them, the people will come? And that's what makes it really hard is that I think if you get too far ahead of yourself, there's this little doubles in the details kind of thing where absorption rate is really the guiding factor on how many homes are actually sold each month.

Josh: And if you add too many homes to the housing supply and you don't have enough people to buy them, they sit. And if you're a contractor building new homes, that's a major problem. We have seen over the last couple of years with the Carr Fire and the fire that was there in Paradise, that that really caused us to have this pretty big construction boom here, because the homes that were burnt down, that were rebuilt, that added to our construction here in the marketplace, but it also gave an opportunity for contractors to buy vacant lots too and build homes as well. So we're starting to see some construction. It's not all bad. It's definitely getting better.

Joey: It's starting to trickle in as far as like final production hitting the market.

Josh: Oh yeah, yeah, a lot of the Carr rebuilds have already been done, and the homeowners, most of those have already rebuilt at this point. Some of the vacant lots that were sitting out there in the inventory were homes that were burnt down, that was purchased by contractors, most of those have been rebuilt. There are still some vacancy lots out there, but a lot of it has been done, a majority of it has.

Joey: Do we have... My next thought is like our volume. How many contractors do we have? 'Cause I can only think of a couple of larger names of actual subdivision developers, right?

Josh: Yeah, yeah.

Joey: Versus individual contractors.

Josh: Yep. I'm not gonna go into the names of them because that would be disrespectful to anybody I didn't mention.

Joey: Yeah.

Josh: But there's four or five larger ones in town. We have a large national home builder that just came in and acquired a subdivision in West Redding that's gonna be building, in my understanding, in the spring, but as far as contractors, there's a lot. I don't even know how many. I mean it would be over 100, because a lot of them just do one home or maybe two homes a year, and they do it for that reason. They only wanna do one or two a year, so there's a lot of people who do that. And then there's some that are actually more productive and volume-minded, and those are the ones that we normally see running around on the market.

Joey: So in your opinion, do you think we have enough new construction in Shasta County? I don't even know what the inventory numbers would be for that, but it seems like there's almost nothing.

Josh: It feels that way, but there is. And do we have enough? Probably a little light but for good reason, right? So right now you've got some challenges with contractors. What they're dealing with right now is you have the labor shortage itself. So that plays into this. Can I find enough people to... So that if I go out, make promises and bids on different projects, can I fulfill those promises and bids with people? And then you have the wage piece of it, where some of these folks or the wages are... They're competing against each other a little bit, some contractors are taking labor from other contractors. And so, that's causing wages to go up because one way to lure them over is wage.

Joey: Sure.

Josh: And so, we're seeing some of that happening. We talked about in our last video about the disruption of the supply chain, and when it's harder to get access to those products that you need, home products like appliances and even paint. I was talking to my friend yesterday and he said that they ordered their paint and it took him like 60 days to get the paint.

Joey: Wow.

Josh: And I don't know if that has anything to do with the supply chain, maybe there was a warehouse that burnt down somewhere, I don't know, but I just know that there's major issues with supplies, and I think that's putting its own pressure on the ability to supply the market. And you know what, honestly, that might be a good thing because it's certainly keeping us from over-building in our market. We've heard of times in the past where other markets have overbuilt big time and it dragged the whole market down because they over-supplied. We haven't done that here.

Joey: We're going through a remodel right now, I mean like a major remodel, we almost doubled the size of our house, and at every point it seems like there's been a supply issue, just product... We have a really good general contractor, I guess I won't name him because we gotta name everybody, but he talked about how juggling the projects, but it was... He would make comments like, he was surprised how long... How many weeks out with just a simple product.

Josh: Yeah.

Joey: Like a toilet.

Josh: Yeah.

Joey: Something like... I think my wife picked a couple of sinks and I went down and picked them out, and then they called back and they said, "Oh yeah, we can have those about seven months." And she's like, "What?"

Josh: What's my other option?

