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Category Archive: ‘Market Buzz’

Trump Travel Ban and Real Estate

A pair of married software engineers hooked up with real estate agent Tim Gullicksen about six months ago in pursuit of their dream home.

After taking time to peruse the market, the couple found a multimillion-dollar single-family home in San Francisco that they loved. In January, they wrote an offer letter to the seller, complete with an attached photo of the young family, and squared away their finances.

In early February, the couple told Gullicksen they would no longer place a bid. They planned to take a three-week vacation in their native country of India, and decided they couldn’t risk buying a house if President Donald Trump’s administration wouldn’t let them back into the US. (While no such restriction exists, they worry the new administration might change its mind.) They declined to speak with Business Insider directly for fear of retribution from the government.

San Francisco is one of the most competitive housing markets in the US, with a median listing price that tops $1.1 million. But foreign-born tech workers, who often commute to Silicon Valley, are starting to back out of buying property because they worry about an escalating crackdown on immigration under Trump, according to some real estate agents.

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Posted by on Feb 9, 2017 in Jim's Take on the Market, Local Government, Market Buzz | 6 comments

Spring Selling Season Preview

Buyers are wondering, “When will we see more inventory?”

We got off to a hot start in 2016, with the first three months having more new listings than in previous years.  But last month was a dud, relatively.

NSDCC New Listings By Month

Year
Jan
Feb
Mar
Apr
May
Totals
2013
410
375
503
534
490
2,312
2014
413
389
433
511
497
2,243
2015
389
410
477
471
512
2,259
2016
445
432
516
510
494
2,397
2017
370

This is the chart of NSDCC sales sorted by the month they went pending.  In spite of the surge of new listings in the first quarter of 2016, sales in January and February were the lowest of recent years.

NSDCC Sales Sorted By The Month They Went Pending

Year
Jan
Feb
Mar
Apr
May
Totals
2013
248
284
335
371
324
1,562
2014
201
264
252
286
294
1,297
2015
188
274
332
295
294
1,383
2016
171
235
323
302
322
1,353
2017

I think buyers will be somewhat hesitant in 2017, and sales might get off to a slower start like we did last year.  But there are 306 NSDCC houses that are currently pending!  By March, we should be rocking.

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Posted by on Feb 3, 2017 in Jim's Take on the Market, Market Buzz, Spring Kick | 0 comments

Bidding-War Report

I am fortunate and grateful to have a group of home buyers willing to make offers during the off-season.  To give you a feel of what to expect ahead, here are the results of offers made since December 18th:

Purchase-offers submitted: 11

Bidding wars: 9

Bidding wars won: 3

My buyers tend to prefer the premium properties, so no surprise that other buyers would also be interested.  But to have multiple offers on 9 out of 11 properties during a historically quieter time in the market probably means that the selling season will be raucous and highly competitive – and it starts Monday!

I usually have a better win ratio with bidding wars, but we strive to get the right discount for fixers.  Today’s frustrated buyers make hasty offers without properly assessing the cost of repairs needed, and once the bidding war breaks out, they end up paying too much just to win a house.

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Posted by on Feb 1, 2017 in About the author, Jim's Take on the Market, Market Buzz, Market Conditions, Why You Should Hire Jim as your Buyer's Agent | 3 comments

Ridic

I had a buyer refer to our market as ‘ridic’, and the point is painfully obviously to anyone who has been looking to purchase a new home for months or years – the pricing seems to get more ridiculous every day.

Today’s goal is to buy the least-ridiculously-priced home!

In the last post, you could see that the government may have some ideas, but they won’t be implementing any effective relief measures for a while – if ever.

What can buyers do?

You have two choices:

  1.  Go up in price.
  2.  Compromise.

For those who have resources, going up in price is probably the easiest way to solve the problem.  Add more down payment, get a co-signer, have the seller buydown your rate, or buy more lotto tickets!

Tip for self-employed:  You can qualify for a Freddie Mac loan with one-year’s tax return.  You are getting ready to file your 2016 returns now – bite the bullet and don’t include so many write-offs this year!

The thought of compromise makes every buyer cringe – Chris Rock says that women don’t like to go backwards in lifestyle, but try to give it a shot.  A smaller home, yard, garage, or fewer other features may be worth it to stay in the same area.  Or widen the target area – consider going farther out.

