Market Evidence

Here’s the tour of the Solana Beach listing from last night:

Nobody is giving away the premium properties. The more premium, the more buyers!


I should do more follow-ups on listings seen here previously for market calibration:

This RSF view estate sold for $23,500,000 full price cash in five days.

The Solana Beach fixer that listed for $1,995,000 did close escrow for $1,960,000:

Our listing in Terramar closed escrow for $2,440,000 with a 1031 buyer from LA:

Buying the superior properties for a fair price is something Charlie Munger would say!

An Inventory Surge?

While a surge in inventory next year would help to change the market dynamics, there isn’t any hard evidence of it happening yet:

How many would be considered a surge? If the number of new listings rose 10% or even 20%, would anyone notice? Probably not.

Using these November numbers, and adding an extra 20% would only get us back to last year’s total – which we thought was bleak then. but now I’d take it!

It would take a real bump to get buyers to step back and say, ‘hold on, I’m going to wait and see where this goes for a month or two’.

Let’s guess that it would take at least a 25% increase in new listings for buyers to pause.

I was asking around yesterday, but nobody had anything definite to report about their new-listings flow for next year. One agent thought that we’re going to see a lot of short sales though (???).

New Fannie/Freddie Loan Limits

In 2024, you will be able to buy a million-dollar home in San Diego County with 3% down.

Thank you taxpayers!

What will it take to qualify for a $1,006,250 loan? The P&I payment at 7% is $6,695, and by the time you add PMI, property taxes, insurance, and HOA, the total payment will be around $8,733 per month.

It would take an annual income of $325,000 to qualify with only a car payment or two, and no other debts.

Hopefully those earning $325,000 have more than 3% to contribute to the down payment. But if not, it’s ok if you want to opt for the max mortgage interest write-off instead. What a great country!

One-Story, Newer, Price

Michele and I cruise around twice a week looking at the new listings.

I love it because I get to pontificate about the business and give her guidance like a good broker should.

She asks many great questions, and today was no exception. She had read the blog post from 2009 where I said agents should know the hot buys. She asked about the definition of a hot buy.

Today there is an easy formula to identify a hot buy:

If the number of Zillow Saves is 5% or more of the Zillow Views, it is a hot buy.

If the Zillow Saves are 7% to 10% of the Zillow Views, grab your checkbook – because it is sizzling hot.

Of course, now that I’ve divulged my tip, a few agents will manipulate the counts so if the listing agent is a known scumbag, then don’t trust their counts. You know who the scumbags are, don’t you?

We came up with another idea too.

If the house is one-story, newer, and the price is attractive, it’s a hot buy. But then we went one better.

If the house has two of the three (one-story, newer, attractive price), it’s probably a hot buy anyway.

If the list price is attractive, that is enough to power any sale, but if the price is attractive and the house is either one-story or newer it will probably be a hot buy. In 2024, a newer one-story house doesn’t even need to have an attractive price – there are so few of them that they can ask anything they want.

We saw three houses for sale today that will demonstrate my theorem. All are one-story homes that have been improved and should appeal to the maximum number of buyers – especially the seniors who have the money and will only consider a renovated one-story in a good location with some view:

For those who desire a full ocean view from both the family room AND the primary suite and can live with 1,620sf built in 1986 on a smaller lot in Carmel Valley, you can’t do much better than this for $2M:



If you want a fully-renovated one-story house just east of the freeway in Solana Beach that overlooks the golf course, then this would be worth a look:



Want to step it up and buy a brand-new 4,194sf one-story house with ADU in a prime Del Mar location with ocean view – and price is no object? Then this is for you, priced at $16,995,000:



Why would these three list for sale now instead of waiting until next year? Well, I can’t help you with that. It is the most lucrative time ever for buyers to pause during the absolute peak wait-and-see period of all-time.

So if 1-2 of these go pending by the end of the year, it will show that the premium properties are always hot – and I wouldn’t be surprised if they all sell.

