Can you feel it? The frenzy, creeping in on you?
Those watching closely may have noticed how the market has ‘picked up’ over the last week or two.
We’ve had more buyers than sellers for a while now, so that alone doesn’t constitute a frenzy. In a low-inventory environment, you should have multiple offers on every quality property.
It’s the velocity.
Here are signs of frenzy-building:
1. It’s been hot. A year ago, the frenzy was just becoming obvious – but at this point, the market has been hot for the 18 months.
Both buyers and sellers are expecting a frenzy now.
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All three indicators from last month are pointing to more frenzy.
2. How fast listings go pending. With listing agents riding high on their horse, you typically see them play around for 7-10 days before a new listing gets marked pending. It seems like more listings are going pending faster – and it’s about the same as last year (though this year’s haven’t all closed):
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3. The percentage-paid-over-list-price. It’s been standard to see homes sell for 5% to 10% over list price, but it can get crazier.
This was a fascinating – though extreme – example. A great-looking house with fantastic view, but it is right on La Costa Ave. and located in an area with terrible soil quality:
http://www.sdlookup.com/MLS-140009811-2662_Galicia_Way_Carlsbad_CA_92009
Look how steep the hill is – it looks like it could slide down the hill any day:
From the remarks: This property is for cash buyer, builder, or investor. Home has compaction and soil issues. Only shown to qualified buyers.
The soils problem must be serious, given their initial list price of $500,000. Yet it sold for $685,000 cash, or 37% over list price and closed in ten days.
It must have been worth it to someone, and probably worth close to that for many, but it is the percentage that gets me. With the problems, wouldn’t you try to buy it for 10% or 20% over list?
4. It’s March. The wait-and-see buyers haven’t had any indications of inventory flooding the street – in fact, we’ve had fewer new listings this year than last (between Jan. 1 and March 5th):
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Buyers are getting antsy – for them, there aren’t any signs of relief.
It is a great time to sell – contact Jim the Realtor to get started today!
(858) 997-3801 cell or jim@jimklinge.com.
For what it’s worth, I’ve lived up here in Manhattan Beach for 30+ years and have never seen anything like this. I would estimate that the value of my million+ dollar home has increased a minimum of 25% in the last year.
I know a few people looking and “frenzy”, for some reason, is a very accurate description of the attitude of these folks. They are picky, but if something pops up that has the basics, there are multiple, all-cash offers every time.
Hello MB Mike!
As fast and loose as the money is being thrown around, do you think a lot of it is inherited? Or does every lottery winner come to SoCal?
Even the bad streets are selling.
http://www.mbconfidential.com/blog/wendy-not-a-turnoff.html
I attribute it to the fact the 1% ‘ers are getting richer and are willing to pay whatever it costs to get into well-located places (with good schools). The gain on a $10M portfolio in the last year more than covers paying (overpaying?) the add’l 25%.
Lots of opportunities for a fair deal a couple miles east. There are properties on The Strand (oceanfront) that have increased $2-3M in the last YEAR!
I agree on the 1%’ers having the money to blow. They used to be the ultra-sharp home buyers who bought the premium properties, but only if they made sense too. It is the inferior properties popping at retail or close that is fascinating. Buyers are valuing real estate much more than money these days!
I think the baby boomers want to leave a legacy too, and more than just cash (which they think the kids will just blow through anyway). Buying a trophy property that will last in the family forever is a noble deed.
The real trouble is that every seller thinks their property is premium and that there are dozens of the 1% waiting in long lines for any property that hits the market.
The media has been talking about how El Nino will rise up and flood us out next year. If true, then the new owner of Galicia Way will have many sleepless nights next year.
Hi Jim,
Blew through SD last weekend and stopped in at Bellasario. Turns out they’re almost sold out after some strong sales months. The plan 1 model that we absolutely adore is even available now — for $1.9M (ouch). [Note: We love the house but not the location. As such I still want to buy the blueprints.]
Let us not forget chinese immigrants. I have a friend who lives down the block from a couple of apartment buildings that were not being taken care of much, changed hands a number of times. A chinese family bought them at market price, they certainly dropped a few hundred thou to rehabilitate it, and did a hell of a job. Those places look better, inside and out, than when they were first built. Now it’s fully rented with good tenants. My friend talked to them one day, and they said they were in it for the long haul. No flipping.
There’s a lot of foreign cash rolling in.