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Jim Klinge
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klingerealty@gmail.com
701 Palomar Airport Road, Suite 300
Carlsbad, CA 92011


Posted by on Jan 22, 2013 in North County Coastal, Sales and Price Check, Thinking of Buying?, Thinking of Selling? | 7 comments | Print Print

Peak Pricing Is Back

We’re at the stage where everything sounds like good news for housing – after being pummeled for years with bad news, it is a welcome relief for the casual observer. But it is mostly feel-good emotions, without much detail on how it will play out.

A snippet from the Bloomberg story today on existing home sales:

“This isn’t worrisome at all,” said Stuart Hoffman, chief economist at PNC Financial Services Group in Pittsburgh, who projected a drop to a 4.95 million annual rate. “For the first time in a while, it looks like it’s a sellers’ market as much as it’s a buyers’ market. I suspect prices and sales will go up again in 2013.

But without foreclosures or short-sales to rely on for inventory, we are dependent on the elective seller.  When they catch a soundbite like that one, it empowers them to wait until prices rise further, or list now and shoot for the moon.

The new listings of NSDCC detached-homes between January 1-17:

Year #New Listings LP Avg. $/sf
2004
203
$488/sf
2005
224
$526/sf
2006
366
$552/sf
2007
338
$537/sf
2008
278
$490/sf
2009
261
$520/sf
2010
256
$518/sf
2011
303
$458/sf
2012
241
$461/sf
2013
228
$551/sf

The inventory keeps dropping, while sellers’ expectations keep rising.  Something has to give, and it’s likely to be the buyers’ willingness to keep chasing these prices – at this rate, we’ll be above peak pricing before too long.

Who will keep the buyers in check?

  • Appraisers don’t get paid enough to over-inflate values. They will bring in a higher price if it is within reason, but they aren’t going to do any favors.
  • Mortgage underwriters are still conservative, and have the right to whack an appraiser’s value if they think it is out-of-line.
  • Friends and family are going to tell them they are crazy paying that much.

The smart sellers are those that list for a reasonable price about 1% to 5% above comps – they will look like a deal, compared to the rest, and the resulting bidding war should run it up further!

7 Comments

  1. That’s a ~40% appreciation in 2 years. The insanity is back…*sigh*. I’ll say it differently: I’ve seen at least a dozen sellers in the past couple of months RAISE their list AFTER their home had sat on the market for 30+ days.




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  2. I agree, that is a large price increase. Although I have to say…I like that house a lot. The Easy-ranch view is pretty awesome also. This house may actually be worth that much? Maybe?




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  3. Do you mind getting plunked by an occasional golf ball?

    First house in this video:




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  4. If my arithmetic is correct, that’s a 25.7% increase in price in two years. Yes, substantial but not as extreme as 40%. I’m intrigued to look at the video, Jim…




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  5. Go on Redfin and check the number of houses listed for sale by county. I haven’t found one that isn’t 50% off YOY. This is playing out across the country. How can this not be a systemic move to control prices? Don’t fight the Fed.




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  6. How much did that house sell for back in the day when it was new? Is 1.4m peak pricing on it? If not how far off peak is it? I though Encinitas Ranch was still 20% off. Shocked to learn its not?




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