There are elementary schools rated a 10 in several areas:

We know the elementary schools in the Del Mar School District (Del Mar and Carmel Valley) are all rated a 10, but they are among some pricey real estate.  But there are other ’10’ rated elementary schools in the Solana Beach and Encinitas school districts, and here are four ’10’ rated elementary schools in Carlsbad too, where, if you don’t mind driving 5-6 more exits up the 5, you money goes further!

For those who prefer no maintenance, buying a pimped-out condo or townhouse might be a better choice than an older house!

I think we could see the move-up market come alive with people who bought a temporary residence.  If you have more horsepower coming your way in a few years, buy something that will last you for now, and get the forever home later!

I’m happy to discuss your situation, and help you find solutions!

My cell phone is (858) 997-3801, call or text!

Posted by on Jan 25, 2017 in Jim's Take on the Market, Market Buzz, Market Conditions, Thinking of Buying?, Why You Should Hire Jim as your Buyer's Agent | 1 comment

Inventory Watch

How about that weather!  Flash-flood warnings, high-surf advisories, and 1-2 inches of rainfall in the last 72 hours!

It’s not stopping buyers and sellers from getting together though!

We had 59 new pendings this week – the most since mid-October!

The lower-end exploded this week too.

There are only 24 houses for sale under $800,000, and their average list price per square foot jumped 10% in one week, to $470/sf.

The $470/sf is higher than the category above it, $800,000 – $1,400,000, which averaged $463/sf.  It’s the first time that’s ever happened!

HIGH SURF ADVISORY REMAINS IN EFFECT UNTIL 4 AM PST TUESDAY…WAVES BREAKING  22 TO 25 FEET ALONG WEST AND NORTHWEST FACING BEACHES. HIGHEST WAVES WILL OCCUR DURING THIS AFTERNOON AND EVENING.

Click on the ‘Read More’ link below for the NSDCC active-inventory data:

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Posted by on Jan 23, 2017 in Frenzy, Inventory, Jim's Take on the Market, Market Buzz, North County Coastal | 2 comments

Bring Back Dirty Cash?

Just a month after President Donald Trump’s inauguration, a federal anti-money laundering program that targets luxury real estate is set to expire.

The dragnet monitors pricey home deals for signs of dirty cash, helping detect criminals who launder money through real estate. Manhattan and Miami-Dade County were the first markets scrutinized by the feds.

Here’s the big question: Will Trump — who made his money as a developer — keep the heat on the real estate industry? And if the administration of a developer-turned-president chooses not to renew or expand the regulations, will it be perceived as a conflict of interest.

Unlike other industries where cash changes hands freely, real estate has few checks on buyers.

Drug dealers and corrupt foreign officials have been busted buying condos and mansions in the United States. While the Obama administration rules were blasted by developers and brokers as faulty, they don’t seem to have hurt business as much as first feared since going into effect in March.

Read more here:

http://www.miamiherald.com/news/business/biz-monday/article127809744.html

Posted by on Jan 23, 2017 in Drug Money, Frenzy, Jim's Take on the Market, Market Buzz, Real Estate Investing, Spring Kick | 2 comments

Trump and Local Real Estate

The inauguration is almost here – Trump will be your president on Friday!

How will he affect our local real estate market?

His detractors are aghast over his tweets, but Trump keeps them coming.  In spite of their bombastic nature, I think we are already numb to his tweets, or at least getting used to them being part of the landscape.

At this point, I don’t think the Trump Effect will have much, if any, impact on us – positive or negative.  If rates stay under 5% (today’s 30Y is 4.12%), buyers should shrug it off and keep buying.

I also think sellers and agents are getting smarter about price, which will help tremendously.  As you saw in the previous post, they might screw it up a bit once they hit the market, but eventually buyers and sellers should both be happy with a modest appreciation rate of 2% to 4% this year.

The #1 thing that should keep our market stable is the buyers’ focus on getting the right house for the long-term.  Before the 2007 downturn, buyers thought they could always sell for a gain, and, as a result, any house would work for the short-term.  But after our so-called ‘crisis’, we recognize prices can go down – but it only hurts if you sell.

Sales and prices may bounce around, but with the focus on the long-term as a foundation, our market should keep cooking.

Posted by on Jan 17, 2017 in Forecasts, Jim's Take on the Market, Market Buzz, Market Conditions, North County Coastal, Sales and Price Check | 6 comments

Traffic Doesn’t Equal Offers

By now, the low-inventory/fast-market has trained the motivated buyers to be on red alert.  If a new listing pops up that looks remotely interesting, those buyers know to get over there quick for a peek.

This presents a major problem for the sellers and listing agent.

