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Category Archive: ‘Market Buzz’

Underpricing on Purpose

From sfgate.com:

http://www.sfchronicle.com/business/networth/article/SF-home-buying-insanity-means-paying-1-6347687.php

Bravo’s reality show “Million Dollar Listing San Francisco” debuts July 8, but I already have an idea for a spinoff — “Million Dollar Over Listing.” It would feature homes in the Bay Area that sold for at least $1 million more than the list price.

There were at least 10 such sales in San Francisco over the past year, 14 in Santa Clara County and five in San Mateo County, according to Multiple Listing Service data. They ranged from teardowns to mansions.

A home at 178 Sea Cliff Ave. in San Francisco, for example, sold in April for $11 million, which was $4.7 million or 75 percent over the $6,298,000 list price.

Patrick Carlisle, chief market analyst with Paragon Real Estate Group, chalks it up to the “general insanity of the overheated market,” which stems mainly from demand outstripping a long period of below-average inventory. In addition, “many agents have adopted a strategy of egregious underpricing,” he said.

In San Francisco especially, underpricing is so prevalent that most buyers search for homes well below their target price, knowing the sale price will be much higher.

“If you price (a home) where it should be, it will sit,” said Realtor Alan Canas.

Canas represented the sellers of a home at 44 Everson St. in San Francisco’s Glen Park neighborhood. The four-bedroom, four-bathroom home was somewhat dated but had magnificent views, which were hard to value.

Canas priced it at $1.8 million in October, expecting it would sell for $2.3 million to $2.4 million.

“The offers we received, it was shocking,” he said. He made counter offers to the two highest — $2.65 million and $2.725 million — asking them to come up to $2.8 million. “One jumped, the other jumped too late,” he said.

What if he had listed it closer to his expected price? “If we had priced it at $2.2 million, I honestly don’t think it would have seen the play (it got) at $1.8 million,” Canas said. “It’s psychological, almost a game.”

The top two offers were both all cash, which is good because if the buyer had needed a loan, “I don’t think it would ever appraise at $2.8 million,” he said.

Read full article here:

http://www.sfchronicle.com/business/networth/article/SF-home-buying-insanity-means-paying-1-6347687.php

Posted by on Jun 25, 2015 in Bidding Wars, Jim's Take on the Market, Listing Agent Practices, Market Buzz, Market Conditions | 0 comments

Local Trends

SD pricing June 2015

Have you seen how some of the list prices have gone ballistic lately?

You can see above how the red ‘Sold’ price-per-sf trend line has been increasing moderately, but the 90-day average list pricing has taken off over the last few months (in blue).

What is causing the recent enthusiasm among sellers?

The inventory is still low – lower than last year.  But there are more sales happening in 2015, in spite of fewer choices and higher prices!

These are San Diego charts, but the same in true in NSDCC, where we had 1,259 sales between January 1st and June 15, 2014, and this year there were 1,349 sales – which is a 7% increase in NSDCC sales year-over-year.

In 2013 we had 1,497 sales.

Here are the active listings and sales counts below:

SD Inventory 2015

Though this chart doesn’t show all of 2013, it is incredible to see that today’s inventory is back around those levels when we were in the full frenzy!

It’s a slightly different mix – we’ve had fewer NSDCC listings this year than in 2013.  But the frenzy fever looks very similar on paper!

How long can it last?  Have you seen an occasional neighborhood that has for-sale signs piling up?  Coastal tract houses in the $1M to $2M range are particular susceptible.  There are 367 houses for sale in that range currently, which isn’t exactly panic time, because there were 127 that closed in the last 30 days!

But those were the plums – the best available. What happens to the rest?

I know it seems like summer just started, and we’ll probably keep getting enough happy news to keep the party rolling (like Case-Shiller next Tuesday).

But those are reflecting ancient history now.  By the time we get to August, the inventory will be so picked over that we should hit stall speed!

Get Good Help!

Posted by on Jun 24, 2015 in Jim's Take on the Market, Market Buzz, Market Conditions, North County Coastal, Sales and Price Check | 1 comment

Market Impulse

The California Association of Realtors does a phone survey every month of 300 realtors (there are more than 250,000 licensees in the state).  They don’t offer any analysis on what their data means, or how to digest it – just the results:

http://www.car.org/marketdata/surveys/marketpulse/

Last Transaction
• 40% of transactions are closing below asking price, 34% are closing above asking price, and 26% are closing at asking. The discount on asking price is 7%, on average, down for the first time in 4 months. The premium paid over asking price is 8%, on average, down from 10% in April, but up from 6.5% in May 2014.
• 65% of properties are receiving multiple offers, down from 72% in April and up from 62% in May 2014. The average number of offers per property declined for the first time in 3 months to 2.8, from 3.6 in April.
• The proportion of homes that had listing price reductions decreased from 28% in April to 25% in May.

