Nov. 16, 2022

Josh Barker Real Estate Podcast #13

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Joey: Okay, welcome back, Josh.

Josh: Thank you. Glad to be here.

Joey: It's November. This blows my mind saying this out loud, November of 2022.

Josh: Time flies when you're having fun, my friend.

Joey: Yeah. And even when you're not.

Joey: It's like 2022 is almost over. And it's been quite the year for real estate.

Josh: Yeah, we had a little bit of a transformation, haven't we?

Joey: Yes, we have.

Josh: Yep.

Joey: And we were talking before the camera started. We were talking about the big news in real estate has been: interest rates. This time last year, we're talking a huge difference and a major... What you'd call a headwind, a major headwind. But there's a little bit of good news: hey, there's a rainbow behind this monsoon thunderstorm, that interest rates went down.

Josh: It went down a little bit. Yeah. So for our listeners, our lowest point was about 3 1/4%, roughly of interest rates. It was in the mid-sevens, not even a month ago. And right now, we're about 6 3/4 over the last week. So that report from the Feds basically said, hey, we got some good news on the... That looks like inflation is cooling a bit, even though they're not reporting that until next month. Some of the other lead indicators are telling them that. And so, as a response, the interest rates came down just a bit. And for everybody, too, it says for every 1%, the interest rate goes up. So it has an impact of about 10% on purchasing power. So when the rates dropped to half a percent, that increased purchasing power by 5%. And last week we saw some sales go up because of it.

Joey: And if you're talking about a $400,000 house, that's $20,000.

Josh: It is. It's significant.

Joey: Yeah, absolutely. We were also talking about... because one of the themes that have been going through this year is we've been comparing the inventory, the thing that you call the absorption rate, meaning if nobody brought a house to market, how long would it take for the current inventory...

Josh: To sell-off.

Joey: To sell-off. Because that's a big sign of whether we are in a seller's market, a neutral market, or a buyer's market, we've obviously, over the last few years, been in this like insane seller's market. At one point, it was like one point something, right?

Josh: Yeah, exactly.

Joey: And three is the magic number. Where are we? Like three months is...

Josh: Yeah. One to three months' supply is considered to be a seller's market. And then, from three to four months, supply is normally considered a neutral market. And then five months or more is considered to be more of a buyer's market. And that tends to be... At least for our marketplace, that's what it kind of tends to be. Right now, we're at the 15th of the month for this podcast. That's what the date is today for this filming of this. And we were at 98 pending for the month, and we had 715 residential properties for sale. So if you do the math on that, we'll report in our market update this next month. We'll be reporting that we're in at three months of supply, which means that we're on the tail front end of a neutral market in terms of demand relative to supply.

Joey: So, which means that you got two things going on? Number one, interest rates are heavily affecting sellers and buyers, obviously buyers. But if you don't have buyers, then sellers... Yeah. And sellers aren't bringing inventory. So it's starting to slow off a little bit, it's starting to... Because the number was creeping. It was. I remember it was in the low ones jumped up. The last time we spoke, it was like 2.9. So it's not just racing up but starting to level off a little bit.

Josh: It is. You know, and in our inventories right now, are right around 715 or so homes for sale. We saw a peak in the last few months in the 740-750 range. And part of this is seasonality, too. Fewer people want to come to the market in November or December than spring. So it's common to see our inventory decline at this time of year. And that's having an impact, obviously, on the absorption rate. But really, the quick question everybody's asking is, what's going to happen next year? Are a lot of folks going to come to market? And if they do, at what volume? What is the demand going to look like, cause that's going to tell us a lot about what to expect next year?

Joey: Yeah. And you'd have to have a crystal ball because trying to think about, well, are we going to have a big demand, are we going to have a big push of people moving to rent again next year? Or has the whole telework... Has that kind of settled out? Because during COVID, we had a massive push. And I've been like I said, I go on a radio show with a local lender a few times a year. And for the last several years, I've been bullish on people moving here. But it's leveled off. I think we need to get that.

Josh: Yeah, well, at the peak of COVID, obviously, during the pandemic, you had people that were migrating significantly for multiple reasons. And I think now obviously that big, robust migration pattern shift is obviously over. So whether or not people are going to continue to be able to work from home and have those types of jobs, people are moving up here. So I think that's still going to happen. It's just not going to have the same volume that it was before. But, you know, the median sales price in the market right now is 350,000. And if you go back one year ago, in the same month, it was 350,000. So our prices actually went up last year after October.

Josh: But at this point, we've given back a lot of the market gains from last year up to this point in terms of prices coming down a little bit softening. But if you take the median buyer and what they qualify for and compare that to the median selling price right now, it's still a delta of 40-50,000 bucks. And so, the headwinds are still there, and the only thing they can change is interest rates going down, inventory continuing to decline, or wages going up. So it's going to take something along those lines to get it done.

Joey: Do you know much about inventory besides sellers bringing it into the market? Are there a lot of projects for construction? I remembered a few months ago. We talked about how DR Horton was one of the first indicators because they're a big corporate builder. So they just came right out and said, hey, we're dropping our price. Was it 10% or 5%?

Josh: Yeah, they were like at the 470-480 range, and those same products were down, down in the 440-450 range in a short amount of time. To answer your question, we are definitely seeing builders tapping the brakes a little bit in terms of new construction. It's certainly not as robust as it was a year ago, for example. It's beginning to feel like they're being cautiously optimistic right now. I mean, it's hard. The part that's getting better for them is their access to labor is getting better. The cost of materials and supplies is going down. And so that gives some flexibility to their pricing strategy if they're trying to be more price competitive against the resale market. But there are some headwinds there right now. While we're in a higher interest rate environment, where you had the rates double in less than a year, that's what you will be up against.

Joey: And so, when I think about this stuff, we bring the data in these podcasts. There are certain things that it's like it's just information. It's like, well, what can I do with that? It's like you can't do anything. Can't you lower the interest rate?

Josh: Right.

Joey: If you're thinking of selling and you're selling because you're moving, it almost doesn't matter what's going on. If you have to move, you have to move. If you were thinking, hey, I'm going to sell my house at retail, and then Imma go pick up a house at wholesale, that's you're watching too much AE TV. I'm just going to house flip real quick. But it's like some of this data, it's like, what can you really do about it? Be calm.

Josh: When you're saying all that, I literally I'm thinking of myself. We're like trying to be a calming force, right? People always want to jump to one extreme or the other. It's either, "Oh, my gosh, we're going to the moon." Or, "oh, no, we're gonna be the worst thing since the last recession." And it's like it doesn't have to be like that. This time around, the market cycle is a bit different than the fact pattern it was last time. And we've talked about that on previous podcasts. But I think if anything, it's to be calm about it. Say, look, here's what's going on. Yeah, we have some pressure on the housing market right now. Interest rates are high. It's having a corresponding effect on demand. You have a lot of people, though, that don't wanna sell their homes. They're happy to be in their houses at a three-and-a-quarter percent interest rate. So we don't have inventory that's shooting through the roof. That's large because we didn't have a massive amount of speculation over the last 24 months. For most of those purchases, the vast majority were owner-occupied, which means that those folks, if they were to sell, must find something.

Josh: They have to go to the rental market or whatever, which that's interesting. The rental market has been changing.

Joey: How so?

Josh: Well, I was talking to a friend of mine that has a pretty good-sized property management company, and I asked him, I said, how are things going on the property management side? So what's the vacancy rate like? And he was like, "Well, COVID was like one percent." And he's saying now that it's probably anywhere between five and seven percent.

Joey: Oh, wow.

Josh: Yeah, it's jumped a lot. He gave me an example of putting a property on the market for rent at one point and getting 15 offers on it or 15 applications for it. And now he can come into the office on a Monday and realize that there are only applications for that same product. And so the rental market is beginning to show signs it's probably reached its peak. And for some of us that have been around, we saw some of the rent prices people were asking were like, ah, this doesn't even look right.

Joey: Yeah, some of it was crazy.

Josh: It's crazy. And so I think that those folks, not the ones that are priced with the market, people that have rental properties and are pricing them fairly in the market based on comparable rents over the historical trend line, or all those are still those that are rented out. But those people that were going out there and trying to cut a fat hog, if I'm allowed to say that.

Joey: Mm-hmm. I think you're allowed.

Josh: Okay, I don't know what the rules are on that one. But that type of product is no longer really easy to rent out anymore. So it will also show up in the vacation rental market. In the vacation rental market, the vacancy is beginning to go up. But they were getting for those rentals, vacation rentals at one point, is beginning to decline a little bit. We see that, too, for different reasons, though. Some of it's associated with what I just said, but some of it's because, A lot of those vacation rentals, a lot of traveling nurses and doctors were utilizing some of those facilities instead of hotels. And that was because of some of the... I don't want to get into the politics of it, but some of the hospitals, with some of their programs and some of their rules, made it more difficult for people to work in the medical field. And so, for them to be able to facilitate the services they have to offer, they were bringing in traveling nurses and doctors. And now I think they're backing off on that a little bit, which is taking off some of the pressure on the vacation rental market.

Joey: As we sit here and talk about this, this is like just an incredible dance of variables. Just so many, the more data you take in, and it's for the people that are trying to time the market, as you said, it's a calming voice because, hey, look, if you're in a home, if you're renting, you probably want to buy if you can. If the interest rates don't make sense with the current inventory, it feels like based on... You didn't say this, but I'll go out on a limb. Here, the median price is down from its peak. Interest rates are still high. The delta is about 40 grand. So what does that tell you? Housing prices are probably going to come... That delta has to be fixed somehow. So either Feds have to lower interest rates dramatically so buyers can get that 40 grand, or sellers have to come down. That's how that delta has to be dealt with.

Josh: It does. And where people overestimate what's necessary, like based on that description, which sounds right, prices would have to come down that much. But this is what happens when the prices start to come down. The buyer demand starts to pick up.

Joey: Yeah.

Josh: And we have to compensate for that adjustment, too. If we move into a recession, which obviously it looks like that's what we're going to be in if we're not already there and everybody can...

Joey: We don't use the R-word, Josh.

Josh: Okay, fair enough.

Joey: You can say fat hog, but you can't say the R-word.

Josh: Fair enough. Okay, so since we have multiple quarters of a less gross domestic product being sold.

Joey: Okay.

Josh: We won't call it anything else but within that. During that season, normally, the Fed's, once they feel like that's the case and they see unemployment going up, they're going to start to cut the rates. And so that's what I'm saying: when things start to change, the Fed will take some action, too. So if interest rates go down, the corresponding effect is that purchasing power increases, and you see buyer demand pick up. That's just part of what happens in economics, right?

Joey: Yep.

Josh: So I'm looking at that, and I'm thinking, well, next year will be interesting. We'll probably have some tougher days ahead over the next quarter. Maybe two quarters. And then, at that point, we will have a good feel for where the bottom is. And in terms of adjusting, and letting the Fed do what they're doing right now to try to get this inflation thing under control, and then we can resume whatever that new normal is going to be. But inflation is going to be an interesting thing next year.

Joey: Yeah.

Josh: Because I think that as those numbers start to improve, the optimism of the average consumer is likely to improve, too.

Joey: And so interest rates, I mean, they've got if they come down enough to where they were last year.

Josh: I don't see that happening.

Joey: Yeah. That's going to fire it. Right, that's going to fire the kiln right back up. Do you know what I mean? Everything's going to start going crazy. But if interest rates can get down to, as you said, they're in the mid to high sixes right now.

Josh: Right now, they are.

Joey: So if they get down in the mid to high fives. You've got that delta.

Josh: Yeah.

Joey: So if they come even down a half point and then sellers reduced, maybe make a couple of reductions, you're going to meet in the middle.

Josh: You're going to meet in the middle, which might be our new normal.

Joey: And it's going to shoot. That's how it works. It always overshoots this way. Then it overshoots that way.

Josh: Sure.

Joey: So it's just going to steady out. But it was up until this year. I mean, it was just straight. It was a bull market.

Josh: Yeah. Well, COVID just, I mean, it's like riding a bike down the street. Somebody took a baseball bat and shoved it right through the spokes on your front and back tires.

Joey: You shouldn't hang out with that dude.

Josh: Yeah, I shouldn't...

Joey: And maybe there's something like that...

Josh: And we're still dealing with the aftermath because when the bike flipped, it broke the handlebar and the seat post off. Do you know what I mean?

Joey: Yeah.

Josh: You got a pedal that's off in the cutter somewhere. And now we're trying to piece this whole thing back together after you've picked it up off the ground. I mean, and so there are all kinds of leftover carnage from this massive economic catastrophe if you will. Not to mention the fact that we just threw tons of money trying to solve the problem, which created its own issues. So there's a lot of work ahead of us to get this thing back to normal. It isn't going to happen in six months.

Joey: No. And so our headwinds are interest rates. Our tailwinds are low inventory, although that's going away. The other big one is we were talking about people coming into the area that's slowed down. So all points seem to say the market will continue to come down a little bit.

Josh: A little bit. Little bit. It's going to continue to soften a little bit. It's funny because I hear this. I have lenders that will run into me like, "Oh, my gosh, we're going to see rates at 10% in the next 90 days". I'm like, calm down, calm down. It's probably not going to be like that. And then the same people, two months later or two weeks later, come to me and go, "Oh, I just read this awesome report, and rates are gonna be at 5% in the next 30 days". And I'm like, calm down. It's not going to be that good, either. It's like, just calm down. The rates are likely in the high fives, mid-sixes, and long term. That's historically been the trend, anyway. When it gets a lot higher than that, it's unusual. If it gets a lot lower than that, that's unusual. So if we were to figure that it's going to be mid-fives, mid-sixes, that's a pretty decent market.

Josh: And if we can get it done, market to stabilize where buyers and sellers in the marketplace go, "Okay, here's our fact patterns. Here's what the information is on the ground. Here's what we can expect." So now people can properly start planning, and planning is really what people need to make moves. I mean, if you're going to stay locally, move up or move down or move sideways, or if you're going to leave the state or people are going to move from out of the area, all of that takes planning, and they want a fact pattern that's a bit more consistent so that they can make plans that they can rely on. And that takes time, and that's kind of...

Joey: C'mon, good luck with that.

Josh: I know.

Joey: Good luck with stability. When was the last time we had stability being serious? When was the last time you were like, oh, it's a totally stable market? We're at equilibrium.

Josh: I'd say probably 2015 to '19 was pretty cool.

Joey: Yeah?

Josh: Yeah. Pretty stable. I mean, we were climbing. I mean, it was great because homeowners would buy and we weren't, hitting the cover off the ball. But have a home and value of five to seven percent in a year. That was pretty exciting news. They could decide to sell the home a year from then. They'd have enough equity to make some money if they wanted to and get onto the next home. And that might even be aggressive in terms of appreciation over the long haul, but it's still nice. And that's... We've had it where that's been the case. But the challenge we had back in '14 and '15 was that prices needed to be higher for builders to build at a meaningful level and compete against the existing resale market. And that was the challenge. We were watching them, waiting for home prices. We're like, okay, when the home prices get to X number. Home builders can start building again. Do you know what I mean?

Joey: Yeah.

Josh: And we were watching that pretty closely, waiting for that number to hit. And it started to hit probably at a meaningful number. And, '17, '18.

Joey: I wonder if that number is now to flip, that is, is it worth people to build now? It has to be. It has to be somebody that has a major infrastructure already taken care of. It can't be probably the individual unless they bought the lot years ago. Maybe they got that at post-car fire a lot or something. The cost to build a home right now is with that property coming back down. So they're probably back to that number again.

Josh: Yeah, they are. Again, we talked about this in our previous podcasts. The construction field is going to have some disruption coming up because you've got at least here locally what we had was, and for some of your listeners, we've had multiple fires that created this huge demand for new construction to rebuild a lot of those homes.

Josh: We've had some pretty big hailstorms, which are fairly unusual for our market, and created a huge amount of re-roofs in the county. And then if you combine those two things, and then you have the pandemic, I mean, we had just a massive amount of labor in a very short amount of time in the area. And we're beginning to see the housing market slowing down. And so you've got these crews now that are a bit more swollen compared to what they have been in the past, with all the different employees working for them. And so it'll be interesting to see what happens in the future with bid pricing and stuff like that. I could see the price per square foot going down, not just because supply and material costs go down, but also because labor potentially, or at least profit, the amount of acceptable profit will start to decrease.

Joey: When taking a kind of a step back. When we talk about year-over-year interest increase, so an appreciation of homes.

Josh: Sure.

Joey: I'm thinking, do you want it to just be a little bit higher than inflation? What is an ideal, sustainable growth number?

Josh: Well, don't go year over year. I go five years over five years kind of thing, right?

Joey: Okay, fair enough. Fair enough.

Josh: Because everything modifies.

Joey: What about weekly?

Josh: Well, what people don't probably realize is that the Federal Reserve actually has a stated... They want inflation. They absolutely want inflation.

Joey: Was it like one to three percent or something like that?

Josh: Yeah, I think it's like two-something, right? I have to double-check what the number is. So, everybody, I'm sure listening, can fact-check this. But if you were to go to the Federal Reserve.

Joey: They will.

Josh: Yeah, go to the Federal Reserve's site and look at their mandate. Their mandate will target a certain amount of inflation, which means they want inflation.

Joey: Yeah, growth.

Josh: And that's how you get that growth, right? And then the second part of that, that you're going to be looking at, is they also have a targeted number of unemployment, which means they actually want to cause some unemployment, which might sound counterproductive, but in a healthy work environment, we need people to have equal leverage. I mean, employers and employees, to have a more harmonious relationship, we need to have some unemployment in the marketplace so that you have more value as an employer to offer a job to somebody. Do you know what I mean? It allows the work and the effort of an employer. You receive from your employee to be a bit more meaningful and profitable because the person wants to keep their job. Whereas if the jobs are just too robust, it's like, "well, you have to accept my 50% effort because if I don't, I'm gonna go work for somebody else." And this is some of that disruption we're going to see, and we're hearing some pretty good-sized layoffs right now.

Joey: Amazon just reported 10,000 this week.

