More Links

Are you looking for an experienced agent to help you buy or sell a home? Contact Jim the Realtor!

(760) 434-5000

Carmel Valley
(858) 560-7700

Category Archive: ‘Frenzy’

PQ Follow Up Part 2


The process of selling a house has many variables – let’s keep examining.

What were the comps used to determine the price?

The most important thing about evaluating the comps is to see them through the eyes of the buyers.  I cannot stress enough how critical this is to selecting an attractive price – every seller has a high opinion about their house, but they’re not the ones buying it.  Today’s buyers are looking for any reason not to buy, and they are being conservative.

Consider those thoughts as we progress here:

A. The last sale of this model closed for $612,000 in June, 2014:

It had been moderately upgraded to sell, and you could say that the backyard was a more normal setting.  My listing on Chaco had superior upgrades, which makes buyers feel good, but they prefer to pay about the same as the last guy for them.  This is where over-improving your house for the neighborhood can get you into trouble, price-wise – you’re not going to get a dollar-for-dollar return for the good stuff.

A discerning buyer would probably call them even at best, because they will be tempted to ignore it altogether because of it being old news   The San Diego Case-Shiller Index has gone up 6% since, so let’s adjust accordingly, even though no appraiser will use it (they want/need comps from the last six months).

Comp #1 adjusted value = $648,720.

B. This is a 5% larger one-story model in Crestmont that closed for $612,000:

The original list price was $645,000, but after three weeks they put it on the range $615,000 – $645,000.  Eighteen days later, the listing agent found his own buyer who paid $612,000 cash, and it closed on September 16th.

The house only had a couple of upgrades, and my listing had at least $100,000 of improvements. We already mentioned that you don’t get full value, but for the sake of evaluating I’ll assign a 50% credit. It means we need to deduct $50,000 off this comp – but then add back 10% because it was a one-story plan which have been selling for a premium over two-story plans because of the older folks.  The ‘cash’ purchase would indicate these buyers were probably elderly on this sale, and they probably ignored or didn’t realize that nobody else was willing to pay $615,000 for this house so they may have been able to grind out a better deal.

Buyers evaluating this sale as a comp may not think that hard, but as a listing agent trying to factor in every variable, I need to consider that the $612,000 sales price here could have been optimistic.  But I’ll subtract the $50,000 for improvements and add 10% for one-story.

Comp #2 adjusted value = $623,200.

C. Same one-story model as above that closed for $605,000 two weeks ago:

This house was in original condition, so I’m going to subtract a little more – $70,000 – and add back the same 10% even though this was an estate sale by the original owners who paid $150,000 in 1988.  The seller was recently widowed and didn’t try too hard to sell, and let’s face it, a quick $605,000 was a big win.  It was listed on the range $590,000 to $605,000, and the buyer went direct to the listing agent, but we can call it a mostly-retail sale of a house in original condition.

Comp #3 adjusted value = $595,500.

There are two pending comps to consider too:

D. This 1,486sf one-story with $50,000 in improvements was listed for $635,000 and went pending in five days:

E. This newer 4 br/2.5 ba, 1,733sf house listed the day before us for $674,900, and went pending in 4 days.  Hopefully it got bid up:

The Wild Card

F.  This 1,681sf two-story house has $120,000 in improvements with pool and backs to the canyon.  It sold for a whopping $730,000, which was above the top of the range ($699-$729) in six days:


My seller has taken a new job out of the area, and wanted a realistic assessment of the market.  Many sellers would ignore the rest, and jump on the $730,000 as proof that more buyers will come along and pay the same.  But given the rest of the evidence, a normal buyer will throw out the high sale and use the rest as the accurate market data.

The realistic range for my listing was $600,000 to $650,000, and because we had the 100,000 in improvements it deserved to be at the top of the range.

I didn’t have a problem with angryPQneighbor expecting a higher sale – I had every intention of selling it for more.  My seller saw my reasoning that pricing the home attractively would create more action and urgency early on, and create a frenzy-like bidding war.

Other Factors:

1. Zillow reported lower school scores on the subject property’s zillow page.  I addressed them in my remarks, and included snips of the actual scores of 10 for each school in my photo galleries.  I think that lends respect to the equation in the buyers’ minds.

2. The zestimate for my listing was $630,000, and after I inputted my listing there, they dropped the zestimate to $614,749.  You have to anticipate that bad things will happen that are out of your control. But price fixes everything.

