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Category Archive: ‘Market Conditions’

One-Story vs. Two-Story

This tends to be a blog for analytical folks, so let’s further dissect the market stats to assist in making better comparisons and decisions about home buying and selling.

We’ve discussed how the supply and demand for one-story homes is quite different from the staired variety.  Older folks are hanging onto their single-levels so the supply is lower, and with 76 million baby-boomers heading into retirement with bad knees and arthritis, the demand is growing.

Our MLS imposes a cap on the number of listings for research at 650.  So I broke down the numbers below into price categories to help demonstrate the differences in pricing between one-story homes, and not-one-story (two-story, three-story, four-story, split-level, and other):

Pricing of NSDCC Annual Sales Between $1,000,000 – $1,400,000

Year
One-Story Avg $$/sf
Non-One-Story Avg $$/sf
2013
$586/sf
$381/sf
2014
$616/sf
$407/sf
2015
$612/sf
$389/sf
2016
$638/sf
$389/sf

Pricing of NSDCC Annual Sales Between $1,400,000 – $1,800,000

Year
One-Story Avg $$/sf
Non-One-Story Avg $$/sf
2013
$661/sf
$468/sf
2014
$693/sf
$468/sf
2015
$701/sf
$466/sf
2016
$710/sf
$478/sf

It’s probably not a big surprise to anyone reading this that one-story homes are more popular. But let’s note two important points:

  1.  One-story homes are carrying the load, statistically – their pricing is appreciating at a steady clip, while the pricing of two-story homes has been flat as a pancake.
  2.  Only use one-story comps to valuate the single-level homes, and likewise, only use two-story comps to put a price on a two-story home.  The pricing of one-story homes is so much higher that, if included in a two-story analysis, they will skew the pricing artificially higher.

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Posted by on Jan 10, 2017 in Jim's Take on the Market, Market Conditions, One-Story | 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

Buying A Home

Food for thought – he doesn’t get into the benefits of raising kids in the same home, which probably warrants a paragraph or two – see comment section too:

http://www.nytimes.com/2017/01/06/opinion/the-home-buying-decision.html

I’ve been thinking about the big decisions in life: How do people choose careers, colleges, spouses and towns. Of those decisions, buying a home ranks with the most difficult.

It is difficult emotionally. Like a lot of the biggest decisions, it is more emotional than coldly rational. People generally don’t select a house; they fall in love with it.

Part of that falling-in-love process is aesthetic: the sense you get within 10 seconds of walking into a place that it just feels happy and right. Part is aspirational: When people fall in love with a house, they aren’t really falling in love with the walls and the roof; they are falling in love with a beautiful vision of their future lives.

Read full article here:

http://www.nytimes.com/2017/01/06/opinion/the-home-buying-decision.html

Posted by on Jan 8, 2017 in Jim's Take on the Market, Market Conditions, Thinking of Buying? | 2 comments

San Diego County Annual House Sales

For those looking for a more binary view of market conditions (hot/cold, good/bad), let’s compare San Diego County detached-home sales for 2016 to the previous years.

San Diego County Annual Detached-Home Sales

Year
No. of Sales
Median Sales Price
Avg. Days on Market
2012
25,023
$383,000
76
2013
24,910
$455,000
50
2014
22,101
$495,000
47
2015
23,732
$529,000
42
2016
23,802
$560,000
37

The median sales price has gone up 46%, yet the number of sales were only 5% lower in 2016 than in 2012. Last year, sales were higher than the last two years, and the average days on the market are half what they used to be

Those are fantastic market conditions!

Could the momentum keep going? Will it?

There were good reasons that the real estate market has tanked previously. In 1981, mortgage rates hit 18%, when just four years prior they were in the 8s – that is sticker shock! In the early-1990s, we had the Savings & Loan crisis when they gave away all the foreclosed houses. Of course, in 2006-2008 we had the Mozilo Crisis, where exotic mortgages caused a panic.

It would take a catastrophic event to topple our market now. Sales and prices may bounce around, but the baby-boomer wealth distribution program will juice the market for decades. The final gift of boomers will be to make sure their children all have houses, and even Trump won’t screw that up. If anything, the hysteria will cause more boomers to worry about their kids!

Here are the NSDCC annual sales, broken down into North and South:

La Jolla-Del Mar-SB-RSF-Carmel Valley Detached-Home Sales

Year
No. of Sales
Median Sales Price
Avg. Days on Market
2012
1,364
$1,175,000
93
2013
1,462
$1,350,000
61
2014
1,285
$1,445,000
63
2015
1,301
$1,500,000
63
2016
1,369
$1,520,000
58

Carlsbad-Cardiff-Encinitas Annual Detached-Home Sales

Year
No. of Sales
Median Sales Price
Avg. Days on Market
2012
1,790
$684,042
70
2013
1,756
$770,500
41
2014
1,564
$815,000
41
2015
1,723
$870,000
37
2016
1,639
$919,000
34

What could cause the market to tank, besides a catastrophic event? We’d have to run out of buyers. But if there is any place in the good ol’ USA that people will keep coming, it’s San Diego!