San Diego Case-Shiller Index, September

Ok, ok – yesterday I said that we’re at the highest pricing ever, but the San Diego non-seasonally-adjusted Case-Shiller Index isn’t quite there yet.

But it feels like record pricing around the north county coastal region, doesn’t it?

The index dropped eight months in a row last year, and it might track negatively over the next few readings of 2023 – big whoop. The index gave back 11% last year, and we’ve regained all but 2% of it this year.  It is a seasonal event that will probably repeat in the coming years.

If the pricing keeps trending upward in 2024, at least it should be somewhat offset by lower mortgage rates this time. The quick rise in rates in the middle to late 2022 had to be reflected in the pricing, which it was. But this year, pricing held up nicely in spite of touching 8% rates recently.

I’m predicting an increase in listings next year, and it could amount to a full-blown surge. I already have three listings lined up for early-2024, which has never happened this early – there have been years where I get well into January without sniffing a new listing!

I’ll survey my fellow agents over the next couple of weeks to see what they say – two have already agreed!

Soliciting Off-Market Listings

If your listing doesn’t sell, or your listing agent withdraws it and then ‘refreshes’ it by inputting it a second time into the MLS, don’t be surprised if your phone starts ringing around 7am the next morning – and ring non-stop for hours, days, and weeks.

Did you know that those solicitations are prohibited?

While the listing agents might get a little frosty, they probably won’t do anything about it. Of course, there isn’t any MLS police either, so these solicitations run unabated – you will literally get dozens of calls and mailers, plus agents knocking on your door.

If lawyers want to chase around realtors for all the scummy things that happen, they will be busy!

Inventory Watch

The local market will wind up the year with the lowest number of annual listings ever, the fewest number of annual sales ever, the highest prices ever (the latest Case-Shiller Index released tomorrow), and we’ll enter the new year with the fewest number of active listings ever.

What’s the worst thing that could happen?

We keep sliding into the Priced-To-Sit program, where sellers are happy for the market to come up to their aspirational price.  It’s a strategy that was perfected in Rancho Santa Fe, where before the pandemic the actives-to-pendings ratio ran 10:1, and sellers just waited until their day came.

I’ll never forget the one RSF listing agent who took great pride in telling me that her one-year anniversary of her listing being on the market was coming up the following week. She was proud of her endurance and willingness to hold out until the ‘right buyer’ came along.

Interestingly, it was in 2012 that we had the lowest annual number of listings, and the following year got frenzied when the number of listings popped up by seven percent. There were other contributing factors to the resurgence, and our recent history is probably the exact opposite of then (years of real estate prosperity now vs. years of doom then).

Best-case scenario?

We get a 10% surge in new listings that aren’t priced ridiculously, and buyers keep buying – causing momentum to build through the selling season and give everyone assurance that it’s going to be alright.


Hiring A Buyer-Agent

Hopefully the hubbub about realtors’ pay will cause consumers to investigate agents more thoroughly, which I’ve been encouraging for a while. Here’s one of my blog posts from 2009 – check the comment section too:

Most buyers struggle to find a quality realtor to assist them in buying a house, and it’s the realtors’ fault.  The national, state, and local associations are so adamant about protecting the new agents and giving everyone an equal chance, that they provide no help whatsoever to the general public.

Their message?  When trying to find good help, you’re on your own.

So how do you get what you need?

Everyone tells you to ask around, get referrals from friends, go to open houses, go with a big company, go with a small company, new agent, old agent, kickbacks, etc., that it probably doesn’t matter where you get a realtor, what matters is how to evaluate them.

Here are my things to look for when evaluating a realtor’s ability to help you buy a house:

1. ASK ABOUT THEIR RECENT TRACK RECORD OF SALES – Let’s cut to the chase, shall we?

Has the agent been able to successfully guide others to the finish line this year?  The best answer is 1-2 closings per month, if you want an agent who delivers personal service.  Any agent who sells four or more per month is slamming people into houses, and those at zero, well let’s face it, they don’t have anything of value to add to the equation.  Get a testimonial from a past client, and/or at look at the sales they’ve done and judge them to see if they were good deals.  (I’ve assisted 10 buyers with closing their sale this year).