Market Conditions
• Floor calls, listing appointments, and open house traffic are up when compared to last month.
• Auctions are down from last month.
• All cash purchases are flat from last month
• Open house traffic and all cash purchases are up from last year.
• Open house traffic is up compared to a year ago.
• Auctions and all cash purchases are down from last year.
• The majority of members expect the same or better market conditions over the next year.

Great news for sellers! A third of you will get 8% over your price, a quarter of you will get your price, and the rest will have to live with a 7% discount. 😆

Seriously, if these results show anything, it’s that the ‘market’ is a mixed bag – and more random than ever.  The houses that are selling are those that are relatively-well-fixed-up and priced attractively, and those owned by sellers who can live with a discount for doing little or no repairs/improvements.  Make sure you pay the right price, for the right product!

Posted by on Jun 23, 2015 in Jim's Take on the Market, Market Buzz, Market Conditions | 0 comments

Staging Benefits

Visitors to today’s open house were very complimentary about the staging, and it does assist those who have trouble visualizing how to furnish a house.  The next-door neighbor at first wondered why we didn’t stage it sooner, but then mentioned that he doesn’t understand why it is needed.

This is a selfie film – If you are watching in front of a regular-sized computer screen, you may want to back up several feet before hitting the play button:

Posted by on Jun 20, 2015 in Jim's Take on the Market, Listing Agent Practices, Market Buzz, Market Conditions | 1 comment

California Home Sales in May

The state is cooking! She brings up a good point – it might be hotter if there was more to sell:

California home sales softened in May, but the housing market momentum continued to be solid as the spring home-buying season marked higher year-over-year home sales and prices for the fourth straight month, according to the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.).

Highlights

  • Home sales rose above the 400,000 mark in May for the second straight month since October 2013 and were the second highest level in nearly two years. Closed escrow sales of existing detached homes in California totaled a seasonally adjusted annualized rate of 423,360 units in May.
  • The May figure was down 1.1 percent from the revised 427,880 homes sold in April, slightly below the long-run April-to-May average sales increase of 0.6%.
  • Home sales were up 8.9 percent from a revised 388,690 in May a year ago though, and the statewide sales figure so far has outpaced last year by more than 5 percent.
  • CKC.A.R. President Chris Kutzkey commented, “The spring home-buying season continues to be strong, especially in areas where insufficient housing supply is less of an issue. With mortgage interest rates edging up recently and an imminent increase in rates by the Federal Reserve, housing affordability concerns will be heightened but may also prompt prospective buyers to feel a sense of urgency to enter the market.”
  • The median price of an existing, single-family detached California home edged up in May from both the previous month and year for the fourth consecutive month. The median home price was up 0.8 percent from $481,880 in April to $485,830 in May, the highest level since November 2007.
  • May’s median price was 4.4 percent higher than the revised $465,470 recorded in May 2014. The median sales price is the point at which half of homes sold for more and half sold for less; it is influenced by the types of homes selling as well as a general change in values.
  • While sales continued to improve from last year at the state level, the number of active listings dipped slightly from the previous year, keeping the supply of homes on the market flat. The May Unsold Inventory Index was unchanged from the 3.5 months reported in April.

http://www.car.org/newsstand/newsreleases/2015releases/may2015sales

Posted by on Jun 19, 2015 in Local Flavor, Market Buzz, Market Conditions, Monthly Sales Count | 0 comments

More Market Pulse

From cnbc:

http://www.cnbc.com/id/102614420

The biggest barrier to a more robust spring housing market is simply a lack of listings, and there may be even fewer than we think, at least fewer homes people want to buy.

Nearly three-quarters of the homes on the market are “stale,” which is to say that they have sat on the market for more than a month with little to no interest from buyers, according to a new report from Redfin.

The number of homes for sale rose 2 percent in March from a year ago, according to a report from the National Association of Realtors released Wednesday. That, however, includes both new listings and homes that have languished on the market for months. With demand and sales increasing, there is just a 4.6-month supply of listings; a six-month supply is considered to be a healthy market balance between buyers and sellers.

There is something else at play as well: information. With so many websites and apps pushing moment-to-moment market movement, today’s buyers are increasingly data driven. Especially after the epic housing crash that gave birth to all this data, buyer psychology and suspicion are in full swing.

