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Jim Klinge, broker-associate
617 Saxony Place, Suite 101
Encinitas, CA 92024
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Jim Klinge
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Posted by on Jun 6, 2013 in Thinking of Selling?, Why You Should List With Jim | 15 comments | Print Print

“Great Time To Sell”

For real estate scoop these days, the media goes to the same three places.  But the guy at Trulia is too high up in his ivory tower, and Redfin gets conflicted between reporting market data and creating new gimmicks.

However, Spencer Rascoff of Zillow is right on the money – from

Against the backdrop of increasing home prices and the prospect of much higher mortgage rates, it’s a “great time” to sell, Zillow CEO Spencer Rascoff told CNBC on Thursday. That is, if you can find a place to buy, he added.

“As mortgage rates inevitably come from 3 percent up to 5 or 6 percent, it’s going to create problems down the road,” Rascoff said in a “Squawk Box” interview.

The average rate for a 30-year fixed rate mortgage punched through the 4 percent level this week for the first time in a year, according to the Mortgage Bankers Association.

“If you have any equity in your home and you’re thinking about selling in the next couple of years,” he continued, “[it’s] probably best to sell now, even though home values are continuing to rise.”

“Imagine yourself buying a $300,000 home today, and in four years you may want to trade up to a $500,000 home,” he said. “That home is not just that much more expensive—but because mortgage rates are going to be higher—it’s significantly more expensive. So the trade-up market is going to be very troubled in a couple of years.”

“This is not today’s problem,” Rascoff added, saying today’s real estate market problem is a “big supply-demand imbalance: huge demand driven by low mortgage rates and investor purchasing [of] distressed properties. But very limited supply.”

The reason for the limited supply is that “44 percent of Americans with a mortgage are effectively in a negative equity position,” he said. “Meaning if they sold their home, they wouldn’t be able to clear their mortgage. They’re basically trapped in their home and can’t list.”

“So very little supply and significant demand. That’s driving price spikes,” he said. “You’ve seen six months of greater-than-5-percent appreciation rates. It’s the longest streak of greater-than-5-percent appreciation rates since the [housing] bubble.”

Last week, the S&P/Case-Shiller 20-city home price index for March showed a 10.9 percent increase in housing prices from a year ago.

“We’re now seeing unsustainably high rates of appreciation,” Rascoff said. “In Phoenix, in San Francisco, in Orange County and San Jose, [Calif.], 20-plus percent year-over-year appreciation. Far too high. We’ve come back too fast. It’s concerning.”


  1. It also brings up the old adage….

    When is the best time to sell? When everyone else isn’t.

  2. I don’t know, I think that as long as the market does not crash (which no one said it would in the video I believe).

    maybe it’s better to buy while rates are low ? (if you can find a deal anyway).

    Most of the area’s he talked about having 20% price increase (outside of the phoenix market which is STILL down considerably from their peak) is more about the Tech boom/bubble than a housing boom/bubble,

  3. San Diego is +17% or +18%, so we are right there, and riding at peak prices or higher in the exclusive areas.

  4. Rascoff is such a slick BTO that he figured out that even though Zillow is in prime position to create the PublicMLS, it would be better to get realtors to pay him to advertise our listings.

    I literally pay $500 per month to Zillow to ensure that my name and mug is on my listings. If I don’t pay the vig, then he puts three other realtors’ names, photos, and contact info ON MY LISTINGS!

  5. Sounds like extortion LOL.
    Still I think the majority of area’s/sub-markets even in SD are more about the wireless boom than anything else.

  6. I mean that are hitting peak price again.

  7. As the institutional investors become more involved with single family homes the volatility in home prices will increase. They’ll go up more than they probably should and they’ll fall harder and faster than they should. They’ll also become more interconnected to what the stock market is doing rather than how the real economy and household formation is doing.

    While we wouldn’t have gotten the price appreciation we’re seeing right now without the investors it’s far more likely that we’ll see a crash during the next inevitable downturn rather than a rational decline. Some investment group is going to make bad decisions, get in over their head, and blow up in a margin call. Hopefully they aren’t in your particular locality. North County Coastal you probably need to worry about QCOM growth and expansion much more than investment groups.

  8. You state that like it is fact.

    Can you elaborate more on why it is your opinion?

  9. dont let the sheep scare you into thinking the party is over. They just weren’t invited.

    Hers a toast to more double digit profits!!!!

  10. livinincali,

    What you describe is the old way of thinking. Back when banks weren’t all intimately connected together and working as a group.