Chaco zestimate

3. Zillow also has this new local market meter that is positive for Rancho Penasquitos in the small print, but the ‘Cool’ and blue color could dissuade buyers from looking at it much harder:

Chaco Zillow

4.  The biggest factor in my mind was the experience of the buyers’ agents.  Any agent can handle writing an offer on an attractively-priced listing, but the houses priced too high tend to befuddle all but the best agents (who are good enough to lowball you anyway).

It was competitive to the end between the six offers – five submitted their highest-and best offer, and it was close.  We took the buyer represented by an agent who had closed 32 sales in the last 12 months.  The other agents averaged 8 sales in the last year, which was still pretty good.  But if we hit any bumps in the road, I want to take my chances with the most experienced agent.

We still have a long way to go to the finish line. But this is the type of start every seller should appreciate – you got a good price, the hassle of showing the house was over in 6 days, and the chances of it closing are pretty good when the buyers knows he beat out five other contenders!

Get Good Help!

Posted by on Nov 5, 2015 in Frenzy, Jim's Take on the Market, Listing Agent Practices, Thinking of Selling?, Why You Should List With Jim | 6 comments

PQ Follow-Up

Yesterday this comment was left by angryPQneighbor:

Why did you list this one so cheap? The same model sold almost a year and a half ago in a bidding war over $610K!

We are listed for $639,000 in most places, and on the range $619,000- $639,000 in the MLS.  He/she didn’t say what they thought the price should be, just that my price was wrong.  Do we expect double-digit appreciation every year?

They haven’t been following the pricing discussion we’ve had on the blog here, or considered that, given the current market conditions, it is better to price attractively to take advantage of the urgency that a new listing enjoys – at least for the first week or two before going stale.

The attractive list price makes the listing stand out, and grabs the attention of the buyers – have you noticed that most listings aren’t priced attractively?  We were on the open market for six days (including Halloween), and here’s how the market responded:


Chaco stats on Trulia


Chaco on Redfin


Chaco on Zillow

The frenzy died a couple of years ago.  Why?

Because the prices stopped looking attractive.  But using the same pricing principles, a mini-frenzy was created here.

We received six written offers!

However, they were all within the range. Is that it?  Do you just select one?

No – we’re not done yet!

I carefully and respectfully caused each bidder to consider going higher on price, and we ended up over $650,000!

Get Good Help!

Posted by on Nov 5, 2015 in Bidding Wars, Frenzy, Jim's Take on the Market, Kayla Training, Listing Agent Practices, Why You Should List With Jim | 5 comments

Frenzy vs. Frenzy Sales Overlay

Every day we hear some pundit talking about the latest real estate bubble forming.  Can we learn anything from comparing recent sales to those during the bubblicious 2004-2007 era?

graph (56)

Sales were dropping precipitously in 2005 and 2006 after the 2003-2004 run-up.  There was one last blowout at the end of 2006 and into 2007 when Countrywide began pushing the no-doc, 100% financing up to $1,500,000.

When Angelo took away the punch bowl in the middle of 2007, the party was over – you can see how sales tanked, beginning in August, 2007.

One big difference when comparing these two eras is that the neg-am teaser rate in 2007 is today’s 30-year fixed rate.  When the teaser rate went away, and people had to qualify again, the market collapsed.

It doesn’t look that way today.

This year, sales have been strong, in spite of the San Diego Case-Shiller Index rising 42% since January, 2012.  If we hit an unsustainable stretch, the first indicator will be sales dropping off, like they did at the end of 2007.

Posted by on Aug 22, 2015 in Bubble-Era Pricing, Frenzy, Jim's Take on the Market, Market Buzz, North County Coastal, Thinking of Buying?, Thinking of Selling? | 4 comments

Frenzy History In Color

frenzy graph

Let’s describe the frenzy era… far:

2012: Rev the engines, we have liftoff.

2013, first half: Full tilt boogie, prices going up as fast as they can.

2013, second half: Mortgage rates rise 0.75% to snuff out price rally.

2014: Normalizing.

2015: Rates dip under 4% to begin the spring selling season, sparking a rally.

If the Fed does raise a rate this year, it won’t be much – maybe 0.25%. We will survive a similar bump in mortgage rates, and it might be a relief for it to have finally happened.

Posted by on Aug 21, 2015 in Frenzy, Jim's Take on the Market, Sales and Price Check | 1 comment

Why Sell Your House Now


We need more homes to sell! From the DQ:

“One month doesn’t make a trend, but December’s uptick in home sales might indicate renewed interest in housing thanks to lower mortgage rates and job growth in recent months,” said Andrew LePage, data analyst for CoreLogic DataQuick. “The gain came despite a continued decline in the share of homes sold to investors and cash buyers.

