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Category Archive: ‘Market Buzz’

Current Market Trends

sf

Here are the thoughts of a two-percenter agent from the Bay Area about her market, which are probably about right.  Instead of wild bidding wars, there might only be one or two offers per house – which will leave sellers’ egos disappointed, but the market will survive.  Plus, more houses won’t sell – let’s face it, only about 60% of NSDCC listings actually close escrow.  P.S.  Have you noticed that most agents seem to be in the Top 1% or 2%?:

http://www.marketwatch.com/story/san-francisco-bay-area-housing-bubble-not-bursting-but-moderating-2016-05-17

The whole story – I bold-italicized the phrases where I had strong agreement:

Real estate markets are moving toward a “new normal” in the San Francisco Bay area. This is according to the local “feet on the street” stories I hear from top Bay Area Realtors.

The Bay Area housing bubble is not bursting. It is changing to what appears to be a “new normal.” Let’s look at the big picture to understand what we believe are the trends driving the current market and how we think they will continue to impact the market in 2016.

1: This is a high-stress market and it will continue

Buying or selling a home is usually prompted by a life event: death, divorce, marriage, relocation, job change and increase or decrease in family. These life events often bring stress and buying or selling a house adds to this stress. Add in the drama of a notably contentious presidential campaign, toss in the uncertainty of the financial markets and then add the pressure of the fast-paced expensive Bay Area market where decisions and offers need to be made quickly.

Unfortunately, all this is here to stay for a while. Yes, any normal person would be hard-pressed not to feel like they were in a tornado.

2: Low inventory of good homes will continue to drive pricing. However, buyer demand is becoming tempered and more deliberate

Yet another reminder that markets invariably change. While our group of top agents acknowledged the low inventory, they also recognized that buyers were becoming much more selective and deliberate. They look, they think and if they don’t “feel it” they move on. “Who cares if there is an offer date?” “Another day and another home will appear.” “Maybe the home won’t sell and we can buy it for less.” If they don’t see the value they pass.

As a client of mine once said during a previous hot market, “This market is so crazy even a burning house will sell.” Not so any more. Many agents believe sellers are seeing the last days when homes with deficiencies will sell quickly for top dollar. Great homes in great locations, priced fairly and marketed properly are selling. However, we are now beginning to see situations where even these homes only have one offer and sometimes, unfortunately, none.

3: Now more than ever you must play to win

While we don’t believe another downturn is on the horizon, having a Realtor with strategies to address even the slightest of market corrections is critical to success whether you are a buyer or seller. A San Francisco agent in our group told a story of a home with 12 disclosure packets out to potential buyers. When the offer date came his buyer did not make an offer. What happened? The buyer thought the home would sell outside his price range. Sadly for him, the home sold below what he was prepared to spend. The moral to the story is “nothing ventured nothing gained.” We are entering into a shifting market. Don’t be afraid to make an offer.

Finally: The bottom line is we are moving to a ‘new normal’

The “feet on the street” believe that the outlook for the rest of the year remains positive, but moderating, with a continuing but more purposeful demand for Bay Area housing.

Posted by on May 19, 2016 in Jim's Take on the Market, Market Buzz, Market Conditions | 4 comments

Nothing Price Won’t Fix

sv

A pullback in Silicon Valley? It could happen anywhere!

http://www.bloomberg.com/news/articles/2016-05-17/silicon-valley-mansions-linger-on-market-in-real-estate-slowdown

Excerpts:

A custom-built home in the heart of California’s Silicon Valley had its price cut by $500,000 last week after sitting on the market since the end of March — a move that would’ve been almost unfathomable a year ago and a signal that frenzied demand has peaked.

The six-bedroom, five-bath house in Palo Alto — located blocks from Stanford University and the homes of Google co-founder Larry Page and Steve Jobs’s widow, Laurene Powell Jobs — is now listed for $7.5 million. It joins a growing inventory of high-end homes in the area that are taking longer to sell.

“We’ve recently noticed a slowdown,” Jack Woodson, who works at Alain Pinel Realtors in nearby Menlo Park, said on a tour of the house in the Old Palo Alto neighborhood. “Buyers are taking more time to decide about making offers.”

Silicon Valley, the most-expensive U.S. housing market, is seeing a pullback by the wealthiest homebuyers after a four-year real estate boom marked by bidding wars and multimillion-dollar prices. Stock-market turmoil, a drop in foreign investors and concerns of a technology-industry slowdown are cooling demand at the high end, even as interest remains robust for more moderately priced properties.

In Palo Alto, an ultra-wealthy city that’s home to many Google and Facebook Inc. executives, homes costing more than $5 million were on the market for a median of 16 days in April, compared with 11 in the same month in 2015 and 10 in 2014, according to data from Irvine, California-based John Burns Real Estate Consulting. The 11 active listings in that price range as of May 14 have been on the market a median of 30 days.

“The seemingly inexhaustible well of very high-end buyers has proven exhaustible after all,” said Dean Wehrli, a senior vice president at John Burns. “The peak is behind us, and that’s becoming clearer and clearer to builders and buyers.”

