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Category Archive: ‘Market Conditions’

San Diego’s Pending Index Rises

pending index

Work with an agent who is well-versed in handling multiple offers!

http://www.car.org/newsstand/newsreleases/2016releases/may2016pending

Pending home sales in Southern California as a whole rose 5.6 percent from May 2015 and 2.4 percent from April, thanks to year-over-year gains of 6.9 percent in Los Angeles County and 6.2 percent in San Diego County. Orange County experienced a 1.8 percent decrease from the previous year.

In a separate study, California REALTORS® responding to C.A.R.’s May Market Pulse Survey reported slower growth in floor calls, listing appointments, and open house traffic, reflecting slowing market activity. Despite the lagging indicators, the percentage of properties selling above asking price reached an all-time high and the number of offers per property rose.

• The share of homes selling above asking price in May increased to 38 percent, the highest level since the survey began, rising from 32 percent in April. Conversely, the share of properties selling below asking price dropped to 34 percent. The remainder (27 percent) sold at asking price.

• For the homes that sold above asking price, the premium paid over asking price declined for the third straight month to an average of 9.4 percent, down from April’s 9.6 percent and up from 8 percent in May 2015.

• The 34 percent of homes that sold below asking price sold for an average of 10 percent below asking price in May, down from 12 percent in April and up from 7 percent a year ago.

• Nearly seven of 10 properties for sale received multiple offers in May, indicating the market remains competitive. Sixty-five percent of properties received multiple offers in May 2015.

• The average number of offers per property increased to 3.1 in May, up from 2.9 in April and 2.8 in May 2015. The increase in the number of offers was driven by a greater share of transactions that received three or more offers. Moreover, homes priced between $200,000- $399,000 and $750,000-$999,000 saw the greatest increases in three or more offers compared to a year ago.

• About one in four (23 percent) properties had price reductions in May, indicating sellers are pricing their homes more realistically. One-fourth of properties had price reductions in May 2015.

Posted by on Jun 24, 2016 in Jim's Take on the Market, Market Buzz, Market Conditions, Why You Should Hire Jim as your Buyer's Agent, Why You Should List With Jim | 0 comments

Prices Should Be Rising Faster?

houses

The folks at CE are talking about the housing market in the UK, but the principles are similar – if there were more homes selling, it could provide more pricing momentum.

Just keep an eye on sales – demand would have to subside for prices to alter their current trajectory.  From HW:

Home prices have consistently increased around 5% year-over-year for the majority of the last two years, but this percentage could be severely off according to a new report from Capital Economics.

A new housing market update report from Capital Economics shows that given the current housing conditions, past experience suggests that house prices should be rising at double their current rate of around 5%.

Due to the lack of housing inventory, there are more buyers than homes available, which would typical lead to an much higher acceleration in house price growth than where it sits now.

Currently, there is less than five months’ supply in the market, which looking at past data would normally be associated with house price growth of around 10% year-over-year.

So what’s causing this abnormality?

Read full article here:

http://www.housingwire.com/articles/37293-capital-economics-whats-keeping-home-prices-from-rising-even-higher

hpi

Posted by on Jun 20, 2016 in Forecasts, Jim's Take on the Market, Market Conditions | 0 comments

Buyer Tips in a Seller’s Market

buying

Hat tip to bode for sending this in, and noting the importance of #3!

http://www.trulia.com/blog/mistakes-buyers-make-in-sellers-market/

The real estate market fluctuates often, making it tough to predict whether the market will favor buyers or sellers when it’s your turn to buy. If you’re shopping for real estate in a market that currently favors sellers, you need to know some tricks of the trade to help ensure you don’t make any mistakes.

Buyers in a seller’s market can get what they want, but they need to bring their “A” game — buying a house in a hot market isn’t for the indecisive. Here are six common mistakes many buyers make — mistakes that you can learn to avoid — when shopping in a seller’s market.

http://www.trulia.com/blog/mistakes-buyers-make-in-sellers-market/

 

Posted by on Jun 11, 2016 in Jim's Take on the Market, Market Conditions, Thinking of Buying?, Tips, Advice & Links, Why You Should Hire Jim as your Buyer's Agent | 0 comments

One-Story Premiums

2016-04-10 15.23.25

Richard and I were discussing the phenomenon of houses selling for prices that are well-above comps – and how they almost always end up being all-cash sales.

Back in the day, the cash buyers always demanded the best deals – figuring that because they were paying cash, they somehow deserved a better price.  But today, cash buyers are throwing around big money to get what they want.