Josh: Yeah, these are big numbers. And they start to trickle into the economy because those people, obviously, while they're in a disruption of labor, will not be out there making some of those higher dollar purchases, and they'll probably be cutting some expenses here and there. And that starts to have a corresponding effect on those markets in which they would have been participating. So three to six months from now is when we will finally start to see where we really stand economically.

Joey: So back to that five years over five years, what kind of appreciation would you want to see on a home? In a stable...

Josh: Stable market.

Joey: Robust, but not crazy, because what goes up comes back down. So when you get these white hot... There's the other side of the mountain.

Josh: Yeah, I would say four to five percent is probably something. And, you know, Redding tends to be...

Joey: Over five years? Five percent?

Josh: Per year.

Joey: Per year. Okay.

Josh: Compound effect, yeah.

Joey: So 20 to 25%.

Josh: Yeah.

Joey: Probable it will be more than that because it compounds.

Josh: Yeah, it compounds, right? But that helps you to stay ahead of inflation. It gives you the ability to repurchase another home. But you must also realize that Redding is a lot like those flyover states. In the sense that we don't have these massive, robust swings in our home valuations, whereas you could get on the coast, you know, people think... Whenever they hear I'm from California, people say, "oh, you're from California." I'm like, yeah, but I'm not from California. You think I'm from. But we can buy a home where we live. And I'm proud to say that. Whereas if you look at the Bay Area and Southern California, it's extremely expensive.

Joey: Insane.

Josh: Yeah. And what they do in terms of appreciation has a lot to do with the economic factors on the ground at that time. When the economy is doing well, those prices down there are doing really well. When the economy goes down, they get back some value quickly. In our market, we go up and down more slowly than the Bay Area, and Southern California does. So for anybody that's thinking about moving up here, just enjoy the fact you get to buy a great home. We can't wait to welcome you here. But realize that the valuation is going to be different from what it was for you if you lived in LA. It's going to go up slower.

Joey: Well, at four to five percent, you're looking at the value of your home doubling about every what? 15 to 20 years, 15 to like 18 years.

Josh: Yeah.

Joey: So you think about you buy a home for $400,000 now, 20 years from now, it could be, on average, valued worth $800,000 at that growth rate.

Josh: Yeah. You used the rule of 72, I think, on that?

Joey: Yeah, that's what I was doing. Yeah. Kind of cheat math, cheat math. I was using poker math.

Josh: Poker math. Like, wait for a second. He's got seven outs. We'll give a training tip right now. If you guys want to know what the rule of 72 is, if you want to know how to double an investment, you'll take the rate of return. Let's say it's five percent, and you multiply it by whatever number to equal 72. And by doing that, that's how you'll get that corresponding. How many years would it take for you to double in value? So if you took five times, what, twenty-five?

Joey: No, five times 14.4.

Josh: Is that what it is?

Joey: 14.4.

Josh: Yeah, that sounds right. Yeah. Yeah. And then it puts you there.

Joey: So it sounds like 14 and a half to about 17, 18 years at that interest rate which...

Josh: Well, there you go.

Joey: There you go. Yeah. So that sounds reasonable. It sounds kind of crazy, too, at the same time, because you think like 4 years later, you know, a 400,000 house is 1.6 million.

Josh: I know.

Joey: And then, I think I just described the East Bay, you know? Maybe they were getting a bit better than that because I remember being a kid, a teenager, and going down and visiting my aunt and uncle and then buying a brand new house in Dublin at the time. And it was, I think, just these numbers, you think of something, and a number pops in your head, and you say, "I think that's the number because it popped in my head." But I remember them buying it for like $100000. It was a total track home, cul de sac, four-floor plans, and hundreds of homes. But there were fields everywhere.

Josh: Oh, yeah.

Joey: You know? I remember walking down, and now you look at it, and I'm sure that house has to be... I don't know. It's way over a million dollars.

Josh: Oh, yeah.

Joey: Way over a million dollars. And that was about... Oh, wow. I'm much older than I anticipated. Thirty-five years ago. But that sounds about right.

Josh: Yeah. I mean, if you were to look at... Same thing. I have a family in Santa Clara who purchased a property for like four hundred thousand bucks. The last time I saw it sell, they didn't own it anymore. They'd moved on to another property, but it was like 2 million. It's probably over the same period, like over 30 years, that it did that. And it's interesting to see what real estate does over time. I'm obviously a huge advocate, and full disclosure, I'm heavily invested in the real estate market. And so, for me, I like and enjoy the benefits of appreciation, but I equally enjoy the benefits of cash flow. And if you want to find an investment that has proven itself over an extremely long period of time to perform well, it's not the magic answer. I invest in stuff like the stock market as well. I try to be somewhat diversified, but I... More heavy in real estate because that's what I do. It's what I know.

Joey: It's what you know.

Josh: Yeah. And I've got friends that are stockbrokers, and obviously, they do some real estate, but they're way more invested in the stock market because that's what they know. But it's wise to invest in something because dollars, no matter what, return to zero if they don't get invested into some asset.

Joey: Especially with the inflation. We've seen this year that if you've got cash sitting in the bank, you're losing money.

Josh: You're losing money.

Joey: You're losing money at eight to 10%, depending on...

Josh: You are.

Joey: Yeah. So you want to purchase assets that you will appreciate. And yeah, that's a whole...

Josh: Well, even purchasing something that holds its value is going to be, you know, protecting you, right?

Joey: You're going to beat cash.

Josh: Yeah, exactly. I mean, investments are not a liquid position, or at least not very often. So you'll have to commit to being in that investment for a time. Real estate is a challenging investment to diversify out of quickly. It takes a period of time to market a property and sell a property.

Joey: One of the least liquid, if not the least liquid.

Josh: Yeah. Well, you could get a refinance or pull cash out. So, if you are in a position where you could do that...

Joey: But you can't just run down to Goldmark and sell your necklace.

Josh: No, you sure cannot.

Joey: And you can't get on E-Trade and sell, sell, wait, everyone's selling? Buy buy.

Josh: That's right. Yeah. No, with real estate, you will want to be a bit more strategic in how you approach things. But I can access cash out of all of our properties at any given time if I want to. I don't choose to because if I don't need it, why would you pay interest on stuff you don't need? But setting yourself up for that, investment in real estate still as a long-term prospect is a great investment.

Joey: I've got a question for you that's going to be... You're not going to be prep for this.

Josh: We've got two minutes, by the way.

Joey: Oh, okay. Are you familiar with what commercial rates are doing? Because normally, when residential rates were at three and a quarter, the commercial was at like five and a half, it's always a little bit higher. It just is. But I'm wondering now, where are commercial rates? So I put you on the spot if you don't know it's cool, 'cause I'm wondering, "Hey, I want to buy a templex," you know...

Josh: Yeah. Well, I've got some commercial lines right now. I mean, most of my building stuff is obviously fixed-rate stuff. But we have our instant offer program. And what we use that for is we have a huge line with the commercial line. And I just got my notification of what the rates are right now. And they just sent me the rates at eight and a half percent.

Joey: So the same thing, they're a couple of points higher than residential.

Josh: They are.

Joey: So they just track. I think there was a time there, a few months ago, when you could have snuck in. And so we'll see the commercial because the last few commercial buildings, apartment complexes, I keep my eyes open for that stuff. The prices had yet to come down.

Josh: Well, we don't have time... Well, they can't because they have a cap compression issue. And that's going to be an interesting story going forward. A lot of folks had some very short maturity on some of the notes they had on their investments on the multifamily side. Many people were really getting aggressive into the multifamily space, with cap rates that were already compressed, and now rents are likely going to compress. And now they're going to be paying more for that mortgage than last year. We don't even have time to talk about the rental market today because we need more time. But I would say if you were to look at what's the next thing we're going to see, we have some serious challenges. I mean, we already have the stock market and the real estate class. Where would we get hit first? I would say it's going to be in the multifamily space.

Joey: So we have topics for next month. But just to leave everybody on a good note, we're talking about total pandemonium, cats and dogs sleeping together. I mean, real wrath of God-type stuff.

Josh: Real end-of-the-world stuff.

Joey: Oh, yeah, total. Wrath of God.

Josh: Send the nukes. We're done.

Joey: Yeah. Clickbait. So well, awesome. Thank you, Josh, for this month's report. And next month, I'll make a point of us definitely doing some homework to talk about commercials and rentals and stuff.

Josh: That's a great idea. Let's do that.

Joey: Okay, thank you, Josh, have a good one.

Josh: Thank you. Appreciate it.

Posted in Podcasts
Nov. 1, 2022

Shasta County Market Update - November 2022


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


From the Desk Of Josh Barker


Homes for Sale

The total number of homes for sale climbed slightly in the month of October finishing at 817 up 17.4% compared to the 696 homes available for sale in the month of October last year. Home inventories have plateaued in recent months as the prospect of moving and giving up a low-interest rate for today's higher rates is challenging for many.

Homes Sold

Home sales in the month of October finished at 210 down from the 239 sold last month and down 25.5% compared to October of last year. The slowdown in homes sold has been largely a result of higher interest which have more than doubled since the beginning of the year.

Pending Home Sales

Pending home sales finished at 208 in the month of October, down from the 274 homes pended in the month of September, and down 30% compared to homes pended in October of Last year. Pending home sales are projected to decline over the remainder of the year as the median list price of a home remains out of reach for many buyers in today's market due to high-interest rates.

Mortgage Interest Rates

Mortgage interest rates averaged in the mid 7% range for many borrowers in the month of October which is more than double the interest rate available at this time last year. The federal reserve is expected to meet the first week of November with many experts projecting a .75% increase in the federal reserve rate. The Federal reserve's anticipated rate increase will likely have little effect on long-term mortgage rates as most banks have already priced in an anticipated rate hike by the Fed.

FHA and VA Assumable Loans

Homeowners with a VA or FHA loan may be in the best position to sell in today's market...Why? VA and FHA loans are assumable meaning today's home buyers have the opportunity to assume the home sellers loan and interest rate. The process is challenging and requires cooperation on all sides, but offers a great option in today's high-interest rate environment.

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 November! 

Josh Barker

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

Posted in Josh's Blog
Oct. 19, 2022

Josh Barker Real Estate Podcast #12

🏠💰Home Value Tool➔

Find Rent Data - 💵🏘❓


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. We're back.

Josh: Hey, we're back. Alright.

Joey: We're back again. It's October.

Josh: It is.

Joey: Although the weather tells you it's July, [chuckle] but the calendar tells me it's October.

Josh: Oh, man. It's a good place to live.

Joey: So last few months, we've been talking about how the absorption rate, which is how quickly if no homes came to market, how fast the current purchase rate would inventory be gone, and you've always said that if it's three months or less, that's considered a seller's market, 4-5 months is neutral. Anything more than five months is considered a buyer's market.

Josh: That's right.

Joey: We've been watching it creep because I remember... I don't know if it was last year, but it was like 1.2, and it slowly started to creep up. I think the last time we spoke, I think you said it was 2.75. Do you know where it sits right now?

Josh: The absorption rate right now is about 2.96.

Joey: So we're still in a seller's market?

Josh: Yeah, we call it the tail end of a seller's market, but with the angle of that trajectory, though, by next month, I would imagine we're going to be in a neutral market.

Joey: So what does that mean for... I mean, is it... When you talk to sellers and you talk about pricing, that affects pricing, right? Because it's pricing before when the market is so... The inventory is so low, you're always trying to price for what's about to hit.

Josh: That's right.

Joey: If the market's going up?

Josh: Yeah. Yeah.

Joey: So what are you guys doing now when you have conversations?

Josh: Yeah, how we're changing that?

Joey: Yeah.

Josh: Well, first, I would say it's a lot different between... There's a difference between what a real estate and does for pricing strategies and what an appraiser does. So real estate agents are typically trying to project what might be happening in the future, whereas appraisers are typically requested to provide evidence of what's already happened in the past. And so that's where there's always this little conflict that pops up from time to time between what a realtor might be able to generate for an offer on a home and whether the appraiser can justify the value. Those things pop up. But to answer your question, when you're moving into a neutral market, the advantage begins to slip to more of a neutral position and pricing more accurately from the start instead of testing the market is typically how the more successful sellers approach it. So if they have the option of pricing at the high end of the range or pricing at value, most sellers, if they want to get moved, are pricing at value right now and not risking that they overprice and perhaps even chase the market down if it declines a little bit in this season.

Joey: And you're always trying to balance that idea like, "Look, we wanna get you the most for your home, obviously."

Josh: Yeah, absolutely.

Joey: But at the same time, people don't want their homes to sit on the market for a long period of time. It's considered like a negative thing, right? So you have to price... It's probably a little bit easier now, I would think, than it was five months ago when interest rates first... Five or six months ago, when interest rates were first... Because they jumped very quickly.

Josh: They did, yeah. They've doubled now in the last eight months.

Joey: And at that point, people were like, "But my friend just sold their house four months ago for X." That was a 2.9% interest rate.

Josh: Yeah and the media was a little bit behind that, too. It's always tough for a real stage, and when you come out and you can... You know the facts on the ground that day. You know how much the rates have moved up. You know exactly where... What's selling and what's not, but the property owner that you're going to meet with may not be up to speed with the same situation. They may not see the same fact pattern that you see, and so when you show up, it's like this... You're trying to educate them on where the markets are before you dive into valuation and things like that because you're trying to make sure that they understand what's going on. And sometimes in competing situations, where an agent's... When a seller is interviewing multiple agents, maybe some of those agents are up-to-date on the market, and maybe some of them are not. That's challenging too. Because if they heard a conflicting story of the market compared to what you were saying, naturally, the seller would want to be focused on the more optimistic person. That certainly sounds appealing. Of course, it doesn't necessarily translate into your home sold.

Josh: So my point is that recently the media has caught up, so you see all the news reports and all the headlines, and I think unless you were hiding under a rock or something, most people know the market has now shifted. There are still some local radio stations with some fear-mongering going on with some advertisers or whatever, but the reality of it is, is that we've had a long period of market expansion, and it's natural that we would cycle into a little bit of a retraction period. And that's kind of where we're at right now.

Joey: And there's a bunch of factors that... Because for the last few years, I have been going on a radio show talking about, hey, the renting market's going to climb, right?

Josh: Yeah.

Joey: And we would talk, and people would say, "Yeah, but it's gonna be a bubble, and it's gonna come back down." And they always refer to 2007, 2008, because that is historically the single greatest housing bubble that we... You know what I mean? I'll always refer to the absolute best or the absolute worst. It's like, "Yeah, but the factors that drove that, the easy loans, the people purchasing a second, third, and fourth home without renters, that's not there."

Josh: No, no, and what we really don't... What's not there now is inventory.

Joey: That's the other piece.

Josh: Yeah. That's a huge difference this time around the last time. Last time we had a massive amount of speculation going on. We've seen numbers as high as 45%. 50% of all purchases in 2005 and '06 at the beginning of '06 were speculation.

Joey: Which is crazy.

Josh: Crazy. And so you had massive amounts of new construction taking place, a lot of vacant properties all over the place.

Joey: This means was super low rent.

Josh: Super low rent.

Joey: This is not what's going on now.

Josh: No, not at all. Well, because, again, inventory, right? So back then was a different fact pattern. You had negative amortization, interest-only loans, and variable interest rate stuff that was floating around out there and just primed for a market correction. But I just pulled this up. I'm looking right now at our MLS. This is for... That's 2021. Let me get to... I had 2008. Here we go. September of 2008, listen to this. So for those listeners who are listening to this right now, 2005 and '06, arguably that was the market's peak by '07, people were like, "Uh-oh, we're in trouble. Something's going on." By '08, everyone recognized the market had shifted. Prices have changed a lot. So listen to these numbers. The median sales price in 2008 was $274,000. Okay, now this is like the all-time worst market, 2008. If you guys paid intention, that's right around the financial melt-down crisis, and everybody's... Banks are closing down. I mean, things that you never thought about. Hallmark companies in the country are collapsing. There were 179 properties that closed escrow in September of 2008.

Joey: Wow.

Josh: 179.

Joey: Even in the...

Josh: Even in the worst of the worst, 179. This is why I try to push back against people that go super negative. I'm like, "Look, at the end of the day, people need a place to live. No matter what, they need to do it." And they have the option of owning a home or renting a home. Those are the only options those people have unless you're going to live with a family relative or something like that, and for your parents out there with kids in the house still that want them to move on hostile, I get it. But that's really the option, 179. And so right now, last month, we had 238 here in our market. We're still selling a lot of properties locally.

Joey: Yeah, it's just the prices have shifted a little bit because now the cost of money is so much higher.

Josh: Absolutely.

Joey: And anything that goes up that high, it was... I think about 10 years straight of just a quarter after quarter after quarter, and it got super hot during COVID. Really, the market started going crazy, and year over year, people are seeing like 20% to 30% increase in prices at some of the lower segments. The $220,000 house, a year later, was like $265,000. It's just crazy.

Josh: Well, and this is the argument I have with my parents and stuff like that about the higher interest rates, 'cause everybody says, "Well, you know what, we had rates at 16% in the '70s." I'm like, "I get it. I understand."

Joey: You also bought a house for $58,000.

Josh: Thank you very much.

Joey: Yeah.

Josh: That's exactly right. And what we had during COVID was insanely low-interest rates. It absolutely triggered a robust buyer's market with a market that was already really slim on inventory for obvious reasons, driving the valuations high. If anything, what we're giving back right now is very similar to what the stock market's giving back. We're giving back the value that was created during COVID.

Joey: Basically, yes.

Josh: Basically, that's what we're doing, right? And the stock market right now, for apparent reasons, it looks like it's making those adjustments to it. It'll find its new equilibrium if you will, and it'll continue to grow, I'm sure, over time. I'm not the stock guy, but I would assume it is. I hope so. I'm still giving money to them every year. So I would assume that the real estate market will be the same. We're going through a correction there because we had really low-interest rates that pushed prices up. We're going to have this correction that, obviously, we're seeing right now. We'll find a new equilibrium, and then we'll continue to grow out of that.

Joey: Maybe not for this month, but next month or the month after that. What I think would be good for us to just to carry on with this conversation, is to say, look at the median price and let's look at the median price one year ago and two years ago, and what you might find is it only slips down a little bit. Yes, it came down, but it only came down a little bit. It's still much higher than it was two or three years ago. People still see appreciation in the market, and a lot of appreciation too.