Joey: Yeah, it's like "Show me sinks that we can have within the next few weeks." So we're a few weeks behind, but we also dealt with issues with permits and stuff like that. It just seemed like every step of the way was pushed back a little bit, and I really don't think it was the contractor, 'cause his communication level was so high, and so I just think you're right, there's a lot of supply chains that are disrupted. And we had an issue with the paint too, where they're just like, "Oh no, that one will be months out." So when she went to choose the paint, they gave her guidelines and she said, "Hey, what can I get now?" "Oh, okay, well, then only look at these." The same thing with appliances, and we even got a couple of furniture pieces, I was shocked. We went in there and they're like, "Oh yeah, you can have that in a year." What?

Josh: And put that at scale. Imagine you are a contractor that has to develop 40, 50 homes in a year. I mean, think about all those disruptions where you have a great supplier, but all of a sudden that supplier's supplier is now disrupted, and so now your go-to supplier is no longer reliable and it's just... It's a challenge.

Josh: I think if we go forward and look at the next two, three, four years, I do see there's an opportunity for us to see some construction here at a meaningful level. And I suspect that with the demand that we have coming from Sacramento, the Bay area in Southern California, that a lot of that is justified. I think we'll be able to fill it. I think there's a lot of homeowners that are currently living in homes now, that they're looking around going, "Well, I have to make a decision to remodel my home, or if we want, we can go pick a new one." And if there was enough of those new ones out there for them to choose from, they might make that choice instead, and so they buy a new home that now provides a resale home to the market as well. And it's a healthy, healthy thing when new construction is being added to the existing housing supply. If anything, it's gonna help us to stabilize the appreciation piece, because seeing appreciation jump as fast as it has is gonna price our children out of a market that we don't want them to leave.

Joey: That's one of the things I think about is that everyone is very excited... Well, if you're a home owner, you get very excited when rate...

Josh: Home appreciation.

Joey: Yeah, it goes up. Thank you. But as the younger home buyers, that's not... Or even people that are thinking about... I've heard a couple of people, like, "Well, I was thinking about selling. But then what do I buy?"

Josh: Yeah.

Joey: They wanna downsize...

Josh: Yeah.

Joey: They wanna... The kids have gone off to college and they're like, I kinda want a smaller home...

Josh: Yep.

Joey: But they're like, You sell, but there's really no inventory. I know there's inventory, but as far as like, numbers go, I think in your market update, you were talking about, our numbers are pretty much...

Josh: Just over 600 homes right now.

Joey: And last year it was just over...

Josh: Well, it was a little higher. About 700, but yeah, it's pretty similar. The whole last 12 months... 18 months since COVID has been... The inventory has been depleted.

Joey: Yeah, so is 600 a healthy inventory or...

Josh: No. No, not at all.

Joey: What do you think a healthy a inventory is?

Josh: Probably a 1000 to 1100. And we talk that right now based on sales volumes.

Joey: And we talked about how there could be, with the forbearance programs and things that are happening, that we might see some inventory hit the market, a large volume of homes hit the market, so.

Josh: Yeah, in one form or another, they might be just regular sales 'cause they have equity. Or they might be a short sell if they didn't have it, any equity, and worse case scenario, foreclosure. And there's gonna be a portion of those, that distressed property from our last video that's gonna be there. I don't think it's gonna have a massive drag on the market because, even if half of them came to the market, it's not large enough to be life-changing in terms of what prices will be. But if you were to describe this perfect housing price appreciation in the market, it would be really 2%, 3%. It would be a...

Joey: You track inflation?

Josh: Yeah, stay ahead of inflation just a little bit... Not today's inflation. [chuckle] But normal historical inflation, because if prices go up about 2% or 3% a year, after about three or four years, you could choose, if you wanted to, to sell your home. You'd have the equity necessary and probably have enough money to, We'll put something down on the next home. And that's what you really would want, is... 'Cause then people every three or four years have options if they choose to take them. You know what I mean?

