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Category Archive: ‘Market Conditions’

‘Soft’ Market

I showed 20-25 properties to buyers over the weekend, which always makes me cringe because I know what will follow – those incessant ‘feedback’ requests.  In a hot market, they come by email – listing agents don’t care what you think then, because they know the property will be selling any minute.

But these days you get phone calls.

The calls usually come from assistants, and, for the most part, they don’t care what the feedback is, they just need to write something down.

But occasionally the actual agent will call, which hopefully means somebody has some real motivation over there.  I like to turn these into two-way conversations and ask questions to see if the agent might be realistic.

Agents love to gush about how many showings they’ve had, and as a result, how a sale must be right around the corner.  You and I know that a lot of showings but no offers means a lot of buyers not interested – at least not at this price.

But most agents are slow to accept that reality, so I’ll follow it up by suggesting that the market must have turned soft and see what they say.  You can’t assume that it’s obvious to everyone, even those in the business.  Besides, after the run we’ve had, most realtors think the market is soft if they don’t get multiple offers in the first week!

But what is a ‘soft’ market?

From Investopedia:

DEFINITION of ‘Soft Market‘ – A market that has more potential sellers than buyers. A soft market can describe an entire industry, such as the retail market, or a specific asset, such as lumber.

This is often referred to as a buyer’s market, as the purchasers hold much of the power in negotiations.

The market will feel ‘soft’ to sellers and agents who are getting showings but no offers.  They will blame the ‘market’, as if the problem is outside of them.

But we know what the real problem is – sellers got a little too enthusiastic about their list price, and buyers are now balking.  For example, see below.


Most agents are reporting no offers on their listings, and you can see why.  There isn’t enough pricing momentum to propel buyers to keep paying more.

How soft is it?

Probably 5% to 10% – but do you deduct from today’s lofty list prices, or from the last comps?  Results may vary!


Posted by on Sep 8, 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

San Diego #6 Hottest in U.S.A.


Housing is sizzling in the last few weeks before the end of summer. According to®, it’s the “hottest August in a decade” for real estate.

Homes are selling 2 percent more quickly than a year ago and prices are reaching new highs. The median home was listed for $250,000 on®, which is 8 percent higher than a year ago.®’s research team did its annual check up on housing markets across the country to identify which metros are seeing homes sell the fastest and garnering the most listing views (based on® traffic).

New cities added to its list this month included Kennewick, Wash., and Waco, Texas. Detroit also notably moved up in the rankings this month, up four spots to land in the top 10.

Here are the 20 real estate markets that topped®’s list in August:

  1. Vallejo, Calif.
  2. Dallas
  3. Denver
  4. San Francisco
  5. Stockton, Calif.
  6. San Diego
  7. Columbus, Ohio
  8. Waco, Texas
  9. Detroit
  10. Sacramento, Calif.
  11. Fort Wayne, Ind.
  12. Yuba City, Calif.
  13. Modesto, Calif.
  14. San Jose, Calif.
  15. Fresno, Calif.
  16. Colorado Springs, Colo.
  17. Santa Cruz, Calif.
  18. Kennewick, Wash.
  19. Santa Rosa, Calif.
  20. Nashville, Tenn.

Posted by on Sep 1, 2016 in Jim's Take on the Market, Market Buzz, Market Conditions | 2 comments

More Boomer


The author calls for a better look at how baby boomers impact the housing market, which is great.  Talk to realtors who work the street – we are the ones who have the direct one-on-one contact with buyers and sellers.

Excerpted here:

Location, location, location. It’s the long accepted golden rule of real estate. Could it be possible that the golden rule of real estate is being rewritten to focus on the golden years?

The National Association of Realtors does a great job studying real estate trends and providing data that could be powerful to local municipalities if interpreted correctly and applied strategically.

In its 2016 Home Buyers and Sellers Generational Trends report, the data showed that sellers ranging in age from 61 to 90 pick the same top three choices as a reason for selling.  This homeowner demographic chose to sell to move closer to family and friends, downsize, or retire.

That’s not new news. Older homeowners have always sold their homes to move closer to family and friends, downsize, or retire. What’s new is that older homeowners may make up the majority of the homeowners in your town. That could mean an oversupply of inventory, which could mean longer market times or falling prices, even if activity is strong and the number of units sold is up.

As it continues to unfold, some communities will feel the pain of falling prices fueled by oversupply of inventory as seniors need to sell in numbers larger than younger buyers are moving in. Some communities will feel the pain of rising prices fueled by low inventory and increased demand if they are a retirement destination and the beneficiary of relocating seniors. Some communities will boom if buyers both young and old penetrate their market, benefitting from the enormity of both the baby boom and the echo boom.