Josh: Well, the median sales price right now last month was $424,000. That was the median... Sorry, the median list price. Median sales price.

Joey: That sounds high.

Josh: Let me rephrase that. The median sales price was $361,000. The median list price was $424,000.

Joey: Wow, what a difference.

Josh: Oh yeah, between the two, yeah.

Joey: Little bit of disparity there. Oh, yeah, and it goes back to what you said about the realtors that come in and interview and they're, "Well, I can get you a... Whatever. Retail plus 20%. Sure." Like, there you go.

Josh: Well, there's the market, right? And right now, what we have is a situation where the median price of a home is higher than the median qualified buyer, and that's because of interest rates going up. And it's going to take some time because the median sales price either has to continue to come down or the median buyer somehow has to be able to qualify for more, which could be either through wage growth or through interest rates going down, but we're going to continue to see pressure until those two things are closer together. Right now, there's a pretty big spread between the two, the median sales price and the median buyer that qualifies. But as those two numbers come closer together, the frequency in the volume of home sales starts to go up more, and you start to see the market begin to find itself again, and that's really the transition that we're in right now. We're not done. We still have a transition to get through, but as I said, everybody's still faced with the same decision: Rent or purchase. And right now, it's not the peak anymore, so would you rather buy at a peak or closer to the bottom? And in this cycle, we're moving that way.

Joey: Well, as we've said, somebody else coined it, but "You marry the house, and you date the interest rate." So purchasing at the lowest point and then refinancing a couple of years later when the interest rate... Something's going to have to give. Something will give.

Josh: And another one I like to hear too, we're all hearing these little phrases popping around. The other one that I really have taken a liking to is that "If you rent, you're paying 100% interest."

Joey: Yup.

Josh: because you're not gaining any equity.

Joey: None.

Josh: Whereas if you own, currently, right now, you're probably paying an interest rate at 7% or somewhere in that range anyway.

Joey: Is it up to 7%?

Josh: Oh yeah.

Joey: Oh wow.

Josh: Yeah, in fact, for some, it's higher.

Joey: Wow.

Josh: So, right now, the interest rates are...

Joey: I was still thinking we were in the sixes.

Josh: No, no, man, that was so last week.

Joey: That was so last week.

Josh: No, rates right now, guys, if you don't know that, the rates right now, they're balancing somewhere between 7% and then 7.5%. You can get it down in that 6.5% range, but you'll pay some points to do it. And that's kind of what's going on right now.

Joey: There's a lesson in there because I remember when the rates were 5% just a few months ago. People were like, "Well, I'll just wait till it comes back down," and look what happens.

Josh: Yeah, it didn't change, and people are still faced with the earlier part of this conversation of whether you're either renting or you're buying. So it's a tough situation to be in, but I'm very optimistic in the long term. We had what, two million people migrate into the company, and obviously, that's... Whether it was illegal or legal, it doesn't matter. You got two million people here that need to be housed.

Joey: Oh, you said in the company. I was like, what?

Josh: No, not in the company. In the country, I'm sorry. So I look at the demands on housing, and I say because of the demands on housing that we can visually see, that's why I'm optimistic about the real estate market going forward. We don't have enough housing units to provide adequately for those who are going to need them, and that's the pressure that, over the long term, I could see the housing market continue to strengthen over time, and that's the reason why is because the demand's not going away.

Joey: Now, when a market shifts like it is now, this is usually that time when people are like, "Oh, I'm gonna hold on to my cash because there's gonna be foreclosures, there's gonna be short sales," but that's probably not what's happening. That's probably not going to happen because of that whole inventory issue, right?

Josh: It's tough to know for sure what the shadow inventory really is. Last year, we purchased some data that gave us insight into the moratorium market in terms of how many people were in some sort of forbearance program. We have researched that as heavily as we could to get a feel for it. I'm not going to quote numbers in this podcast because I'm not confident that everything was accurate.

Joey: Oh, okay.

Josh: What I will say is that it was a lot of people were there. However, like six months later, that number had diminished a lot because a lot of those people had transitioned away from the forbearance program. So they'd either refinanced their home or brought their mortgage current or they sold the property. And all three of those resolved the forbearance issue. So now you go into where we're at today, and I would say maybe about a third of who was experiencing that during COVID is probably what's still left to be what we consider to be distressed. And they're probably in a position where they have to decide, do we sit on our homes longer or sell them if we have some equity? And so we're not quite there yet. I think it'll probably take another six months before we know what that market looks like. I can tell you right now we don't have a lot of for closure showing up, and we see occasional short sales, but they're very occasional, and for most of them, those are people that have purchased over the last 24 months because anybody that's owned their home longer than that, usually has plenty of equity just to sell the property, if that's what they want to do.

Joey: And hopefully, took advantage of refinancing in those high twos, low threes.

Josh: Yeah. Yeah.

Joey: So we're not going to see that. So what is it? We see inventory climb, very... But for the small amount, you just went from 2.75 to 2.9 in a month. It's still not going crazy. We are going into a neutral market. Interest rates continue to rise. Is there any news coming out that's like, "Hey, over the next few months, this is what... The feds are going to do this or nothing. Is it just cloudy?"

Josh: Well, it's... They've been pretty clear, actually, right now with this most recent inflation report, I think it was like at 8.2 or 8.3, I think that gave the Federal Reserve, that's the entity that sets short-term interest rates. I feel like it gave them some runway to raise that rate, so I'm no expert, but the experts that I'm listening to are saying that it's likely going to be a three-quarter of a percent increase in their next meeting or when they make their next announcement for raising the rate. And that's what they're saying. My personal opinion is it's probably anywhere between half a percent and three-quarters of a percent, so I'm somewhat agreed that it's probably somewhere in there. That will translate into some upward pressure on the long-term mortgage rates, but they've not tied lockstep, you know what I mean? So, just because the Fed raises the rate doesn't mean the mortgage rate goes up overnight just like that. The mortgage rates are set a lot more by the demand for mortgage-backed securities.

Josh: And actually, the biggest pressure, I think, on the mortgage market is that they think that long-term interest rates are going to be lower, and so they're kind of pricing into mortgages, they're doing now...

Joey: That means they want to buy the mortgages now at 7%.

Josh: But they know that they're going to refinance out of them, though.

Joey: Oh. Okay.

Josh: You get what I'm saying? So the mortgage companies recognize that "Hey, you know what, I'm going to go and give this loan to somebody at 7% today, but in two years, the rates are probably going to be 5%. I don't have a crystal ball, but if that's what they're thinking, then they're thinking, "Well, I'm only gonna have this loan for a couple of years, so I've gotta charge some points upfront." Do you know what I mean?

Joey: Yes.

Josh: Or do I have to charge a little bit of a higher rate? I have to get a bit of a better return because the chances are they're going to refinance out of this loan over the next 24 months, and that's actually what's creating some of that challenge right now in the mortgage market. So I'm pretty optimistic again about interest rates too. I think that it's highly likely that once we get inflation numbers to come down, you will also see mortgage interest rates going down. And I'll tell you right now, listeners, the moment that mortgage interest rates consistently go down, you will see buyer demand or affordability correct. Because we had talked about it in a previous podcast, and I'm serious about this, we do not have a demand problem. We always talk to buyers who want to purchase, but we have an affordability issue, and a little higher interest rates have created that affordability issue.

Joey: And there's... I'm very conflicted because I try not to listen to any news, but unfortunately, I'm able to pull some pieces of data in. There are a few things that have popped up recently like. I was reading how the British pound has never been lower against the dollar for some long period of time, and that the European Union and some other Countries were applying pressure on the United States to say, "Hey look, you need to stop raising interest rates because it affects the dollar" because the dollar is basically still the currency of the world. So it didn't get too far, and it just said that there was pressure. They're trying... Outside forces are trying to stop us from raising interest rates. And then, on top of that, I was reading about how there are some proposals in California around trying to slow down the... I think it was the effects of that capital gains every two years, you know how it... Which just kind of escalated people flipping homes. So there are a lot of forces at work trying to slow this down... Do you know what I mean?

Josh: Yeah.

Joey: I don't know what they're going to... I don't know if that's what's going to happen from that.

Josh: Yeah, I don't either. I don't think the Fed is probably too concerned about what Europe's doing right now. I think the Fed is probably pretty focused on just handling the inflation issues in the country. They probably have more of an egocentric opinion of "if we can keep our inflation in check... " They've already solved the problem for the rest of the world, [chuckle] And I don't mean that to be egotistical or anything, but I do think the Fed...

Joey: Mocker...

Josh: Yeah, right.

Joey: Mocker.

Josh: I think the Fed is more focused on controlling the US issue.

Joey: Well, we also talked about how at some point, supply chains are going to catch up. And then... And that's going to cause... Inflation is going to come down.

Josh: Well, it's happening now.

Joey: It is... And then, once you have inventory, inflation will come back down.

Josh: Absolutely, no, we got inventory, and supply chains are being re-established. I think, for most intentional purposes, the shipping lines are now open. What we hear now is that... I'm reading this... I read this from Economist. There's a great article out there, I won't quote magazines or anything like that, but there's some, there's some good reporting out there right now that's suggesting that shipping, for one, for example, the demand has fallen. And so now, they're not backed up as much as they were anymore. The bigger issues apparently currently are around the trailers of trucks. Getting enough truck trailers available to move the stuff out of the ports is where the next issue is now. And it's kind of like a traffic jam. How many times have you guys driven down the freeway and then suddenly stopped, and then you start moving again, and you're like, "What the heck, why did everybody stop right here for?" Do you know what I mean? It's just like...

Joey: The accordion effect.

Josh: The accordion effect.

Joey: When you have a big group that just does that.

Josh: Right now, the accordion effect has moved all the way out now to trucks driving down the road. Fortunately, that's where the choke point is, where all of us were hearing about the ports before being the issue, right?

Joey: Mm-hmm.

Josh: The issue now has moved to the trucks and the trailers for those trucks, so we're kind of working our way out of it. You can just see it one step at a time, resolving the supply chain issue, and as you said, it's going to bring down inflation long-term.

Joey: So once they reduce those interest rates, housing prices will probably start climbing again.

Josh: That's my opinion.

Joey: Very quickly too.

Josh: I am so, I am so bearish on, or bullish on that, yeah.

Joey: Because the demand's there.

Josh: What's that?

Joey: Because the demand's there. So that demand is like an immediate pressure, like the minute the valve is released with interest rates going down...

Josh: Yes.

Joey: You're going to immediately feel like, "Okay, it's gonna drive... "

Josh: Yes.

Joey: People are going back to, like, "Hey, I've got six offers for you."

Josh: And the people that are in the market right now, I mean, that have the option of purchasing right now, don't forget, and maybe you didn't know, but don't forget that 18 months ago, it didn't matter if you found an amazing home that you were excited about purchasing. You were one of probably 15 other people trying to buy it, so 14 people who wanted to buy it were excited but didn't get to buy it. Today, you can shop, and today, you can make decisions, and today you don't have to be one of 15 offers, but when rates start coming down, watch out because you're right, it's going to be like a pressure cooker, all that pressure is going to get released.

Joey: About 18 months ago, my brother-in-law put in an all-cash offer for the asking price the second day the property was listed. They didn't even get countered.

Josh: No.

Joey: And I contacted the agent, and I said... And I won't throw them under the bus, but I said, "Hey, why didn't you counter? Like all cash, full price?" And he's like, "Oh well, I didn't think it would appraise." I thought to myself, "That's why it's all cash, buddy. It's... Did you not catch the first part of that?" But it was just, he took an offer for 10 grand more, and it just, it was the beginning of, the market just getting crazy, and people just getting multiple offers same day over, and it just became a bidding war. That wasn't that long ago.

Josh: No, it's not. And I don't want to put roses over everything. We are definitely still in a market correction, and we've got months to go before we can resolve that. We'll likely be in a real recession, fully documented, by the end of the year, beginning next year, for sure. And that's, that's probably a good thing. For those who don't like recessions, losing a job is no fun, and that's the sucky part about recessions, which is that typically it reflects a bad job market, right?

Joey: But that's not what we have.

Josh: That's not what we have.

Joey: At all.

Josh: No, we just have a reduction in GDP, largely created because of the inflationary numbers we're seeing. So I think that we're going to see this recession come in and we're going to have to cycle through that issue. Higher interest rates are definitely going to be a drag on the housing market, and then as we work through this and get to the other side of it, it's going to be pretty optimistic. But if you're selling in the next 12 months, today is probably your day. Do you know what I mean? And if you're buying right now, don't buy and only plan to stay there for a year. Plan on staying there for three, or five years, and if you do, you're going to be great. As I said, you still have to make a decision today, "Do I wanna rent or do I wanna own?"

Joey: Which is part of that pressure, because as soon as those interest rates turn, all those renters that are paying $1800 a month for a small three, two, or higher... Do you know what I mean? They're chomping at the bit.

Josh: Oh yeah.

Joey: Because, as you said, they're paying 100% interest.

Josh: Yeah.

Joey: They're paying someone else's mortgage. There was a TV show when we were growing up, I don't know if it still exists, but it was... I think it was called Point Counterpoint, where someone would make something and I feel like I have to be negative to your positivity. But the problem is that NASA could deflect an asteroid, and so I was going to bring that in, like interest rates, we've got asteroids headed to Earth.

Josh: Well, I didn't even know why they thought that was a big deal. If you want to go back in history, I was alternating. I was alternating... Is that the word?

Joey: It depends on... Finish the sentence, and I'll tell you.

Josh: Yeah, I was moving the course of an asteroid years ago on Atari because I was playing the game asteroid, remember? And you'd shoot it and the asteroid would literally move its trajectory in another direction, so this NASA stuff, not even a big deal. I've been doing it since I was like seven years old.

Joey: I was going to say, I think they, I think they brought in Activision just to help them with this one. Which...

Josh: Yeah, it makes total sense to me.

Joey: Yeah, so I'm not negative about it either. I think a lot of people like you said, I think when the market is so hot, and it's been so easy to just to buy, "Hey, got you in at 2.9 percent. Hey, we listed your house today, and we got 12 offers." It's just, it gets this weird, rather silly euphoric feeling like you're in a casino, and just the dealer just keeps busting type stuff. For any type of correction, people are hyper-sensitive, and they always want to go back to the worst market ever, and none of those variables are in play. We don't have the huge speculation, we don't have inventory, so the one headwind that we have is interest rates, and it's just trying to counter inflation, and I think that the factors pushing inflation are going to catch up. We are. I mean, that and they printed a ton of money, man, that's another big one.

Josh: Yeah, these podcasts are not designed necessarily to get into those things, but yeah, it's not... That definitely creates a burden for our kids. The more debt that the country assumes, the larger liability for our kids to have to deal with when they're our age, right?

Joey: Our country has debt?

Josh: Just a little bit.

Joey: Just a little bit, little bit, a little bit. Little bit.

Josh: Just a little bit. But I think the last thing to talk about is if we want to have a more sober-minded conversation, less optimistic, I would just say that right now, as we're going through this transition. And I said it a minute ago, is that seller... It's probably more important right now than ever before to make sure that you are educated on the market before you make a decision on what you're going to do. Some agents have been on the market for just a little bit of time. Some have been here a long time. In reality, that doesn't necessarily mean that one's more educated than the other. Make sure you're talking to an agent that is up-to-date on the market, understands what's happening today, is assessing that seller's unique situation and what they're trying to accomplish, and then make sure you design a plan that complements that.

Josh: Right now, more than ever, you've gotta slow down and really look at the big picture before you make a big decision like that because people are stuck, they're trying to figure out, is it a good idea to move? Is it a good idea to move up or move down? So there are a lot of questions in the market right now, and I think it takes a lot more discussion upfront before making a decision.

Joey: Yes, one of the things that I think... When a hot market, you just... Anybody could have sold a house because the second you put the sign out front, the neighbor is like, "What? Your house for sale!" People are flocking, and that's not... And so you need to make sure you find somebody that can say, "Look, this is what we think your house is worth." Well, yeah, but I wanted... It's like, "Okay, then let's go with... " 'Cause I've heard these conversations in here where they've said, "Hey look, this is what your home is worth." Well, I was hoping to get this. "Okay, if we go to market with this and we don't see certain signs, is that gonna tell you, like, Look, this was the price."

Josh: Right.

Joey: Because when someone works on commission, of course, they want the highest... I was hoping to sell your house for a billion, you know what I mean? But the market... What determines the price? The marketplace. And just having those kinds of conversations and having people that can even have those conversations, realtors that can sit down and say, "Look, I can tell you why I came up with this number." I didn't pull it out of a hat."

Josh: That's right.

Joey: And these are all the variables, and it wasn't one var... Well, your neighbor sold last year for 369, so I have to think 372, right? No, the more variables you take in, the more accurate your assessment will be.

Josh: I 100% agree. And buyers are now shopping active inventory, not homes that sold in the past. So a really healthy dose of reality is to look at what's active for sale also and try to determine where you would position yourself on a scale of one to 10, 10 being most likely that you'd be picked... How do you position yourself at that price point where you'd stand out as a value because not everybody will sell right now? We're about to move into that neutral market.

Joey: Well, awesome, Josh. Thank you. I think... You were pretty optimistic, you know what I mean, but we need some optimism because, as you said, there are a lot of people that are being a little too Chicken Little right now. The sky is not falling.

Josh: A little bit. Yeah, it's never going to be as bad as everybody thinks it will be, and it's not going to be as rosy as everybody talks about. Let's just be rational. It's somewhere in the middle, right? Awesome, let's stay rational.

Joey: Thanks, Josh. I appreciate you—next month. Have a good one.

Josh: Thanks, everyone.

Posted in Podcasts
Oct. 3, 2022

Shasta County Market Update - October 2022


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


From the Desk Of Josh Barker


New Listings

New listings coming to the market in the month of September finished at 313 down 18% compared to the 382 listings that came to market in the month of September of last year.  Recently, multiple homeowners have stated that the prospect of giving up an existing 3.5% mortgage interest rate for today's interest rates of 6.5% or higher is just not that attractive.