If demand continues to build, we’ll need more supply to keep up with it. One of the big questions hanging over the housing market is whether higher demand and home values will lead to a lot more people listing their homes for sale, as well as more new-home construction, which remains well below average.”

The ultra-low mortgage rates have gotten every buyer’s attention, and the sales are starting to reflect it – just like at the end of 2012.  If the December sales are the precursor, then we are at least looking at a frenzy-lite experience over the next few months:

NSDCC December Sales
# of Dec. Sales
Median SP
Median DOM
Avg $/sf

Around the NSDCC, you can sell your home for more than it has ever been worth.  But is that enough to cause people to sell?  For most people, no. We like living here, and have no place better to go.

We don’t need everyone to move.  All we need is about 10% more listings than last year, and we’ll hit full frenzy. The 2003-2004 era was the craziest frenzy of all-time, and it’s because we had more houses to sell:

Number of New Listings, First Half (Jan-Jun)

In a region of 300,000 people, all we need is about 80 more houses per month to sell.  We need a few potential sellers to change their mind about selling later, and sell now instead.

If you know you are going to be selling in a few years anyway, but these ideal conditions look too good to pass up, here’s how you can justify moving now:

1.  Move before you retire.  If you were thinking about downsizing and wanted to stay local, then either buy a condo close to home, or move to the outskirts where you can still buy a home for less than $500,000 – and commute to work for a year or two.  The low-end market is much hotter, and prices moving up quicker.

2.  Sell and rent. If you know you are going to be leaving town shortly, sell when the market is red hot, and rent a beach hut for a year or two.  Yes, rents are outrageous – but your home’s sales price will be too!

3. Retire early.  You are making more money in the stock market than you are at that stinking job you can barely tolerate.  Cash out while you can!

4.  Sell and move when you are healthy.  If you’ve been in the same home for more than 10 years, you have a lot of stuff to sort through – physically, mentally, and emotionally.  It is much easier when you have your health.

5.  Move up when rates are low.  Obviously, if you are moving up and financing the next purchase, these low rates are advantageous.

6.  Sell before rates go up.  Remember that in June 2013, that mortgage rates moved back into the mid-4% range on a rumor that the Fed was going to tighten – which they never did.  It won’t take much to pull this punch bowl.

Historically, the market has been a ten-year cycle, and the SD trough this time was April 2009.  It got dragged out longer in the 2005-2007 era by Angelo’s nutty no-doc financing, and today’s low rates might extend the party a while longer.  But it isn’t going to last forever, and mortgage rates will go up before the Fed does anything.

Once mortgage rates go up, buyers will expect lower prices, and we saw prices stall out much of last year.  But do you want to sell for less?  Not until you test the market for a year or two, and by then, buyers will be in control.

Contact me today for a free consultation!

Posted by on Jan 16, 2015 in Frenzy, Jim's Take on the Market, North County Coastal, Sales and Price Check, Thinking of Selling?, Why You Should List With Jim | 4 comments

NSDCC Actives and Pendings


Back when we had a normal market, it was considered ‘balanced’ or ‘healthy’ to have a 2:1 ratio of active listings to pendings.  Now that the Fed’s QE is over, and mortgages are slightly easier to get, today’s environment is probably as close to normal as we’re going to get.

How are we doing?

With jumbo rates breaking records daily, there’s no surprise that the lower-end of NSDCC is scorching hot – and would be hotter if there were more decent houses for sale:

NSDCC House List Prices
A/P Ratio
Median DOM

I think we can expect another full-out frenzy in the coming months – at least around those new lower-end listings that are within shouting range of the comps. You need an agent who can handle a bidding war – it is not a given!

Posted by on Jan 15, 2015 in Actives/Pendings, Frenzy, Jim's Take on the Market | 0 comments

Pricing By Zip

Isn’t it amazing that prices have kept rising without frenzy help?

We’ve had the frenzy hangover this year. Inventory is still tight, sellers confident, and buyers don’t have much choice except to pay what it takes – or to stand by.  But sales are softer – and the number of NSDCC active listings today is 7% higher than last year.

Here are the two pricing measurements for each zip code for detached-home sales between May 1st and July 31st.  Every zip code between Carlsbad and La Jolla shows a positive year-over-year increase in BOTH pricing metrics!

Zip Code
Avg $/sf
Median SP
Cbad NW
Cbad SE
Cbad NE
Carlsbad SW
Carmel Vly
Del Mar
La Jolla
Solana Bch
All Above
% chg

I had to average the averages for the NSDCC $/sf, so they are probably high.

