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Category Archive: ‘Market Buzz’

Rest of 2015

This summer’s 3-mo moving averages look quite different from last year.

In 2014, the list-pricing started to falter as summer approached, and stumbled along until this spring.  But since then, we’ve been on a tear!

summer 2015 avg LP vs avg SP

How can it be explained?  The lower-end buyers are more affected by rising rates, so maybe they are scrambling to buy anything affordable while they can?

According to the MLS, the San Diego County detached-home sales are 7% higher for the first seven months of 2015, compared to last year!  Summer sales this year are hotter than the 2013 frenzy levels in the graph below.

summer 2015 actives vs solds

Any decent houses-for-sale have been gobbled up so quickly that the inventory appears bleak to casual observers who only see low numbers and lousy offerings left behind by the more-motivated buyers.

The casual buyers and sellers will check out once school starts – leaving the rest of this year to the motivated players on both sides.

When is the best time to buy?  When everyone else isn’t!

Posted by on Aug 3, 2015 in Jim's Take on the Market, Market Buzz, Market Conditions, Sales and Price Check | 1 comment

Suspicious Comps

The comps haven’t mattered much during our frenzied market.  But with things settling down a bit, we might see comps matter more.

In March, we discussed who pays more than they should, and why:

http://www.bubbleinfo.com/2015/03/04/verifying-comps/

Today, let’s point out which comps are the most suspicious.  Both sellers and buyers should proceed with caution when using these comps:

1.  Sales prices above list prices.  Bidding wars have been the norm, but the eventual sales price was thrown out there by somebody who was trying to win the contest, not pay market value.  They probably waived the appraisal contingency too, so there aren’t any checks and balances in place.  Just because one crazy nut was willing to pay that price doesn’t mean there will be others willing to do the same.

2.  ‘Sold before processing’.  How can it be considered market value if the market never had a say?  Rarely do they have a full description or ample photos so you don’t even know what was sold, or why.  Sometimes these are high-priced, where you wonder if the seller and listing agent thought they’d never get the same price on the open market.  But usually they are lower-priced.

3.  Dual agency.  When the seller’s agent represents the buyers too, how do you know what happened at the moment of impact?  Be wary of those that closed for a deep discount under list.

4.  Long-timers.  Have you seen those properties that have been on the market for months without lowering their price, then all of a sudden they sell for full price, or close?  Sure, the market can come up to meet them, but it just smells fishy to me that buyers wouldn’t demand to pay less for a property nobody else wanted for months.

5.  Comps that went pending when hottest (Jan-April 2015).  Today’s market is still good, but for the rest of 2015 it won’t be sizzling like it was when rates were 3.67 – 3.77% earlier this year.  Buyers are going to want to pay a little less than before to compensate.

6. Weak buyer’s agent on the sale.  Inexperienced or desperate agents don’t stop their buyer from over-paying.  The inexperienced agents are usually unaware themselves.  The tricky ones are the big teams who just use the leader’s name on every sale – but you suspect it was an assistant who handled the sale.

Tip of the Day: Examine the photos from the buyer’s perspective.

Buyers have never relied less on their agent – they have all the comps at their disposal, and they will interpret as they see fit.  Your accuracy about the comps is only half the battle – understanding the buyers’ position and how to add value to their interpretation is essential too.

Get Good Help!

Call Jim!

Posted by on Jul 13, 2015 in Jim's Take on the Market, Listing Agent Practices, Market Buzz, Market Conditions, Why You Should Hire Jim as your Buyer's Agent, Why You Should List With Jim | 1 comment

NSDCC Months’ of Inventory

foot traffic

These guys are making the pitch for why potential sellers should list their home (with Jim) and sell now, using NAR stats that show foot traffic is up, and inventory is down:

http://www.keepingcurrentmatters.com/2015/06/29/two-graphs-that-scream-list-your-house-today/

Historically its been said that six months’ worth of inventory is ‘normal’ and demonstrates a healthy market.  But it doesn’t take into consideration the buyers’ behavior in a tight-inventory environment, and how the internet has supercharged the dissemination of new listings.

I’d say about 3 months of inventory would indicate a healthy market today.

Let’s break it down by price range too, because different segments are hotter.

NSDCC Detached-Home Inventory:

Price Range
# of Active Listings
# Sold in June
A/S = Months’ of Inventory
0-$800,000
111
66
1.7
$800-$1.4M
299
164
1.8
$1.4M-$2.4M
280
71
3.9
$2.4M and up
398
30
13.3

Sellers can adjust accordingly – the lower your price point, the more likely you will be able to sell for retail, or retail-plus. If you are in the upper region, you should undercut the competing listings nearby because, well, how should we say it, your market is bloated-plus.

Get Good Help!

Posted by on Jul 8, 2015 in Jim's Take on the Market, Market Buzz, Market Conditions, North County Coastal, Sales and Price Check | 0 comments

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