“The trust is broken among buyers. In Denver and Silicon Valley, if the house has been on the market for two weeks, there is something wrong with it,” noted Nela Richardson, Redfin’s chief economist. “Everyone is afraid to overpay, and the herd behavior in the stock market is something we’re now seeing in the housing market.”

Posted by on Apr 23, 2015 in Market Buzz, Market Conditions | 1 comment

NSDCC Could Be Hotter

With all the recent action mentioned in the previous post, it makes you wonder how much the market is fueled by frustration over the selection of homes for sale.  Yes, it is the “season”, but is the lack of inventory causing buyers to grab anything, at any price?

More inventory would help satisfy the demand, and help us discover if there is a ceiling to these prices. But adding just a few more houses for sale would only fire up the frenzy.

Here are the number of NSDCC houses listed between Jan. 1 and April 15th:

Year
Number of New NSDCC Listings, Jan 1 to Apr 15
2012
1,466
2013
1,565
2014
1,486
2015
1,483

Note how the hot frenzy in 2013 was fueled by having more homes for sale.  If we just had an extra 100-200 decent houses for sale now (especially under $2,000,000), they would likely get gobbled up.

Potential sellers, now is the time!

Posted by on Apr 21, 2015 in Jim's Take on the Market, Market Buzz, Market Conditions, North County Coastal, Spring Kick | 2 comments

Go Time

Usually around tax day, the real estate market goes into a bit of a funk, and this year it was compounded by the disconnect between our MLS and Zillow – any new listings have to be manually inputted to Zillow, which isn’t obvious to most agents.

In spite of all that, there have been some remarkable new pendings in the last week.  A few examples:

1.  The neighbor down the street had a smaller lot and no guest apartment but had a more wide open view looking south – yet they struggled for 124 days before finding a buyer who paid $1,349,000 (closed on April 2nd).  Then this house lists for $1,599,000 and goes pending the first week:

http://www.zillow.com/homes/2313-mica,-carlsbad_rb/

2.  Granted, this is across the street from what is probably the nicest house in Carlsbad, but $1,980,000 is a boatload for the neighborhood.  Yet this only took 13 days to find a buyer:

https://www.redfin.com/CA/Carlsbad/3665-Maria-Ln-92008/home/3425217

3.  This house has been listed since September, with no price changes this year – the sellers just hung on and waited, and they went pending this week:

https://www.redfin.com/CA/Carlsbad/7671-Sitio-Manana-92009/home/7486694

4.  This is a teardown on a 9,771 sf lot with some ocean view in Leucadia listed for $1,299,000.  You could buy a brand new house down the street for the same money (or less), yet it only took 26 days for this to go pending:

http://www.zillow.com/homes/380-Hillcrest-Encinitas-CA-92024_rb/

5.  The seller of this house paid $1,575,000 two years ago, which was $80,000 over the list price then.  Two weeks ago, they listed it on the range $1,629,000 – $1,699,000, and received eight offers at or above the high end of the range.  My clients offered $1,760,000 cash and lost – rumor has it that the sales price is around $1,800,000:

http://www.zillow.com/homes/1309-Caudor-St-Encinitas-CA-92024_rb/

6.  They couldn’t find a taker during the first two months of this year, so they went off the market for 30 days and came back on at the same price, $1,399,000.  Boom, went pending the first week:

http://www.zillow.com/homes/1041-Saint-Albans,-Encinitas_rb/

7.  This has the big ocean view in Cardiff, but it also has a vacant lot in between which provides some uncertainty.  But it only took a week for this to find a buyer, listed for $2,915,000:

http://www.zillow.com/homes/1464-summit,-cardiff,-ca-92007_rb/

8.  In Del Mar, Solana Beach, RSF, and La Jolla there were 17 new pendings, and almost all were lower-enders.  The auction happened on Friday night and I didn’t see any last-minute advertising like there was on the other auctions.  But it’s pending too:


Casa de Los Morros — from Concierge Auctions

Not only does there seem to be no drop-off in demand, but buyers are willing to pay whatever it takes to get the creampuffs – and most are above previous-peak pricing.

With the end of school/summertime within sight, expect the next four weeks to be very active before the graduation season commences.

