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More on September Sales

From the C.A.R. press release:

“While it’s encouraging that statewide home sales improved both monthly and annually, the year-over-year sales rate is losing steam, reflecting the persistent shortage of homes for sale and an easing of concern over a surge in mortgage rates,” said C.A.R. President Geoff McIntosh. “Additionally, for the areas that have been affected by the recent wildfires, we anticipate sales will pull back in those regions as damages are assessed and replacement efforts are coordinated.”

We’ve discussed how fewer homes for sale could be the sole cause for a drop in sales.  Can we learn something by comparing the change in sales count to the change in inventory!

Rich shows San Diego County inventory down 2% MoM, and down 16% YoY:

San Diego County sales down 16.7% MoM, and down 4.3% YoY:

Here are the ratios in an easier-to-read comparison:

 

Type
Month-over-Month
Year-over-Year
SD Inventory
-2%
-16%
SD Sales
-17%
-4%

A year ago we were in a presidential election cycle – I’m not sure data from that era means much today.  But a 17% drop in September sales from August when inventory only fell 2% is probably worth noting.

The 2% inventory drop didn’t change the selection much, but with 17% fewer sales, it means that the homes for sale must not be as appealing as before.

Posted by on Oct 19, 2017 in Jim's Take on the Market, Sales and Price Check | 0 comments

Amazon to Chula Vista?

We’re in the running – and only $400 million in incentives!

LINK

San Diego’s region-wide bid for Amazon‘s second headquarters was sent off Wednesday, one day before the online retailing giant’s deadline, according to the San Diego Regional Economic Development Corp.

The competition for the headquarters is pitting municipalities large and small against each other for a piece of Amazon’s very substantial pie. The company plans to spend more than $5 billion on what it calls HQ2, which would provide 50,000 new high-paying jobs and support thousands of construction and other related positions.

The EDC submission, set to arrive Thursday, proposes four sites — Chula Vista, downtown, Mission Valley and Otay Mesa.

On Tuesday, the Chula Vista City Council approved a $400 million incentive package for Amazon, which would have HQ2 incorporated into the city’s Millenia mixed-use mega-development. Chula Vista would provide the company with 85 acres valued at $100 million and tax breaks of $300 million over 10 years.

Amazon could also partner with the city in its ongoing plans to bring a four-year university to the city.

“We have the best proposal for Amazon,” said Chula Vista Mayor Mary Casillas Salas. “We can provide eight million square feet of space in a continuous greenfield development and Amazon can embrace our unmatched quality of life in master planned communities with housing for all income levels, biking and hiking trails, recreational activities and an incredible climate.”

Last week, the San Diego County Board of Supervisors voted to send a letter to Amazon CEO Jeff Bezos in support of the local bid.

Amazon already has a large presence in San Diego after leasing more than 100,000 square feet of office space in University City. But the region faces stiff competition in the bidding war with numerous other cities offering land and tax incentives.

Posted by on Oct 19, 2017 in Jim's Take on the Market | 13 comments

Gord Downie, RIP

We lost another all-timer today, Gord Downie, 53, lead singer of The Tragically Hip.  He started the band with high-school friends from Kingston, Canada, made great music for 34 years, and died yesterday of brain cancer in his hometown, which is the way it should be.

He went on tour last year – it had to be incredible for all involved to play this last show after 34 years, knowing that your lead singer was on his way out:

Posted by on Oct 18, 2017 in Jim's Take on the Market, Wednesday Rock Blogging | 0 comments

This Week’s Disrupter

This start-up has the right ingredients, but their auctions do have a reserve amount and no buyer-agent commissions, which cuts out other agents.  They say  “No Double Ending’, but when the buyers are unrepresented it puts the listing agent in an agency position – if the buyers ask a question, and the agent replies, an agency relationship has been created. 

Every start-up wants to beat out realtors, and think that the consumers will trust their faceless, unproven venture instead:

LINK

TORONTO, Oct. 18, 2017 — There is a new way to buy and sell real estate in Ontario. With today’s official launch of On The Block Realty, the uncertain and often frustrating process of trying to navigate the home market has taken an innovative step forward. This brand new real estate brokerage based in Toronto, has opened its doors to the public, offering new unique approaches to the industry.

Chief among these advancements is the development of a cutting edge online auction platform that is aimed at bringing much needed transparency to buyers and sellers. The home buying process has been protected by silent bids in many situations, leaving buyers confused about what price to pay, and sellers concerned that some buyers may not have offered their best price. Inspired by the successful practice of real estate auctions in countries like Australia and the UK, this new system offers an exciting alternative for sellers who want to be certain they have maximized every bid from prospective buyers. It also ensures that every buyer has an equal opportunity to buy without any secrecy guarding the process.

“This isn’t about changing or fixing anything, it’s about evolving,” says CEO Daniel Steinfeld. He adds, “People deserve a choice when they make the biggest financial decision of their life. They also deserve clarity about every aspect of the transaction. We provide that.”

While the auction platform is the most distinguishing feature of this premium brokerage, there are several other features that the company believes will set it apart from the traditional brokerages in Ontario.

