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Are you looking for an experienced agent to help you buy or sell a home? Contact Jim the Realtor!

Jim Klinge
Cell/Text: (858) 997-3801
klingerealty@gmail.com
701 Palomar Airport Road, Suite 300
Carlsbad, CA 92011


Category Archive: ‘Market Conditions’

Stagnant City For Years?

Rich didn’t sound any alarms in his most-recent post, and he is among the most neutral observers – he’s not in a real-estate-related profession.  He said:

So, there’s nothing extraordinary or panic-worthy here… the market is a good amount weaker than it was in recent times, but that’s coming from a very hot market, so things are still very much in the realm of normalcy at this time.

You can see why.  The inventory remains relatively low, and it wouldn’t take much for it to plunge again.  Rich made the point that with both rates and prices higher, we may have reached the tipping point, but if one or both were to relax a bit, the current inventory would thin out.

You can see in the graph above that the inventory peaked in the middle of the year previously, when in 2018 it’s kept growing.  We may just have more sellers waiting longer into the year before cancelling their listing for the holidays.

This graph doesn’t trigger any alarms either:

More factors that will create more Stagnant City, instead of a downturn:

  • The county population has grown by roughly 300,000 people already this decade, and is expected to grow by another 600,000 people by 2050.  Home building is so anemic that we will be short 150,000 homes by then!
  • The move-up market is comatose.  Prices have gone up so fast that it is miracle work trying to make sense of moving up – you really have to have a good reason, and loads of money.  My rule-of-thumb is still in effect – you need to spend 50% more than the price of your old home to have it work (if you sell your a million, you can’t stay in the same area and spend $1.1 million – there isn’t enough additional benefit – maybe an extra bedroom?).  There is too big of a delta between the purchase prices for someone who bought at $800,000 and can sell now for $1,000,000 who then needs to spend $1,500,000 to get enough benefit.
  • Virtually nobody knows different market conditions than what we’ve had this decade.  Anybody who got into this in the last nine years has only known a seller’s market, and the rest of us are too old to remember!
  • Buyers don’t lowball, instead, they just walk away – which doesn’t give overly-optimistic sellers any feedback on price.  They just keep waiting for that magical nuclear family with 2.2 kids to show up tomorrow.
  • The trend for agents to be on salary or lower commissions means they aren’t going to work too hard – and won’t employ the expertise to create solutions.
  • There are just enough sales to keep everybody optimistic!

The total number of NSDCC listings are steady, in spite of more ‘re-freshing’ than ever:

Year
Number of Listings between Jan 1 and Sept 15
2013
3,899
2014
3,755
2015
4,018
2016
4,150
2017
3,728
2018
3,763

As long as fewer people want to sell, expect more of the same.

Posted by on Sep 18, 2018 in Jim's Take on the Market, Market Conditions | 18 comments

Pricing Plateau

Hat tip to Rob Dawg who sent in this example of what’s happening in most markets – lower-end prices are holding, and it’s softer in the higher-end markets.

But because the higher-end sellers typically have more horsepower, and aren’t going to ‘give it away’, prices could just stagnate, instead of dropping.

You could call it a levitating market too, and many will think that it’s just a matter of time before pricing turns south.

Here are reasons why prices are sustainable:

  • We have newer agents representing the buyers.  Even if they have nine years experience, they’ve never seen anything but a seller’s market.  If their buyers don’t like the price, they just pass on the house, instead of making a low offer.
  • Rarely is a seller motivated enough that they might consider a lowball offer. You’re lucky if you get a call back, let alone a counter-offer.
  • Agents are looking to provide less service, not more.  The trend is to capture the consumer’s contact info, send it to the call center, and have dialers hound them until they buy or die.

  • Buyers are so used to pressing a button to transact everything else that they don’t even know they need good help.  All buyers and newer agents know how to do is to find a decent house and process the order.
  • With traditional, discount, and disrupter agents all offering less expertise, the fixers stand virtually no chance of selling – they are too much of a turnoff to buyers who are essentially do-it-yourselfers.  It’s too easy to skip them.
  • If fixers aren’t selling, then just the good-to-excellent homes have a chance, and buyers are typically willing to pay close to list for those.
  • If there were a couple of sales in the neighborhood that were lower, the vast majority of potential sellers would quit, rather than panic. When their motivation is already suspect, it won’t take much for them to wait until some mystical time in the future when they can sell for that extra 5% to 10%.
  • Buyers who go straight to the listing agent are in effect, unrepresented, and will just end up paying retail.
  • Off-market properties would only sell if they get their price.
  • Sellers who can’t get their price can always rent for astronomical prices, and try again next year.

