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Category Archive: ‘Carmel Valley’

Zestimate Accuracy

2016-02-20 08.40.22

Our regular commenter elbarcosr backed me up on how wacky the zestimates have been lately. They seem to be getting worse, which is hard to believe.

Being a Zillow homer now, I thought I better look into it.

Let’s serve up a nice big softball.  Certainly the zestimates have to be accurate on recently-sold homes, don’t they? We saw how Redfin’s evaluator can cozy up close to a recent list or sales price, and you can’t blame them.  After a few years, the database would look pretty consistent.

Does Zillow do the same?  Wouldn’t it make sense to have your algorithm compute a recent sales price into the property’s zestimate?  Because if you did, it would also help value the nearby homes that haven’t sold recently – because that’s how everyone would value them.

Evaluations in unique, non-tract areas is tougher.  But if we are just looking at recently-sold properties, and their zestimates – the uniqueness shouldn’t matter as much!

I looked at 28 homes sold in La Jolla, Del Mar, and Rancho Santa Fe that closed between $2,000,000 and $3,000,000 in 4Q15, and compared their sales price (the definition of value) to their zestimates.

The average margin of error was 16%, and after removing the four that were wrong by more than $1,000,000, the average error was still 12%.

These are houses recently sold, and their sales price defines the actual value!

Even though the $2,000,000 to $3,000,000 range is the lower end for those areas and there are plenty of comps to help pin-point a zestimate, let’s consider an easier target.

Carmel Valley should be the hotbed of zestimate accuracy, especially when we look at the low-end where every data point is a pure tract house.

There were 57 CV sales in the fourth quarter between $1,000,000 and $2,000,000 that were considered.

The average margin of error was 3.6%, which is probably acceptable.  But if it was any higher, there would be concerns – these are tract houses that just sold in 4Q15, and have a long history of steady comps around them!

My takeaway?

The only zestimates that might be close are in pure tract neighborhoods.

Disregard all others.

Posted by on Feb 20, 2016 in Carmel Valley, Del Mar, Jim's Take on the Market, La Jolla, Rancho Santa Fe, Zillow | 8 comments

Zillow San Diego Forecast 2016

la jolla 2016

Most national forecasts are predicting a 3% to 4% appreciation rate for 2016, which has to be a safe bet.  If it comes in anywhere from -2% to +8%, you can say that you were close.

Zillow has enough algorithms that they are willing to make predictions for each local area.  They have conflicting numbers, depending on where you look on their website – these are from the Home Values section:

http://www.zillow.com/home-values/

You can see that Zillow was less optimistic last year too.  Most were predicting that mortgage rates would be in the mid-4s by now, so the lower rates in 2015 helped fuel higher-than-expected prices.  Could rates stay right where they are? Maybe, but both Zillow and I think the euphoria will die down next year:

Zillow Price-Appreciation Predictions

Town
2015 Prediction
2015 Actual
2016 Prediction
“Market Temperature”
Carlsbad
+2.7%
+4.8%
+1.9%
Cool
Carmel Valley
+0.3%
+5.4%
+1.4%
Cold
Del Mar
+5.5%
+1.1%
+1.4%
Very Cold
Encinitas
+0.6%
+8.3%
+2.4%
Warm
La Jolla
+2.7%
+6.6%
+2.3%
Very Cold
RSF
+0.4%
+11.1%
+3.7%
San Diego
+1.7%
+6.4%
+2.1%
Warm
Solana Beach
+2.7%
+6.4%
+2.2%
Cold

For some reason, Zillow is also labeling each market from Warm to Very Cold.  The labels don’t seem to correspond to the predictions, so I don’t know their intent – are they just trying to tell you to put on a sweater?

How will buyers feel about getting worked over for that last 2% to 3% when they see they are in a ‘Very Cold’ market?

Posted by on Dec 28, 2015 in Carlsbad, Carmel Valley, Del Mar, Encinitas, Forecasts, Jim's Take on the Market, La Jolla, Market Buzz, Market Conditions, Rancho Santa Fe, Solana Beach, Zillow | 2 comments

CV New-Home Update

Alta del Mar - Sept 2015

Two of the most successful new-home tracts in the history of Carmel Valley are winding down, and the demand has been impressive.

After 2.5 years, ADM is down to their last 13 homes plus the three models, and they still have 90 people on their priority list – and those had to qualify to get on the list.  This weekend, they are releasing ten homes, starting at $2 million. I love the strategy, because it sends a thrill throughout the entire list of people – everyone might have a shot to buy something!

Further out the 56 corridor – but still in the Del Mar School District – is Verana. In February, they opened the models to sell 78 homes around $1,000,000, and they are down to the last two phases plus a handful of stragglers; of which two or three back to the freeway.

