Friday, August 29th, 2008 at 8:17 PM
Million-Dollar Market
Let’s take a look at the million-dollar market.
Sales above $1 million between 1/1 and 8/28:
| Town or Area | 2007 | 2008 | % diff |
| Carlsbad | 174 | 97 | -44% |
| Carmel Vly | 168 | 120 | -29% |
| DM/SB | 141 | 99 | -30% |
| Encinitas | 118 | 88 | -25% |
| La Jolla | 251 | 158 | -37% |
| RSF | 124 | 85 | -31% |
| WRB92127 | 129 | 59 | -54% |
| SD County | 1,848 | 1,114 | -40% |
But is the drop in sales due to fewer listings above $1,000,000? Sure enough, if you look at the county-wide stats, there is some explanation. In 2007 there were 5,250 total listings over $1 million between Jan. 1 and Aug. 28, and in 2008 there were only 3,096 – a difference of -41%.
But when you look at the individual coastal areas, the number of million-dollar listings are pretty similar Y-O-Y, with the exception being 92127:
Total Listings over $1 Million between Jan. 1 and Aug. 28:
| Town or Area | 2007 | 2008 | % dif |
| Carlsbad | 490 | 435 | -11% |
| Carmel Vly | 317 | 329 | +4% |
| DM/SB | 347 | 352 | +1% |
| Encinitas | 318 | 291 | -8% |
| La Jolla | 590 | 543 | -8% |
| RSF | 373 | 384 | +3% |
| WRB92127 | 390 | 260 | -33% |
Even though the number of million-dollar homes on the market have been fairly similar in both years, the sales are down substantially. How is pricing? Oh – here’s an answer, there hasn’t been much deterioration in the median $ per sf:
Median $ per sf of closed $1M+ sales between 1/1 and 8/28
| Town or Area   | 2007   | 2008   | %diff |
| Carlsbad | $333 | $343 | +3% |
| Carmel Vly | $370 | $366 | +1% |
| DM/SB | $587 | $622 | +6% |
| Encinotas | $419 | $423 | +1% |
| La Jolla | $732 | $706 | -4% |
| RSF | $519 | $508 | -2% |
| WRB92127 | $359 | $342 | -5% |
Would there be more sales of higher-end homes if the prices were lower, or with financing being much tougher in the upper range – could it be too late?
Posted on Friday, August 29th, 2008 at 8:17 PM in Uncategorized | 7 Comments » | 
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"Would there be more sales of higher-end homes if the prices were lower, or with financing being much tougher in the upper range – could it be too late?"
I think the answer to that question is on one of your t-shirts.
Speaking of which, one of the shirts is making me not want to get married. My gf is not going to be happy with you.
genius | August 29th, 2008 at 10:09 pmI know the CV data is erroneous: I’m not a math major but going from $370/sqft to $366 is not a 1% increase.
But, thanks for the very helpful info Jim.
I would attribute the drop in million dollar sales to the fact that buyers actually have to qualify for the loans now.
gaswalla | August 30th, 2008 at 12:27 amThe interest rates on jumbo mortgages are part of the problem when it comes to these high end markets. I live in Fresno, CA and just up the mountain in Shaver Lake, CA they have not sold one house for a million or more in the last six months. Shaver Lake is considered a second/vacation home market, but they have more than 20 properties listed for a million or more and nothing is moving up there. The buyers have disappeared entirely and now with summer over where are the buyers going to come from? This is happening all over the state in my opinion when it comes to these million dollar properties and it will get much worse.
Nathan | August 30th, 2008 at 1:10 am"Shaver Lake is considered a second/vacation home market, but they have more than 20 properties listed for a million or more and nothing is moving up there."
I am following a few high end 2nd home markets in different locations/states, and making similar observations for the over $1M or $1.5M market. A few sales here and there, but mostly a stale mate between sellers and buyers with a huge divide that is not getting crossed.
Something has to give. If there are no loans, or if interest rates are higher, prices and/or sales have to fall. The most irksome NAR-rant is "buy before interest rates go up". To the contrary; buy after the interest rates go up (at least if you are paying cash). So, come on up interest rates!
Another factor will be if Obama is elected and (as promised) taxes on high wage earners go up 15% (mostly the increased soc sec taxes for self-employed and professionals). On a million dollar income, you will have $100K less leftover. Maybe it won’t matter much, but I cannot see this helping the high end housing market (at least not the utlra high end like Rancho Sante Fe, La Jolla, Coronado, etc).
Smithers | August 30th, 2008 at 1:24 amI’m waiting for the Option-ARM and Alt-A recasts to start doing damage in CV. We need some distress to put downward pressure on the present and future sellers. Add to that the requirement of mortgages to have 20% down and 30 year fixed and that has to wipe out a lot of potential buyers. The credit crisis is only started and I can forsee the stock markets and a couple big banks taking a big hit in early 2009.
I can’t see why anyone in CV putting a for sale sign on their lawn today unless they have to sell, or they figure they can sucker someone to unload their house on before the tide goes out. I’d say most people are trapped and can’t sell unless the bank lets them discount.
bearing01 | August 30th, 2008 at 2:17 amThis is deja vu all over again. What happened at the low end, when this whole housing fiasco started unraveling? Prices stayed fixed, and sales dropped through the floor. It was the prelude to a 30-40% drop in prices. Some of those $1M+ sellers have no choice, for various reasons. As bearing said, anyone trying to sell now probably has some pretty compelling reasons. When those houses can’t be unloaded at yesterday’s figures, prices will have to come down, dragging comps along with them. It will be a nasty downward spiral.
Dwip | August 30th, 2008 at 2:22 amHaving watched this end of the market in Carlsbad for about a year now, it’s not very surprising to me that the $/sf is higher. The homes that ARE selling over $1M in C’bad are generally exceptional or unique properties or brand new. That’s what’s selling–homes that can demand some premium. Run-of-the-mill is generally not moving. Big views (the one on Amber that went full asking price for $1.8–sold to a Texan, I heard), fabulous location, etc. have still been attracting buyers. Many, many more are either lingering forever or falling out of the market.
Also, many that started above $1 are now selling below that mark–Bressi is a good example.
Even very high end in C’bad is falling. An excellent example is 7157 Obelisco which just closed. Huge (4956 Sqft/1 acre lot), old La Costa location with pool, multiple decks and ocean views. It was pretty meticulously maintained, even if it was rather 1980′s (the white berber carpet, for example, was still white!) It started last fall at $2.5 and has just recently sold for $1.74M.
But the NoCounty area that’s REALLY in denial is Fallbrook. I know that Jim doesn’t post numbers from there, but there are an AMAZING number of homes there that do NOT get that they are not in RSF. There are about 60 active listings over 4000 sqft with over 100 days on market; 11 are over 300 days. Not one in this size range has lowered their price recently enough to show a "reduced" arrow on sdlookup.com. Only four in this size have sold since 4/30/08: $1M, $1.3, !.3 and !.5. And before that it wasn’t many more. In fact, they had virtually stopped selling since the fires last fall.
If I’m going to spend more than a million in NoCounty, it better be pretty darn exceptional.
CM | August 30th, 2008 at 1:29 pm