Joey: Yeah.

Josh: That'd be perfect. You wouldn't wanna be too much faster than had an appreciation, because, like we talked about, you want your children to have the capacity to purchase a home and stay in the community that they grew up in, right? You want the person who provides professional services, and even just regular blue-collar services in a marketplace, you want them to be able to own a home as well, so they stay. You want everybody to have some level of an American dream, and it's based on merit, of course, but you still wanna provide some ability that when you do the right things and you work hard, you should be able to own a home. And that's what I love about Redding right now, is that we still, for the most part can do that.

Joey: It's still affordable.

Josh: It is. I don't mean to disregard anybody that's not able to afford a home, because we feel for that too, and we wanna see that gets solved. But the only way that's gonna get solved as if we add homes to the inventory.

Joey: So if someone was coming to you and said, "Hey, we're thinking about building versus buying." Do you point him in a certain direction?

Josh: Well, right now, building versus buying is interesting. I would suspect that... You can obviously build and for equal to what you can buy an existing home for. And the only proof of that is in the fact that builders right now can build a home and sell it on the market, right?

Joey: Got it.

Josh: So you can do it, but there is time involved. So if you're thinking today, I might wanna build a home. It's probably... If you even got started today, it's probably gonna be about a year out, and it could be as even as far as maybe a year and a half. And that's what most people doing all the things right the whole way through. And that's because of the things we talked about. The supply chain disruptions, the lack of labor, how long it takes to get things done. So first thing to think about is, how long will it take, right? The next thing you're gonna be looking at is, a lot acquisition. Are you buying in an existing neighborhood with a lot sitting there waiting for you? Or have the developers got the plans already ready for you? Or are you gonna go out and find a lot on your own? That takes time. And so it's totally doable, but if you haven't done it before, you're definitely gonna wanna pair up with a really reputable builder. They should be able to help you through the process of designing a floor plan... Share with him what your budget is, so you can design a plan where you get what you want for the price you want. All those pieces are gonna be a big part of it, if you're gonna make that decision, but it takes a while.

Joey: Do you think it's a good investment right now? Do you think that... 'cause I...

Josh: Yeah...

Joey: One thing would be, Hey, I wanna do this because I have my dream home in my mind. And so I want this exact home.

Josh: Yeah.

Joey: And you go, "Okay, then you gotta build it." Or the other would be like, "Well, I'll make equity, because I'm building, even with a general contractor, I should... "

Josh: Yeah.

Joey: That certain percentage, right?

Josh: Yeah, [chuckle] the word "Yield spread premium" comes to my mind, but that's not a great way to describe it. But are you saying, Is there a clear benefit to building over purchasing existing homes? No. There is no financial clear benefit.

Joey: Really?

Josh: No, it's probably slightly more expensive to build a new home, than it is to buy an existing one.

Joey: Wow.

Josh: So you don't think you're saving in a ton of money in that way... But look what you get in the trade-off for it? You get a little bit of a house that's more along the lines of exactly what you wanted. It's new. So it comes with the benefits of less maintenance and repair in the next 10 years.

Joey: Roof, HVAC system...

Josh: Yeah.

Joey: All that stuff...

Josh: Yeah.

Joey: Doesn't need to be replaced in five years.

Josh: So there's... Exactly, so there's some built-in conveniences that you get by buying new. And so, maybe on paper it's slightly more expensive, but maybe over the 10-year period, it's not. But I wouldn't say that it's a no-brainer to build right now versus buy.

Joey: Are we seeing anything, outside of single-family home construction going on, I've always heard that Redding doesn't have enough... I don't know if the term is low-income housing or what the proper term is, but basically like multi-unit. That's always been a big dig on Redding, that there's... I don't know what that percentage is that they use, where they say, "Hey, this is a certain percentage... "

Josh: Higher density.

Joey: Higher density. There you go.

Josh: Yeah.