As a nation, we’re accustomed to the real estate market moving in concert, either up or down, in response to a variety of economic factors. The market has never really had simultaneous hot spots and cold spots with no clear economic indicator, and it is confusing because local age distributions are not currently being factored into the statistics, so demographics are not part of the conversation.

Let’s change that. Here is an all-call for housing analysts to look at the data through a different pair of glasses as the boomers move through their aging years, so the public is more educated on this dynamic. Municipal planners need to analyze their age distribution relative to housing inventory so residents understand a local supply or demand issue.

In addition, builders need to identify markets that are drawing more than their fair share of one or both generations to accurately project demand, which may not be the same communities that needed new construction in the past.



Posted by on Aug 31, 2016 in Boomer Liquidations, Boomers, Jim's Take on the Market, Market Buzz, Market Conditions, One-Story | 0 comments

Moving Inland


As money and affluence continue to invade the coasts, those not so fortunate will be making choices.  Warning to all who are thinking about leaving California – it is virtually impossible to move back.  But you can always visit!

As businesses look for cheaper places to expand, job growth in the middle of the country will begin attracting more residents, according to experts surveyed in the latest Zillow® Home Price Expectations (ZHPE) Survey.

That would reverse a trend over the last decade that drew many to the coasts following strong job markets, with more employment and income growth. Over half of experts surveyed said they don’t expect migration to the coasts to continue indefinitely. Of those, 56 percent pointed to jobs and 24 percent said high housing costs on the coasts will drive residents inland.

Recovery from the housing boom and bust has looked very different for Middle America and coastal America. While markets on the East and West coasts experience rapidly rising home values and strong job markets, markets in the Rust Belt and Midwest are moving more slowly; negative equity is still prevalent and job growth is minimal.

The quarterly ZHPE survey, sponsored by Zillow and conducted by Pulsenomics LLC, asked more than 100 housing experts about their expectations for the housing market.

The experts were also asked if they thought the distinct split between Middle America and the two coasts would reverse. Over half of the respondents said this trend has already begun to reverse, or expect it to in the future. A quarter of respondents believe this trend is a permanent shift, and 11 percent believe the migration to the coasts is an illusion.

Of the reasons experts predicted people would move back to the middle of the country, job growth was most popular. Just over 20 percent said people would migrate inland in search of more affordable housing, and 13 percent said Americans will start to seek the traditional lifestyle that the middle of the country has to offer. Only 2 percent said climate change will force residents away from the coasts.

“Since the Recession, employment has boomed in relatively expensive coastal areas, often attributed to a shift in preferences among workers – especially millennials – but also facilitated by soft labor markets that have resulted in a plentiful supply of available workers,” said Zillow Chief Economist Dr. Svenja Gudell. “Now, as labor markets tighten and the country approaches full employment, employers will have to look elsewhere to keep costs in check. For some businesses, this will mean relocating away from expensive coastal areas to more affordable interior communities. Sooner or later workers will follow the jobs, providing an impulse to local housing markets.”

Overall, the experts surveyed predict home price appreciation across the country will be up over 4 percent year-over-year by the end of 2016. They expect home prices to slow down over the next four years and by the end of 2020, they predict home prices will grow at an annual pace of just 2.9 percent.

Posted by on Aug 27, 2016 in Forecasts, Jim's Take on the Market, Market Conditions | 2 comments

Canada Real Estate


Sound familiar?

A year ago, when Bank of Canada Governor Stephen Poloz cut interest rates for the second time in six months, we knew we’d have to take the bad with the good. Slashing the bank’s overnight rate in half to 0.5 per cent would surely further inflate regional real estate bubbles. But that, we figured, was just the price to pay in order to fuel non-energy exports and a sustainable recovery.

A year later, we’re still waiting for the second half of the equation to kick in. The real estate sector keeps setting new records. Indeed, it’s now Canada’s biggest industry, leaving Alberta’s oil patch and Ontario’s manufacturing heartland in the dust. Ongoing weakness in those latter sectors is generating talk of yet another rate cut, no doubt to the delight of the friendly neighbourhood broker who keeps urging you to sell.

Hewers of wood and drawers of water, not. Canada is now a real estate nation, with little else to keep the economy from sinking into an even deeper funk. Gross domestic product shrank 0.1 per cent in May, and that’s after excluding the negative impact of Alberta’s wildfires on oil sands output. Yet, we’re still buying houses like there’s no tomorrow.

And there may not be a tomorrow for the suckers who buy in at the peak, whenever it comes.

The so-called economic rotation from oil to manufacturing exports that rate cuts (and the related decline in the Canadian dollar) were supposed to produce has not only failed to materialize but policy makers have pumped helium into an already overheated real estate sector that is masking structural weaknesses in the economy and setting us up for a bigger fall.