What do they want?

What do they need?

We know that the one-story homes have always been popular, especially with seniors. Guess who has all the money? Yep – the older set.

But there is more to it. Buyers get pickier as prices go up, and now they want everything.  You can’t blame them – we are at record prices!

My rule-of-thumb has been that one-story houses sell for a 10% premium over two-story houses. But I think the gap is increasing, and for single-level houses that also have the other valued features like 3-car garage, view, and a low-maintenance but attractive yard, there is a combo premium too.

Part of the pricing pressure is due to the inventory differences. Here’s a look at South Carlsbad over the last six months:

Detached-Home Listings in 92009 and 92011

Type
ACT Listings
Avg. LP/sf
SOLDS last 6 mo.
Avg SP/sf
SP:LP
One-Story
26
$425/sf
67
$418/sf
98%
Two-Story
133
$355/sf
301
$337/sf
95%

If you prefer one-story homes, there aren’t many to consider, and the cost-per-sf premium of the solds is 24%!

When analyzing the comps, you can’t compare 1-story and 2-story homes together – they are two separate markets.

Here are two examples of one-story homes listed yesterday:

6678 Cabela, Carlsbad, 92011

6387 Huntington, Carlsbad, 92009

You can buy two-story homes that are 600-800sf larger nearby for the same price – or less.  But because both of these have other premium features (views, lower-maintenance yards, 3-car, and no pools), and the selection of one-story houses is scant, these two stand a good chance of selling promptly!

With 10,000 baby boomers turning 65 years old every day, it’s understandable that one-story homes are fetching a premium, which today appears to be 10% to 20% above two-story homes.

What is the combo premium for the one-story houses with the extras?  It has to be another 10% minimum, and for those that have it all, there is no ceiling.

It means that the method of selling will determine the outcome.

If the seller hires a regular realtor who compares the super-duper one-story to other two-story homes nearby, there will be money left on the table.

This is where the auction format could really pay off. Bidders are uncertain about calculating the value of the extra features, and getting them into a competitive environment will cause them to pay whatever it takes to win.

Get good help – hire a realtor who can evaluate the premiums, and create an auction-like format to ensure top dollar!

Posted by on Jun 11, 2016 in Auctions, Boomers, Jim's Take on the Market, Market Buzz, Market Conditions, One-Story | 1 comment

NSDCC Sales and Pricing, May

In the first four months of this year, the market was a bit lethargic with more new listings and fewer sales than in 2015.

The trend was reversed in May, with fewer new listings but more sales, YoY!

Year
New Listings
Closed Sales
2012
425
289
2013
490
362
2014
497
269
2015
512
287
2016
477
305

All it means is that more participants were able to agree on price for a stretch.

I don’t think buyers are intimidated by the lack of inventory any more – they’ve learned to live with it, and are willing to be patient.  But they have their eye on the calendar too, so there could be a flurry of activity in June as families want to get in and get settled before school starts again.

Posted by on Jun 3, 2016 in Jim's Take on the Market, Market Conditions, North County Coastal, Sales and Price Check | 0 comments

Miami Condo Market

fh

Here is a hyper-example of how a boom unravels – first there is an extended stagnation because sellers don’t believe it, and besides, they’re not going to give it away. But their unwillingness to sell for what the market will bear only emboldens the buyers to wait longer.

Thankfully, we only have 6,507 houses and condos for sale in a county of more than 3.2 million people!

http://www.bloomberg.com/news/articles/2016-05-27/miami-s-condo-frenzy-ends-with-inventory-piling-up-in-new-towers

Miami’s crop of new condo towers, built with big deposits from Latin American buyers and lots of marketing glitz, are opening with many owners heading for the exits.

A third of the units in some newly built high-rises are back on the market, though most are listed for more than their owners paid in the pre-construction phase. At the current sales pace, it would take 29 months to sell the 3,397 condominiums available in the downtown area, according to South Florida development tracker CraneSpotters.com.

With the U.S. dollar strong, South American investors who piled into the downtown Miami market after the real estate crash are now trying to unload their recently built condos, adding inventory to an area where 8,000 units are under construction and nine towers were completed since the end of 2013. Some are offering homes at a loss as demand cools. Condo purchases from January through April slid 25 percent from a year earlier, while the average price fell 6 percent on a per-square-foot basis, CraneSpotters data show.