Once the parade of lookers descends upon the new meat within hours, it is irresistible for the ego to go wild, and it causes sellers and listing agents to have visions of lottery-type money.

It is so much fun, they want it to last forever! They are so excited!

Savvy buyers know that if this is THE house, they need to make an offer promptly.  It makes the equation quite simple – sellers will receive offers from the motivated buyers within the first 2-3 days.  All you have to do is counter for every buyer’s highest-and-best offer, and by Day Four the buyer who will pay the most will emerge.

But what usually happens?

The overly optimistic buyer-agents get all giddy and tell the listing agent that they think they will be making an offer.  But a funny thing happens to buyers once they roll down the street for a couple of blocks – all the reasons NOT to buy that house come up, and most buyers talk themselves right out of it.  At least half of the people who threaten to make an offer never do.

What if you are a motivated buyer, and make a great offer in the first 1-2 days?  It happens regularly that sellers and listing agents will pooh-pooh a great early offer, and hope that there are two in the bush.

What can buyers do?  You only have one option, and that is to walk away if you don’t get a response by the time the offer expires.  At least if you threaten to quit, it should hopefully get their full attention.

Sellers and listing agents think that lots of visitors = lots of offers.  But most visitors don’t offer – they’re just visiting.  In virtually every case, the no-offer rate is at least 90%, but sellers ignore that and are convinced there has to be two or more in the bush.

Here’s today’s example:

The seller paid in the low $700,000s in late-2012, and didn’t add anything but lipstick since. We initially offered $1,275,000 last week, and sure got the feeling that we were getting shopped around – the listing agent kept reminding me that there were other offers expected.  So we put a deadline of 1:00pm today to accept our $1,300,000 counter-offer.  Two hours after our deadline, the seller countered $1,339,000, which was just $6,000 under their first counter.  They called it their final offer, and it wasn’t a multiple-counter, so no other offers were on the table.

The sellers paid low-$700,000s, and couldn’t live with $1,300,000 – they had to have an extra $39,000, or the deal was off.

My buyers stuck to their guns, and instead we were off to a new listing that was priced well under this one.

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Posted by on Jan 16, 2017 in Bidding Wars, Jim's Take on the Market, Market Buzz, Thinking of Buying?, Thinking of Selling?, Why You Should Hire Jim as your Buyer's Agent, Why You Should List With Jim | 2 comments

Watch the Dogs

How do you know if the market conditions are improving? There are the regular indicators to watch to judge whether market momentum is building:

General Market Indicators

Number of Sales is steady or rising.

Pricing is steady or rising.

Average Days on Market is low and dropping.

Months of inventory is tight and dropping (currently 3.0 in NSDCC)

Mortgage rates aren’t jumpy.

Bidding Wars.

The professor says so.

But those are mostly feel-good stats and known well after the fact.  How can we know which way the market is breaking in real time?

You can expect the well-kept, beautifully staged homes to sell, and most anything with an attractive price should go quickly too.  Those with a recent tune-up will be more popular, and having a hot-ticket item will help – great location, one-story, newer, top schools, culdesac, beachy, and walkable.

The best tell-tale signs of market momentum is how the inferior homes do. Make a note when you see a house in this category, and if a few of these go pending around you, then you know the market is starting to cook:

Homes in bad locations.

Houses with long market times (90+ days)

Houses in original condition.

Anti-staging – a house full of old furniture.

Funky floor plans.

Tough listing agent

A house listed for a price you think is ridiculous.

Wait until the sale is closed to confirm the actual sales price before jumping to any radical conclusions – maybe the sellers had to give one away.  Besides, it might only mean that a few weak, anxious buyers dived in too high, too soon, and their agents didn’t stop them.

If you see inferior homes starting to pile up – especially those who lowered their price with no luck – then you know the buyers are winning.  When you see a series of inferior homes sell for retail or close, then you can expect the sellers’ confidence to be brimming, and momentum on their side.

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Posted by on Jan 9, 2017 in Jim's Take on the Market, Market Buzz, Market Conditions, One-Story, Tips, Advice & Links | 2 comments

Inventory Watch

I heard of four bidding wars over the weekend – we’re right back at it!

No surge of listing either, which is a leading indicator of how the selling season will break.  The first two January readings of weekly new NSDCC listings:

2014: 138

2015: 121

2016: 122

2017: 108

Expect that the one-story houses will be red hot!

Click on the ‘Read More’ link below for the NSDCC active-inventory data:

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Posted by on Jan 9, 2017 in Inventory, Jim's Take on the Market, Market Buzz | 0 comments