Saturday, August 4th, 2007 at 4:50 PM
La Jolla to Encinitas Ratios
How’s the rest of North County doing? I’ve suggested that a good way to gauge the health of the market is to compare the number of active listings to the number of pendings, because over the last few years they have had an inverse relationship. When there were hardly any active listings, the sales were brisk, and when the inventory started to grow, sales slacked off.
Comparing over time gives us a sense of market direction. In the 2000-2004 time frame, the ratio of actives-to-pendings was around 2:1, with the hottest times as low as 1:1.
Scoring Guide
| A-to-P Ratio | Description |
| Under 3 | Hot market |
| 3-4 | Regular market |
| 4-5 | Market in trouble |
| 5-7 | Too many choices, buyers are winning |
| 7+ | Freefall |
The last time these were noted was June 30th – here is how that compares to today:
| Local Town or Area | June 30 | Aug 3 |
| Carmel Valley | 2.75 | 2.88 |
| Cardiff | 3.08 | 3.17 |
| La Jolla | unk | 4.85 |
| Encinitas | 4.08 | 4.91 |
| Solana Beach | 3.38 | 6.22 |
| Del Mar | 5.35 | 6.83 |
| RSF | 10.43 | 10.57 |
Carmel Valley is looking good so far, can it continue to beat the odds? Can you say the Ranch is in freefall, or is it different because of the ultra-wealthy being able to hold out?
The next six months will be interesting!
Posted on Saturday, August 4th, 2007 at 4:50 PM in Thinking of Selling? | 16 Comments » | 
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Great stuff Jim but you work too hard. You need a vacation.
Robert Coté | August 4th, 2007 at 10:33 pmYou’re real funny.
I’m just hoping there’s a lender left by Monday morning. Can you imagine the type of weekend the remaining CEOs had? They’ve been begging their funding sources – "Please, just a couple of more weeks, and we promise to clean up the loan quality this time".
Plus, if anyone would know, it’s you. These blogs don’t run by themselves. (do they?)
Jim the Realtor | August 5th, 2007 at 2:59 amJim, to what extent do you think the active/pending is a different way of looking at months supply? I wonder what months supply is for those areas. When homes don’t sell, they stack up, and the inventory grows. The more homes go into pending, the lower the inventory as the homes are whisked off the shelves.
I really like your active/pending metric.
We need more realtors like you, who know how to analyze the health of a market.
People buying with resale in mind should keep in mind which markets are healthy, and which are not. There’s a tradeoff: you can save money buying in a less healthy market, but you will also get less money when it’s time to sell.
When we moved here, we were able to get a lot more land by moving a little rural. Of course, that area which was the last to rise in 2000, was also among the first to fall.
These metrics you provide show the importance of location. If you do further analysis by neighborhood or street or size of home, you will find even more differences.
The most popular size seems to be 2000-2500 sq ft. The inventory is lowest in that range.
It is really true that real estate is local. The value of a realtor, who knows these trends and nuances, cannot be overemphasized.
Whatever you pay in commissions, you will more than make up in money earned by making a good buy. I’ve said this all along, go read my early posts on piggington from 2005.
Schahrzad Berkland | August 5th, 2007 at 3:18 amJim,
Why do you think CV is holding up so well right now?
Anon | August 5th, 2007 at 6:43 amSchahrzad,
active/pending is similar to active/sold, or months’ supply.
The active/pending is more current, where the solds from last month were decisions made 30-60 days before that, making the data 60-90 days old.
Most of the pendings were decisions from the last 30 days, but they haven’t closed yet either, which is probably worth adding an extra point to the ratio. So both have their faults.
You and I have been talking a lot lately about the differences between agents, and how to find a good one. Having pertinent data and knowing how to explain it will be critical, yet it is hard to find.
You want me to show you 50-60 houses, and write offers on 10-15. You’ll need me to outfox the other agents to get you the best deal. I’ll have to find good financing, who knows where that’ll be in another year or two. I’ll have to help you inspect the property so you don’t get stuck with a clunker.
In short, find you the perfect house at a great price, and get you to the finish line.
I’ll do it, because that’s what I do. It takes full service though, what is described isn’t lightweight.
Simple question – is the discount agent of the future going to be able to pull that off? I’ll answer – no way. They might be able to show you the 50-60 homes, but the rest of it is how you buy ‘em right.
Jim the Realtor | August 5th, 2007 at 6:49 amAnon,
The Carmel Valley area has great schools, and it seems that buyers want to get their kids into the school district so bad that they’ll buy there regardless.
There is very heavy demand in CV, and a lot of agents working it. That listing I mentioned here a few times was shown literally every single day, 7 days a week, for 50 days.
They are getting somewhat picky, we had to lower the price by 8% after 45 days, but when we did we got three offers, two full price. The buyer came to the first open house, but waited very patiently until the price got right.
I would also say that there is a real drive to settle the family/kids in a good house & school and don’t move for another 5-15 years.