“The problem is that investors are no longer buying, and now they’re going to be looking to sell,” said Jack McCabe, a housing consultant based in Deerfield Beach, Florida. “And what buyers are going to replace those other than vulture buyers looking for deals?”

Posted by on May 29, 2016 in Jim's Take on the Market, Market Conditions | 1 comment

Current Market Trends

sf

Here are the thoughts of a two-percenter agent from the Bay Area about her market, which are probably about right.  Instead of wild bidding wars, there might only be one or two offers per house – which will leave sellers’ egos disappointed, but the market will survive.  Plus, more houses won’t sell – let’s face it, only about 60% of NSDCC listings actually close escrow.  P.S.  Have you noticed that most agents seem to be in the Top 1% or 2%?:

http://www.marketwatch.com/story/san-francisco-bay-area-housing-bubble-not-bursting-but-moderating-2016-05-17

The whole story – I bold-italicized the phrases where I had strong agreement:

Real estate markets are moving toward a “new normal” in the San Francisco Bay area. This is according to the local “feet on the street” stories I hear from top Bay Area Realtors.

The Bay Area housing bubble is not bursting. It is changing to what appears to be a “new normal.” Let’s look at the big picture to understand what we believe are the trends driving the current market and how we think they will continue to impact the market in 2016.

1: This is a high-stress market and it will continue

Buying or selling a home is usually prompted by a life event: death, divorce, marriage, relocation, job change and increase or decrease in family. These life events often bring stress and buying or selling a house adds to this stress. Add in the drama of a notably contentious presidential campaign, toss in the uncertainty of the financial markets and then add the pressure of the fast-paced expensive Bay Area market where decisions and offers need to be made quickly.

Unfortunately, all this is here to stay for a while. Yes, any normal person would be hard-pressed not to feel like they were in a tornado.

2: Low inventory of good homes will continue to drive pricing. However, buyer demand is becoming tempered and more deliberate

Yet another reminder that markets invariably change. While our group of top agents acknowledged the low inventory, they also recognized that buyers were becoming much more selective and deliberate. They look, they think and if they don’t “feel it” they move on. “Who cares if there is an offer date?” “Another day and another home will appear.” “Maybe the home won’t sell and we can buy it for less.” If they don’t see the value they pass.

As a client of mine once said during a previous hot market, “This market is so crazy even a burning house will sell.” Not so any more. Many agents believe sellers are seeing the last days when homes with deficiencies will sell quickly for top dollar. Great homes in great locations, priced fairly and marketed properly are selling. However, we are now beginning to see situations where even these homes only have one offer and sometimes, unfortunately, none.

3: Now more than ever you must play to win

While we don’t believe another downturn is on the horizon, having a Realtor with strategies to address even the slightest of market corrections is critical to success whether you are a buyer or seller. A San Francisco agent in our group told a story of a home with 12 disclosure packets out to potential buyers. When the offer date came his buyer did not make an offer. What happened? The buyer thought the home would sell outside his price range. Sadly for him, the home sold below what he was prepared to spend. The moral to the story is “nothing ventured nothing gained.” We are entering into a shifting market. Don’t be afraid to make an offer.

Finally: The bottom line is we are moving to a ‘new normal’

The “feet on the street” believe that the outlook for the rest of the year remains positive, but moderating, with a continuing but more purposeful demand for Bay Area housing.

Posted by on May 19, 2016 in Jim's Take on the Market, Market Buzz, Market Conditions | 4 comments

Nothing Price Won’t Fix, Part 2

sv1

The Bloomberg story already got picked up by Vanity Fair and realtor.com.  Is this new news, or just what we’ve been seeing around NSDCC for months?  All that matters is what buyers’ perception will be.

http://www.vanityfair.com/news/2016/05/is-the-silicon-valley-real-estate-bubble-about-to-explode

http://www.realtor.com/news/trends/silicon-valley-slowdown/

The realtor.com version:

Silicon Valley is known as one of the world’s most expensive markets. But these days, those shopping for a luxury home in the techie paradise may be able to score a (relative) deal.

Wealthy homeowners are starting to slash prices on the most expensive mansions, which have been sitting on the market a little longer, according to Bloomberg.com. The reductions aren’t quite an everything-must-go fire sale, but they hint that the days of skyrocketing prices may be coming to an end.

That’s due to a topsy-turvy stock market, fewer foreign buyers, and worries that the tech industry could be headed for a slowdown, Bloomberg reports.

