Wednesday, May 28th, 2008 at 2:05 PM
How Many Motivated Sellers?
So how bad is it in Carmel Valley – what is lurking under the surface?
We know that there are 199 active listings of detached homes, here are other facts that are obvious to those who look hard enough at the MLS:
28 are vacant (that aren’t listed below)
9 are short sales
1 is a probate
2 are REOs
5 are builder sales
10 are agent-owned (at least)
55 total
We’ll figure that the agents know enough that we can call them motivated sellers, and won’t hold out if a deal can be made. Four of them are among the most prominent realtors in the area too. So we’ll call 55 of the 199 the motivated sellers – ones who will be setting the pace for the others.
Is that all there is? Just 55 out of 199?
Who is lurking under the surface?
Nine are short sales, but we’ll guess that there are 10% to 20% (at least) that if they had to price ‘em to sell, they’d be underwater. Let’s use 15% of the 199, or 30 more motivateds.
88 of 199
What about those who have defaulted, but aren’t listed as active or pending on the MLS? Add another 23 detached homes to the list.
111 of 222
There was only one REO found that wasn’t on the open market yet – we have seen it before and wondered if Navy Federal might eat their $100,000 second mortgage (they did). I had guessed a list price of $849,000 then, but the opening bid was $733,125 at the trustee sale, so it could come on the market in the $700,000s:
4344 Corte al Fresco
4 br/2.5 ba 2,555 sf
$980,000 SP 8/05
$799,000 LP guess (any day now)
YB: 1992, HOA = 0, MR = $85
**********************************************
In summary, we can count 112 of 223 as motivated sellers, just over 50% – and that could be conservative. Are the buyers aware of the odds? A casual glance would only see a scattered handful of short sales and two bank deals, but in this analysis it looks like there is more beneath the surface.
Carmel Valley has been the strongest around – if you are in other areas, consider the percentage of motivated sellers to be higher, due to more bank deals and more erosion of prices that has already taken place.
Posted on Wednesday, May 28th, 2008 at 2:05 PM in Thinking of Buying? | 16 Comments » | 
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Jim,
When do you think banks will actually start competing on price? I keep hearing about how all the REO’s are postponed 5-6 months when they could have been on the market?
shadash | May 28th, 2008 at 10:56 pmHow many Realtors® are carrying their personal listings in their pocket using the MLS to attract qualified buyers and then offering them a sweet deal just coming to market or whatever?
As it is say 80% of sales in the next 90 days are from the motivated sector. That still means the motivated seller has at best a 50:50 chance of selling.
Rob Dawg | May 28th, 2008 at 11:15 pmCV is great. When I first moved to SD that is where I lived. You avoid all the traffic that occurs north of Del Mar. It is also close to the beach.
However, What has occurred in CV is truly amazing. People are still able to sell their Pardee Homes bought in 2006 for a profit. Pardee cannot build Saratoga quick enough. It is hard to believe 4S Ranch (all of ten miles away) will sell for $150 sq ft and CV will sell for $325. I think sooner or later something has gotta give. For the record I think the gotta give part is the resetting of Option ARMS and I do not expect major price changes in CV until they occur in large numbers.
LV Renter | May 28th, 2008 at 11:24 pmGreat analysis Jim! This is exactly what I am seeing bubbling beneath the surface. I’ll bet you that the 23 current NOD’s (defaults), plus the 2 REO’s & 9 Short Sales is an all-time record for CV. Also, you only examined Detached homes…Attached ain’t a pretty picture either…
CV Watcher | May 29th, 2008 at 4:14 amAgreed, the attached are worse.
There are 84 properties in default, 30 of which are detached and seven of those are on the MLS (four active. three pending)
Which leaves 54 condos in default.
I’m going to check the short sales next – I’m guessing there are 15% that are short but don’t know it yet, but it could be a lot worse (?)
Any guesses?
I’m going to check to see how many of the active listings have less than 20% equity at current list price – those are short sales that don’t know it yet, unless they can get into escrow in the next 30 days.
Jim the Realtor | May 29th, 2008 at 4:23 amMy guess is that there were as many stated income loans in CV as anywhere else in the county during the boom.
SMC | May 29th, 2008 at 5:43 amCV is all about the commute, it is true. Your quality of life is affected if you have to drive in traffic every day for 45-60 minutes. In CV you might get away with a 15 minute drive will not too much traffic.
They are located close to the jobs, and that is their winning formula. The communities and houses are slightly below other areas (carlsbad, encinitas, poway, scrips, etc. for example) IMHO, but the commute ends up being the dominate factor.
daveg | May 29th, 2008 at 12:35 pmTo Daveg:
"CV is all about the commute, it is true. Your quality of life is affected if you have to drive in traffic every day for 45-60 minutes. In CV you might get away with a 15 minute drive will not too much traffic."
NO – Carmel Valley is all about the SCHOOLS!!! That is it. That is why I wanted to live there and ultimately ended up not buying there because I want to have money for my kids college education too.
There is 1 place in town that is ALL ABOUT LOCATION – can you guess it??????
UNIVERSITY CITY – GOLDEN TRIANGLE – is the town that is All about location. Talk about being really 5-10 minutes to everything. As gas goes to $10 a gallon, I expect a floor in the prices as more try to move there.
