Are you looking for an experienced agent to help you buy or sell a home? Contact Jim the Realtor!
Carlsbad
(760) 434-5000
Carmel Valley
(858) 560-7700
jim@jimklinge.com
The market is still cooking, just not boiling over. The 10%-plus increase in inventory since the beginning of the month (during the prime selling season), suggests that a pricing plateau could be forming:
The UNDER-$1,200,000 Market:
| Date | ||||
| April 29 | ||||
| May 5 | ||||
| May 9 | ||||
| May 18 | ||||
| May 23 |
The OVER-$1,200,000 Market:
| Date | ||||
| April 29 | ||||
| May 5 | ||||
| May 9 | ||||
| May 18 | ||||
| May 23 |
It is relative though, and the cheaper, the hotter!
The intensity of the frenzy is determined by inventory – which grew this week, signaling some slow down in the market:
The UNDER-$1,200,000 Market:
| Date | NSDCC Active Listings | Avg. LP/sf | DOM | Avg SF |
| April 29 | ||||
| May 5 | ||||
| May 9 | ||||
| May 18 |
The OVER-$1,200,000 Market:
| Date | NSDCC Active Listings | Avg. LP/sf | DOM | Avg SF |
| April 29 | ||||
| May 5 | ||||
| May 9 | ||||
| May 18 |
You can feel it on the street, but a slight slow down only means fewer offers in the bidding wars. We would need a few weeks of reversal before the momentum takes a hit.
Looking for a break in the frenzy? Keep an eye on the active inventory.
We’ve considered a 2:1 ratio to be a sign of a healthy market.
Since April 29th, the UNDER-$1.2 market has stayed red hot with 87 new listings and 78 new pendings (1.16:1), and the OVER-$1.2 market has been steady with 70 new listings and 43 pendings (1.63:1).
If you see any shift here, then the frenzy may be eroding:
The UNDER-$1,200,000 Market:
| Date | NSDCC Active Listings | Avg. LP/sf | DOM | Avg SF |
| April 29 | ||||
| May 5 | ||||
| May 9 |
The OVER-$1,200,000 Market:
| Date | NSDCC Active Listings | Avg. LP/sf | DOM | Avg SF |
| April 29 | ||||
| May 5 | ||||
| May 9 |
It will take a steady build-up of unsold homes to derail this train – and it’s unlikely that buyers will surrender. Expect more thrills in the near future!
Prices are moving up rapidly on the lower-end of each market.
People complain that there is no inventory, but part of the reason is that sellers are pricing much higher. Buyers in the mid-to-higher-end of each market will get a smaller house or yard, but those on the lower-end are quickly getting priced out altogether.
Here are the number of detached homes sold in the last 12 months, and the number of active listings today:
| Town and Price Point | #Closed last 12 mo. | #ACT Listings |
| Oceanside Under $300K | ||
| Carlsbad Under $600K | ||
| Encinitas Under $700K | ||
| Carmel Vly Under $900K | ||
| La Jolla Under $1.1M |
Where it stops nobody knows, but you can expect the bidding-war intensity to be extremely hot on the lower-ends of each market.
Here is our regular NSDCC inventory watch:
| Date | NSDCC Active Listings | Avg. LP $$/sf |
| Jan 14 | ||
| Feb 4 | ||
| Feb 10 | ||
| Feb 25 | ||
| March 6 | ||
| March 11 | ||
| March 16 | ||
| March 23 | ||
| March 31 | ||
| April 5 | ||
| April 11 | ||
| April 17 | ||
| April 22 | ||
| April 29 |
Not much change, but it is deceiving because of the split market. Of the 812 active listings, 67% of them are over $1,500,000 – no wonder the numbers aren’t moving much. Here is the split:
The UNDER-$1,200,000 Market:
| Date | NSDCC Active Listings | Avg. LP/sf | DOM | Avg SF |
| April 29 |
The OVER-$1,200,000 Market:
| Date | NSDCC Active Listings | Avg. LP/sf | DOM | Avg SF |
| April 29 |
There is the usual mantra; “more expensive properties take longer to sell”, but in reality those sellers just wait for someone to come along.
Buyers in the upper ranges need to proceed cautiously – look at how many choices there are!
Casual observers won’t notice the subtle change, but the active inventory of detached homes around NSDCC is creeping up.
It’s because there aren’t as many properties opening escrow. With it being the prime spring selling season, the sellers (and their agents) will want to wait another month or two, rather than lower the price.