Rob Dawg said in his 2014 forecast that he thought we’d see all the annual gain happen in the first half of the year. It’s the post-frenzy soft landing!

Posted by on Aug 21, 2014 in Frenzy, North County Coastal, Why You Should List With Jim | 7 comments

Escalation Clause

escalationIn the spirit of fair play, this isn’t right.  But in a market where buyers get tired of losing, you can’t blame them for trying alternatives.  Agents should have a standard policy/strategy on how to handle the escalation clause – get good help!

From the Boston Globe:

Katrine and Stephen Campbell were up against stiff competition from 10 other bidders for the Reading home they wanted to buy. So the couple tried an aggressive strategy to give them an edge: Instead of making a specific offer, they promised to top whatever turned out to be the high bid by an additional $5,000.

The increasingly popular tactic, known as an escalation clause, worked. The Campbells bought the four-bedroom house late last year for $597,000 — or $18,000 above the original list price, including the extra $5,000.

“We must have looked at 50 places before making a bid on a house,” said Katrine Campbell. “We made only one offer — and we got it. The escalation clause gave us an edge.”

In a sign of how competitive the Boston-area housing market has become, the maneuver is becoming part of the area’s bidding war landscape, brokers and other real estate executives say. Some report there hasn’t been this much escalation clause activity since the last house-buying frenzy 10 years ago.

There are several kinds of escalation clauses, but all involve an agreement to top the high bid on a home by a set amount of money — often $5,000, and sometimes more.

Potential buyers who offer such arrangements usually insist on a brief amount of time, an hour or less, to follow through or to back out once a top bid has been established.

Skeptics say the clauses are potentially risky and a needless ploy that could backfire by alienating some sellers. It can also lead to disputes about whether buyers or sellers have complied with escalation clause terms, they say.

“It’s a tactic that’s not going to appeal to everyone,” said Peter Ruffini, a regional vice president at Jack Conway Realty in Norwell and president of the Massachusetts Association of Realtors.

“It sounds a little risky to me. It sounds sort of like issuing a blank check to sellers.”

Read More

Posted by on Apr 15, 2014 in Ethics, Frenzy, Market Buzz, Market Conditions | 4 comments

Lower-Level Frenzy

The media will soon be touting the year-over-year drop in home sales.

Around here it is mostly due to the lack of decent homes for sale – and if you want a decent home for a decent price, good luck.

But the glass-half-full view notes how remarkable sales have been, given the dramatic rise in pricing:

First Qtr.
NSDCC Det. #Sales
Avg. $/sf
SD Co Det. #Sales
Avg. $/sf

Buyers are determined and resilient in their quest to purchase a home, which is causing prices to maintain upward momentum today, 18 months after the frenzy started:

SDCo list and sold ppsf april 2014

In the past, escalating prices have caused a surge of new listings.  But today sellers are happier to stay put, regardless of price.

The low inventory is disguising the drop in sales – it still feels frenzy-like because buyers out-number the sellers.  The blue line is the number of homes for sale today in San Diego County, and the red line is the 90-day moving count of homes sold.  It’s not a common metric, but it shows the sales trend well:

SDCo #listings-sales

With sales dropping, prices would normally stall right about now.

But this is the new normal.

Buyers don’t see many houses for sale, and as a result, they still feel the frenzy vibe and desperation.  With inventory so low, future sellers are going to be more optimistic about hitting the jackpot, and price accordingly (too high).

The graph above shows how sales took off in April, even though inventory wasn’t keeping up.  We are in the prime selling season now – this is when buyers want to buy a house!

Any new listing with a decent price should get gobbled up in the next 30-60 days.  But many, if not most, sellers will come out too high, and risk missing the opportunity – and potentially face a OPT glut by summer.

It’s a fancy dance between inventory and sales, but if we do get a surge of reasonably-priced listings, the sales momentum should take off again.

Stay tuned!

Posted by on Apr 8, 2014 in Frenzy, Jim's Take on the Market | 2 comments

Saturday Open House Report

orangeThere were enough open houses in the area that the streets of Encinitas were crawling with people today.  Thankfully, my listing was the cheapest!

I appreciate the big turnout for Padres-tickets contest too, and for 47 of the 48 guesses being higher than list price – thanks for your faith and confidence!

Here’s my open-house report, check back tomorrow:

Posted by on Apr 5, 2014 in Bubbleinfo TV, Encinitas, Frenzy, Jim's Take on the Market, Why You Should List With Jim | 0 comments