So, you are wrong.
Carmel Valley is ALL ABOUT THE SCHOOLS
University City is ALL ABOUT LOCATION
Just my stupid opinion.
Todd | May 29th, 2008 at 3:11 pmUC has pretty good schools too. The only problem is that for elementary, I have heard that you need to stay east of Genessee to stay in the Curie district and out of Spreckels. Hear that Spreckels has lots of ESL students. It’s a bummer because west UC is much nicer IMHO than the east side. Most of the houses in UC are real pieces of crap and most are smaller than 2000 SF, but prices are finally getting to a point where you can afford to buy a POC with 1500 SF and add a 2nd story and fix it up to be habitable. When you compare what you get in UC for the money to Carmel Valley, UC still needs to come down in price.
NC | May 29th, 2008 at 3:18 pmI was too conservative – there are 61 active listings, or 31% that if you knocked 20% off from their list price, they’d be underwater.
What to do with this information?
If you are selling, start lowering your price now and get it over with, even if you have to short-sell.
If you are buying, tread carefully and work to create deals. By the end of summer there should be plenty of sellers, (using this data, at least 50-100 sellers) who will be happy to see an offer 20% below today’s list prices.
Why use 20%? Because there should be buyers willing to pay 20% less than list price now, but are there sellers who will sell for that? They should consider 20% below list as a decent offer today.
They’d probably argue that 5% to 10% might work, but 20% off is giving it away! But once the selling season concludes in about 60 days, 10% to 20% below list price will sound good, because the alternative will be to wait until next year!
Jim the Realtor | May 29th, 2008 at 3:50 pmFreddie Mac said Thursday the 30-year fixed-rate mortgage average hit an 11-week high on inflation jitters. The 30-year fixed-rate mortgage averaged 6.08% with an average 0.6 point for the week ending May 29. Last week, the average was 5.98%, and last year at this time it was 6.42%.
So, what do all the piggs think will happen to 30 yr. mortgage rates over the next 6, 12, 18 and 24 months?
I personally believe inflation is heating up not only in the US but in Europe as well, which will drive the 10yr Treasury note and LIBOR up.
Considering this, my thought is that 30 yr. mortgages will be around 6.5% by the end of 08.
Any thoughts?
Let’s please try basing the analysis on facts we know about the economy and data figures coming from financial markets…
courtc2911 | May 29th, 2008 at 6:16 pmTodd–>So, you are wrong.
Todd–>Carmel Valley is ALL ABOUT THE SCHOOLS
Todd–>University City is ALL ABOUT LOCATION
You’re partly wrong. Carmel Valley is not *ALL*
about the schools. It is about
SCHOOLS
LOCATION
AGE OF HOUSES
FLOORPLANS OF HOUSES
At least that’s why my family prefers to pay the CV premium.
bubbleinfo fan | May 29th, 2008 at 7:06 pmI would say CV was all about the Builders, Marketing and Hype over the past 6 yrs. The builders did a great job of hyping that area as ALMOST DEL MAR and cramming as many houses into their subdivisions as possible to maximize profits. They were the real winners in that area.
Now that the market is calming down, people realize that sound they hear is not waves crashing on the beach, it is cars flying down 56……….
SMC | May 29th, 2008 at 8:02 pmSMC–>I would say CV was all about the Builders,
SMC–>Marketing and Hype over the past 6 yrs.
I could say the same thing about the Marketing and Hype for downtown and Little Italy condos, Chula Vista’s Otay Ranch and Eastlake, San Elijo Hills, Scripps Ranch Villages, Temecula(!!!) and all the other recent developments. The builders and realtors won but not just in CV.
Based on personal experience, CV, Torrey Hills specifically, was marketed to us as having — great schools, family-friendly communities (versus downtown), new houses, relatively low crime, 10 minutes to the beach, 10 minute work commutes for my wife and I, 20-30 minutes north to Carlsbad and south to Lindbergh Field and downtown. All at a slightly higher cost. We bought the marketing and hype, paid the premium, and though there was a delay in the opening of the neighborhood elem school, received everything we expected. So, in our eyes, we won, too.
I can’t speak for the other CV homeowners, but the aforementioned advantages will still be there for us to enjoy even if house prices go down.
UC is also great location-wise. School district- and house quality-wise however, it is just not up to par with CV.
My ultimate disclaimer: YMMV of course
bubbleinfo fan | May 29th, 2008 at 9:33 pmNC: Hear that Spreckels has lots of ESL students.
Spreckels is Spanish language magnet school, so I guess that would follow!
There exist very nice houses in University City — I’ve seen ‘em. They are the exception rather than the rule though. The majority look like they are off the generic shelf at Von’s: "House. Qty: 1."
Dwip | May 30th, 2008 at 2:18 amJim, do you have any gut feeling / experience as to how long a short sale will linger around on the market before the bank finally gives up and goes through the foreclosure process? I see short sales sit around for half a year and more, and nothing is happening, because their short sale price is unrealistic. It just seems stupid – the longer they wait around, the lower the comps will go.
Simone | May 30th, 2008 at 6:04 pm