“We’re probably moving toward normalization,” said Katharine Carroll, vice president at Pacific Union Real Estate in Palo Alto. “Buyers see that they have a few more options. They don’t feel the urgency that they have to decide on something right away and put an offer in. They can kick the tires a little bit more.”

http://www.bloomberg.com/news/articles/2016-05-17/silicon-valley-mansions-linger-on-market-in-real-estate-slowdown

Posted by on May 17, 2016 in Forecasts, Jim's Take on the Market, Market Buzz, Market Conditions | 1 comment

NSDCC Spring Kick Report

2016-04-16 15.56.17-2

We’re well into the spring selling season (May 1st is twelve days away), and soon the talking heads will be touting fewer sales this year, compared to 2015.

It is short-sighted though, because 2015 was a great year, statistically.  When you consider that prices are still strong, and any softness in the market is at the high-end where hopefully sellers can endure, it’s hard to complain!

NSDCC Detached-Home Sales between March 1 – April 15

Year
# of Sales
Median SP
Avg. $/sf
2012
345
$813,500
$367/sf
2013
438
$873,250
$406/sf
2014
351
$1,030,000
$494/sf
2015
419
$1,100,000
$496/sf
2016
365
$1,142,331
$525/sf

Whether the demand is getting more picky or just taking a breather, to still have 365 sales after a 40% price hike in four years is phenomenal.

Posted by on Apr 19, 2016 in Jim's Take on the Market, Market Buzz, Market Conditions, North County Coastal, Spring Kick | 2 comments

733 Stratford Drive

733-stratford-dr-076

I love my new Encinitas Highlands listing at 733 Stratford Drive, which is at the top of the hill and offers some of the best ocean views in EH!  This is another property that is ideally suited for the multi-generational buyers because there are bedrooms and full baths on the ground floor plus a detached 1br/1ba cottage out back.

This is my first real tour of a house with the new camera (and because I’m trying to move slower and smoother), so this is the extended full version of the whole property:

http://www.zillow.com/homedetails/733-Stratford-Dr-Encinitas-CA-92024/16718577_zpid/

Posted by on Apr 14, 2016 in Boomers, Bubbleinfo TV, Encinitas, Klinge Realty, Listing Agent Practices, Market Buzz, Osmo, Thinking of Buying?, Why You Should List With Jim | 3 comments

NSDCC Avg DOM, 1st Qtr

sell

Our low inventory has buyers starved for houses to purchase.  When they see a good one, they react immediately – an attractively-priced house will have people driving by within the first hour or two on the market!

Sellers should be aware, and expect to sell their house right away.

Those who don’t shine up their house before listing, or those who get exuberant about price – thinking they have plenty of time – will miss a golden opportunity.  The most desperate buyers are motivated to pay top dollar in the first few days on the market!

Here are the number of NSDCC houses sold up to $1,400,000 in the first quarter, ranked by days-on-market:

Avg DOM
2013 #/SP:LP
2014 #/SP:LP
2015 #/SP:LP
2016 #/SP:LP
0
19/97.0%
8/98.2%
6/91.9%
9/97.4%
1-14
205/99.5%
169/99.4%
160/98.6%
125/99.3%
15-30
80/97.2%
58/97.7%
65/96.7%
64/97.7%
31-60
68/96.5%
78/96.5%
83/96.7%
72/97.0%
61+
157/95.5%
96//94.8%
104/96.1%
89/95.9%

Sellers – you want to get your price, right?

The houses that sell closest to list price are those that go pending in the first two weeks.  These SP:LP ratios are based on the list price on the pending date – the price which typically needs to be lowered first to get a buyer to offer, because they know it isn’t working after the first few weeks.

Hire a listing agent who can handle the immediate urgency – Get Good Help!

Posted by on Mar 31, 2016 in Jim's Take on the Market, Market Buzz, Market Conditions, North County Coastal, Thinking of Selling?, Why You Should List With Jim | 0 comments

Pot Bubble?

pot

We figured the next real estate bubble would look a little different…..

http://blog.sfgate.com/smellthetruth/2016/03/16/marijuana-real-estate-bubble-inflates-in-california/

Excerpts:

A marijuana real estate bubble is inflating in parts of California thanks to new state regulations clarifying the legality of the $1.4 billion medical pot economy in the Golden State.

Newsweek reported March 5 that the pot industry is outbidding the Predator drone industry for commercial real estate in the tiny desert town of Adelanto.  City leaders hope to corner the Southern California medical pot market and are speeding to permit mega-farms that will be grandfathered in among the limited number of state licenses for mega-farms.

Consequently, property values in zoned areas have shot up from $1.5 million to $4 million. Desert wasteland once going for 50 to 90 cents per square foot is now going for $12 to $14 — a yearly increase of 14,000 percent, reports state.

Over in Oakland, realtors report bubble pricing is already baked into real estate values inside the city’s waterfront industrial zone, the site of the city’s first licensed pot farms this year or next.

In San Francisco, medical cannabis permits are tied to the building, not the manager — leading to a string of multi-million dollar buyouts of underperforming clubs by investors. One Financial District landlord is charging a reported $1 million in application fees to lease one of 15 small, licensed medical cannabis delivery co-working spaces for up to $15,000 per month each.