    It’s easy for banks to buy up properties with the money they print and lend it back to themselves at lower interest rates then regular buyers can purchase with.

    It’s also nice that banks can control the number of properties listed for sale on the market limiting foreclosures and manipulating the market into artificially high prices.

  11. Sorry about that. Should have stated IMHO.

    Looks like we’re back to were we used to be where an opinion that party might come to an end are frowned upon and laughed at. Fair enough, let’s just go back to the standard mantra of this time it’s different and {insert your faith in the fed reason here}.

    I could very well be wrong, but I’ll remind you that the only thing that the fed has been reliable at is creating bubbles that nobody (other than fools that try to crash the party) is able to see as they happen. San Diego Coastal real estate will most likely be an outlier and continue to beat national averages, again in my opinion. I’m willing to entertain it’s different here, but that seems relatively unlikely in the grand scheme of things.

    I do think the opinion that’s it’s a great time to sell right now is right but I expect most people to dismiss it and say, no prices are going up. I also expect there to be a glut of sellers looking to sell into relatively weak demand when this phase is over but I have no idea nor does anybody else know when it will be over. The only sure thing about the future is there will be another recession and more taxes, when is the only question.

  12. I’m not busting chops, people want to hear the ‘why’ more than anything. There are big gaps in the logical sequences that all of us are strugging with, and if you or anyone has a good explanation, I’d love to hear it.

    For instance, how can foreclosures and short-sales being going down at the same time when the debt-tax relief has six months of life left. It is hard to believe that everyone just started making their payments again one day.

    If there is no better explanation backed with factual evidence, it appears that the banks have deliberately stopped pursuing defaulters. If so, then what else is believeable? The entire system must be rigged but so big and complex that they don’t think that real Americans will rally and conquer.

    P.S. I think they are going to bug my phone next!

  13. Banks aren’t foreclosing becasue they see the market going up as well as we do. Their cost of funds is nearly nil, so why hustle to take back an asset that has been appreciating 10-20% and still running? They own the house, they know they do, and the longer they pile on interest and penalties, the more that is a certainty. Plus, I don’t think they have to book the loss until they take the loss. They are betting the loss will be less the longer they hold out, heck maybe they come out whole in some situations. It’s not personal, its just business.

  14. Great – sure it’s just business but consider what gets scattered around in their wake:

    1. Moral hazard – the defaulting deadbeats whoe get to enjoy the free-rent are telling their freinds and family how lucky they are. Soon everyone will want free-rent!

    2. The media broadcasts daily how foreclosures are down and the real estate market is on fire from coast to coast. But it’s all a lie – foreclosures are down because they stopped foreclosing, not because borrowers started making their payments again. I’ll blame the media too for being too lazy to investigate and being lap dogs to the banking cartel.

    I guess we’ll shrug it off and keep moving but it’s wrong.

  15. …I might also be inclined to point out that institutional/large investors have only one motive: profit.

    I’m of the opinion that large-scale investors will put as little as possible into their rental properties, but extract as much as they can out of them. Rent controls? Fuhgettaboutit. This all boils down to loyalty and there won’t be any on either side. The renter will feel no loyalty to their landlords with the specter of continually rising rents on the horizon, and dealing with a bureacracy to get repairs done. And remember, investors concentrated on the low end of the market so repairs will be inevitable. Also, in this socioeconomic climate of protecting the big dogs (banks, etc.) and keeping delinquent homeowners in their homes at almost any cost, renters are the class left behind. There are no incentives — nor rescue initiatives for renters if they get behind — state laws notwithstanding depending upon which state. Does anyone believe that dynamic will instill a greater sense of loyalty towards landlords on the part of renters? Please back away from the crack pipe…

    I would also posit that economic growth — in large part expanded by homeowner equity for the past couple/few decades — cannot be sustained by lack of organic growth.

    All in all, the only part of this economic environment that looks anything close to capitalism, is the opportunity hawking on the part of the well-heeled and large institutions. And Jim:

    a.) you might send a thank you card to Bush II, Obama and Bernanke, because they created the target rich environment you’re currently enjoying,

    b.) aaaand, save every penny you make so when the music stops, you won’t be left behind like so may others will.

    Sellers ought to bail now before the music stops. World governments do not have competent people at the helm to solve economic issues (run up the gov’t credit card) and world leaders have shown a propensity to circle the wagon and take care of their own first. This time, it’s NOT different, only the names have changed…


  1. Industry Newsflash: Week of July 1st, 2013 | PalmerHouse Properties Blog - [...] These are among the reasons why Zillow CEO Spencer Rascoff says it’s now time to sell your house (via…

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