These current market conditions are unlike any seen before.  If your agent has been closing some buyer transactions this year, they must have something of value to share.  Here’s what to look for:

2. ASK THEM, “WHAT/WHERE ARE TODAY’S HOT BUYS?  How they answer that will tell you just about everything you need to know.  If they give you a smart-aleck answer, they probably aren’t the right agent for you, only because they aren’t in the game.  If they can name one, at least they are looking at properties, and those are agents who can provide value – ideally your buyer’s agent is previewing property every day, in person.

3. THEY SHOULD ASK YOU QUALIFYING QUESTIONS – If they jump in the car without asking questions, their time must not be too value to them, and this isn’t a business where wasting a lot of your time makes for good quality realtors.

4.  THEY SHOULD KNOW ABOUT FINANCING – I guess it’s alright if they just hook you up with their lender to get pre-qualified, but if they can ask/answer the qualifying questions themselves, it might help when it comes time to structure an offer.

5. HAVE THEM SHOW YOU SOME HOUSES – Go in their car, and if they don’t need a map to get around, you’ve found an experienced veteran.  It’s not guaranteed that they can help, nor is it required, but it’s a good indicator.  If they are pointing out specific sales/listings along the way (theirs or others), then they know the comps too, which is another great indicator.

6. EVALUATING THE PROPERTY’S CONDITION – They don’t have to be a general contractor, but they should be able to educate you about the property’s condition.  If all they do is point out that “This is the living room”, they’re not going to have much to offer in terms of added value, unless you don’t know what a living room is.

7. HAVE A VENDOR’S LIST – Successful agents know professionals to call to fix stuff – the more thorough the list, the more problems they have encountered.

8.  DO THEY CHARGE FOR THEIR SERVICE? – Ask about “transaction fees”, “processing fees”, or “compliance fees”.  These are junk fees used to pad their bottom line, and are not required.

9.  DO THEY INSIST ON HAVING YOU SIGN A BUYER-BROKER AGREEMENT? – Pass on those, unless you got married after having one conversation too.

10. “FORECLOSURE SPECIALIST” – Be very leery – we are all foreclosure specialists now.  Any agent who tries to make it sound like they have some special “foreclosure ability” is blowing smoke, unless they are listing REOs and not putting them on the open market.  If they don’t mind breaching their fiduciary duty to their bank-seller, they’ll sell you down the river in a heartbeat.

11.  SHORT SALES – I personally see 2-3 short sales every day that have already found their buyer before MLS input, and it is VERY frustrating.  These agents don’t care about their own reputation amongst their peers, and that alone should make you wonder.

12.  OFF-THE-GRID – Ask about what agents can do to find properties that aren’t on the regular websites.  Any positive response would be a good indicator, and any examples of closing one would be even better.

If they can get through those questions and you still like them, you found a good agent!

NEW AGENTS – A new agent’s zeal and availability can really help buyers who don’t have the time or willingness to search for properties themselves.  Want somebody to do the legwork for you?  Put a new, hungry agent on it, but there may be some struggle clinching the deal if there are competing offers.

OUT-OF-COUNTY AGENTS – You’ll be doing all the work yourself, so your own proficiency in being a realtor needs to be up to par.

RELATIVES – Many deals crash and burn, and hearts are broken over houses.  Want a relative to help you?  Make sure that you’ll accept never wanting to talk to them if they cost you the right house, at the right price.

“GREAT TIME TO BUY” – If you hear that catchy phrase, just walk away.

The inventory of quality homes at good prices is EXTREMELY LOW, causing the buying experience to be full of frustration and disappointment.  You can look for weeks or months without seeing anything attractive, so I don’t know why any agent would call that a great time.

REALTOR TEAMS – No problem, but don’t interview the big dog and then get passed off to the assistant without asking the same questions.  You want to be clear about who is helping you, and what you can count on.  In my case, I may have Richard or another KR realtor help me on occasion, but I’m still the main person in charge, and am responsible for your success.

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