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Posted by on Dec 31, 2012 in Forecasts, North County Coastal, Thinking of Buying?, Thinking of Selling? | 7 comments | Print Print

2013 Predictions

Predicting anything correctly in this frenzied, government-supported marketplace takes some luck. My recent predictions were conservative – on July 1st, I guessed that sales would taper off during the second half of 2012, and then after a robust 3rd quarter, I still thought thought that the fourth quarter would slow down too.

Why?  Because inventory was dropping and prices were rising. I didn’t think buyers would go for it – but they did.

The chart below is from July 1st, where I predicted that we’d have fewer than 2,000 houses come to market during the second half of 2012 – which corresponded with the trend from previous years.

At least I was right about fewer listings:

Year 1H New Listings 2H New Listings Chg.
2009
2,878
2,168
-25%
2010
2,966
2,320
-22%
2011
3,046
2,176
-29%
2012
2,522
1,861
-26%

But also I thought that the lower inventory would cause second-half sales to drop under 1,200, which seemed to be in line with previous years. I ignored the momentum building in 1H12, and looked what happened – 2H12 sales went ballistic, posting a 27% increase over 2H11:

Year 1H Sales 1H Avg $/sf 2H Sales 2H Avg $/sf
2009
899
$394/sf
1,324
$393/sf
2010
1,231
$383/sf
1,229
$378/sf
2011
1,281
$374/sf
1,281
$376/sf
2012
1,439
$369/sf
1,631
$385/sf

At the beginning of 2012, I predicted that this year’s NSDCC sales would be 10% higher than in 2011, and the average cost-per-sf would drop 5%. But the ultra-low rates did their trick:

Year # of Sales Avg. $/sf
2007
2,479
$468/sf
2008
2,037
$438/sf
2009
2,222
$393/sf
2010
2,460
$380/sf
2011
2,562
$375/sf
2012
3,105
$377/sf

The 2012 sales increased 21% year-over-year, and average pricing was flat, so I wasn’t too far off. Who would have guessed that we’d see an extended period of mortgage rates under 3.5%?

2013 Prediction

The recent momentum around NSDCC (which happened during a boisterous election) deserves to be reckoned with, but December’s pricing cooled off after the hot November:

2012 # of Sales Avg. $/sf
Jul
258
$365/sf
Aug
298
$381/sf
Sep
287
$372/sf
Oct
296
$388/sf
Nov
240
$414/sf
Dec
251
$397/sf

I’ll predict that the debt-tax exemption gets extended, and the banks surprise everyone and escalate foreclosures due to the CA Homeowner’s Bill of Rights (see this link). There will be some isolated sales at 10% to 20% over comps that will make it look like the market is on fire. In the end, the NSDCC sales for 2013 will be up 10%, and average-cost-per-sf increased 6%, and be around $400/sf.

What do you think?

7 Comments

  1. Curious about your thoughts on these guys, THR California LLC hitting Ventura and other counties. I guess they haven’t hit SD county; prices to high for them down here?

    http://tinyurl.com/bzay2pw – Sacramento Areas

    http://tinyurl.com/aq8ag8l – Ventura County

  2. From the Tampa Bay story:

    “We’re moving more toward a nation of renters,” Pavonetti said, “and we want to provide a product to meet that demand.”

    Blackstone insists that the homes have at least three bedrooms, two bathrooms, less than 20 years of wear and tear and little need for repairs. Blackstone’s most profitable sweet spot is between $100,000 and $175,000, Pavonetti said, though the firm is open to buying bigger and pricier if they smell a good deal.

    “There’s no upper limit. We can spend as much as we want,” Pavonetti said. “If we’ve determined we want that house, we’re going to be there, no matter what it takes.”

    Blackstone would install its own property manager and cover maintenance, taxes and insurance, Pavonetti said. He would not specify rental rates, but brokers seeking homes for other funds said rents would hover around 1 percent of the home’s purchase price, or about $1,500 a month on a $150,000 home.

    Blackstone brokers have begun distributing flyers offering cash-in-hand deals with quick turnarounds, “no lowball offers” and “no red tape.” Many are working with local agents and banks to divine the choicest homes as soon, or even before, they hit the market.

  3. My prediction is that I can’t make an accurate prediction. I’ve been right every year so far!

    Happy New Year Everyone!

  4. My guess is that there will be an echo effect. Higher pricing in Q4 will bring Sellers to the market looking to cash in. With an increase in sellers, buyers will become choosier and hold out for either better properties or lower prices.
    This assumes interest rates remain low. Should monetary policy change all bets are off.

  5. Interest rates have to go up in my opinion.

  6. I predict the market will be what it’s gonna be, but that the price trend looks up-ish.

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