The last time we checked, the new-listings-to-new-pendings count was 89:74 – this period was slightly slower at 76:57.
| Date | NSDCC Active Listings | Avg. LP $$/sf |
| Jan 14 | ||
| Feb 4 | ||
| Feb 10 | ||
| Feb 25 | ||
| March 6 | ||
| March 11 | ||
| March 16 | ||
| March 23 | ||
| March 31 | ||
| April 5 | ||
| April 11 | ||
| April 17 | ||
| April 22 |
The market shift won’t be that noticeable is because there are still plenty of hot sales. Of the 57 pendings this period, 23 of them sold in 10 days or less.
But today’s list prices are being determined by adding a little extra to the 10% already gained this year – and buyers are already wondering how long this can continue.
Will the frenzy continue? NSDCC sales have had an inverted relationship with the inventory. When plenty of homes are coming to market, buyers are picky and sales are slower. As inventory got tighter, sales increased.
In particular, look at March, 2012 – it was the peak month for new listings last year, and as supply dropped during the critical April-June selling season, sales took off:
The amount of inventory plays a vital role, and is a leading indicator.
It would appear that the intensity of the frenzy this year will be determined by how many new listings come to market between April and June.
How are we doing so far?
NSDCC New Listings:
| Year | 1stQtr | April 1-15 |
| 2009 | ||
| 2010 | ||
| 2011 | ||
| 2012 | ||
| 2013 |
No wonder last year ended up so hot – new listings in 1Q12 came out lower than previous years, and never got rolling.
This year we got off to a similar start, helping to stoke the frenzy further.
But new listings are rolling now.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Here are the 98 new NSDCC listings that hit the market between April 1-15 between $700,000 and $1,200,000 (the MLS only allows 100 flags at a time). The 38 in yellow are already pending:
The new inventory has been fairly steady here in the middle of the prime selling season. Another 89 new listings since the last reading, and their list prices averaged $526/sf. We had 74 new pendings whose list prices averaged $357/sf, and their median DOM was 16 days on market:
| Date | NSDCC Active Listings | Avg. LP $$/sf |
| Jan 14 | ||
| Feb 4 | ||
| Feb 10 | ||
| Feb 25 | ||
| March 6 | ||
| March 11 | ||
| March 16 | ||
| March 23 | ||
| March 31 | ||
| April 5 | ||
| April 11 | ||
| April 17 |
There is a rolling blob of over-priced turkeys being ignored, while a healthy under-current of selling is happening all around. Of the 74 new pendings, 32 of them were in the tonier La Jolla-to-RSF area.
Why would people list their home as a short-sale?
Because their lender is applying pressure to either make payments, short-sale, or be foreclosed. At least that is the old-fashioned way of banking.
It’s possible that, after months or years of delinquency, some might start making their payments again if they receive that magical loan-mod/principal reduction package. I just haven’t met anybody who has.
Maybe I’m a skeptic, but these stats make it appear that the banks aren’t applying much pressure – distressed listings are 1/3 of last year’s total:
NSDCC Detached-Home Listings, First Quarter
| Listing Type | 2012 | 2013 |
| REO | ||
| Short-Sales | ||
| Regular | ||
| Totals |
It might make sense for banks to be lenient in depressed areas where sales and prices are struggling, but around here we are starved for inventory. The policy is working so well that it may last a long time – the ultimate can-kicker!
Meanwhile, another 85 new listings hit the MLS since our last reading, and we had 81 new pendings with a few cancelled/withdrawns – demand is raging:
| Date | NSDCC Active Listings | Avg. LP $$/sf |
| Jan 14 | ||
| Feb 4 | ||
| Feb 10 | ||
| Feb 25 | ||
| March 6 | ||
| March 11 | ||
| March 16 | ||
| March 23 | ||
| March 31 | ||
| April 5 | ||
| April 11 |
This is the most important indicator to watch – if the active inventory starts to grow, it means buyers are backing off.
It feels like we have been experiencing sharply-rising prices, especially on the higher-end.
There should be some relief coming – here is the history of asking prices for San Diego County, broken down into the 25th, median, and 75th percentiles by our friends at the Department of Numbers:
Sellers are exuberant in early spring, then as inventory grows, their pricing power starts to wane. Or at least it has in the recent past!
| Date | NSDCC Active Listings | Avg. LP $$/sf |
| Jan 14 | ||
| Feb 4 | ||
| Feb 10 | ||
| Feb 25 | ||
| March 6 | ||
| March 11 | ||
| March 16 | ||
| March 23 | ||
| March 31 | ||
| April 5 |
Sellers will know quickly if their price has a chance – the buyer feedback is immediate, and a great guide. On my MLS hotsheet yesterday, there were 18 of the 31 new pendings that had a market time of less than 10 days.
But it was also the first time I could remember in the last couple of months that the new pendings didn’t equal the number of new listings (51:31).
Are you looking for an experienced agent to help you buy or sell a home? Contact Jim the Realtor!
Carlsbad
(760) 434-5000
Carmel Valley
(858) 560-7700
jim@jimklinge.com