Active Listings Inventory

Active listing inventories averaged 836 at the end of September up 24% compared to September of last year. The overall slower pace in home sales due to higher rates has contributed to the growing home inventory. Higher home inventories have been a welcomed change to home buyers in recent months.

Sold Listings

Home sales in the month of September finished at 211 closings down 29% compared to the 313 closings in the month of September of last year. The slowdown in migration pattern shifts combined with higher interest rates has contributed to the overall decline in home sales. 

Absorption Rate

The absorption rate in Shasta County climbed in the month of September to a 2.96 supply, up 38% compared to the 2.14 absorption rate in September of last year. The absorption rate represents the number of months it would take to sell off the existing home inventory if no other homes came to market. Typically a 0-3 month supply represents a seller's market in Shasta County whereas a 4-5 month supply represents a neutral market and a 6+ month supply represents a buyers market. Currently, the absorption rate reflects the tail end of a seller's market.

Interest Rates

Interest rates have put a wet blanket on an already adjusting real estate market. The pressure of higher rates has put pressure on overall home sales and has a large impact on affordability. Mortgage rates hit a high of 7% and higher in September and have been floating between 6.5% and 7.5% in recent weeks.

Housing Expectations

Many local residents have grown weary of the housing market in recent weeks and months. The red-hot housing market created by massive migration patterns shifts and low-interest rates has transitioned to a post-pandemic market with much higher interest rates. The transition reflects more of an affordability issue than a demand issue. Home buyers are in the market and want to purchase. However, higher mortgage interest rates have had a significant negative impact as many home purchases require financing. Mortgage rates have more than doubled in the past year.

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 October! 

Josh Barker

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

Posted in Josh's Blog
Sept. 20, 2022

Josh Barker Real Estate Podcast #11

🏠💰Home Value Tool➔

Find Rent Data - 💵🏘❓


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: We're back.

Josh: We're back.

Joey: Guess who's back? So it's September, and it's been raining. Thank God.

Josh: I know.

Joey: It's been awesome, man. I slept with the window open. It was just awesome. Loved it. Got up, went for a walk in the morning, and wasn't breaking out in a sweat...

Josh: There you go.

Joey: A couple of seconds, so I'm very grateful for the change in weather.

Josh: Me too. Hopefully, it knocks down some of those fires out there for everybody.

Joey: Yeah, absolutely. So I think officially, well, not officially, but in a few days, officially, summer is over. And summer is usually a big time in real estate. We definitely had a different summer this year.

Josh: Yeah, we did.

Joey: But I think... This is a podcast about real estate.

Josh: Sure.

Joey: So we think about...

Josh: You don't want to talk about the flowers and the birds?

Joey: Yeah, and I like the effect it has on it, but usually summer is like, I think the... Spring and Summer are the biggest time for real estate as far as like the sales volume usually goes up.

Josh: Well, the sales volume, the amount of inventory going to the market picks up in the spring heavily, and then the highest spending numbers are typically in June and July.

Joey: And this year has been a little bit different, partly because we came out of arguably the hottest, white-hot market for Shasta and Tehama ever, at least in our lifetime. And then, on top of that, the big news was that interest rates just kept climbing, which...

Josh: Yep.

Joey: They just came up again. Right?

Josh: Last week, the Fed came out, and well, it wasn't necessarily just the Fed, but they came out with the Consumer Price Index and said that it was like at 8.3, they were projecting 8.1, so it kind of went the wrong way. It's probably putting some pressure on the Fed right now to raise those interest rates this week, and maybe even by the time this podcast gets out for everybody to listen to, the Fed may have already made their decision, but most of the... If you were to take the average of the 15 different experts out there, they'd probably tell you it's going to be three-quarters of a percent. 0.75 is what the Fed is likely going to raise the interest rates by.

Joey: Which means mortgage rates will probably go up a quarter?

Josh: There'll be some pressure, yeah, maybe a quarter percent, there'll be some pressure there. And it's interesting, Joey, because I had this conversation with about half a dozen different brokerages, brokers that do the stocks, stock trading. Well, I've talked to mortgage lenders, and they're challenged right now because all that refinancing is gone.

Joey: Yeah.

Josh: And I've talked to some home builders, and really, there's this sentiment, just keeping it real, where they're just down and concerned. And it's interesting because it's not like we don't see this all the time. I mean, it's not... It doesn't happen once a year, but real estate, stock market, all these markets, they always cycle, you can't stay hot forever, and so I think my only thing right now is I keep on reminding them, I'm like, "Hey if you act surprised, that's almost naive when you've been in this business for a long time." You know what I mean?

Joey: Oh, absolutely.

Josh: Because things just go through cycles and just a good dose of calming down is probably a good idea.

Joey: Well, the average person isn't like you and I, where we're plugged into real estate. So it's kind of like, we know all this, and they usually get it in quips, soundbites, clickbait, things like that, and the bottom line is that the market is still very good. The numbers are... This is still a seller's market. It's on the edge of a seller's market, right?

Josh: Yeah. I mean, statistically, you look, I think we're at 2.9, 3 months supply of homes for sale.

Joey: Which anything under three is?

Josh: Yeah, zero to three months is a seller's market, four to five is neutral, six and more is a buyer's market, and we're on the tail-end of a seller's market, but the reporters aren't going to say that because they don't report news, they sell the news.

Joey: No. Exactly.

Josh: And they try to... Sorry, let me pause my thing here.

Joey: I think that's the bat signal. I think we better go.

Josh: It's the bat signal, yeah, sorry. Sorry for your listeners hearing that, but no, it's really a situation where people just have to recognize it's part of what happens in the market, not a big deal.

Joey: And the other thing is that the market was being driven by really low-interest rates, there were a number of factors that were driving the market, and now we're kind of in a normal market, and so the idea, at least to me, and you can correct me if I'm wrong, but at least to me, the idea is that in those hot markets, a bunch of people are in real estate purely out of speculation. They're not buying their first home, they're not getting a larger home 'cause they're extending their family, they're not, "Hey, my kids are off to college, I'm downsizing." These are just people like, "Hey, I pulled my money out of my 401K. I'm going to flip a house." And they push that market and what's happened is the incentives for them to be in the market have disappeared, so those people are slowly disappearing, but the regular driving forces year in, year out are, people are still moving here, people are still buying the first home. And speaking of buying a first home, you still have, just like you've seen housing go up, you've seen rent go up, I think, at even higher rates.

JoshJosh: Yeah, if you look at, that's a... I'm going to cite that, so everybody can go there and look at it. But link it.

Joey: I'll link it in the...

Josh: Yeah, link it. That's good. It's a three-bedroom, two-bath home with a two-car garage in the City of Redding that is averaging about 1800 bucks a month right now, and that's what that report would say. And I think most people, they have to make a decision about housing in general, it's like, "Well, do I rent or do I buy?" Well, if you're evaluating do I buy, it's like, well, the next question is, well, where is the market right now? Is it going up or going down, or sideways? And I think we've already given back. I don't know each market. So when you hear this, don't go, "Oh my gosh, it's my house." But if you were to take the average collectively in the market, we're probably down about 10% in terms of the average selling price.

Joey: From last year, from the height or...

Josh: Yeah, so since about November of last year, yeah.

Joey: Which was just about...

Josh: Nine, 10 months ago.

Joey: Yeah. And it was... It probably peaked somewhere around there. Interest rates start changing in December, so it's somewhere...

Josh: They did.

Joey: Yeah.

Josh: And that's really what the whole story is about, is that in Shasta County, there's a huge percentage of the purchases, I'll be speculating, but it's probably close to 90% of purchases right now are financed. And so with it being that high, that means that when the interest rate goes up, like it does, for every 1% it raises, it impacts the purchasing power by up to 10%. So rates went from 3 1/4 to 6 1/2. Well, that's double. I mean, it went up a full 100% higher than it was before, diminishing purchasing power. And that's where the situation in the market is right now, and we have average sellers' prices trying to adjust to the fact that the average buyer qualifies for a lower purchase price, you know what I mean? Because buyers qualify for whatever payment they qualify for. The rate is what dictates how much they can buy. And the difference between those two, there's some reconciliation that's taking place right now, and we're watching it in real-time. So when people ask, "Well, what's the tea leaf say? Where's the market going?" It's like, "Well, if rates stay high, prices will continue to soften. If rates go down, at least for Shasta County, if the rates go down, then you could expect housing prices to firm up," And so everybody kinda has the same data.

Joey: And I think about like it also... We talk about the market in this real general term, and there are people within the market. We talk about segments, but when I think about a young couple, first-time buyers, oh, should they buy? My thought is absolute. Even you go, "Well, the average rent's 1,800, and you're telling me now with interest rates that same home, my payment would now be 2,100 versus a year ago. So it would have been a lot less, right?" So those numbers are going to fluctuate back and forth.

Josh: Yep.

Joey: And so you... We've said this term before. The first time I heard it was months ago, but you marry the home, you date the interest rate.

Josh: Yep.

Joey: So you lock the home in now, and then when interest rates come down, you've built some equity, you've extended your credit, you know, hey, they're making their payment, and you refinance, but waiting until that interest rate comes down, it's like, well, the... You're really... You're trying to time it. It's like... To me, it's very similar to the stock market, where they show the people who constantly try to time the stock market do very poorly.

Josh: Right.

Joey: Very poorly. And so this idea of, "Oh, I'll jump into the market when housing is the lowest and interest rates are little." Like that doesn't happen.

Josh: No.

Joey: Those things are crossing over each other. They're affecting each other.

Josh: They are. And maybe for somebody listening to this right now, think about the buyers that were purchased last year from July until, let's say, October, for example, just to take a segment on the market, they were pretty optimistic behind, right? The reality is that it's a better opportunity to buy today than it was then.

Joey: From a price of the home standpoint.

Josh: Exactly. From the price standpoint, right? And so, to your point you just said a minute ago, if you marry the home, but you date the interest rate, would you rather buy while prices are a little softer and then know that you can refinance when the rate drops, or would you rather purchase when the prices are super high, and now there's no opportunity to refinance because the rate probably was already pretty low in the first place?

Joey: I think if you purchased last year and you extended yourself, you might be in trouble, but if you purchased last year, you should have had a fantastic rate.

Josh: Right.

Joey: And you love the fact that those rents are going up because you've locked in that 3%, 3 1/4%.

Josh: That living expense is locked in.

Joey: Exactly.

Josh: Yeah.

Joey: And so it's just one of those things where the people time it the wrong way, you know what I mean? Or they extend themselves.

Josh: Yeah.

Joey: And that was one of the things that we didn't see in the last market, that we saw in the market that hit hard in the early 2000s, was that... I think it was. You said 10% of the market were investors. So the vast majority of people should have been people buying a home for themselves.

Josh: Well, right now, in the last... It's probably very low, below 10% now, but...

Joey: Yeah, the interest rates...

Josh: Over the last 24 months, it's probably averaged about 10% was investor-related. Not including home builders and stuff. That's a different category. That's more of a speculation, buying a piece of property, building the house, and then selling it for a profit, so. But for speculation, like I bought a house with the anticipation of it appreciating than me selling it or renting it or what have you is only about 10% of the market here in the last couple of years. But going back to 2005, in that era, almost 40% or more of it was speculation, and...

Joey: Was it leveraged?

Josh: Everyone was leveraged. And...

Joey: When it came down, it came down hard?

Josh: That's right. But you know what, there is something to talk about right now: I'm beginning to see those variable interest rates coming out.

Joey: Oh no.

Josh: Yeah. And now they're coming out. They're saying, "But, but, the Dodd-Frank Bill says that we have to make sure we verify their employment, we have to make sure we verify their income and expenses. There's a ratio that's still very solid." And I think all of that is probably true, but variable interest rates are coming back again, and they were not here two years ago. And so when you... Or at least in any kind of a way that's recognizable. So now I'm starting to see these loosening of... Not so much loosening of the lending guidelines, because I think they're probably more heavily scrutinized because I think you have to have larger down payments, more reserves, probably even more of a stable P&L, profit and loss, to qualify for those variable rates, but it does give you an idea that mortgage lenders are going, or companies and banks are saying, "Hey, wait a minute, these rates are pretty high. They're probably not gonna be here for very long before they start to go back the other way, so let's offer a variable interest rate," knowing that these folks are probably going to refinance out of this loan in the next two or three years.

Joey: Oh wow. Yeah.

Josh: Yeah.

Joey: Man, that starts to get... So there are so many variables and so many different... This stuff is... I always think about, like, when somebody goes, "Well, you know, it's not rocket science," right? They'll say that term, and usually, it has to do with something... And I remember one time I was doing this show, and there was a few of us, and we were talking about social issues, and one of them goes, "You know, it's not rocket science," and I said, "Yeah, 'cause rocket science is easy compared to this."

Josh: Yeah.

Joey: I mean, rocket science is not hard. Social science is hard. Trying to figure out why these...

Josh: What are people going to do, and why they're doing it? Yeah.

Joey: Because one of the biggest variables is emotion.

Josh: Yeah.

Joey: Like, yeah, there was no logic to that. Everyone just ran right off that cliff. They got so scared. So there are a lot of variables here. I think the market's normalizing. I think like, hey, it's... You've talked about how it's not good in the long run. Everyone loves it. "Yeah, man, my equity is going up." That's not good in the long run for your community because your children aren't able to purchase a home if this continues. You need the market to kinda ebb and flow just a little bit with... What was the number you gave that you said like a good yearly appreciation is?

Josh: You know, 2 to 4%, right in that range. So yeah.

Joey: Yeah, something like that. And so... And... Where we're at like 20% plus or something?

Josh: Oh, well, yeah, and that's the point I was making at the beginning of this podcast, is like, look, if you have periods of massive expansion in terms of valuation, there is a process of correction that's going to take place, that's just normal. And again, if somebody didn't know what would happen, there could be true naivety. That's totally normal. If you haven't been in the market before, you didn't understand that it did that. But for those who've been around a while, that's probably not a smart thing to be thinking. You should know better if market cycle. So I'm constantly just reminding people, I do this as much as I can with people, it's like, look, the markets are going to... If you have periods of expansion, you have periods of contraction, and be ready for the wild card. The wild card is... Like the last one, we have COVID. Nobody knew in December or January that COVID was going to hit March of 2020.

Joey: Yeah.

Josh: Nobody knew that was going to happen. Now it just came out of nowhere. And then you kind of look at what happens with the Ukraine War or something that had an impact on the cost of fuel and everything else. Well, nobody knew that was going to happen three months before it happened, or maybe the CIA did, but nobody on Main Street knows that stuff. And so I guess my point is, is that things are going to happen, and it's okay, just calm down, recognize that if you need a place to live, you've got a couple of choices, live with someone, a family member, what have you, or rent, or purchase, and any one of those things is fine. But if you choose to purchase, I would say recognize you're probably going to be in that home for a period of time.

Joey: Yeah.

Josh: We'll probably see a market that's going to fluctuate up and down a little bit over the next year or two because we're going through an adjustment period where interest rates are high. They're probably going to come back down at some point. That's going to have an impact on pricing because home values will probably tighten up really quickly when that happens. But the long-term prospect is that you're going to be at home for a period of time, and it will be great.

Joey: Let me ask you a question, and if you don't know the answer to this, it's okay because this is going to come out of the left field. If we see deflation kick in, if we see... So right now, the Feds are increasing interest rates in an attempt to counter inflation.

Josh: Yeah.

Joey: And a lot of people are like, well, the inflation is there because there was printing and distribution of money, agreed, but also supply chains were heavily impacted.

Josh: Sure.

Joey: If over the next year or two, we see the supply chain start to catch up, all the stuff, all the COVID, the ships being off the coast for a year, all that stuff, we get back to normal, where supply chains are kind of normal.

Josh: A new normal.

Joey: And we kind of see that. For example, we're getting a... The contractor is finally being able to build our garage. We had to do this two-car garage, and they said, "Hey, well, good news," 'cause we signed a contract a year ago. They said, "Supplies and materials have dropped dramatically.

Josh: Oh, yeah.

Joey: You're actually... We're going to be able to do it cheaper. When was the last time you heard that? And that's why, because supply chains are kind of catching up now.

Josh: That's right.

Joey: That crazy wood, plywood, OSB that went up, it's come back down. So the thing... I read a couple of things that said, hey, if those supply chains catch up and you've got... If you still have these higher interest rates, you're going to see deflation, which means prices suddenly start to drop. Do you know what effect a deflationary market might have on real estate?

Josh: Well, that's a really good question, man. I don't know, man. I'd have to think through all of that.

Joey: Sorry, I knew that was out of the left field, but I've been thinking about it, and when there's... Then you have all the other answers. I figured you'd know. Like, "Well, Joey, it's real easy. Now, let's look at Japan from '87 to '92."

Josh: Well, this is proof, Marcus, that I don't have... This isn't scripted. So, you're right about the supply chain. Right now, we are seeing things soften up, but think of it more of a supply and demand.

Joey: Yeah.

Josh: If my warehouses now are becoming full...

Joey: Yes.

Josh: Okay. I need to make room because I still have a whole bunch of stuff coming in, right?

Joey: That's right.

Josh: And so if my warehouse is full, I've got one of two choices, I could stop the orders from coming in, but there's profit in that, in bringing those orders in, or I would need to start discounting my pricing so I'd make some room in my warehouse. And as soon as they start making that decision, now a competitor sees that I've made that decision, now they want to get stuff out of their warehouse too, and so you see the snowball effect of things beginning to loosen up, prices starting to come down. And so, to your point, I agree that as a supply chain re-establishes itself, you will see the cost of materials and goods going down.

Joey: I think so.

Josh: And I think that'll happen before labor does.

Joey: Yes.

Josh: Okay. And I... And for the people listening to this, I just say that labor and material and supply cost are two different things because labor and stuff, if I still have margin in there, I'll drop my price, it doesn't matter, I'll drop it. But if you're asking somebody to drop their wages, that impacts what the other things they're able to do too.

Joey: I don't see that happening for a long time.