Joey: We're not seeing any of that, right? I don't even know if we have enough zoning?

Josh: Well, the zoning isn't an issue anymore. The state of California passed a couple of laws where they're basically for pushing back on the cities and saying, You have to actually increase your density for the housing, because they don't wanna be in a situation where the housing market gets too out of control. So it's now giving the cities the flexibility to increase their density zoning, even when the general plan originally didn't outline for it. So that's been a change that's taken place. We are seeing some higher density here. We have four or five major apartment complexes that are being built right now just on the west side of town, so. One of them just got completed. There are several more going up. So, there are some higher density units that are coming in. We have some cluster home developments that are coming in. This is where they're like attached living, so you have your nice townhouse and it's attached... One wall is common with the town house next door. And so we see a lot of those cluster homes coming up as well. There's one that's coming up on the west side of town as well right now. There's a couple of bigger ones on the east side of town. And so I do see that happening now. And really the general plan kinda looks like, imagine a large arterial road. Is that the way to say that word?

Joey: Arterial?

Josh: Arterial. Thank you. And so you see that road coming through. So that first layer is higher density, right along with that road. When you get further back, it starts to drop into a lower priced single family dwelling. And then in the back of that area, would be a higher-end single-family dwelling. And so we're starting to see that kind of pattern up and down the state. So arterial road, higher density right next to it, then smaller single family, and then larger homes behind that. And I think that, that's kind of the game plan I see at a lot of the general plan looking like.

Joey: I wasn't aware of all that. The multi-unit... I just notice that... I always check multi-units for sale. So it's one of those things I like to check and you see almost nothing for sale.

Josh: They're not selling 'em.

Joey: Yeah, they're not selling them.

Josh: Yeah, no, no, they're being built to hold... Some of them are using state money, and so a portion of it maybe will be like a low rent a scenario, whatever that means, 'cause I'm not gonna [chuckle] talk about the project, but I'm looked at one recently, I'm like, "That's called low rent? Wow, okay." But [chuckle] there's some people are tapping government money to do that, but a lot of those bigger ones that I'm referring to, they're not being built on speculation and then sold to the market. They're being built and held, and probably will get occupied, establish a cap rate, and then maybe at that point, if they decide to, they might sell it at that point and exchange somewhere else, but no, I think the people you're seeing right now building are holding them.

Joey: So, do you wanna talk about the cap rain at all? Is there like a cap rate that you'd say is that the Shasta county cap rate?

Josh: I talk to folks that are down in the Bay Area, in Southern California. And it seems like their cap rates are averaging on the really low end, and I don't know why they do it other than future appreciation, but 1% and I see them as high as maybe 3, 3.5%. And that's pretty normal. For them to find more than that, it's that highly educated investor that knows how to find the deal, right? But for average investors, I'd say 1-3% down there. Up here, you're seeing cap rates that are about 5%. And they go up from there. You see them 7%, 8%, 9%. But it really depends on the condition of the property. So our newer inventory, the newer stuff that you're gonna find... And if you get a good buy on it, you might find a cap rate at 4.5%, 5% on new stuff or newer stuff. As it gets older though, that cap rate starts to go up and it looks like a better return on paper, but that's because it's gonna come down the road with more maintenance and repairing and stuff like that. We have investors looking up here, because the cap rates are more attractive than bigger cities. And if they're expecting a return, a place like Redding is an option.

Joey: Does the cap rate usually rise by the number of doors in the units?

Josh: It could. But it really has to do with how much money are you putting into this project, right? And then what is your net taxable income when it's done and the reconciliation between those two numbers essentially is how you're gonna establish your cap rate.

Joey: What about that whole four-unit to five-unit step, because a four-unit or less is a residential loan. So it just looks like the four unit... Oftentimes, I see a fourplex, that's more expensive than a fiveplex.

Josh: Yeah.

Joey: And I think it's because...

Josh: Quadplex tax credit.