Carmel Valley does benefit from being mostly newer houses. There are part of Carlsbad and Encinitas that have older houses that most people just don’t want to deal with – either to buy and have to fix, or to live nearby.
The demographics play a role too.
Jim the Realtor | August 5th, 2007 at 7:02 amCV is close to the jobs inn sorrento valley. People loath the commute on the 5 now.
I think CV is a little sterile, but if I had to sit in a car for an hour every morning I would probably change my mind.
daveg | August 5th, 2007 at 7:05 amThanks Jim. Do you think it will hold up still now that mortgages are tougher to get? I guess my question is whether the buyer pool was exotic loan types who are now effectively shut out.
Anon | August 5th, 2007 at 7:23 amJim, a discount agent cannot help you find a home , you have to find it yourself. In my opinion.
I was obviously not thinking when I asked about active/pending.
I actually track active/pending in my own Excel spreadsheet, as a more current version of active/sold, or months supply. Sorry for that stupid question.
I know someone who just moved from Point Loma to CV, and still has the Point Loma house for sale. Any ideas on how long it will take to sell that $1.2 mil Point Loma house in a market where mortgage credit has seized up? He bought the CV house in the same month he put his other house up for sale, I guess he can afford to pay 2 mortgages.
Schahrzad Berkland | August 5th, 2007 at 4:00 pmWe retail peons have no idea how bad it will get with lending. Jim Cramer thinks he knows and he was in orbit. It was so bad in his estimation that Wall Street types were in danger of losing their bonuses. It takes months for the siezure at the top to fully trickle down to where we are retail. That is unless you were about to lock with Novastar on Fri or ACA tomorrow. Jim’s first comment my prove prescient; there might not be a lending market 6:30Am Monday morning. Here’s the latest ACA warning. http://www.reuters.com/article/marketsNews/idUKN0533130920070805?rpc=44
Robert Coté | August 5th, 2007 at 8:36 pmSB,
No stupid question there, I think we’ll see some additional information comparing the two. It will probably be the way to identify the market improving, when we see the a/p ratio rising quickly compared to a/s.
Not sure we’ll need it for a while though.
Jim the Realtor | August 6th, 2007 at 12:09 amAnon,
There is a ton of money in CV, and heavy demand – it’ll be a great test. If Carmel Valley can continue to beat the odds, it’ll confirm how many different variables play into the decision-making besides price/loans/affordability.
Jim the Realtor | August 6th, 2007 at 12:15 amRobert,
After reading about ACA, it looks like they’ll be toast by lunch tomorrow.
You’re right, this would be a good week for vacation.
Jim the Realtor | August 6th, 2007 at 12:21 amJim,
FirstTimeRenter | August 6th, 2007 at 2:35 amI have to agree with you about CV. There are a lot of people with down payments ready to buy, but waiting for the right place at the right price. I think what has happened is that CV has become the area that people will still spend their money becuase of it’s desireable location and schools. I’ve run into to no less than 3 other couples besides us who are waiting with cash in hand to buy the right place. I know we are a bit more resilient than some of the others I’ve spoken with but it wont take much of a price drop in CV to sell the houses that are there. And no one is relying on "exotic" loans or high LTV’s.
(completely OT post now!)
Sigh. Carmel Valley was where I rode horses in the late 1970s and early 1980s. The stable, on the south side of the valley, is now covered by office parks. We could cross Carmel Valley Road and literally ride to the San Dieguito River without any obstacles beyond the occasional gate, or we could head south up onto the mesa and ride for miles to the east.
Before that, I rode in Sorrento Valley and the same thing happened there.
But I can see why people are buying there now…
Perhaps if RE implodes enough some of the less successful neighborhoods will just be torn down and revert to open space. I can dream
quietann | August 6th, 2007 at 4:48 amI have shopped for a home in CV 2 different times. In April 2000, when there was a recession, the homes in CV were dropping VERY HARD! I did not buy because I found a nice home in University City (which is my overall favorite area).
I again tried to Buy in 2006. I had $800,000 down payment. No one would drop their price .05 Percent so I bought a new home west of 5 in Encinitas for 1.1 million. The price is now over 1.4 million in a DOWN MARKET. I got a good deal.
I too wanted CV for the Schools but could not stand the tiny yards and Power Lines that most homes view. I am going to wait a few years in my appreciating west of 5 beach house for the next recession.
I BELIEVE THAT A RECESSION SENDS JOBS AWAY AND SINKS PRICES HARDEST IN CV! People will get transferred and their house will have to sell. I still love the school system there, but not crazy must have over it. Schools are still crowded there and Torrey High is scary crowded with drug kids their.
JIM the Realtor – you should do a topic on West of 5. It is HOT HOT HOT in Leucadia with large new projects coming to the area. I feel it’s a far superior investment then CV. With the $$$ earned in Appreciation, I will be able to PAY for my kids complete College education and maybe a condo to spare.
Danny | August 6th, 2007 at 4:25 pm