Josh: It's going to be a challenge because it's almost like you're going to have a situation where a lot of people are going to say, "I'm not willing to work for less," and it's like, "Well, I can't... Then I can't afford you anymore," and then you start to see some layoffs. So that's where the recession piece is looming out there. I think a lot of experts are saying they're projecting the first quarter of next year... Even... And above those, some people would say we're in it now, but going into a recessionary period, if they have... If I have... If I don't have as much work for my employees, what will I do?

Joey: I think they'll lay people off.

Josh: Yeah, and we can't deny the fact. I'm reading reports right now of companies that are making these layoffs now. I'm seeing 10% cuts, 10, 20% cuts. So our industries right now are getting cut, lenders are getting blown out left and right, real estate agents, because the volumes will drop, they're beginning to leave. So there are some impacts there.

Joey: Some tech giants are doing it too. I just saw that Twilio laid off, I think, 800 people.

Josh: They did. It was about 10% of their overall workforce, so...

Joey: That's a tech company.

Josh: Yup. Yup.

Joey: Big-time tech company.

Josh: Yup, so it's something that we just know, that this reconciliation, if you will, is coming. And I think it's smart to say, "Okay, well, if that's coming, what will it look like?" Well, the inventory is like we said. They're 2.93% or 2.93 supply... 2.39... Or 2.93 month's supply of homes for sale. So that's not a lot of inventory.

Joey: No.

Josh: If that inventory was six, seven, eight months, that's when you really see things getting soft.

Joey: Okay, because I was going to think in a deflationary period, cash will be king again, right?

Josh: It should be.

Joey: I think to... Because of interest rates, this is where we're getting way out of my... I'm not an economist. I play one on TV. But I'm a... I'm not an economist. But I'm thinking, "Okay, if price started going down, cash is going to be king, and then what are they going to do with credit? Are they going to... Are interest rates going to come down to try to counter that or... Yeah, it starts to get...

Josh: Well, it gets really weird because, again, real estate mortgages, so people getting loans to buy homes, that rate is a lot different than what the Fed is doing right now. Mortgage-backed securities are all about investors who buy those mortgages knowing that most people pay them off in four or five years and buy them at a coupon rate. So if the Federal Reserve decided to go out there and re-purchase a lot of these mortgage-backed securities, if they came out today and said, "You know what, we'll buy everything funded at... We'll buy coupons of 4% all day long." The mortgage lenders would then go out and sell these loans at 4%, and they would have a buyer in the market, which would be the Federal Reserve buying them at 4%.

Josh: So with a policy action, they could change the mortgage rate today. And this is the thing that I'm constantly aware of in my mind when I look at real estate valuation. It's like, "You know what? Once real estate gets hit, it's highly likely the Federal Reserve would step in and shore that up," because they don't want a foreclosure market. What they don't want is a massive short-sell market where you're trying to sell your home for less than you own it because of the expense that they carry and the banks carry, and the taxpayer has to pay to get people out of that situation. Because everybody pays when that happens is greater than if they were just to start buying those mortgage-backed securities. Does that make sense?

Joey: Oh, it totally makes sense.

Josh: Yeah. And so I'm kind of bullish on the Feds stepping in, and I think that would be a lesson they've learned from last time.

Joey: And also, you know what we're talking about is the overall California market versus the renting market, one of the great things that we have going for us in this market is low supply, that keeps prices steady.

Josh: It does.

Joey: Yes, they're down a little bit from the super high...

Josh: Because interest rates are up?

Joey: But that's... They're not... They didn't plummet.

Josh: No. It's not an over-supply issue.

Joey: No. If you know what I mean...

Josh: Because as soon as prices... As soon as rates go down just a little bit, we see it every weekend here, where rates are at 6.5. Things are a little soft, right? Drops to 6, boom, the next week, the corresponding effect a week later, buyer demand picks up. The demand is there. It's not a demand issue. It's an affordability issue. You know what I mean?

Joey: Yes.

Josh: That's why I'm confident that when rates go down, prices immediately stop, and they start to firm up, and if they really go down, they go up because the demand is there, people want to purchase, they do. We see it every day, but affordability is a hurdle that they absolutely have to be able to overcome.

Joey: Case in point to your materials versus labor, my contractor didn't tell me he was going to do it for cheaper. He just said I was...

Josh: No. That's right.

Joey: My material is going to be... He didn't say the good news is I'm taking a 20% reduction in pay, no.

Josh: But if there are three contractors competing for your job, then now, all of a sudden, they start making decisions on labor terms.

Joey: I don't see that happening. And everybody knows I have a crystal ball, and I nail it every time, but I just don't see that happening because I don't think we have the labor. I don't think there's an abundance of labor. Maybe there will be.

Josh: But there isn't today because there are still people wanting to do stuff, but if you look around at the real estate construction boom over the last 24 or 36 months, okay? If that demand gets killed off over the next, let's say, 6 to 12 months, for some reason, you're going to have skilled labor without a lot of work. What do they do?

Joey: Yeah.

Josh: What do they do? They have to make a decision, right? Either I'm not working, or I'm going to work for a little less. That's the decision that'll have to be made. I've seen this because... I remember this in '05, '06, and it was... I didn't think it was going to happen either back then, and quite honestly, all I'm doing is borrowing from back then. People were getting paid a lot of money to build stuff. The market corrected, alright, and when it did, that meant that the cost of labor started going down. I built a home in 2007. I built it for like 100 bucks a foot.

Joey: Oh, wow.

Josh: I know it's... Sorry, everybody. But if I would have built it two years before, I probably would have paid about $130 to $140 a foot, okay? Part of that was the supply and the cost of materials going down a little bit, but most of it was in labor.

Joey: Yeah.

Josh: Most of it is because of labor. People were willing to do a lot more... To do work for a little bit less.

Joey: Okay. Yeah, it's funny. You don't get a jobs report for Shasta County, do you? Does anyone publish something like that? We need confirmation.

Josh: That's a good question, man. For anybody who's listening to this, if you have it, let us know.

Joey: Yeah, no kidding. I'd love to link to that.

Josh: Yeah.

Joey: because I still think... What's funny is now that you're bringing that up, I was talking to a couple of contractors I know, and they're still... It's funny because the mentality is, they were talking about how they're not booked out as far now as they were, and then that conversation shifted to... They were like, "Yeah, I'm only like nine weeks out." I'm like, "That... Nine weeks. That's over two months and... "Oh, yeah, but this time last year, I was seven months out."

Josh: That's right.

Joey: And then we... Then it shifted to, "Okay, well, four years ago, what were you... " And they're like, "Oh, we were about seven to nine weeks out," and I'm like, "So this is a normal market?" But in their mind, they're so used to that white-hot market, and they're like... They're freezing up a little bit. And they also said people are... Yeah. So I don't know where that's going to go, but all of that...

Josh: Well, mine is just a guess, but I'm taking a little bit of what I saw last time and kind of applying it this time and thinking about supply and demand. If the demand for labor goes down, and the supply for it is... Four minutes left, Marcus, six. But the number of people that are available to do the work is pretty high. What do people do? Because a ton of that was in profit, right? So if you take a couple of years ago, when, everybody was rebuilding from the car fire, right? A lot of that was on insurance money.

Joey: Oh yeah.

Josh: So they were charging a lot of money to build a home. The supplies weren't that much higher... What was higher?

Joey: Labor.

Josh: Labor. Labor went up. Why? Well, because there were only so many resources of labor available, people were basically stealing labor from each other, I'll hire you on my crew for more money, kind of a thing, and that was happening a lot. But now that that insurance money is gone, they can't necessarily charge the same amount anymore. And so this is what the impact is, and I can't help but think that the cost of labor for a lot of what we're looking at right now, I'm not saying it's going to go down in half, but for it to go down, it wouldn't surprise me at all.

Joey: Well, yeah. When you say it like that, I forget about that, which was pretty crazy. People were racing to get those homes rebuilt, and some of the contractors were like... I remember hearing some of the people, and they were months, and months, and months out. And then COVID hits, and the supply chain gets completely disrupted. And we've gone through quite a bit in the last couple of years, now, to say it loud.

Josh: All those wild cards. Yeah, all those wild cards. But remember, and just to put a little bit of a red bow on this thing here.

Joey: Yeah.

Josh: If somebody's making a little bit less in the labor market, but the cost of all your goods and services is also going down, it doesn't necessarily mean you're going to hurt.

Joey: It's in relation to each other.

Josh: It's in relation to each other.

Joey: You get a 20% raise, and if products go up 30%, you lose money. And vice versa. Yeah.

Josh: Right. Exactly. And you have to think about the supply and demand issue and what's created as a result of that.

Joey: To me, all of this that we're talking about is if you don't own a home, and you can afford to buy, then all this stuff doesn't matter. It's... You need to buy a home.

Josh: Well, it's an asset. You're securing a position in the market. You've secured an asset. So if that asset goes up in value, you receive the benefit. It goes down in value. You hold it longer. It's one of those two.

Joey: And also if you're renting a house, you got two houses side by side, one's being rented, one's being owned, I know in my neighborhood, you know who the homeowners are.

Josh: Sure.

Joey: You know what I mean? On the weekend, instead of partying at the local brewery, they're out there pulling weeds and putting fresh paint on the trim. And it's increasing the value.

Josh: Adding the value. That's right, adding to the value.

Joey: Yeah. And the renter's like, "Yeah, I didn't take my trash out again. It's overflowing." You can tell. So it's like... I think that's even a good thing for young people.

Josh: 100%, I totally agree.

Joey: All of these things that we're talking about, I'm trying to figure out if I should dump my 401K and buy a triplex, or should I sell a duplex and buy Apple stock.

Josh: Calm down, be diversified. Relax, take a deep breath. Recognize that this... As with all things, this will come to pass too. And be smart about it. Just don't do emotional stuff. Recognize that, look, buying and selling in real estate, if you're doing it for, "I'm gonna try to flip it and make a quick profit." This is not Bitcoin, I don't think that this is...

Joey: Which is down, big time.

Josh: It's down, big time. Right? It's a long-term strategy, but I've watched a lot of people, and I mean a lot of people, retire because of their investments in real estate. So I would strongly encourage looking at the numbers, so in any case.

Joey: Well, thank you, Josh. I appreciate it. I hope we helped some people today.

Josh: I don't know if we did or not, man.

Joey: I feel like we did good.

Josh: Alright. That's great, so.

Joey: Okay.

Josh: Well, thanks for your time. I appreciate it very much.

Joey: Thank you, sir. See you next month.

Josh: Okay.

Posted in Podcasts
Sept. 2, 2022

Shasta County Market Update - September 2022


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


From the Desk Of Josh Barker


Residential Sales

Home sales finished at 266 closings in the month of August down 18.9% compared to the 328 homes that sold in August of last year. The decrease in home sales over the past 8 months has been a reflection of the housing market transitioning away from a pandemic related market fueled by low interest rates. The recent housing market reflects a more normal balanced market that is adjusting to a higher interest rate environment.

Residential Listings

Current home inventories average 827 at the end of August up 28% compared to the 644 homes for sale in August of last year. The number of new listings coming to market in August finished at 322 down 13% compared to the 371 homes that came to market in August of 2021. Recent home listing activity suggests that homeowners are choosing to remain in their homes for longer periods of time. Whether this trend continues is anyone's guess. However, a recent report from Google reveals that the search term "sell my house" exploded in recent weeks. This recent report suggests that an increase in homes coming to the market may be just around the corner.

Absorption Rate

The absorption rate in Shasta County has continued to climb in August peaking at a 2.89 supply of homes. The absorption rate reflects the number of months it would require to sell off the existing home inventory "based on current demand" if no other homes come to market. Typically, a 1-3 month supply of homes represents a sellers market , whereas a 4-5 month supply reflects a neutral market and a 6 month or greater supply represents a buyers market. Currently the absorption rate reflects the tail end of a sellers market overall. However, careful consideration to absorption rates in individual price ranges is critical to determining pricing and average market times. Nationally pending homes sales have cooled noticeably with a national average reduction of 20% compared to last year with a whopping 30% decrease in pending home sales year over year in the west.

Median Sales Price

The median sales price for a home in Shasta County averaged $355,000 in August down $40,000 compared to the high in May of $395,000. The drop in the median sales price was largely due to the impact of higher interest rates that borrowers were subject to in recent months. The median sales is a critical middle number that represents half of all properties selling for more and half of all properties for selling for less in a given month.

Interest Rates

Interest rates have had a bumpy ride in recent weeks as the average rate for a 30 year mortgage ranged between a low of 5.5% in early August to an average of 6.5% as of the first of September. Mortgage rates play a major role in overall home pricing as many borrowers obtain financing to purchase. For every 1% the mortgage rate increases, a borrower's purchasing power is reduced by up to 10%. In addition to higher mortgage rates in recent months, borrowers are also feeling the pinch of tighter credit and underwriting guidelines. As lending standards tighten, the access and cost of credit has an impact on purchasing power.

Rental Market

The rental market in Shasta County continues to remain tight for would-be tenants although demand has begun to cool off in recent weeks. Many property managers are reporting that multiple rental applications for individual properties have slowed down. In the past it could be common to receive 5-10 applicants for a single property compared to the 1-3 they may be receiving today. This change in demand has not impacted rental rates in a meaningful way at this point but is a sign that the rental market is softening compared to the past 24 months.

Home Insurance

Expect insurance costs to rise across the board from everything from commercial, auto and home insurance in the next year. Experts are projecting rate increases from anywhere between 5% to as high as 20% in most sectors. However, homes located within designated high risk fire areas will receive the largest increases and in many cases have already received large premium hikes. Home insurance hikes will play a major role in overall affordability and are anticipated to have an impact on overall property values in areas that are impacted the most by higher insurance costs.

Future Market Forecast

Many experts are predicting a slow-growing economy in 2023. How slow? It depends on whether the U.S. slips into a mild recession by the end of Q1 2023 as many are predicting. The good news is that many large economists believe inflation has peaked although it will likely continue to remain stubbornly high until late spring early summer 2023. The housing market is projected to follow a trend along a similar pattern of mortgage interest rates. If mortgage interest rates climb higher, home buyer demand will likely decline.

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

Slides and links that relate to the topics discussed above



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 September! 

Josh Barker

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

Posted in Josh's Blog
Aug. 17, 2022

Josh Barker Real Estate Podcast #10

🏠💰Home Value Tool➔


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, Josh? Well, it's been, correct me if I'm wrong, but it's been a month.

Josh: It has been a month.

Joey: When I kind of I looked, there's nothing there. Okay. Still nothing there. Excellent.

Josh: He's checking us again.

Joey: Yeah. So, it's August.

Josh: It is.

Joey: We were talking before the camera started rolling. There were several topics because the landscape was moving. Things are shifting a lot, and there's a lot of concern. Some of the things that you were talking about, we were talking about interest rates and the current inventory, but a big topic that you talked about, you talked about insurance, especially for people that are outside of the area, insurance has gone up a lot.

Josh: Yeah. It has. Yeah.

Joey: For example, Shingletown.

Josh: Well, I mean... Yeah. Shingletown. Yeah. It's an effect of what the state's doing too. So the state is putting a lot of pressure on the wildland, wildland-fire interface and trying to push a lot of people back into the cities. They're probably not really putting a lot of pressure on insurance companies because the insurance companies are, for the most part, they're getting very aggressive on how much they're charging in these forested areas. So Shingletown right now is probably a prime example of that. So for our listeners, Shingletown is a community that's to the east of Redding. It's up a hill. It's about 25 minutes away. So for listeners that might be in Sacramento, just think of it like Auburn, going up the hill into Auburn kind of a thing.

Joey: Yeah, totally.

Josh: But, and so Auburn might be even dealing with this too, I'm not sure. But a few years ago, before all the fires that we really started to see at a higher volume, you had... Insurance was probably, let's say, 12, 1500 bucks a year, for those places up there in Shingletown, for just the average type of home. And today, that same property is probably somewhere between $4,000 and $5,000 per year. So it's pretty...

Joey: Now, that's huge. That's a huge impact on your monthly payment.

Josh: It's huge. Yeah.

Joey: You just went from $100 to potentially $400 a month.

Josh: Yeah, exactly. And it has an impact obviously on what you can afford to buy.

Joey: Yeah.

Josh: And we've had numbers that are even higher than that too, much higher than that in terms of the insurance. I've gotten some scary quotes that are much higher than that. So I think it's a challenge. I think it's a challenge for property owners that are up there on the mountain right now because they recognize that they might be grandfathered in with a lower insurance premium, but as soon as the property changes title, the new buyer has to be subject to new rates, and they're not grandfathered in. So that's playing into value in Shingletown right now. So everybody's dealing with interest rate increases, but Shingletown's dealing with interest rate increases and the increase in the fire insurance premiums themselves. And that's...

Joey: It's probably not just Shingletown. It's all the areas that have heavy trees, right? That's...

Josh: Oh, yeah. No, I know. Yeah. Insurance companies right now have these maps that they're doing massive overlays on and their proximity to water access for fire hydrants, full-time fire stations, ingress, and egress. So there are a whole lot of considerations that go into their fire mapping, but Shingletown, unfortunately, is rated essentially as being a pretty high risk for insurance carriers. And so the rate's higher. And if you go all the way down the foothills of the Sierra Nevadas, and also true for the west side of town too, if you get up into Weaverville and places between here and French Gulch and all that, it's kind of the same thing where these higher risk fire areas, they're suffering some much higher fire insurance premiums now.

Joey: To me, that's a perfect example of when we talk about the market, and it's not just when you and I talk about it, but when people talk about the market and I've always tried to say, okay, well, that's a very general term within the market, you have the state market, you have the Redding market.

Josh: Yeah.

Joey: This is, even within this area, suddenly that's pressure. You go 25 miles east, and that's going to be pressure on a home's listing price.

Josh: Oh, yeah.

Joey: Because they're like, well, they're going to have to pay $300, $400 more per month for insurance that they didn't have to pay, just like interest rates. That's just another thing of just a... Even within this market, you now have the segments outside the city limits that they're going to. So it's going to be that headwind pressure that brings down the listing price.