Joey: Yeah, the availability to finance it versus the second you go to five doors, it becomes a commercial loan...

Josh: Yeah.

Joey: Rates go up...

Josh: Yeah.

Joey: You have to put a much larger down.

Josh: Yep.

Joey: A young person... You don't have to be a young person, but a young person starting out could... Their first purchase could be a fourplex. They live in one of the units and say, "Yeah, this is my primary residence."

Josh: Yeah. I've met clients over there that have done that.

Joey: It's genius. It's brilliant.

Josh: Yeah, it actually is, because you're getting it with less money out of your pocket. You're... 'Cause you can buy them for much less than what you buy an investment property for. And then when you go and you purchase it, now you're renting out the other three, usually almost always covers your own personal rent, so now there's no expense to your living expenses at all. And you're building equity. It's pretty incredible that but your point there is really well-taken that up to four units, you can use FHA financing, which means that you can increase the amount of buyer demand for your property. As soon as you go to five, the down payment goes way up, it shoots way up, because now you're into a non-conforming product. And when you're in that zone, the investor pool, you're getting rid of all the other folks. And now you're only with investors, essentially, that can purchase that property. So it narrows the market. And that's why you could see a fourplex selling for more than a fiveplex.

Joey: I don't know how commercial loans work, but in the past, when I've dealt with them, it's like they also want a much larger down payment. You know what I mean? I think it's 30% maybe? You might...

Josh: On average. Yeah.

Joey: Yeah. And then on top of that, as I said, the interest rates are... I think when residential rates were in the low threes, I still think the commercial was five...

Josh: It was.

Joey: It was five-plus?

Josh: Yeah.

Joey: And I think in our last episode, you talked about 1% interest rate reduces your buying power by 10%. So you can see why right? Is that about right?

Josh: Yeah, so for every 1% the interest rate goes up, the purchasing power goes down by 10%. So if you qualify at $400,000 at 3%, if that rate then goes to 4%, now you only qualify for a $360,000.

Joey: Now, it makes sense why you'll go in and you'll see a property that's four fourplexes parked...

Josh: [laughter]

Joey: Side by side and they're like, why didn't you just build a 16-plex?

Josh: Yeah.

Joey: It's like, 'Cause I can sell these four, four...

Josh: Correct.

Joey: The amount I put...

Josh: Yeah, they're probably on four separate lots and have the ability to be financed differently. You have access to credits a lot differently. And that's probably a smart move. Absolutely.

Joey: So you're comfortable with the level of new construction. It's buying it, staying just a little bit underneath it, kind of as a safety net for those builders to not over-build. You're comfortable with the level of commercial building that, with the projects we have, what is the marketplace moving forward if we're underneath our inventory, isn't that just gonna cause the appreciation rate to be much higher than you think? If we do get to where inventory meets and exceeds, we're gonna see a drop, right?

Josh: Yup. And I think the best way to describe it would be... 'Cause absorption rate is really what it is. A healthy market's gonna be about a healthy market, about four to six months supply of homes, meaning that it would take four to six months to sell the existing inventory if nothing else came up for sale on the market. Our inventories are too low right now, 'cause our absorption rate right now is probably sitting at 2.5 months supply, that's why we're appreciating so fast. But as people start to get moving again, as the supply chain starts to get moving, as people start going back to work, as people feel more comfortable with whatever this pandemic thing is now, whatever that looks like, you'll start to see our inventories begin to grow out of this. I expect this spring that we're gonna see our inventory grow.

Josh: Will it grow really fast? It's hard to tell. But if it does grow, that means our appreciation is gonna begin to taper off, and that's not a bad thing. For those that are thinking, "Oh that means the crash", it's like no, it just means that we're hopefully transitioning back to a more stable and slow steady growth real estate market. We don't like big swings in real estate, it affects people's lives too much. It's much safer, it's much more comfortable for people when there's just slow predictable, steady growth.

Joey: When was the last time we had that?

