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Category Archive: ‘Market Buzz’

Freeze-Dried Frenzy

The market is sizzling, and it could kick up to another level if there were just more homes to sell! Here is a comparison of today’s inventory to previous years (the lower-end is selling fast!):

NSDCC Active Inventory – Second Week of April

Year
$0-$800K
$800K-$1400K
$1400-$2400K
$2400K+
Total
2014
97
233
233
349
912
2015
65
220
218
346
849
2016
37
235
260
447
979
2017
28
168
235
386
817

NSDCC Pendings Today

PEND
$0-$800K
$800K-$1.4M
$1.4M-$2.4M
$2.4M+
Total
4/10/17
38
202
126
69
427

Without more homes to sell, it’s like a freeze-dried frenzy on the lower end – very dry but it’ll keep you alive!

From cnbc.com:

Anyone eager to buy a home this spring probably has reasons to feel good. The job market is solid. Average pay is rising. And mortgage rates, even after edging up of late, are still near historic lows.

And then there’s the bad news: Just try to find a house.

The national supply of homes for sale hasn’t been this thin in nearly 20 years. And over the past year, the steepest drop in supply has occurred among homes that are typically most affordable for first-time buyers and in markets where prices have risen sharply.

In markets like San Diego, Boston and Seattle, competition for a dwindling supply has escalated along with pressure to offer more money and accept less favorable terms.

“Sellers will have the edge again this year,” said Ralph McLaughlin, chief economist for Trulia, a real estate data provider. “Homebuyers are really going to be scraping the bottom of the barrel as far as housing choice is concerned.”

The intensity of the competition this spring has surprised even sellers like Kathleen Mulcahy, a 37-year-old product manager in Seattle.

Within a week of listing her one-bedroom, one-bath condo, Mulcahy received 21 offers – all above her asking price of $398,000. Most of the offers came with built-in triggers to automatically rise in case a rival bidder sweetened a bid. In the end, she accepted an offer of $500,000 – all cash.

“A lot more than I expected,” Mulcahy said.

Yet the changed landscape cuts both ways: Facing higher prices and competition herself, Mulcahy has decided for now to put off buying another home.

“There’s very little available, and it’s just too expensive right now, so I’m going to wait,” she said. “I’ll probably rent for two or three years.”

About 1.75 million homes were for sale nationally at the end of February, according to the National Association of Realtors. That’s down 6.4 percent from a year earlier and only slightly up from January, when listings reached their lowest point since the association began tracking them in 1999. All told, the supply of homes for sale has fallen on an annual basis for the past 21 months.

Read full article here:

http://www.cnbc.com/2017/04/10/mission-nearly-impossible-this-spring-finding-a-home-to-buy.html

Posted by on Apr 10, 2017 in Actives/Pendings, Frenzy, Inventory, Jim's Take on the Market, Market Buzz, Market Conditions, North County Coastal | 0 comments

Relief from Realtors

Hat tip to Richard:

https://www.wsj.com/articles/jersey-city-creates-no-knock-registry-as-relief-from-realtors-1490741911

Longtime homeowners in Jersey City, N.J., are trying to put the kibosh on endless aggressive real estate solicitations sparked by a hot property market.

In response to complaints, the Jersey City Council unanimously passed a resolution creating an anti-solicitation city program referred to as a “No Knock” registry. Residents that sign up will receive “No Knock” decals for their front doors, and violators who continue to inquire at those homes can be fined up to $2,000 and sentenced to 90 days of community service.

“It’s something that we want to address and do it in a proactive way that builds community as opposed to creating conflict,” said Council President Rolando Lavarro.

The population of Jersey City, the state’s second-largest municipality, grew 6.7% between 2010 and 2015, according to the U.S. Census.

Median housing prices there have increased 17% over the last six years, to $305,000 in 2016 from $260,000 in 2010, according to RealtyTrac.

Amid the rapid residential development, longtime homeowners say that persistent offers from real-estate investors and developers have at times escalated to the point of harassment.

Assunta Folcarelli, a crossing guard who has owned her Jersey City home for 35 years, said realtors started calling her six years ago asking to buy her home. She has repeatedly declined but said solicitors continue to call, show up at her door and send her letters.

“They keep on calling up, they want my house. I say, ‘Wait a minute, where am I going to go?’” said Ms. Folcarelli, 57 years old. “It’s kind of scary.”

Michael Griffin, a lifelong Jersey City resident and local activist, supported the registry’s creation but said the city needs to do more to protect vulnerable homeowners from developers. Mr. Griffin said the city needs to educate residents about cash offers, including in several neighborhoods where many homeowners live at or below the poverty line and the old Victorian and brownstone homes are attractive to developers, he said.