Combine those together and it’s easy to see how prices will stall, or could even drift upward with only the creampuffs selling.  The inventory counts won’t matter either, because if they grow, it will just mean a sea of OPTs lying around, nothing more.

With a healthy economy and no foreclosures, there isn’t any pressure on sellers to dump and run. Besides, where are they going to go in such a hurry?

It will be a binary market – buyers will say yes or no.  Pricing should stay about the same, but if buyers were to dig in, then sales could be affected.  Keep an eye on the sales count – they are the precursor, and they’ve been holding up nicely the last couple of months (at least between La Jolla and Carlsbad).

Posted by on Sep 9, 2018 in Jim's Take on the Market, Market Buzz, Market Conditions, North County Coastal, Sales and Price Check | 1 comment

The Real Estate Business, 2018

People are wondering where real-estate-selling business will go.

The Uber Real Estate yesterday proved to be fake news – they aren’t affiliated with the real Uber – but they did follow a familiar theme; bashing the traditional realtor model.

Virtually every disrupter does the same thing, accusing regular agents of charging too much for doing too little.  Then they claim to do the same thing (full service) for less money.

But nobody has offered a different way to sell homes.  Why? Because there isn’t any mystery about the process; it is what it is.

Sellers decide how much help they want and need to expose their home to the marketplace, and handle the details of getting to the finish line.  Buyers review the offerings, and decide how much help they want and need to buy one.

That’s it – that’s the process.

HOW MUCH HELP DO PEOPLE WANT?  DO THEY KNOW WHAT THEY NEED?

Because nobody in the business does much to expose what they actually do to sell homes, the difficulty of buying and selling is a mystery.  As a result, it looks easy – easier than it really is, especially as we’re transitioning into new and relatively unknown market conditions.

They don’t know how much help they will need because they under-estimate the difficulty.  Sellers have sold cars and other items in their life, and take pride in knowing a few things about their world. Buyers have rented homes before – how hard can it be to buy one?

Disrupters ignore the difficulty too, and claim their Full Service is all you need.

But we’re in an era where the difficulty is getting harder, as the disrupters are making it sound easier – and cheaper.

As a result, the consumers (sellers and buyers) are under-served.  Some don’t think they want much help, if any.  This includes the sellers who think that paying less for limited exposure will still net them the same money, and the buyers who go to the listing agent direct – thinking they will get a better deal.

Traditional realtors could make their stand by mounting an effective advertising campaign to demonstrate the truth about the difficulty, and how important it is to get good help.  It’s what consumers need to hear – and then find the appropriate service provider.

Without that guidance, consumers will select their realtor like they buy everything else in the Amazon era – rush a cursory review of the choices, and then grab one based on chance and luck, not thorough research.

Why don’t the traditional realtors step up to the microphone?  Because they haven’t had to yet.

But when they do, they will be faced with an interesting decision.  Do they take the high road, and educate consumers properly?  Or jump into the swamp?

Let’s hope for more consumer education.  We have more choices of service providers than ever, but less truth!

GET GOOD HELP!

Posted by on Sep 7, 2018 in About the author, Jim's Take on the Market, Market Conditions, Realtor, Why You Should List With Jim | 1 comment

Susie’s Move

Our long-time reader (and California transplant) Susie is moving into a new home in Boise, Idaho.  She has been preparing to put her current Boise home on the market, and expected the RV garage would help propel the sale.

Here is her report:

Sales have slowed here (How could they not?) but still only 1.2 months of inventory.  Putting my home on market for $399,900. Comp across the street went pending at $428,900. ( New 4/2.5, 2,250 SF with bay RV garage).

I only have 1,971 SF. My agent Luke said from $399,900 to $415k, up to me. I should be only single level w/40-ft RV garage on market. Eleven on market comparable.  Hoping for multiple offers, (always on my RE bucket list), but w/ kids already back at school,  I dunno.