Josh: It is. And it's happening up and down the state of California. It's not just localized to our region only. It's really up and down the state. The state is continuing to focus on infill. They want to see more and more development inside of the cities. They want to see less population in the wildland-fire interface. They're coming out, speaking about it all the time. If you guys were to go on YouTube right now and watch the Governor speaking at the last State of California meeting that he did. That's how it... He spent probably 25 minutes talking about that. They're 100% on it.

Josh: So for me, I'm looking at it going, well, I don't think they're going to put a ton of pressure then on insurance carriers to lower premiums in the wildland-fire interface because I think ultimately, they're trying to push populations into cities. And so, it will be challenging for those already out there. I don't know if this increase in insurance is going to remain or if it's going to change, but right now, it's hard. It's hard on a lot of them.

Joey: Yeah. And it makes sense. I'm not going to be somebody that aligns themself with politicians or anything, but I get it. It's infrastructure.

Josh: Yeah.

Joey: Because of the fires that we have seen and the destruction we've seen, nobody wants to see that.

Josh: No.

Joey: And so everyone wants to see that go away. But it's like, how do you get rid of it then? It's tough. Unless somebody can figure out how to make it rain all the time, we're at the mercy of and when... We've been driving around. My wife just went down to Piedmont, and we just went over to the coast, and we were talking about the water shortage is an issue everywhere. Just driving to the coast normally, the trees looked a lot better than they do this time of year. It looks dry, real dry. It's kind of scary. In fact, when we came back, there were those lightning strike fires that started outside of Willow Creek and Sawyer.

Josh: Yeah. In Six Rivers or something like that.

Joey: Yeah. Something like it was... When we were headed over, it had just happened the night before. So you could see smoke. We're like, what's going on? Found out when we came back two days later. We drove through. It was kinda eerie. It was... I was like, Ugh, should we be on this highway?

Josh: Well, before we segue onto another topic, let's... I just want to tie a loop around this real quick. A lot of the clients that we have that have had a hard time with insurance in those wildland interfaces, they have some options at the state level, they have what's called, I think it's a California FAIR Plan, where they'll actually work with you to insure your property. It doesn't insure your personal contents, and so well, they'll often get a second policy, almost like a renters policy for the personal contents.

Josh: But they can get their fire insurance through this California FAIR Plan, and then they get their own extra insurance rider for their personal property through a normal... Normal insurance carrier. So there are workarounds, but it's challenging. So, I just wanted to share that with our listeners, in case you're saying, "Hey, I'm stuck. Who do I talk to if I can't find insurance?" I'd consider starting there. And I can imagine all of the buyer's agents at Josh Barker know that when they're dealing with a buyer, they let them know about that.

Joey: Oh, yeah, yeah.

Josh: Like our agents are educated on it, they can share it with the clients and walk them through that.

Joey: Absolutely.

Josh: I mean, we have clients we're selling homes for in Shingletown right now. And so, us resourcing some of those insurance options for buyers is a big part of what we have to do. Yeah.

Joey: Awesome. There you go. So some of the other things you and I were talking about... We were talking about headwinds and tailwinds. We always talk about that because those are the big things that kind of are dictating the market. Right?

Josh: Yup.

Joey: And we were talking about... I've been very bullish on one of the tailwinds. To me, the two biggest tailwinds... Well, I guess there are three really big tailwinds, and one of them is interest rates. When interest rates are high, people are dumping out their 401k to buy real estate. It's just like... It makes sense, right? But they're not there anymore.

Josh: No.

Joey: So that huge tailwind is now arguably a headwind. Another big tailwind is obviously inventory. If there's no inventory, people start to get a little bit... It's the classic supply and demand. No supply, demand doesn't have to be... All it has to do is be a little bit higher than supply, and things can get a little squirrely. The last one, though, is... We had a lot of people moving in the area. There was a lot of telework. There was a lot... Covid really amplified that. And that's... What you're seeing is, that's not that way anymore.

Josh: No, it's starting to change, obviously, so there's a lot of stuff in what you just said. If you talk about people coming in from out of the area, if you want to go over that for a minute, we have seen that slow down recently over the last six months. Part of it's because a lot of those markets they were coming from are subject to the same issues we're having right now, which is buyer demand is going down, so it's taking them longer to get their property sold. Maybe the price at which they're selling is having an impact on some of their decision-making, things like that.

Josh: But we're really starting to see this transition from a pandemic-related work practice to more normal work practice. So a lot of these companies, during Covid, we're letting them work from home, which gave them total flexibility in where they might have wanted to live. So a lot of folks were looking at Redding as a great place to go, which we totally agree. But now that these companies are saying, "Hey, it's time to come back to work." So they're starting to bring people back into these companies, physically into these workspaces, and that's reducing some of the options that buyers used to have, so that's why I think we're seeing some of that decline in buyers coming in from outside of the area, some of it's because of that.

Josh: An unrelated issue, but kind of along what we're going to see going forward is that we're starting to see some layoffs in some of these larger, bigger companies. You guys have probably... Our listeners here have probably heard about some of the bigger tech companies doing some layoffs, and a big part of that was that, when Covid hit, they had to send a lot of people home. That caused the productivity to drop a little bit, so they needed more people to do the same work they were doing before Covid. Right?

Joey: Yeah.

Josh: And now that people are coming back into the office again, the productivity is beginning to go up again, and so what that's causing is the employers to say, "Well, now we can start to reduce our number of employees because we're getting more productive now." My phones are ringing... Sorry.

Joey: You're a wanted man.

Josh: I'm a wanted man. So we're getting more productive, or these companies are getting more productive as people come back in the office, and so they're able to lay off... They're not able to, but as a result, they're laying off people they don't feel as necessary. So, that's changing it as well.

Joey: So, we had several big tailwinds that are either arguably neutral or are now headwinds.

Josh: Yeah, that one's probably more of a neu... Just a softening of a tailwind. The biggest headwind of all right now is interest rates, you know, and for people...

Joey: Yeah. And where are they?

Josh: Well, right now, they're at about 5.5% today.

Joey: Which historically is still so low...

Josh: It is.

Joey: You know what I mean? Historically speaking, that's...

Josh: It is. But you know what, Joey? The challenge people don't necessarily think about in that same thought is the pricing of homes pushed up so high as a result of lower interest rates...

Joey: 2.875 and stuff.

Josh: Yeah. So the history of it, if you look at rates six, seven months ago, they were as low as 3.75%, which you would agree is a low rate, right?

Joey: Oh, it's... Yeah. It's almost free money.

Josh: Yup, that's right. Then it pushed up about a month-and-a-half ago, to a height of about 6.5%, and so what happened was that you had median sales prices that were pretty high, and you had the median buyer that was now qualified at 30% less once the rates went up. And so that delta, if you will, the difference between those two was 30%, and it's like, well, volume is going to slow down because the average buyer now is qualified at 30% less than they were six months ago. And home prices are still too high to adjust for that.

Josh: And so, what we've seen in the market is we've seen the volume start to drop off as a result. But there's been some things on the ground that have changed. One is that pricing has come down. Everybody has their own opinion on this overall, but I would say that most people agree pricing has already softened between 8% and 10%.

Joey: Well, you said last time that D. R. Horton had reduced their prices by 10%.

Josh: They did.

Joey: This is a brand new construction.

Josh: Yeah. And now they're selling a little bit. I was just out there this last week, walking those properties out there. They had a little over 50 homes total that they're building. They already had 12 in escrow when we were out there. So, there were 12 of them already under contract, and a lot of that was after they went in there and made some adjustments on their pricing. So, they found the market. But they found the market. Instead of being at 490, they found the market at 430. You know, 430,000 instead of 490,000. So, that's just an example. And of course, a builder's a lot different than a homeowner because the builder is going to just... Like that one anyway, because of them being a national home builder, they work in reality, they're not going to fall in love with their product, they're going to sell it.

Josh: And so they're going to, they're going to face reality and do what they have to do to sell a product. A homeowner may not do that. A homeowner may not, might say, Hey, if I can't get the number I need, well, then I'm not going to do anything. And that's a totally fine answer, of course.

Joey: Or my neighbor got this six months ago. It's like, yeah. When interest rates were 3%, you're right. But at interest rates, the same buying power is now 10% less. That's a whole point you're trying to make of the person that purchased that house, let's say $600,000 at 3.75%, now they're looking at 5.5% to get the same monthly payment. That has to come down. It's a lot. It's almost 2%. That's over a 2% increase in interest rates. I think you. You had a rule you used for every percent, it goes, what, it goes down 10%?

Josh: Yeah. For every 1%, the interest rate increases, which takes away the buyer's purchasing power by up to 10%. And so when rates jumped 3%, 4%, that was a 30% impact on purchasing power. That's where you had that disparity between the median home and then the median buyer and what they qualify for. But prices of, like I said, they've softened a little bit, 8% to 10%, but rates have come down a little bit too. They were at a high of 6.5%. Today they're at 5.5%, which means that a buyer's purchasing power has increased on average by a full 10%, right? So now the delta, if you will, between the median home price and what a median buyer qualifies for, it's sitting right around 10, 12% is what the difference is.

Josh: And does that mean the market's going to go down that far? Well, no, I don't know. I mean, it depends on a whole lot of things, like, you know, what will wages be? What interest rates will be in the future, and how many homes are on the market? You know, right now, home inventory is holding very, very strong. It's not going up really drastically at all at this point, which is actually very surprising. I mean, if there's anything in this story that is really helpful is the fact that the inventory is not exploding right now.

Joey: So last time, I think we were at 2 points. The replenishment rate was like 2.1. Was that right?

Josh: Yeah.

Joey: It was in the 2s. Yeah. And 3 and under is considered a seller's market.

Josh: Yes.

Joey: 4, 5's neutral.

Josh: Yep.

Joey: Anything 6 and above is a buyer's market.

Josh: Exactly.

Joey: So are we still in the, you're saying we're still in the 2s?

Josh: Yeah. We're on the tail end of a seller's market. We're, you know, in the mid-2s regarding an absorption rate and how many homes, how many months of supply we have, and how long it would take to sell off the supply if nothing else came up for sale. So that's where we're sitting right now. And I think what's happening is that a lot of these homeowners are sitting on interest rates at 3.75, and they're going. You know what, if I were to sell my home right now and downsize or sell my home and buy a similar newer home or sell my home and upgrade, they're going to have to give up that 3.75 interest rate. And by going in now, they will buy a home at a 5.5% interest rate.

Josh: And the payment is just such a shocker, I think, in a lot of cases that I think a lot of sellers are saying, you know what? I think our best option is to stay. At least that's what they're saying right now at a larger number. And I think that's contributing to an overall lower home inventory, which is great. I mean, right now, having home inventories in the mid-7s for single-family homes is helpful, you know? Because when inventory starts climbing when that absorption rate climbs, you know, and it goes from a mid-2s to a 4 or a 5-month supply, that's when you start to see days on the market extending, you know, it takes longer to get a home sold.

Josh: You start to see prices soften even more aggressively, a lot of significant price reductions. That's when you start seeing many major changes if that happens.

Joey: Are you guys, so is there a timeframe when you have a listing that you say, Hey, we've been listed this long, that tells us maybe we're overpriced for the market because this is fluctuating so fast. I mean, these numbers are all over the place. Somebody's going to... That traditional comparable market analysis includes previous sales. So like we said in normal times, you would pull a home sale in your neighborhood from six months ago, you know? Pull a few, but you're like, well, it's hard to use that one because those buyers got 3.75%. And these buyers are going to get 5.5%.

Joey: So I can imagine if I'm going to sell my home and I come to you, and I'm like, well, my neighbor got this, and my other neighbor got that. And you're trying to explain to me, I get it, but the market has shifted pretty quickly. And there, it's because this, you know, you're trying to help them sell their home. They're trying to get the absolute most they can. Yeah. And we're past that kind of the peak of that. So is there a timeframe on the market where you go? Hey, look, we should look at changing the price. Is there a standard or a rule or anything like that?

Josh: Well, its price range depends on the type of property you're selling. So, you know, we have a few properties we're selling right now in a retirement community. Well, just the fact that it's a 55 and over, right? That's going to limit the market a little bit. And so our market times are how long we sit before we make recommendations is going to be a little bit longer than just a normal, you know, home in a subdivision somewhere. If you have a two-story home versus a one-story home, two-story home is going to limit your market a little bit because there are more people that want a one-story than a two-story, right? And so, because of that, it might take a little bit longer to find the ideal buyer. So that would be a reason to, you know, make a recommendation that's a little bit different.

Josh: Another one would be maybe the price point itself. You know, if it's a higher price property where the buyer demand is lower, then often it takes a little bit longer before you find the ideal buyer. And so it really comes down to an individual product. I think the best thing that you can really do is that when you do your comparables, when you look at all the homes that are similar to yours that you're selling, right? So if I'm in a retirement community, I'm only going to use retirement community homes as my examples. What I would want to do is to make sure that I look at what the average is for those comparables.

Josh: So if I'm going to use a two-story home, use a lot of two-story homes, what's the average market time for two-story homes? And so that way, when you sit there and determine like when would be a good time for us to make an adjustment on price, if we're not, you know, hitting the target, you and the owner, you know, the agent and the owner should have already identified what period of time that you're going to go before you're going to really make a decision on what to do next. And a lot of it's in the data. Our agents are trained to follow the data.

Joey: I think this would be the hardest market to do that in because you're coming out of such a hot market driven by such low-interest rates. And it's still so fresh, meaning like another year from now, you'll have a year of 5% and 6% or whatever interest rates. And so things will level out, but you still are. So you're coming out of that white hot. So these are the hardest conversations. Because there's this, I remember there was this... There was a meme, but there were a couple of points on it, and it showed these three kids, and one had first place, second place, and third place. So maybe you saw it, and the first place was happy. And the second place was like mad and kind of looking at the first place, and the third place kid was really happy.

Joey: And they were talking about, they even did a survey of Olympians and the happiness of bronze medal winners versus silver medal winners were much higher because of the silver... Because of the silver, all they could think about was how close they were to gold, and the bronze was like, oh, my goodness, I'm on the podium.

Josh: Yeah. I'm on the podium.

Joey: And so you get that when a seller comes to you, and you're like, Hey, they're like, oh, look, you know, all my neighbors got this last December. So...

Josh: Well, you can shift it.

Joey: They're not thinking like, yeah. But look at how much more you got than if you would've sold two years ago. Look at how much equity you create, the mind.

Josh: Yeah. Well, you go through a grieving process, right? I don't remember all the stages to that. I mean, the people here have degrees in psychology, I'm sure, and all that stuff. But yeah, if you thought that your home was worth X and it turns out it's only worth Y, and that's a surprise to you, then you have to go through a grieving process to accept the new reality. And depending on what kind of pressure you're under or your reasons for wanting to sell in the first place, it's going to, and you'll find a way to justify it.

Josh: One thing that many people do, though, is that I hear all the time from sellers basically exchanging a position in the market. So they're selling their home here. That's great. And then they're going to buy another home here. That's great. If the market's down, fine, you're selling for a little less. You're buying for a little less, right? If the market's up, you're selling for a little bit more and buying for a little bit more.

Josh: And so if you, if you look at it from that perspective, most people, they're not moving strictly based on investment, they're moving for their life. They're moving toward a life decision. There, I need more room for the kids, or I'm moving to follow my grandkids or whatever it might be, so they'll make decisions for different reasons. But the other thing that we look at too, when you're talking to sellers on the pricing piece, is when the market's going up, we almost always price based on actives. So you look at active inventory, which is currently for sale, because of that help... That's how you target the highest price for the home.

Josh: When the market's flat, sold data tends to be good data because the market's not changing that much. Sold data kind of gives you the storyline, and then you know where... What you could expect. When the market's going down, pending data...

Joey: Got it.

Josh: This is really what you're looking for. You're looking at homes currently under contract because the pending data is the market's pulse at that moment. We train our agents based on market conditions when you make different types of recommendations because the strategy changes when the market changes. But as long as you spend the time with a homeowner and just walk through here, nationally, what's going on, countywide, this is what's going on. Here's what the comps are doing that is similar to your home. And then, based on that, walk them into it. I think most people get a pretty good understanding of what the options are.

Joey: So I'm going to ask you to pull out your crystal ball.

Josh: Oh, boy.

Joey: And magic eight ball, answer this. So...

Josh: Eightball.

Joey: We've got, what have we got, about five months left in 2022.

Josh: Yep.

Joey: What are the... Do they still have projections of interest rate increases? What are the, at least, that's the, if somebody did research, they could say, well, at least this is what they say is going to happen. What do you see over the next five months?

Josh: Most of the experts right now, I think, are pretty satisfied with, or a lot of the companies are pretty satisfied with a coupon of 4.5 to 5. So I think interest rates being in the mid-5s is probably what most consumers will see on the main street for a while. So I wouldn't necessarily disagree with that. I think it will probably be a real number, and, remember, interest rates aren't necessarily set by the Fed. They're more set by how many people are purchasing those mortgage-backed securities.

Josh: And right now, it seems like there's a pretty healthy appetite for buying mortgage-backed securities in that mid-5 range for the consumer on the street. And so that's one piece, but we're all going to have to look at the delta I was talking about earlier. The median home right now is selling for 10-12% higher than what the median buyer could have afforded, can afford. And so, a few things have to be figured out in that situation.

Josh: I mean, is, rate, if rates soften by half a percent, that increases purchasing power by 5%. So right now, rates will play a very large role in what values do going forward. So watch the rate. If the rate goes down, you know the market will probably not have to adjust much more in terms of pricing. If rates go up for some reason, that's not good news. So that's going to have an immediate impact on value likely.

Joey: And so, out of all the tailwinds we were talking about, we don't see much of a change in inventory. You said that's steady.

Josh: Yep.

Joey: We do see a decline in people moving into the area from out of the area.

Josh: Yep.

Joey: And so the interest rate seems to be, as the interest rate goes, so goes to market for now?

Josh: Yeah. Yeah. I mean, the interest rate will probably be the one for the, for most people on the main street are like, well, what do I watch for? Just watch rates. Right now, if rates stay at the rates that they are right now at 5.5%, you know, the pricing might soften a little bit more, but we're certainly not in a position where it's going to be a terrible thing. If rates spike, you know some bad things are coming. And if rates go down, expect that the homes' pricing will probably flatten out or start to tick up again if rates were to drop. So rates would be what I would be staring down and keeping a really close tab on.