For example, the average price of Silicon Valley properties costing more than $3 million was $3.76 million in April—down from $4.12 million a year earlier, according to data provided by the Silicon Valley Association of Realtors®. It rebounded a bit to $3.94 million in the first half of May—but that’s still quite a chunk of change.

Meanwhile, Silicon Valley homes costing more than $3 million stayed on the market a bit longer as well. They were at 30 days in April, a small rise from 26 days a year earlier, according to the association’s data.

“The market is cooling down,” says Realtor® Avi Urban of Keller Williams Palo Alto. He’s seeing interest wane for properties costing more than $4 million.

“It doesn’t mean the market is going to crash tomorrow,” he says. “This is a time where basically we have reached a point where it’s too expensive” for many would-be buyers, and it’s starting to pull down prices.

The median price for all housing types in Silicon Valley’s ritzy Palo Alto is a staggering $2.2 million, according to realtor.com®.

For example, Urban had a two-unit condo property in a prime Palo Alto location in the $2 million range that received only one offer in the first two weeks it was listed. A year ago, he would have expected it to receive more than a dozen bids for 10% to 15% over the asking price.

To compensate, homeowners are lowering the prices of the highest-end residences that aren’t attracting enough potential buyers, says Karen Trolan, president of the Silicon Valley Association of Realtors.

“Everybody gets so excited when the market’s crazy that they push the prices up. They’re testing the market,” Trolan says. And when the homes don’t move, “what they usually do is bring [the costs] down.”

Prices are not dropping much yet, though, on the midddle to low end of the market, say local real estate agents. Stories still abound of a Google employee living in his truck and a San Francisco man residing in a plywood box for $400 a month because they can’t afford the astronomical housing prices. And bidding wars continue to drive up sale prices even higher.

But demand remains high for turnkey, single-family homes and condos at (relatively) affordable price points in good school districts, Trolan says.

“We have a housing shortage here,” Trolan says. “Our homes are still [selling] really well.”

Posted by on May 18, 2016 in Jim's Take on the Market, Market Conditions | 0 comments

Nothing Price Won’t Fix

sv

A pullback in Silicon Valley? It could happen anywhere!

http://www.bloomberg.com/news/articles/2016-05-17/silicon-valley-mansions-linger-on-market-in-real-estate-slowdown

Excerpts:

A custom-built home in the heart of California’s Silicon Valley had its price cut by $500,000 last week after sitting on the market since the end of March — a move that would’ve been almost unfathomable a year ago and a signal that frenzied demand has peaked.

The six-bedroom, five-bath house in Palo Alto — located blocks from Stanford University and the homes of Google co-founder Larry Page and Steve Jobs’s widow, Laurene Powell Jobs — is now listed for $7.5 million. It joins a growing inventory of high-end homes in the area that are taking longer to sell.

“We’ve recently noticed a slowdown,” Jack Woodson, who works at Alain Pinel Realtors in nearby Menlo Park, said on a tour of the house in the Old Palo Alto neighborhood. “Buyers are taking more time to decide about making offers.”

Silicon Valley, the most-expensive U.S. housing market, is seeing a pullback by the wealthiest homebuyers after a four-year real estate boom marked by bidding wars and multimillion-dollar prices. Stock-market turmoil, a drop in foreign investors and concerns of a technology-industry slowdown are cooling demand at the high end, even as interest remains robust for more moderately priced properties.

In Palo Alto, an ultra-wealthy city that’s home to many Google and Facebook Inc. executives, homes costing more than $5 million were on the market for a median of 16 days in April, compared with 11 in the same month in 2015 and 10 in 2014, according to data from Irvine, California-based John Burns Real Estate Consulting. The 11 active listings in that price range as of May 14 have been on the market a median of 30 days.

“The seemingly inexhaustible well of very high-end buyers has proven exhaustible after all,” said Dean Wehrli, a senior vice president at John Burns. “The peak is behind us, and that’s becoming clearer and clearer to builders and buyers.”

“We’re probably moving toward normalization,” said Katharine Carroll, vice president at Pacific Union Real Estate in Palo Alto. “Buyers see that they have a few more options. They don’t feel the urgency that they have to decide on something right away and put an offer in. They can kick the tires a little bit more.”

http://www.bloomberg.com/news/articles/2016-05-17/silicon-valley-mansions-linger-on-market-in-real-estate-slowdown

Posted by on May 17, 2016 in Forecasts, Jim's Take on the Market, Market Buzz, Market Conditions | 1 comment