The results:

1. Listed house Friday for $399,900.

2. 1st showing that night: 7-7:30 pm.

3. 2nd showing scheduled for Monday afternoon as they left town for holiday.

4. My agent Luke asked if Sunday showing was ok as they came home early.

5. My beloved neighbors said we could hang out in their backyard next door during showings as Moosh (my cat) gets sick in cars.

6. Sunday showing lasted from 5:30-6:30 pm.

7. Luke called yesterday morning: “You called it! Offer came in!”

8. Luke said he’s never had it happen this quick with only the second showing  (100’s of transactions).

9. Ridiculously clean offer: List price, no contingencies.

10. We move to new home October 5th.

The photographs were stunning, and I staged it as well as I could.

Sometimes life works out perfectly, just as you projected. 🙂

She wanted to have a smooth transition and not have to worry about a softer market – and she had her price reflect it!

Posted by on Sep 4, 2018 in Bubbleinfo Readers, Jim's Take on the Market, Market Conditions | 6 comments

Housing and Household Formation

This work by the Fannie Mae Research team suggests that there is further divide between the affluent, and everyone else.

Their trend shows that people who are having families are those who can afford a house too.  Renters are having to choose, or are going with neither.

http://www.mortgagenewsdaily.com/08172018_fannie_mae_forecast.asp

Posted by on Aug 21, 2018 in Jim's Take on the Market, Market Conditions, The Future, This Is America | 2 comments

“The business model is flawed”

They charge even less in America, and you need good help to handle the load:

“Broke” real estate agents are quitting British disrupter Purplebricks in droves as the fixed-fee agency’s low-margin, high-turnover business struggles to achieve enough sales amid a slowing Australian housing market.

Research by The Australian Financial Review found at least 27 agents had quit Purplebricks Australia since March with overall agent numbers now down to 88 from 105 reported by the company in October when it filed its British interim results.

Purplebricks territory owners (franchisees) and agents, who spoke to the Financial Review, said they were struggling to make a living and were preparing exit paths after the $100,000 to $180,000-a-year salaries they were told they could earn failed to materialise.

Employment contracts show Australian agents earn just over $1000 out of the $5000 to $6000 upfront fee vendors pay when they list with the Purplebricks.

Internal sales figures obtained by the Financial Review for NSW – where the market has slowed the most – paint a picture of struggle for many.

They show that 15 agents undertook a combined 768 home appraisals between February and April, but have so far secured just 189 listings between them

While two of these agents have 72 instructions between them, the remaining agents have won between zero and 18 new listings each over the three-month period.

“The concept is brilliant, but the business model is wrong for Australia,” said former Purplebricks Newcastle agent Steve Bashford, who quit in May. “There is a big difference between what they promised us and what we achieved.”

Many other current agents and franchisees, who asked not to be named, made similar observations.

“There’s no money in it. The business model is flawed,” said a current franchisee.

“I’ve sold 50 properties in 18 months and I’m broke,” said another agent who recently quit.

Apart from the $1000 instruction fee, agents can earn additional fees if a customer arranges a Purplebricks home viewing or signs up for a mortgage with one of its partners.

However, much of this additional income has vanished as franchisees have had to hire and pay sales assistants to help clear the backlog of listings.

In addition, agents told the Financial Review, Purplebricks clawed back money from them if a customer complained and obtained a refund.

They also said the company had been “turning off postcodes” in places such as Sydney’s eastern suburbs without notice as agents battled to manage their ever-growing number of unsold listings.

According to its Australian website, since launching in September 2016, Purplebricks has secured more than 5200 listings and sold more than 3600 homes. It currently has 1563 properties for sale.

It reported a £5.1 million loss from its heavily marketed Australian business for the six months to the end of October 2017.

Read More

Posted by on Aug 11, 2018 in Jim's Take on the Market, Listing Agent Practices, Market Conditions, Realtor, Realtors Talking Shop | 1 comment

San Diego Tiered Pricing

These are through May, and though all three are at new record levels, we should see the usual year-end leveling the rest of the way:

Posted by on Aug 10, 2018 in Jim's Take on the Market, Market Conditions, Sales and Price Check, Same-House Sales | 0 comments