“Not too many people in my community have seen that much money at one time,” Mr. Griffin said. “It may look like a sweet deal to them, but they might not be realizing the taxes involved when you take a lump sum of cash like that, or not thinking what their next move might be. Will you be able to sustain yourself just by renting? Rents in Jersey City are high.”

Posted by on Mar 30, 2017 in Jim's Take on the Market, Market Buzz, Realtor | 1 comment

Home Buyers – Prepare for Battle

An article from cbsnews.com – get good help!

http://www.cbsnews.com/news/buying-a-home-in-2017-prepare-for-battle/

An excerpt:

“Home buying is about substantive economics, but it’s also got an element of ‘animal spirits,’” said its President Steve Udelson. “In some of the hottest markets, we’ve seen a double-digit run-up in prices.”

The website surveyed 1,289 prospective buyers nationwide, and its findings suggested that most prospective homeowners already had their feet in the starting blocks for the spring selling season. More than half were willing to go beyond their budget — by an average of nearly $38,000 — to get the property they desired.

And like most competitive athletes, they were hopeful as well as scared. Not surprisingly, about 60 percent of those surveyed feared:

  • Bidding wars driving up the price of their dream home.
  • Losing the “earnest money” they put down when they signed a contract.
  • Becoming “house poor,” that is, unable to afford amenities like a meal out in order to make the mortgage payment.

Read full article here:

http://www.cbsnews.com/news/buying-a-home-in-2017-prepare-for-battle/

Posted by on Mar 26, 2017 in Frenzy, Jim's Take on the Market, Market Buzz, Market Conditions, Thinking of Buying? | 2 comments

“Severe Housing Drought”

We are used to headline porn, but this one sounds startling – are we having a Severe Housing Drought?

http://www.cnbc.com/2017/03/23/this-is-whats-behind-the-severe-housing-drought.html

In the article, she says that nationally we have the fewest homes for sale than at any time in the last 18 years.  But are they just selling faster, which would give the appearance of low inventory?  If we have a similar number of houses being listed and they are selling faster, I wouldn’t consider that a drought, let alone a severe drought.

First, let’s compare the total supply and number of closed sales in 2017 to previous years – these are the numbers from January 1st to March 15th:

NSDCC (La Jolla to Carlsbad)

Year
# of New Listings
Median LP
# of Solds
Median SP
Median DOM
2013
1,042
$1,149,000
518
$842,950
31
2014
1,029
$1,295,000
464
$981,500
30
2015
1,043
$1,345,000
459
$1,145,000
31
2016
1,145
$1,489,900
421
$1,105,584
26
2017
987
$1,499,000
431
$1,200,000
24

This year’s number of new listings is 7% below the average of the last four years, but I wouldn’t call that a drought. If I watered my grass 7% less, it wouldn’t die. Besides, 40% of all listings don’t sell, so maybe the fewer listings just means fewer OPTs? The number of closed sales is much lower than previous years, but better than 2016.

How about the rest of the county?

San Diego County

Year
# of New Listings
Median LP
# of Solds
Median SP
Median DOM
2013
6,749
$479,000
4,426
$402,000
30
2014
7,077
$539,000
3,544
$475,000
28
2015
7,129
$569,000
3,582
$500,000
30
2016
7,146
$559,925
3,634
$532,500
24
2017
6,347
$639,500
3,696
$560,000
20

There are 10% fewer listings this year, compared to the average of the previous four years, but sales are HIGHER than any of the last three years. There isn’t a perfect relationship between listings and sales, because some of the closed sales were listed before January 1st. But the trend looks fine.

I don’t keep a record of the number of houses that are pending, but a couple of months ago we were around 300 in NSDCC (between La Jolla and Carlsbad).

Here is today’s count:

Area
# of Active Listings
# of Pendings
Median DOM
NSDCC
795
413
22
San Diego County
3,485
3,070
15

The reason we have a record-low number of homes for sale is because they are selling so fast.  Severe drought isn’t the right adjective – can we call it scorching hot?  Half of the pendings found a buyer in 15 days!

With half of the upcoming closed sales finding their buyer that fast, it means they probably paid the seller’s price, or close.  The other half are sellers who are willing to wait until they get their price!  It means the pricing trend should continue upward.

I think we’re back in the frenzy zone!

Posted by on Mar 23, 2017 in Frenzy, How Hot?, Inventory, Jim's Take on the Market, Market Buzz, Market Conditions, North County Coastal | 0 comments

NSDCC Red Hot

Let’s use the $1,400,000 price point to show how hot the lower-end market is between Carlsbad and La Jolla.  When the active and pending listings are running at a 2 to 1 clip, I consider the market to be relatively healthy – and when you look at our overall market, we are about there:

NSDCC Listings

Listing Status
Number of Listings
Median List Price
Avg DOM
Actives
807
$2,395,000
88
Pendings
391
$1,277,900
62

The Actives:Pendings ratio = 2.08, which is a good start to the selling season.