Josh: But keep in mind, too, though, that big picture, there's a lot of good things out there. First of all, our home inventories nationally are still low, 4.5 million to 5 million units short. And I think a lot of what's going to... What's going to be done to contribute to improving that is not going to be single-family homes. It's going to be multi-family, okay? But, you know, multi-family is going to be what's probably going to be to see the greatest growth in the future, at least in the near term. It is because they will solve the problem much faster than single-family can.

Joey: Makes sense.

Josh: Yeah, but volumes... Don't be confused by us as real estate agents out there in the market today complaining, okay? Because you're going to hear a lot of complaints about sales being down. Sales being down does not mean prices necessarily have to be down. The volume of home selling is going down right now. That impacts agents only, right? And the people affiliated with when a house sells are all the people that get to be a part of that, but it doesn't necessarily have an impact on what a buyer is doing, and it doesn't necessarily have an impact on what a seller is doing, it just means volumes are down. Does that make sense?

Joey: Oh, absolutely, and I was thinking it's the people that use real estate as like a trading vessel, the home flippers, the... They're the most affected ones. People that are like, Hey, look, we're moving. Well, then you're probably selling your house and buying a house like, Hey, we're moving to Redding, or we're leaving Redding, it's like it doesn't matter what interest rates are, you have to do... The market is what the market is. So the people are like, Hey, I'm buying... I'm flipping homes. We're an investment, or investors and realtors. Those are the ones. Oh, and lenders. Yeah, those are the ones that are like, you know. They're feeling it. Well, it's just like when the stock market goes up and down.

Joey: The stock market went down big time, and my financial advisor called me. Hey, how are you doing? He's being proactive, right? I was like, fine. He's like, Oh, well, you know...

Josh: It's a good time to buy. Rates are...

Joey: The market's done this, the market's done that. I'm like, That's cool, and he's like, he tells me it's nice because you're relaxed, he's like... He's like, when the market goes down, I'm getting punished with phone calls, and I'm like, Wow, that's... It sounds like day traders that have a broker, like why, if you're a day trader, just do it yourself, but people that are watching the market that closes, that's different than people are like, Hey, look, I'm going to retire in 16 years. I just want more money in there than I put in, and some kind of tax, a little bit of a tax write-off at the end of the year, they're like, at least I put that money away.

Joey: And so when I talk to people in the market, not like I talk a lot, but people are just, they're just not talking about real estate the way they were. No one's upset. But there was a time there last year when everybody was watching all the home flipping shows, and so they were all like, Oh, I'm thinking about just flipping some houses. I'm like, Okay, good luck with that. But that's a TV show. You know what I mean? They've got a million dollar per episode budget, so when they tell you they made that on the house... Because you watch them, and there's no way they made that. There's no way like, Oh, yeah. We completely redid this kitchen for $32,000. No, wrong. No way, $32,000 in tile alone. So that's just... People have just calmed down a little bit.

Josh: I think so too, and I think that's the... The story really is that things are just getting... Things are just getting a bit more normal. It's not as exciting as it was before when you're seeing prices growing by 20% in a year. So obviously, we're seeing the markets flatten out. So, yeah, a lot of that excitement is going away, a lot of agents that came into the business are having a hard time just as a result of the inventory or the demand going down, and so you're going to see that. I mean, I've seen that a few times in my career, been doing this for like 23 years, and I've seen this a few times now, where just, you get a lot of people to come in, and things get disrupted, and a lot of people go back out, and so.

Joey: I've got suggestions for those who need that fix, those people, you know what I mean, those people, like hey, with the market. If you want volatile, you want to get involved. You want to put your money at play, go down to your local farmers' market, because food is escalating quickly, so you could buy some tomatoes and then go down at 6:00 and sell the tomatoes and cantaloupe, you know what I mean? So if you're not getting that fix with real estate or the stock market, just remember the farmers' market Saturdays and Thursdays.

Josh: Alright, with that, I guess we'll end on that note, then, so... Yeah, if it's not working, consider farming.

Joey: Yeah, thank you, Josh. I appreciate it.

Posted in Podcasts
Aug. 1, 2022

Shasta County Market Update - August 2022


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


From the Desk Of Josh Barker

Dear Clients,

Talk of a market correction has grown louder as home prices have softened and rates continue to remain high. The reality of the market shifting to a more normal and balanced market is unfamiliar to many. Home buyers, home sellers and real estate agents that were not in the market prior to 2012 have little experience with market shifts. It is important to recognize that the market all of us experienced over the past several years was a reflection of abnormal buyer demand fueled by tight home inventory and low interest rates. The long term fundamentals in the real estate market are sound but adjusting to the higher interest rates will be challenging. This month we will discuss some of the hottest topics trending now in our local Shasta County Real Estate Market. As always, if you have any additional questions, please feel free to respond to this email or contact our office at 530-222-3800

Have a wonderful August!

Josh Barker


Home Sales For July 2022

Home sales for the month of July finished at 227 down 27.7% compared to the month of July 2021 when home sales finished at 314. The reduction in year over year home sales was anticipated as the pandemic related purchases that were prevalent last year have all but evaporated. The past several months have also experienced notable declines in home sales month over month largely due to the higher interest rate environment. 

Home Inventory July 2022

The current number of active homes for sale is averaging 818 up 32% compared to last year when home inventories averaged 619 for sale. Home inventory for sale over the past month has remained fairly stable with 17% fewer homes coming to market in the month of July 2022 compared to July 2021.

Buyer or Seller Market?

The term "absorption rate" is often used to describe the overall perception of the market. Currently the market would take 2.8 months to sell off the existing housing supply based on current demand compared to last year when it would have taken 1.92 months. Typically 0-3 months supply of homes is considered a sellers market. Whereas, 4-5 months supply is considered a neutral market and 6+ plus months supply is considered a buyers market. Clearly the absorption rate is currently climbing which suggests that days on market as well as home pricing may become softer in the future.

Home Showings are Down

Home showings have typically served as a good indication of overall buyer demand. Recently, many home sellers and agents are reporting a significant reduction in home showings. The sales reports referenced above reflect the overall conditions. Collectively, special attention paid towards accurate home pricing, home preparations and home marketing will have the most positive impact on home sales.

Mortgage Interest Rates

Mortgage interest rates have experienced the largest disruption this year reaching a high of 6.5% in recent weeks. In January 2022 mortgage interest rates averaged 3.22% for a 30 year mortgage compared to today's rates of approximately 5.25%. For every one percent increase in the mortgage rate, a home buyer's purchasing power is impacted by approximately 10% when utilizing financing. Since the majority of home purchases in Shasta County are financed, mortgage rates play a major role in affordability and overall buyer demand.

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 August! 

Josh Barker

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

Posted in Josh's Blog
July 19, 2022

Josh Barker Real Estate Podcast #9

🏠💰Home Value Tool➔

Find Rent Data - 💵🏘❓

Frequently Asked Questions

What is a real estate market correction?

Typically a real estate market correction is when home values change by 10% or more within a short amount of time.

Are mortgage rates high right now?

Mortgage interest rates have increased from a low of 3.07% to an average of 6.125% in July 2022. For every once percent increase in the mortgage rate, purchasing power is impacted by an average of ten percent.

Is the real estate market going to crash?

The number of homes selling each month is slowing down compared to the sales volume of last year. If inventory continues to grow while demand remains constant or reduces, prices could expect to soften.


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, it's been a little bit. I'm here with Josh Barker.

Josh: Hello.

Joey: I missed last month. Last month, Mike Medley was in here. I saw that.

Josh: Yes, he was. Yeah. We did miss you, Joy. I'm really glad that you got to come back and visit again, so.

Joey: I like to... I saw Mike, and I immediately said. You know what I loved is that he brought up the fact of the capital gains tax law change in the late '90s and how that 'cause I brought that up, and other people like Glazer were like, "No, maybe that had an effect." I'm like, "That had a huge effect. Look at the average time people had a home now."

Josh: Yes.

Joey: I mean, they were just flipping hot every 24 months, and that... Can you imagine if they did that with the stock market? They're like, "Well, if you hold a stock for six months, you can sell it." I mean, that would immediately...

Josh: It would change the investment pattern.

Joey: It would change it huge, huge.

Josh: Yeah. And I did that for housing, and I think that was the perceptive or the perception that Mike was sharing, and it was a good perspective.

Joey: I thought so too.

Josh: Yeah, I liked it. And it did. It changed the volume, for sure, and it gave a whole another avenue for investors. For those who don't know what we're talking about, just go back to our previous month's market update podcast, and you'll see an interview that we did with Mike Medley, a 30-year broker, been in Redding a long time, and really shared a really cool story about the real estate market. So I've got a whole another set of facts that are kinda hitting the ground right now this month, though, huh?

Joey: Oh, big time.

Josh: Yeah. I'm watching all the realtors around there kind of start talking about it. Finally, it's like really becoming aware of what's happening.

Joey: So like some of the things that are happening, I mean, this would be episode three or four in a row where we said interest rates are rising, but they've actually come down a little bit, right? I mean, didn't I've seen some lenders I'm on a couple of their email threads and they're like, "Hey, interest rates came down a half a point... "

Josh: From 6.5 to 6. Yeah.

Joey: I've been even high 5s, which historically, if you said, "Hey, you can get a home loan in the 5s," that people would be like, "Oh my goodness."

Josh: "Compared to what?" Right?

Joey: Yeah, compared to historical. It's just that we've come out of when interest rates have been below 3% for mortgage rates? Ever?

Josh: Yeah, exactly. And maybe for our listeners, maybe that would be a good thing to talk about today first, is just the misconception around what the Federal Reserve is doing and how it's having an impact on the mortgage interest rates. You know what I'm saying?

Joey: Yeah, the difference between the feds do something to the rate, but what does that actually do to mortgage rates.

Josh: Right, right. When they move their rate up, why is that not necessarily transferring directly over to the mortgage market? And so like you're hearing, and you're probably going to hear by the end of this month, that inflation was at, what? 9 point...

Joey: One?

Josh 9.1%, which isn't good, if anybody's wondering, at the targeted numbers...

Joey: For year high?

Josh: Yeah, for year high. And the target numbers are in the low 2s, and so they feel like they've got some runway now to raise that discount rate up even more now, and so they're looking at raising the Federal Reserve's interest rate by up to 1%.

Joey: It's huge.

Josh: It is huge. I think it's gonna be. For most of the experts out there, they're saying between three quarters of a percent and 1%, so I think you can debate all you want on those two numbers, but it's probably one of those two numbers. Either one is a lot of pressure on demand because as interest rates go up, it has an impact on what people can buy or how much they can buy or what they can borrow and those kinds of things.

Josh: Anyhow, on the mortgage rate side, why you're seeing rates actually coming down is that it has a lot more to do with mortgage-backed securities. So six months ago, the mortgage-backed securities, they were reducing the number of mortgage-backed securities they were purchasing, and that meant that the private market had to step in and start buying these mortgage-backed securities, and that's where their interest rates went up almost overnight, It felt like, right?

Joey: Yup. Oh, it did, fast.

Josh: I mean, yeah, the 30-year mortgage's almost doubled pretty much in the last six to eight months, and a lot of that's because the Federal Reserve stopped purchasing mortgage-backed securities at the same level they were. That caused the private market to step in. The private market said, "Hey, I'm not gonna buy mortgages at 3.5%, but I will buy 'em at 6, right?" And so, the interest rates have gone up. So even though the Federal Reserve will likely be moving the rate up, the Federal Reserve rate up, it doesn't necessarily mean that mortgage rates are going to go in lockstep with it. So if they raise the rate 1%, that doesn't mean that mortgage rates are gonna go from 6% to 7%. They might go up a little bit because of that impact, but it has much more to do with how many people buy those mortgage-backed securities. Does that make sense?

Joey: Is it still just the private sector buying them?

Josh: For the most part, yeah. Yeah.

Joey: Is there any news on the government buying them at all?

Josh: No. I mean, I don't know if there's any kind of policy that they're discussing at this moment that might change that, but right now, no, they're continuing to tighten their monetary policy, they're reducing the amount of mortgage-backed securities that they purchase, the private market is still having to step in to buy the difference. But you gotta remember, these guys were making nothing six months ago, so the fact that they're actually getting a return now by buying these mortgage-backed securities, the private market doing that, they don't have a lot to complain about. And I think that a lot of them feel like this higher interest rate environment probably won't be that long, and so they'll be the one sitting there smiling all day long with a nod at six or 6.5% or whatever it might be when mortgage rates drop back down to 5 or something. You know what I mean? So I think that some of the investors are looking at it that way.

Joey: It's too bad that there weren't regional interest rates. You know what I mean? Because I was just thinking about like, somebody could say, "Hey, you know what, I wanna get a loan in the Redding Market, because I think the Redding Market is still a very good market, even though it slowed down a little bit, it's just when you are full throttle in a car and you're going as fast as the car can go and suddenly you let off a little bit, now you're only going 80% of the maximum speed of the car, you're still moving fast, but not as fast as you were. So we just came out of arguably the hottest market ever, interest rates below 3s, people moving here, and we're still not getting replenishment of inventory. In your last market update I watched, we're still considered a seller's market. Well, wait, 2.1 months, right?

Josh: Yeah, so no, really, the low 2 is what he's... Joey is talking about the overall supply relative to demand and the absorption rate. So, anything up to a three months supply is considered to be more of a seller's market, and then a four to five-month supply is more of a neutral market, and anything over six months supply is considered a seller's market. And right now, we're at like 2.1, 2.2 months supply currently, and that means we're still a seller's market by definition, although I think everybody would agree that we're trending quickly to a neutral market. Inventories today are like 715 total residential units for sale currently, and the numbers aren't out yet because it's not the end of the month, but it's probably going to be 250 to 270 or so for total pending for the month, which will be down again from the previous month and certainly down by 30% or more over last year. Yeah.

Joey: Yeah. But that's to me, that just came out of the hottest market ever...

Josh: It did, yeah.

Joey: I'm still bullish on this market in comparison to other things that are happening.

Josh: Yeah, no, I agree.

Joey: But, I was on a radio show where we were talking about... And they said... It was opinion. But it was like, "Hey if you don't own a home, you absolutely should be buying a home." Because of the things they talked about, they talked about the increase in rents over the last 24 months in the local market.

Josh: Oh yeah.

Joey: And those were escalating. They were crazy. Now, if you were talking about, "Hey, I own 10 residential homes, and should I purchase... I have some money. Should I purchase 11 through 12?" That's a completely different conversation than, "Hey, I'm renting a two-bedroom, one-bath house for $1650 a month."

Josh: That's unbelievable.

Joey: And that's the kind of numbers that you're hearing. So it was stuff like that. So I was like, "No, I still would be very bullish." And the other term that was brought up was the whole... 'cause I love this term. Is that you marry the house and you date the interest rate. You find your home now, you get settled, within two years... We are technically in a recession. So at some point, the 1% is to try to slow down inflation, but fast forward 12 months, 14 months, I have to think that that's going to be... Experts think that it's going to flip-flop a little bit. Okay, interest rates got high, we cooled off inflation, and now we have to bring the interest rate back down. And if you are locked in your house now... I still think... I think there's a big correction because things were just going... They were ramping up so fast. And... But this... What's the... Still the average price of a home in Redding sales last month versus a year ago?

Josh: Well, the median sales price right now is hovering in the high 370s, low 380s. But here's the deal, prior to the pandemic, we were probably at... The median sales price was in the 280s, 290s.

Joey: Exactly.

Josh: So the challenge that we have right now is that pricing got pushed up so high with low-interest rates and pretty high demand from relocation and all those other things, pushing the demand up. But you have the average or median sales price pushing up into the 400s, but that was based on really low-interest rates that allowed that to happen. Now that rates have went up, you've got buyers that are qualified down here, homes that are being... The asking prices are up here. And somehow, these two things have to reconcile. Either pricing has to come down, or the amount of inventory has to be reduced, or wages have to go up, and rates have to come down. But something has to happen in order for these people to come together. And if that doesn't happen, then what you're going to see is inventory will be price reduced, and to that point, we got D. R. Horton now, which is a national home builder. I think they say America's number one choice or whatever. And...

Joey: I think that's McDonald's.

Josh: Oh, that's McDonald's.

Joey: Think they're the ones that say that.

Josh: A billion served.

Joey: Yeah, exactly.

Josh: Yeah. So, but it's a good company. I'm not talking about the mechanics of how they run their show, but I think they make good sound business decisions. They're, I'm pretty sure, publicly traded, certainly professionally managed. And you've got homes that were priced in the high fours, and we just saw today price reductions on an average of close to 10% on a lot of different products for that particular developer in the city... In Redding right now. So there's a development over on the west side of town that they have about 43 lots or so, and they've already gone in and started price reducing these homes, and they've only been on the market for a few days. So they're not messing around. They're realistic about what the market's doing. And to that point, I was saying, you got asking prices for homes here, buyers qualify down here, and something has to give. And in this case, in the example I'm giving you, the seller gave, the seller decided to bring that price down, and now the buyers, I would imagine, are going to start purchasing because they're going to be reflective of what a buyer can afford. And you're going to see that, I think, going forward as a theme until we start to find that new equilibrium, whatever that might be.

Joey: So I wonder though if that correction where the average price will be in about four or five months...

Josh: The median sales price?

Joey: Yeah, the median sales price, because it might come off a little bit off now, but still, as you said, pre-pandemic, it was almost $100,000 less.

Josh: Yes.

Joey: So even if it comes down like 20, $30,000, you still... Look at that.

Josh: Still have a big gain.

Joey: Yeah, look at that, monstrous gains.