The only thing that could slow the bubbles is increased competition from other California towns, which is likely to happen very slowly.

Posted by on Mar 16, 2016 in Jim's Take on the Market, Market Buzz | 0 comments

Boom or Doom?

Our favorite doomer has published some interesting stats about the Bay Area:

BA

But he is looking at one month only, and comparing to one year only, 2015, which was hot. We’ll see how it plays out.

Yesterday around here we saw a 9% increase in NSDCC new listings and a 9% drop in sales year-over-year for the first two months of 2016 – which looks rather tame compared to those Bay Area numbers.

We can break it down further too.  The lower price ranges have been in a tight range for the last two years, both in the number of active listings and average list-price-per-sf. There certainly has been more new listings this year in the Above-$1,400,000 range, but unless there is a major panic, they will wait until someone comes along:

NSDCC Inventory in the First Week of March

Up to $800,000
# of Active Listings
Avg LP/sf
Avg. SF
2014
82
$397/sf
1,942sf
2015
70
$379/sf
1,945sf
2016
49
$388/sf
2,108sf
$800K-$1.4M
# of Active Listings
Avg LP/sf
Avg. SF
2014
202
$421/sf
2,936sf
2015
200
$438/sf
2,885sf
2016
207
$418/sf
2,904sf
$1.4M – $2.4M
# of Active Listings
Avg LP/sf
Avg. SF
2014
221
$585/sf
3,761sf
2015
198
$602/sf
3,653sf
2016
254
$574/sf
3,595sf
Over $2,400,000
# of Active Listings
Avg LP/sf
Avg. SF
2014
309
$1,004/sf
6,628sf
2015
316
$1,058/sf
6,342sf
2016
414
$956/sf
6,085sf

Mark says prices in key STEM-centric markets will drop 40% – but if sellers can’t get their price, they are more likely to wait, than dump.

Higher-end sellers are just testing the market, and if they are desperate to sell, a few might lower their price in the summer.  But most will wait it out for months or years – they’re not going to give it away!

Link to Mark’s full article:

http://mhanson.com/3-11-hanson-dying-unicorns-still-leave-hoof-prints-just-know-look/

Posted by on Mar 12, 2016 in Jim's Take on the Market, Market Buzz, Market Conditions, North County Coastal, Sales and Price Check | 0 comments

Report on China Real Estate Expo

shanghai

The 11th Annual Overseas Property & Immigration & Investment Exhibition was conducted in Shanghai this past weekend.  A contingent of Mandarin-speaking agents from Orange County had a display booth, where they included three of my listings among their offerings.  They had hoped to make deals on the spot!

It turned out to be a ‘huge disappointment’.

My guy said they hit the ‘perfect storm’ of variables:

  1. The Chinese government has clamped down on money flowing out of China, and the majority of people who came to the expo were wondering just how to get their money out of the country, let alone buying properties.
  2.  One month ago, the Chinese government also lowered the down payment required to buy local properties, which is fueling a resurgence of real estate investment there.
  3.  The currency exchange rate is going in the wrong direction.

He only got two leads out of it, one for Boston, and one for Houston properties.  It’s a long ways to go for a couple of out-of-state possibilities!

He said the best hope going forward was for selling lower-cost properties, like condos for kids around major universities.

yuan

Posted by on Mar 10, 2016 in Jim's Take on the Market, Market Buzz, Market Conditions | 1 comment

Boston Real Estate

boston

Another fast-paced market loaded with bidding wars! Link below:

In Competitive Boston Real Estate Market, Buyers Paying Way Over Listing Prices

BOSTON (CBS) — See a house for sale in Boston? Like the price? Don’t get too comfortable.

If you want to buy property in certain areas around the city, real estate agent David Bates says you should be prepared to shell out a lot more money than what the sellers are asking.

“We’re seeing, literally, condos selling for hundreds of thousands of dollars more than the list price,” said Bates. “It’s almost like their listing prices don’t exist.”

Bates says limited inventory and a steady demand has created a market where buyers are typically going at least $50,000 over the asking price–and sometimes, a whole lot more.

“The highest over-ask in Boston was $675,000 more than the list price,” said Bates.

He says he’s never seen such a competitive market. He said another of the most extreme examples was a $15 million condo.

“Because the competition was so intense for it, it ended up selling for $15.4 million, $400,000 over,” said Bates.

Bates, who also authors the Bates Real Estate Report, says buyers need to know that going in, so they’re not shocked when a bidding war ensues.

“Buyers aren’t trying to negotiate value in Boston anymore,” Bates said. “They’re trying to win.”

The problem, Bates said, is happening in other markets, too–but he cautioned buyers who want their money to go further to consider a town or neighborhood just a little farther down the line.

“If you’re thinking in Cambridge, you can move one market over and consider Somerville,” suggested Bates. “If things seem too overwhelming, too competitive that you’re not getting enough for your money, consider the next market over.”

Bates says he warns his clients to be ready so they can make a decision–either offer up more money, or consider a different location.

Posted by on Mar 1, 2016 in Bidding Wars, Jim's Take on the Market, Market Buzz, Market Conditions | 0 comments