Posted by on Jan 4, 2017 in Boomer Liquidations, Boomers, Jim's Take on the Market, Market Conditions, North County Coastal | 15 comments

American Dream or Nightmare?

Get the other side of the argument at ‘the American nightmare’ link below:

While opponents of homeownership claim it’s “the American nightmare,” self-made millionaire David Bach is doubling down on his faith in real estate.

He thinks that not prioritizing homeownership is “the single biggest mistake millennials are making.”

Buying a home is “an escalator to wealth,” he tells CNBC.

Young adults in particular aren’t hopping on this escalator, and it’s a costly mistake, Bach warns: “If millennials don’t buy a home, their chances of actually having any wealth in this country are little to none. The average homeowner to this day is 38 times wealthier than a renter.”

The self-made millionaire is quick to say that the smartest investments he’s ever made have been the three homes he’s purchased. He tells CNBC: “I first bought a home in San Francisco. It skyrocketed in price. I moved to New York and bought another home. It skyrocketed in price. My net worth has gone up millions and millions of dollars, simply because I’ve lived.”

Bach argues that you have to live somewhere for the rest of your life, so you might as well invest in a home that you could own permanently.

As he writes in ‘The Automatic Millionaire’, “As a renter, you can easily spend half a million dollars or more on rent over the years ($1,500 a month for 30 years comes to $540,000), and in the end wind up just where you started — owning nothing. Or you can buy a house and spend the same amount paying down a mortgage, and in the end wind up owning your own home free and clear!”

If you want to get in the game of homeownership, start by crunching the numbers, Bach says: “Actually do the math. Look and see what things costs, starting with the smallest options. This way, you’re really clear on your goals and you won’t just say to yourself, ‘I’ll never afford this.'”

A good rule of thumb is to make sure your total monthly housing payment doesn’t consume more than 30 percent of your take-home pay. He also recommends having a down payment of at least 10 percent, though more is always better. Finally, recognize that “oftentimes, buying your first home means you’re not buying your dream home,” Bach tells CNBC. “You’re just getting into the market.”

A lucrative market, that is. “The fact is, you aren’t really in the game of building wealth until you own some real estate,” Bach writes.

Read the full article here:

http://www.cnbc.com/2016/12/30/self-made-millionaire-buy-a-home.html

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Posted by on Jan 3, 2017 in Jim's Take on the Market, Market Conditions | 8 comments

Inventory Watch

The last two weeks were impacted by rain, yet both had more new pendings than new listings!  We are heading into 2017 with momentum, but that, and about $5 will get you a cup of coffee if sellers come out too optimistic.

The one NSDCC market that is guaranteed to be hot are the homes priced under $800,000.  There are only 29 for sale today, the lowest reading EVER!

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

Read More

Posted by on Dec 26, 2016 in Inventory, Jim's Take on the Market, Market Conditions | 0 comments

Pending Home Sales

2016-11-12-14-18-43

We have already closed 202 NSDCC sales this month, which is the most November sales since 2012 – and we still have 349 sales pending!

Pending home sales eked out a 0.1 percent gain in October.  The National Association of Realtors® said its Pending Home Sales Index (PHSI) barely managed a second straight month of gains, rising to 110.0 from a downwardly revised 109.9 in September (the previous reading was 110.0, which would have made today’s reading “unchanged,” officially).  Even though NAR’s chief economist Lawrence Yun called the increase “minuscule,” it still pushed the index to its highest level since last July.  The index was also 1.8 percent higher than In October 2015 when it stood at 108.1.

The PHSI is a forward-looking indicator based on contracts for home purchases.  Those signed contracts are generally expected to become closed transactions within two months.

 Yun said, “Most of the country last month saw at least a small increase in contract signings and more notably, activity in all four major regions is up from a year ago. Despite limited listings and steadfast price growth that’s now carried into the fall, buyer demand has remained strong because of the consistently reliable job creation in a majority of metro areas.”

Regarding the continuing limited housing supply, Yun explained that the unwelcome but expected seasonal retreat in new listings is arriving at a time when price growth remains around triple the pace of wages and properties continue to sell at a much faster pace than a year ago. As an indication of the imbalance between supply and demand, 40 percent of sales in October sold at or above list price, an increase from 33 percent a year earlier. 

“Many of the successful shoppers in October likely had to move fast and outbid others for the few listings available in the affordable price range,” explained Yun. “Those obtaining a mortgage last month were likely the last group of buyers to lock in a rate near historically low levels now that rates have marched to around 4 percent since the election.”

Read full article here:

http://www.mortgagenewsdaily.com/11302016_pending_home_sales.asp

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Posted by on Nov 30, 2016 in Jim's Take on the Market, Market Conditions, North County Coastal | 0 comments

High-Paid Renters

renters

The good doctor pointed out that there are more high-paid renters in San Francisco than homeowners now:

http://www.doctorhousingbubble.com/wealthy-renter-households-in-san-francisco-outnumber-owners/

The graph shows 20% of renters in San Diego are making more than $100,000 per year – are those the people you see at open houses every weekend, hoping to find the right house at the right price?  Certainly a portion of those renters are in the hunt, which should keep the market going for now.

Posted by on Nov 29, 2016 in Jim's Take on the Market, Market Conditions | 4 comments