Josh: Not very often man, 20 years. I think I saw the tail end of it in 2000, 2001, 2002, and then by 2003, started to turn into a pretty crazy market, and it's been bouncing really bad ever since. But prior to that, if you looked it looked actually pretty stable. It's interesting, I wonder if it has anything to do with policy too because it seems like the more that the state has implemented a policy in the housing market, it's really begun to disrupt inventory. And if the Bay area in Southern California were able to increase their housing supply or have some more flexibility with expanding out to other areas in places like Redding could do it with a little lower cost, the housing issue could probably solve itself. For example, I talked to somebody before and I said, "You know if we went back to the building standards of 1992, and just did that for homes up to 1500 square feet, and we said we're gonna do that for the next 36 months. Do you have any idea how many homes would be built on the lower end?

Joey: A lot.

Josh: A ton, because the cost would be so much lower, right? They wouldn't be dealing with all that out of regulation. And so within 36 months, you could have... Not saying it would solve all the problems but it would be to be a meaningful contribution to solving that housing issue. But I'm not going into the weeds there, I'm just saying that the way that the government has an impact on a policy does have an impact on how many homes get built.

Joey: Well, I think a perfect example of policy impacting the market was the capital gains laws that changed in the late 90s which said a married couple can wave up to $500,000, a single person can wave $250,000 on your primary residence if it's been your primary residence 2 of the last 5 years and you can do that unlimited number of times. At that point, you really turned up the flipping of buying a new house every three years.

Josh: Yes.

Joey: Especially when you combine that with an appreciation market and easy money, the next word that went to my mind was a casino.

Joey: I said, "Wait, did they just make a casino? Three sevens, yes." So, I think that had a huge impact, right?

Josh: Well, in all these things, there are so many different variables now that have an impact on market valuations. And I think that's part of the challenge is now when I look at what the government's doing... I'm not taking a position left or right or in the middle or anything. I'm literally in a policy and going, "Okay, with that policy this is probably how it's gonna play out on Main Street so that it can be well advised on how to both help our clients but also for our own investment portfolio, what moves we need to make."

Joey: Well, can you imagine if all primary residents, had to pay 15% capital gains? You don't think that would slow...

Josh: That'd slow the market down.

Joey: Slow the market down. Versus, "Hey, let's sell it and buy a boat and buy another house." I think that absolutely has nothing to do with left or right either, it has everything to do with just the policy and...

Josh: Yeah, it controls behavior, it has an impact on behavior.

Joey: Absolutely. And our access to money, and I wonder how that's gonna play out. I bought my first house, I think in 2001, and I think I got 7% and that was really good at the time. And money has been so cheap for so long, and I don't see any really stopping that. It's almost like it's the new norm, right?

Josh: I think so. We're not wise enough and old enough not now to see 80 years into the past. But when I got in the business interest rates for FHA were over 9%, and right now they're in the low 3s. So, and I've seen it this low for a long time now. For them to raise rates is actually a pretty scary thought for me, because most people purchase homes based on what they can afford for a monthly payment. And so, whatever the rate has an impact on what the purchase price is gonna be. So if rates went up to the 9% that I'm saying that I had 20 years ago, that would have a significant impact on what people can qualify to purchase and that would immediately drag the market down. So, no idea. All I know is that if they really can't raise the rates back to the old days. It's just not something that can be done without having a significant consequence.

Joey: Yeah, no. And that's another example of policy and that's something that's transcended whoever's been in the White House or whatever that's been for almost 15 years now, it's been super low. Well, Josh, thank you so much...

Josh: You bet.

Joey: Today, I appreciate that. So, if someone's thinking about building or buying, that your phone number is gonna be listed. They can call you directly and ask to get your advice.

Josh: Yeah, just type it into Google or go to if you wanna see any of that stuff.

Joey: Awesome, thank you, Josh.

Josh: Yeah, you bet, and thank you.

Joey: You have a good one.


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