But when we separate into two sets of data, it is easy to see where the market has been blistering hot:

NSDCC Listings Priced at $1,400,000 and Above:

Listing Status
Number of Listings
Median List Price
Avg DOM
Actives
620
$2,898,000
101
Pendings
165
$2,095,000
88

The Actives:Pendings ratio is 3.76 for the high-enders, which is pretty good, relatively-speaking – it has been much higher in the past.

But let’s look at the lower-end:

NSDCC Listings Priced at $1,400,000 and Below:

Listing Status
Number of Listings
Median List Price
Avg DOM
Actives
198
$1,049,950
49
Pendings
231
$979,000
42

The Actives:Pendings ratio is 0.86 – the lower-end has 33 more pendings than actives, and it’s only March 14th! The 42 average days on market could be seen as the average time it takes for the market to catch up to your price – quick!

Posted by on Mar 14, 2017 in Actives/Pendings, Jim's Take on the Market, Market Buzz, North County Coastal | 0 comments

The Millennials’ Housing Disadvantage

Everything about the real estate market favors those who got in years ago (location, zoning, traffic, property taxes, etc.).  Today’s desperate search for reasonably-priced housing is futile at best, and invites table-tilting by all involved. The rich get richer! Hat tip to Bill W:

LINK

Excerpt:

The problems facing millennials include an economy where job growth has been largely in service and part-time employment, producing lower incomes; the Census bureau estimates they earn, even with a full-time job, $2,000 less in real dollars than the same age group made in 1980. More millennials, notes a recent White House report, face far longer period of unemployment and suffer low rates of labor participation. More than 20 percent of people 18 to 34 live in poverty, up from 14 percent in 1980.

They are also saddled with ever more college debt, with around half of students borrowing for their education during the 2013-14 school year, up from around 30 percent in the mid-1990s.

All this at a time when the returns on education seem to be dropping: A millennial with both a college degree and college debt, according to a recent analysis of Federal Reserve data, earns about the same as a boomer without a degree did at the same age.

Downward mobility, for now at least, is increasingly rife. Stanford economist Raj Chatty finds that someone born in 1940 had a 92 percent chance of earning more than their parents; a boomer born in 1950 had a 79 percent chance of earning more than their parents. Those born in 1980, in contrast, have just a 46 percent chance.

Since 2004, homeownership rates for people under 35 have dropped by 21 percent, easily outpacing the 15 percent fall among those 35 to 44; the boomers’ rate remained largely unchanged.

In some markets, high rents and weak millennial incomes make it all but impossible to raise a down payment. According to Zillow, for workers between 22 and 34, rent costs now claim upward of 45 percent of income in Los Angeles, San Francisco, New York, and Miami, compared to less than 30 percent of income in metropolitan areas like Dallas-Fort Worth and Houston.

The costs of purchasing a house are even more lopsided: In Los Angeles and the Bay Area, a monthly mortgage takes, on average, close to 40 percent of income, compared to 15 percent nationally.

Home ownership rates in California are among the nation’s lowest, with Los Angeles-Orange having the lowest rate of the nation’s 75 large metropolitan areas. For every two homebuyers who come to the state, five families leave, notes the research firm Core Logic.

Like medieval serfs in pre-industrial Europe, America’s new generation, particularly in its alpha cities, seems increasingly destined to spend their lives paying off their overlords, and having little to show for it.

No wonder that rather than strike out on their own, many millennials are simply failing to launch, with record numbers hunkering down in their parents’ homes. Since 2000, the numbers of people aged 18 to 34 living at home has shot up by over 5 million.

Home ownership rates in California are among the nation’s lowest, with Los Angeles-Orange having the lowest rate of the nation’s 75 large metropolitan areas. For every two homebuyers who come to the state, five families leave, notes the research firm Core Logic.

The irony is that the state’s progressive policies are contributing  to a less mobile society and a potential demographic crisis. For one thing, fewer young people can form families—Los Angeles-Orange had one of the biggest drops in the child population of any of the 53 largest metros from 2010 to 2015.

This also has a racial component, as homeownership rates African American and Latino households—which often lack access to family wealth—have dropped far more precipitously than those of non-Hispanic Whites or Asians. Hispanics, accounting for 42 percent of all California millennials, endure homeownership roughly half that seen in other parts of the country.

This is not the planners’ happy future of density dwelling, transit-riding millennials but a present of overcrowding, the nation’s highest level of poverty and, inevitably, a continued drop in fertility in comparison to less regulated, and less costly, states such as Utah, Texas, and Tennessee that have been among those with the biggest surges in millennial migration.

Once identified with youth, California’s urban areas are now experiencing a significant decline in both their millennial and Xer populations. By the 2030s, large swaths of the state—particularly along the coast—could become geriatric belts, with an affluent older boomer population served by a largely minority servant class. How feudal!