Posted by on Apr 20, 2015 in Jim's Take on the Market, Market Buzz, North County Coastal, Spring Kick | 6 comments

Seller Demands

This article lays out the basic 12 tips for homebuyers to use when preparing to buy a home:

http://money.usnews.com/money/personal-finance/articles/2015/04/13/12-tips-for-spring-homebuying-in-a-sellers-market

The local market has been very competitive lately, with multiple offers on every quality offering.  Here are other things for home buyers to expect from sellers once you start making offers.

These aren’t thought out clearly by listing agents; instead, they are things done to them on previous deals so they will want to impose them on you whether they make sense or not:

1.  They will want you to shorten your contingency periods.

The common belief is that shorter periods will make you move faster, and then blow you out quicker if you aren’t a player.  But in reality, buyers get irritated and want to pay less or cancel as the manipulations start mounting.

2.  No appraisal contingency.

Buyers are prone to think, “But this is your price, and you want me to risk the appraisal coming in low?”

3.  Seller rentback.

Sellers want you to fund their retirement account, and have you let them live in your house for free for weeks or months.  Make sure the rent is retail-plus with heavy penalties if they don’t leave on time to ensure they move as agreed. Consider that the seller could declare bankruptcy the day after closing and make your life miserable for six months.

4.  Ernest-money deposit.

Even though it is refundable until you sign off all contingencies, the sellers will want you to increase it, just to make sure you know who the boss is.

 5. Buying ‘as-is’.

It already says in the contract boilerplate that the property is sold “as-is”, but the listing agents will mention it again just so you don’t get any ideas about asking for seller repairs.  Once you complete your inspection, the sellers and agent will expect you to live with any defects – regardless of how much you paid.

6.  Seller disclosures.

The confidence is already running high, so if there are any borderline disclosure issues, they might get left out by the sellers.  Make sure you thoroughly inspect the property, neighborhood, and HOA!

7.  Escrow and title companies.

Don’t even think about selecting your escrow and title companies, and expect that the seller choices on both will include some ‘co-ownership’ fine print later (i.e. kickbacks).

8.  Removing attached items.

Items attached to the home are part of the real estate, and are included in the sale by definition.  But don’t be surprised if the sellers strip out all the good stuff (TVs, lights, window coverings, etc.), and leave you with holes.

9.  Termite clearance.

Ha ha, very funny.  The sellers will expect you to live happily ever after with their termites, just like they have.

10.  Listing agent dominates the home inspection.

Buyers deserve to have a good look around during the home inspection, and get comfortable with what they are buying – chances are they have only seen it for a few minutes before then. Yet the listing agent wants to be there to “answer any questions”, and use that as a guise for snooping on the inspector to see if the problems and defects are really that bad.  Kudos for being concerned, but uncomfortable buyers are less likely to close escrow.

Because a bidding war feels like hitting the lottery, sellers and their agents get giddy and don’t consider how their demands can turn off buyers, and make them want to pay less, not more. 

If you want to sell for top dollar, hire a listing agent who can tactfully include safeguards that don’t cause buyers to go backwards.

Posted by on Apr 15, 2015 in Bidding Wars, Market Buzz, Market Conditions | 2 comments

Designer-Brand Condos

Hat tip to daytrip for sending this along:

http://tinyurl.com/lkswwop

Excerpts:

SUNNY ISLES BEACH, Florida (AP) — The wow factor for Miami’s skyscraper condos no longer comes from a dazzling Atlantic Ocean view.

It takes something more audacious to sell beachfront property these days to the global ultra-wealthy who arrive in Miami with millions to spend on second or third homes. It takes words invested with meaning in the language of the international jet set:

Porsche. Giorgio Armani. Fendi.

With a slew of residential and hotel developments, Miami is embracing the notion that homes, like cars, handbags and jewelry, should carry luxe designer labels. The trend has spread from Europe, Asia and the Middle East, where developers discovered a few years ago that luxury-branded hotels and homes could command huge premiums that the moneyed set would happily pay.

The pull is so powerful that developer Gil Dezer’s Porsche Design Tower is mostly sold-out, even though construction won’t wrap until early 2016, meaning that most buyers committed millions based on blueprints.

Shaped like a piston driven into sand, the concrete-and-glass Porsche Design Tower will contain three car elevators. Each can whisk a convertible up 60 stories and then slide it into the owner’s personal steel-reinforced garage. (The owner can stay in the driver’s seat.) Inside the apartments, curved windows capture a vista of waves billowing from a midnight blue into a pale green along the shore.

“People look at these apartments as bank accounts,” Dezer said.

Read full article here:

http://tinyurl.com/lkswwop

Posted by on Apr 2, 2015 in Builders, Market Buzz, The Future | 6 comments