Selling 78 million-dollar homes in less than a year is an incredible sales pace:

Posted by on Sep 26, 2015 in Bubbleinfo TV, Carmel Valley, Jim's Take on the Market | 3 comments

Qualcomm Layoffs and Real Estate

qcom

http://www.nytimes.com/2015/07/23/technology/qualcomm-earnings-q3.html

The Qualcomm press release today:

http://247wallst.com/technology-3/2015/07/22/qualcomm-to-fire-15-of-staff-after-cutting-outlook-adding-directors/

An excerpt:

The company expects to fire about 15% of its semiconductor business’ full-time staff, significantly reduce its temporary workforce, and streamline its engineering organization.

They expect to layoff around 4,500 people company-wide.  What does that mean for the local real estate market?  Let’s point out the general changes:

1. YOU DON’T HAVE TO MAKE YOUR PAYMENTS.

A result of the financial crisis – banks are equipped to let you ride for months or years without making payments.

2.  CUSHION

There will be severance packages, plus stock and stock options to live on.

3.  ONLY RECENT PURCHASERS WOULD FEEL THE SQUEEZE.

If a Q-employee bought their home more than 3 years ago, they have plenty of equity, and have probably re-financed at a low rate.  Payment amounts are tolerable, especially compared to rents in the same area.

4.  MICKELSON EFFECT

Phil Mickelson made a big stink about the state tax he has to pay (probably around 13%) – but you haven’t heard a peep out of him since. Why?  My guess is that his wife put her foot down, and told him they aren’t moving anywhere.  The same thing would happen here – even if a spouse or both are laid off, they will exhaust all avenues to maintain the same lifestyle and kids’ upbringing.  Selling the house would be the absolute last resort.

5. BANK OF MOM AND DAD

The kids have been very successful up to now, and the grandparents will drain a few accounts to help keep the grandkids’ lifestyle in place.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

There would be loads of buyers today of homes priced at 20% under today’s values.  If that is the floor, then about 10% off would be a retail-price target.  We could have a few different factors contribute to a similar discount (Fed move, Grexit, unknown factors, etc.), but we already endured the most severe downtown in the history of real estate and the premium areas didn’t take much of a hit.

Let’s use Carmel Valley as the target market to follow:

May + June stats
# of Sales
Avg. $/sf
Median SP
Avg. SF
2007
96
$391/sf
$1,003,750
3,117sf
2012
113
$323/sf
$883,000
3,076sf
2015
97
$405/sf
$1,235,000
3,183sf

A mass exodus of elderly or foreign homeowners is much more of a concern – they’re urgency is higher, they have less reasons to stay, and they can probably afford to dump.

Posted by on Jul 22, 2015 in Carmel Valley, Jim's Take on the Market, North County Coastal, Sales and Price Check | 11 comments

The Have-Mores

No shortage of demand for the brand new high-enders.  Here they’ve sold 100+ houses and lots already, averaging $2,000,000 or so for the houses.

If you are on the lengthy list of waiting buyers (who had to pre-qual to $2M), is time running out?  Do you opt for one of the two 1-story plans with 25-ft backyards available, or hold out for a future phase and risk getting nothing?

Posted by on Jun 28, 2015 in Bubbleinfo TV, Carmel Valley, Jim's Take on the Market | 5 comments

Disaster Relief

carmel valley 92130 map

Earlier today, reader ‘socalbuyer’ asked,

Jim,

Word on the street is that Qualcomm is going to layoff a couple thousand folks in San Diego this year. Wanted to get your thoughts on how that would affect the real estate market in San Diego. Most of those jobs may not find a fit in San Diego, and a bunch of Qcomers probably don’t need to sell.

Your thoughts?

My response:

It should mean an instant 10% decline in prices around Carmel Valley because buyers will expect some insurance.  Sellers will reluctantly agree because they probably made that much in appreciation over the last year.

After that, it will get interesting.

The unemployed will shine up their resume and hunt for a new job for a year (or more) before ‘giving it away’. Spouse and kids won’t surrender easily either.

This is what we can expect from any disaster, natural or otherwise, that shocks the system.  Buyers will be prone to hesitate, and the sellers who feel somewhat panicked will accommodate by lowering their price to clinch a sale.

Real estate isn’t known to be a liquid asset, so everyone will adjust expectations after the initial pop.

socalbuyer asked,

My understanding is that we have a total of 9000+ property sale transactions a year in San Diego…the qcom layoff number is as high as 5000. Figure 50% find a job out of San Diego and need to sell, 2500 units on the market sounds sizable, especially if most are in 92130.

Last year there were 22,079 detached homes sold in San Diego County, and 470 in the 92130 – which is only 39 per month.  If pricing retreated a little, there could be a surge of CV buying but either way, it is a small portion of the market compared to the overall county.  I’m guessing that there is enough underlying demand that any excess properties will get soaked up – it’s just a matter of price.

Carmel Valley prices have gone up 20% in the last 2-3 years.  If sellers had to give that much back, they’d survive.  The market will too – CV has too much going for it.

Posted by on Jun 17, 2015 in Carmel Valley, Jim's Take on the Market | 9 comments