Josh: Yeah, it's still a gain. And that's an optimistic viewpoint to see, and I totally agree with it in terms of Redding is still... We're not over-developed. We're certainly not over-supplied. We live in a state that's a pretty cost-prohibitive new construction kind of state, and so we don't... Typically, California doesn't over-build. And there are other states in the country right now that have been over-building, and I think that as things start to constrict and the demand starts to die off, there's going to be some pretty large inventories. I'll give you an example. I've got a good friend of mine that lives in Phoenix, Arizona. And, I have these numbers, or I'm going to try to get them the best I can. But my recollection of the conversation was, and this is a Remax agent out there, he said, 9000 units, 9000 units, I think it was 120 days ago for sale in Phoenix. And then, just two weeks ago, 18,000 units were for sale.

Joey: Wow.

Josh: And so, their inventory has already doubled, that's going to have a corresponding effect on value because unless demand paces with the supply, the only thing to give in that equation is going to be asking prices. So, you look at Redding. I don't think we're immune from that. It'd be foolish, I think, for somebody to say that we were...

Josh: I do think that if you look historically at the recessions over the last, I don't know, 30, 40 years, with the exception of 07, which is Funny Money, a really bad time for policy for financing, most of those recessions, they slid in the housing market, and It was a six to eight month. Little blimp where things got soft for a period, and then they just started to move up again, and I wouldn't be so surprised to see something similar. History doesn't necessarily repeat itself, but I think they say that it rhymes. I would agree it's probably going to be something similar to that coming out of this, and for a lot of buyers, just to think about it, would you rather buy a housing bubble, which was probably what we were dealing with, potentially running into if we didn't stop, or would you rather be buying in a recession, and when you know that pricing probably is more suppressed than it normally is, and that means there's an upside to the equation longer term.

Joey: Now, with a national recession, there is a definition of two quarters with negative GDP back to back. Is there a definition? Is there a formal definition for a real estate recession?

Josh: No, I think it probably trends along with similar lines they use... That they had one figure in that, as they say, if it changes the value of the asset by up to 10%.

Joey: And based on what you just said with D. R. Horton on reducing there, that's kind of one of those...

Josh: Because recession means nothing to a buyer or seller of a home. What matters is correction, not recession. So a correction typically is defined as something of 10% is considered to be a correction, whether it'd positive or negative, it would be a correction, and in this case, we're all contemplating a correction in the negative sense, and that's if pricing were to drop up to 10%. It would be defined as a correction at that point from most economists' perspectives.

Joey: I'm going to put you on the spot.

Josh: Go ahead.

Joey: Is there the median price over the last... Since January to now, do you have any idea like what that's... A medium price got down 5% overall pushing D. R. Horton out of the picture...

Josh: Maybe in sales price it's dropped down approximately 10%, I think if I were to look at...

Joey: Okay, so then there you go, so that is...

Josh: That's only the median sales price, so it's not necessarily on selling prices, and again, median sales prices for everybody, that median sales price is actually the middle number, so if I had 100 numbers on a piece of paper, number 50 would be the median sales price alright? And an average sales price, if I were to take the collection of all hundred of those and then combine it, then divided it by a hunter, that would be the average. So when I talk median, I'm talking about that middle number where half the transactions were done for less and how the transactions were done for more.

Joey: And then within that, there's gonna be segments that there's... The lower end of the segment is probably not gonna see that reduction because you cannot replace inventory, you can't afford to build a $1000, or excuse me, a 1000 square foot house in the city of current customer... Can you build it for under 300 roots when you talk about permits and the purchase of land?

Josh: A house that size?

Joey: A 1000 square foot.

Josh: Yeah, that'd be really difficult.

Joey: Exactly, so you couldn't build something for 300,000, so any of these houses that sold in the high twos and some of the neighborhoods, I think they didn't see a reduction, they're not gonna see it's the house maybe that were like you said, listed at 500 D. R. Horton is bringing it down to 450, the 650 down to 610, stuff like that. So even within the market, there are sub-markets and segments.

Josh: Absolutely, the lower-priced homes in the marketplace are gonna have a little bit more... They're going to be more insulated to a market disruption because the demand is naturally higher on those points where they get pressure is coming in directly, so when Higher price properties begin to readjust their prices down, that it says Has a compounding effect all the way down the price segment.

Josh: So if a 500 becomes a 450 or 450, then becomes a 400, or 400 becomes a 350, and then 300 and 250, and it just kind of pushes it is way down there that way. It doesn't come as fast in the lower end. For sure, it's a much slower process, and it comes back a lot faster, too, because more people can afford it at that price point. So when the market shifts and gets more positive people going into the market, as you bring new buyers into the market, they tend to purchase at the lower price point when they're new buyers into market. And so the other part that we're gonna have a challenge with for a short period of time, it's just gonna be the move-up, move down, move sideways transactions where I already own a home, I need to sell it to go buy the next one, not a lot of that's gonna go on right now because they're sitting on a mortgage at three and a quarter percent who wants to drop off that and go buy a house at 6% right?

Joey: No, yeah.

Josh: And so we're gonna have that issue at the moment, but once we get through this transition, you could see move up, move down, move sideways buyers in addition to new buyers coming into the market, in addition to a fairly low home inventory, because a lot of builders won't be building if they're concerned about pricing. And so you can see real quick how this actually could run up really fast once we make it through that small recession, a correction that we're looking at.

Joey: And I think there are two other factors that are really driving this too, that I don't know if we've ever seen before, and one of them is a shortage of labor, and the other is the supply chain disruption, and I don't know... I don't know the first one. That's a whole different discussion, but the second one I've seen like... I have a friend in roofing, and OSB went, it went... It was like 37, it went up to 120, and then it came down to 41. And they went to... I mean, it's all over the place, so I don't know how much of the supply chain disruption is like, "No, it'll level off, it'll be okay, it'll come back," or it's like, "No, just materials just aren't going to... Those prices... You'll never see all those material prices again." Right?

Josh: Well, to think we're going to go back to pre-pandemic pricing across the board of... I don't believe anybody is saying that that would be the case, I think there will be some markets that are just out of lack of supply, the pricing is artificially high right now, and once that supply is replenished, that's going to bring the prices down. Lumber is probably one of those where there's some disruption, but there's a lot of speculation, lumber runs a lot like oil, there's a lot of speculators in lumber, so they buy a lot of futures in that too, and the over-pay and then they hold on it for a while.

Josh: And so you're going to see some shifts in that market probably, but I just read a Kiplinger letter which is a pretty good economic forecast. They were talking about the freighters and the cargo ships that are coming across the oceans delivering products and goods and services over to us. And when they're coming over right now, the cost for that shipment now has dropped dramatically. I think it's down anywhere between 20 and 25% and 50% of what it was. Now, it's still two to three times higher, though, than what it was prior to the pandemic, that's how much they were gouging people, and that was really, really having an impact on the cost of goods for the United States. But you already see in the cargo ship, and cargo ships pricing is dropping now to the point where I would imagine in the next 6 to 12 months, we probably will have a more competitive price across the board. Where the real issues showing up in the supply chain now is in the Midwest, where you got all these rail cars now sitting with all the product sitting on a rail, and the warehouses are still full because the economy is slowing down, and these guys that have bought all this stuff, they're kind of slow to go pick it up from the trains.

Josh: So now that's that new problem right now, is clearing out those rail cars.

Joey: Sounds like any new TV reality show.

Josh: Well, you know, it just reminds you of traffic, how many times you've gotten traffic, you're stopped, and all of a sudden when you get past it, you're like, "What happened? There's no accident, there was nobody here, and then they're like," Oh, well, a half hour ago, some guy cut across four lanes and took the exit, and that slowed everybody down, and you're still experiencing all of that, that... What's that?

Joey: The Accordion effect.

Josh: The Accordion effect, right? So I think that's playing into that, but I think supply is catching up, and I would not be surprised if our Inflation numbers right now are at 9.1. I'm hopeful that that's the peak, and then we'll actually start to see that number begin to drop.

Joey: Well, that's the official number. I'm trying to find...

Josh: I agree.

Joey: Sights were only gone up 9%.

Josh: Yeah, no, I get it. I don't disagree. I think that that number is baked, but as long as they stay consistent with what they're baking that with. I'm saying that if 9.1 is what it is now, I'm hopeful that that number will be lower in the future.

Joey: And what about labor? That would be the other big one.

Josh: Yeah.

Joey: All of the trades are... It takes a while to replace those two. They're also something that you just don't flip a switching, okay, we... We got 100 carpenters and 100 plumbers here. No problem.

Josh: Yeah.

Joey: And that one's a tough one too...

Josh: Yeah, the labor one's going to hurt, and...

Joey: I think those are big tailwinds.

Josh: Well, I see labor's a head wine, actually.

Joey: Really?

Josh: Yeah, I do.

Joey: Or cause you're thinking of buyers...

Josh: Well, when I'm thinking on labor and new construction and things like that, is that right now they were competing for labor, driving the cost up. Right? And so, I guess on the cost of the home, I could see it going down.

Joey: That's what I meant.

Josh: But I'm thinking about the people that are going to get the conversation by their foreman and their superintendents and their employers that are saying, "Guys, girls, sorry, but our wages are gonna have to get back down to a more competitive pricing." I'm concerned about that. I think some deflation in terms of wages and the construction field or a possibility.

Joey: Really?

Josh: I do. Yeah.

Joey: Okay, I see. I was thinking the opposite. I was thinking that all of the people I know still have such a struggle to get labor.

Josh: Well, that's still an issue right now.

Joey: So they have to pay a good way.

Josh: But six months from now, if there's nothing to do... You know what I'm saying?

Joey: Okay.

Josh: Well, no, nothing, that would be a huge extreme, but if there's less to do, but you still have a lot of labor available to do it, you might make a decision that "Hey, I'm gonna do that job for a little bit less."

Joey: This stuff is so complicated.

Josh: I know.

Joey: Can we just go back to, like sorry. Or we're in...

Joey: Monopoly or just like I'll roll the dice and went in on Baltic, I'll pay you, I got 60 bucks.

Josh: Well, I think the cost of new construction will be lower in the future.

Joey: Okay.

Josh: I do. I think that's the bottom line. And it'll be a combined effect of the supply chain catching up, access to materials that like refrigerators and appliances that slow things down, and labor, I think light labor could soften a little bit. I hate to say it, but I think there's a possibility. That's the case.

Joey: Well, as some of you know, it's all of these things go up and come down, so it's just a matter of timing it and how long they're up for and...

Josh: Yep.

Joey: Down and everything like that, so the interest rates are supposed to be raised a point at the end of the month. I'm not really sure. It'll probably increase mortgage rates, though, but not to the extent...

Josh: A little bit. It won't be a lock-in step with it. Yeah, I don't think you're going to see a lock-in step rate gets raised by 3 quarters of a percent, so the corresponding mortgage rate jumps by 3 quarters of a percent. I don't see that. I see that if the rate goes up 3 quarters of a percent, maybe the mortgage rate goes up a quarter percent, which still sucks, I'm not saying that's a good thing, but I don't know if it's going to be lock-in step with the fed.

Joey: If the other decides we're talking all about supply and the effect on the supply, but talking about demand, are you seeing less buyers into the market?

Josh: Oh yeah, for sure, I would estimate it around 20% right now, reduction and demand overall right now. This is leaning towards why our inventory is growing a little bit. We definitely see an impact on demand showing up in the numbers now. Our sales report last month reflected it, this month at the end of July as I said, we'll probably be off roughly 20%.

Joey: Wow. And is this making seller nervous a little bit?

Josh: Sure it is.

Joey: Because we're used to just like...

Josh: Well, you couldn't be wrong if you're willing to wait. Right? So if you're listing your home over the last 18 months and, let's say, you over-priced it by 5%, just wait a few months, and you'll get your price, right? Where today, if the market does shift and you don't price it correctly on day one, theoretically a month later, you might be doing a price reduction, and that's a huge difference from what it was six months ago.

Joey: I'm seeing a lot of those, that internal real estate traffic words, there is a lot of subject line, price reduced, price reduced, price reduced. A lot of that could have also been that some of the listings I would see 'em. Now we talked about this about three or four episodes ago, where I was like, "Wow, more power to you, that you got your agent to list it at that," and they were flying off the shelf, but it caught up. Whatever they thought it was, hey, just let's go to... As you said, 5% higher. We'll get it. Now, now it's important to price your home right.

Josh: Well, it always depends on the market. Different markets require different approaches. So if you know you're in a rapidly approving increasing market, if you price a little bit higher than the existing inventory, you're probably going to be okay. But that's not a good practice when the market is flatter shifting because days on the market from a buyer's perspective is a concern. So here's an example. For years, sellers asked me, "Does a price reduction look like I'm desperate?" And that's a good question to ask. Our experience has been because we've asked buyers this very same question for years, and what we've seen is a bit more of a pattern is what we've learned that price reductions are typically internalized from the buyer's perspective as motivation. Sellers are motivated. That's why they drop their price. Days on the market is typically interpreted as there's something wrong with the property, and so a seller has to make the decision, "Do I look motivated by changing my price, or do I look like there's something wrong with my home by sitting on the market forever?"

Josh: Right? And neither one is a good option. I'm not suggesting it is, but you have to look at that and make a realistic assessment of what you should do.

Joey: How many... I don't know if you know this stat right now, but days on the market are the average because that's obviously climbing as well, right?

Josh: Not as much as I would have thought. Actually, it was in the, I think, in the mid-high 70s this last month. In the last month's market update, it'll probably be in the low 80s now, so it's trending where it's growing a little bit, but it's not a huge difference yet. And partly because we don't have a massive amount of new homes coming to a marketer or resell homes come into the market. Like in 2007/8, as Mike said in his podcast last month, we had overnight just massive amounts of inventory just being dumped under the market. That's not the case right now. We have a very conservative introduction of new inventory to the market every month. So I think we've almost run out of time. Is that Marcus? Two minutes left? So, everybody who is watching, you got a two-minute warning. We'll have to put up with us for two more minutes.

Joey: Red zone. Red zone. Okay, so the bottom line is, yes, the market has come down a little bit. You said you're seeing 20% less buyers in the marketplace.

Josh: Yep.

Joey: In 2022, you'd say there's about a 10% reduction on average of the median price. Again, the right in the middle of the thing. But it still... I think these numbers are all off of the highest fastest market, so these are still... As you said, the inventory It's 2.1. The replenishment rate is 2.1. It's just considered a seller's market.

Josh: Yep.

Joey: And we have to get up to six months before we would consider that a buyers market.

Josh: Yeah, and you still have to think it this way, you're either renting or you're buying. If you're renting, pay 100% interest every month when you make your payment 100% interest. You're not securing an asset over the long term to appreciate. You do not have the tax savings for home ownership. You're not being able to kind of control what you want to do with your property when you want to do it. You have no real protection over somebody evicting you. Versus owning a home and having the benefits of all the things I just talked about. So it's a tough decision to make. I would really finish off by saying if you're thinking about buying a home and staying there for a short period of time, don't. Don't buy one right now. If you're thinking about staying for a period of years, two, three, four, five, six years, you want to stay longer than that, I think you're going to be in good shape long-term, so in case... I think we're almost finished up, but...

Joey: Before we go, is there any resource somebody could find online that would show the average increase in rent and renting versus it just being antidotal where you're talking to people like, "Yeah, right." Is there something like that? Does that exist?

Josh: is something I think will provide some insight into that.

Joey: Yeah, because I would like to see the number over the last 24 months because I think it would be shocking.

Josh: Yeah, yeah,, I'm pretty sure, is the one. I've got it in our previous market updates on our website, You can watch the...

Joey: I'll link to it when we publish this.

Josh: That sounds great. Let's do that.

Joey: Okay, thank you for your time, Josh. As always, I appreciate it.

Josh: Always Joey.

Joey: If you guys need a real estate agent, give Josh a call.

Josh: Hey, we're here to help. Thanks.

Posted in Podcasts
July 1, 2022

Shasta County Market Update - July 2022


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


From the Desk Of Josh Barker

Hello everyone, 

First and foremost I hope that all of you are off to a great start to your summers! This month's market update is one of the more impactful reports we have delivered in the past year. Please take a moment and review the information. Some of this information is factual based and some of the information is opinion based. If you have any additional questions, please feel free to respond to this email or contact our office at 530-222-3800

Hoping your Spring has been off to a great start!

Josh Barker


Interest Rate Increase

The Real Estate market is shifting. Mortgage interest rates have doubled in the past 6 months from a low of 3.125% to a current average of 6.25% mortgage rate impacting affordability by nearly 30%. The mortgage rate increase was designed by the federal reserve to target housing and reduce buyer demand. The actions taken by the federal reserve have succeeded and in the coming weeks and months the national real estate market will shift. This market shift will be different from the great recession due to one critical point among others…This market shift is intentional and designed to bring down the current inflation of 8.6%. Once inflation reaches an acceptable nominal range it is likely the federal reserve will enact policies in an attempt to stabilize the market and resume a targeted growth rate.

Home Value Expectations

In the coming weeks and months the housing inventory will likely continue to rise as home prices remain stubbornly high and out of reach of many home buyers due to higher interest rates. Eventually, home prices will likely begin to soften as motivated home sellers take the actions necessary to price competitively and sell. Once the market shift begins to normalize, the median sales price (currently 385k) will reflect a balance between pricing, wages and the then-current interest rates. The median sales price prior to the pandemic in July 2019 was $284,000 when interest rates averaged 3.8%. It is unlikely that the median sales price will reach the previous level referenced. However, mortgage interest rates combined with availability of financing will be the largest contributing factors to the future median sales price. 

Home Sales

Homes sold in the month of June finished at 288 closings down from the 368 closing in the month of June last year. This 21% change in home sales is largely due to the increase in mortgage rates. This trend is projected to continue as affordability has become a strong headwind on monthly home sales.   

Home Inventory

Active homes for sale in the month of June finished at 710 properties up from 539 properties for sales at the end of June of Last year. This 31% increase is largely a result of slower home sales combined with a small increase in home sellers entering the market.

Absorption Rate

The absorption rate in Shasta county is currently measured at a 2.39 month supply up from the 1.7 month supply available in June of last year. The absorption rate is a good indicator of supply relative to demand. A 0-3 month supply is typically a sellers market. A 4-5 month supply is considered a neutral market and at 6+ supply is considered a buyers market. Although the current absorption rate reflects a sellers market, the trend is changing quickly. 


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 July! 

Josh Barker

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

Posted in Josh's Blog