Read full article here:

LINK

Save

Posted by on Mar 12, 2017 in Boomers, Jim's Take on the Market, Local Government, Market Buzz, Market Conditions, The Future | 3 comments

McMansion Report

They are re-hashing an old 2016 article here, and I’d like to add:

Homebuyers want quality at a fair price – that’s all.

http://www.businessinsider.com/death-of-suburbia-series-overview-2017-3

An excerpt:

The cheaply constructed mansions of old are plummeting in value as homebuyers are more discerning.

In an article in August 2016, Bloomberg cited data from the real-estate site Trulia that showed that the premiums paid for McMansions have declined significantly in 85 of the country’s 100 biggest cities.

For the study, Trulia defined a McMansion as a home that was built between 2001 and 2007 and that had between 3,000 and 5,000 square feet of space.

In one example, in Fort Lauderdale, Florida, the extra money that buyers were expected to be willing to pay to own a McMansion fell by 84% from 2012 to 2016. In that same city in 2012, a typical McMansion would be valued at $477,000, about 274% more than the area’s other homes. Today, a McMansion would be valued at $611,000, or 190% above the rest of the market.

Experts told Business Insider’s Madeline Stone that the youngest generations of homebuyers tend to value efficiency more than ever before and feel that McMansions are impractical and wasteful.

Posted by on Mar 6, 2017 in Boomer Liquidations, Boomers, Jim's Take on the Market, Market Buzz | 2 comments

Softness?

Perception is more important than the reality….if buyers read this stuff and decide to wait-and-see, then we could have a problem. But every day we are inundated with breaking news – this story will be forgotten by tomorrow.

Hat tip daytrip!

LINK to WSJ article

There aren’t any 2-for-1 deals or rebates yet, but high-end home sellers across the country are offering discounts as the luxury market softens. “Buyers are very price sensitive,” says Donna Olshan, a Manhattan-based real-estate agent who publishes a weekly report on the luxury market. “If it’s not priced right it’s going to sit until the cows come home.”

“We’ve priced to account for today’s market,” says developer Gary Barnett. “The market wants to see some discounting.”

In cities like New York and Miami, where an unprecedented luxury building boom over the past five years created an abundance of lavish condominiums and speculative homes, the market is in the midst of a full-on slowdown.

“The smart sellers today are pricing for now, not 2014,” says Jeff Adler, of New York’s Douglas Elliman.

In other regions, like Southern California, agents say the market is still hot but there’s concern about a potential supply glut on the horizon.

The strength of the U.S. dollar has also turned away some overseas buyers, which had been a large part of the market for high-end condos in Miami and in some new developments in Manhattan.

In San Francisco, where a tech boom and housing shortage have fueled a real-estate gold rush, the peak of the market was summer 2015, says Alan Mark, president of the Mark Co., which does marketing and sales for new developments. New-condo prices are down 3% compared with a year ago, and a few developers are offering incentives like higher commissions for brokers or free upgrades for buyers. But prices, he says, will likely hold steady since overall supply is still low. There are about 700 new condo units under construction that will hit the market this year—well below the peak of new construction in 2007, when 3,000 new units hit the market.

Stephen Shapiro, CEO of Westside Estate Agency in Beverly Hills, says the market for homes priced higher than $25 million is particularly strong in the L.A. area. And the ultraluxury spec-home building spree shows no signs of slowing. A couple of new properties will test the strength of the market, including a newly built home asking $250 million that hit the market last month—now the most expensive listing in the U.S. Though many real-estate agents doubt the home will sell for anything close to its asking price, even a sale at a 50% discount would still set a record in California.

Mr. Shapiro says that over the next three to six months, a number of fully furnished spec homes in the Trousdale Estates area are slated to hit the market, all priced in the $20-million-plus range. “They’re all building the same house,” he says, which may result in some discounting. “So maybe developers will make $5 million profit on a home instead of $10 million.”

Sasha Galbraith, who runs a strategy and organizational design consulting firm, has two properties on the market in Colorado—a condominium at the Four Seasons in Denver and a contemporary ski home in Breckenridge—that she thought were priced to sell at $1.8 million and $4.75 million, respectively. The Denver property went on the market in October, and the Breckenridge property has been on the market for 16 months.

Tired of tidying up the properties for showings and ready to move on financially, Ms. Galbraith decided to auction both properties with New York-based Concierge Auctions. There will be no reserve, or minimum, price set. “It’s a risky process, there’s no question,” says Ms. Galbraith, who is 57. On Feb. 27, the auction date, “either I’ll be needing a box of Kleenex or popping a bottle of Champagne.”

Posted by on Feb 25, 2017 in Auctions, Jim's Take on the Market, Market Buzz, Market Conditions | 2 comments