There is a ‘No Double Ending’ policy that ensures both sides of a transaction are never represented by the same Realtor. President and Broker of Record Katie Steinfeld says, “It is impossible to fathom that people with perfectly opposite financial objectives could have their best interest adequately represented by the same person.” She continues, “This is especially so when that individual stands to make more money by being on both sides of the transaction.” While the Ontario government and real estate industry have diverted from the point of protecting the consumer’s best interest, On The Block has done what makes the most sense – disallow the concept from their business model.

Prospective buyers without representation can still fully participate in a purchase or bidding process, but will not have a client relationship with On The Block – and if they choose to purchase without representation, there is no additional commission payable by either the buyer or the seller. “Buyers are entitled to an understanding of how commissions work. Just because it is widely positioned that the sellers ‘pay’ commissions, that cost is directly coming out of the sale proceeds, and ultimately a cost to the buyer,” Mrs. Steinfeld explains. On The Block’s Transparent Commission Policy explains that buyers should only pay for the service they receive, and so purchasing without representation shouldn’t cost them the extra 2.5% that often get baked into the purchase price.

Beyond the increase in transparency, the company provides a first of its kind ‘all inclusive’ approach to selling a home. One of the most unique included features is that homeowners are given a week in a partner hotel during the selling process to take away the stresses of cleaning and constant vacating that come with showings of the property. This is in addition to perks including professional photography, home inspections, and one of a kind custom signage for every property. “We are trying to sell a home, not ourselves,” Mr. Steinfeld says. “The high end signage is the largest legally allowed, and it is completely focused on the property it is trying to sell, not the brokerage or the name of the sales representative.”

Interested sellers are invited to use the platform at an introductory rate that includes all the bells and whistles, but costs less than half of what traditional Realtors charge.

It has been well documented that the real estate market could use a new approach. Perhaps this is the big change everyone has been waiting for.

About On The Block

On The Block is a premium real estate brokerage and auction house offering prospective home sellers the option to sell by auction or traditionally. As platforms like Uber and Airbnb have disrupted their spaces, On The Block is positioned to challenge a real estate process that for too long hasn’t seen significant change. With home prices continuing to fluctuate widely, and affordability diminishing, it’s more important than ever to give people some choice and power in the biggest selling and purchasing decisions of their lives.

Posted by on Oct 18, 2017 in Auctions, Jim's Take on the Market, Listing Agent Practices, Why You Should List With Jim | 1 comment

Cliffhanger

Hat tip to daytrip for sending this in – the price is now down to $699,000:

Homes near this Chapel Drive neighborhood fetch about $1.5 million, and Crowell priced this property as such. She figures it will cost $300,000 to stabilize the hill that got washed away during February’s rains, $250,000 to fully upgrade the 2,385-square-foot home and leave $100,000 left over for profit. “That’s the going price in this neighborhood,” she said. “The house is still near the best schools.”

The couple selling the house is in their 90s and were forced to move out of the home they’ve lived in since 1968 this winter. While the property underneath the home is shaky, Crowell said the four-bedroom, three-bathroom home is in really good shape.”

As of Monday, Crowell said she had at least 10 inquiries on the home. She said she felt supremely confident she’d sell it — and soon. But she fully recognized that anywhere else in the country, a Realtor who asked for nearly $1 million for a home sitting precariously on a landslide and “you’d be nuts.”

http://www.ktvu.com/news/red-tagged-lafayette-home-teetering-on-landslide-sparks-bidding-war-starting-at-850k

https://www.zillow.com/homedetails/21-Chapel-Dr-Lafayette-CA-94549/18468498_zpid/

Posted by on Oct 18, 2017 in Jim's Take on the Market, Real Estate Investing | 2 comments

Gap Between Median List and Sale Prices

Reader hema-mendo wondered about the mega-gap between the NSDCC median list price, and median sales price for the last 30 days:

I don’t get it. Why is the spread so wide?

It is a bit alarming to see more than a million-dollar gap between the two:

NSDCC median list price: $2,300,000

NSDCC median sales price, last 30 days: $1,245,300

Half of the current listings – and 83% of the sales – are under $2,300,000!  None of the supply-and-demand economics seem to apply to the high-end sellers and their agents – they are happy to sit and wait……for something.

Most probably think it just takes time before the right young couple with 2.2 kids comes along some day.  But the numbers are daunting.

A median list price means we have 402 houses listed over $2,300,000, and there were 41 sales of the same over the last 30 days – let’s call it a 10-month supply.  But it’s been this way for years, and no one seems to mind.

This is what happens when virtually everyone on the market is an elective seller, and is loaded with equity.  Once a house hits the open market, the ego takes over because now the sellers’ family and friends know the price.  Unless the reason for selling is one of the Big Three (death, divorce, or job transfer), the seller’s ego insists on defending that price, even though nobody has looked at their home for weeks or months.

Waiting is much easier on the ego than having to dump on price.

Posted by on Oct 17, 2017 in Jim's Take on the Market, North County Coastal, Sales and Price Check | 3 comments