It’s “difficult to believe that any progress has been made in terms of economic rotation. Indeed, the opposite appears to be the case, given real estate’s increasingly large share of economic output,” TD Bank economist Brian DePratto noted in a Thursday report. “Rising home prices do have positive knock-on effects for consumer spending, but over-reliance on the real estate market is hardly the sign of a healthy economy.”

The real estate sector’s share of GDP has grown 0.4 percentage points in the past two years alone, TD noted, while the share of everything else (including oil and manufacturing) has shrunk. Going back 10 years, to May, 2006, manufacturing output is down 11 per cent in real terms and mining (including oil) extraction is flat.

But real estate’s contribution to GDP has surged 35 per cent since then.

When you tack on to all those real estate fees the financial services that are bought and sold as part of real estate transactions, and the home renovations undertaken by prospective sellers or those unable to trade up to bigger or better houses as a result of surging prices, and it’s not going out on a limb to suggest that the sector has grown too big for the country’s own good.

Who’s to blame? The very policy makers now trying to cool the market with demand-side measures that instead risk crashing the entire economy. Not only have low interest rates and restrictive land-use policies created an affordability crisis by driving prices for detached homes through the roof, any sudden reversal of those policies would take the floor out of the market.

Read full article here:

Posted by on Aug 25, 2016 in Jim's Take on the Market, Market Conditions | 2 comments

Dogs and Real Estate


Dogs are people too! A few examples of how dogs influence real estate decisions. H/T to daytrip:

Two excerpts:

“These are people who have a great deal of empathy,” Dr. Kagle said, “so they worry about their pets as they would worry about another human being — though some have been known to carry it to extremes.”

That group might well include the couple whose elderly dog had a pet peeve about being stuck in New York traffic. “They had a weekend house and they wanted their primary residence to be close to the F.D.R. so they could get out of town quickly for the sake of the dog, because otherwise he would get very stressed,” said Barbara J. Dervan, an associate broker at Fox Residential Group. The solution: an apartment on East End Avenue.

Three years ago, when Mr. Saville, 39, a marketing manager at Pernod Ricard U.S.A., the wine and spirits company, moved to New York from Miami, he knew what he wanted: a walk-up, preferably in a brownstone; failing that, an apartment on a high floor with a grand view of the city. Dreams, dreams, idle dreams. None of this was going to work for Wesley, Mr. Saville’s harlequin Great Dane. Climbing stairs would have been tough on Wesley’s legs, so an elevator building was a must. But an apartment high in the sky, Mr. Saville’s preference, wouldn’t have served Wesley’s needs, either.

“I wouldn’t say I’m ruled by my dog, but I have to give up a certain number of things because of him,” Mr. Saville said. Despite his own preferences for an eyeful of cityscape and sky, he looked for a vacancy on the lowest floor available.

“Elevators can stop at every floor and when there’s an emergency and Wesley’s got to go, being able to get out of the building quickly was important.” Also important: a bedroom large enough to accommodate a California king bed — another Wesley-driven necessity, because the dog bunks down with Mr. Saville. Oh, and the apartment had to have a washer and dryer. It seems that Wesley sheds.

Read full article here:

Posted by on Aug 23, 2016 in Jim's Take on the Market, Market Conditions | 2 comments

Zillow: “Is The Party Over?”


Zillow is the latest to suggest that the ‘market’ might be slowing.

But looking at their own graph, it looks like the monthly percent change begins to decline every year at the end of summer. The second graph also shows that sales are at a new peak – if it fell off a bit we should still be fine.

But all that matters is what readers glean from the headlines and a quick scan.

Maybe it’s just a seasonal thing. This guy was spewing doomer talk in 2014!


From Zillow:

z july 2016

  • Zillow expects existing home sales to fall 1.9 percent in July from June, to 5.46 million units at a seasonally adjusted annual rate (SAAR), ending a string of four consecutive monthly gains.
  • New home sales should fall 6.65 percent to 553,000 units (SAAR) after a stronger than expected June.
  • Given the recent string of home sales beating forecasts, we view risks to the upside and would not be surprised if results are slightly stronger than we expect.

Thus far, it has been a pretty sweet ‘16 for home sales. But according to our July home sales forecast, the party looks like it could be coming to an end, at least temporarily and especially for sales of existing homes that must eventually face the harsh reality of tight inventory and rising prices.

Despite tight inventory, existing home sales have been surprisingly buoyant lately, beating or meeting expectations in each of the four months from March to June. We expect that streak to end in July. If nothing else, the odds that home sales continue to rise are increasingly dim. Since the series began in February 1999, runs of five months or more of consecutive monthly gains have only occurred five times – and only one of those streaks lasted six consecutive months or more.[1]

Shifting seasonal patterns may be behind some of this apparent resiliency. By some reports, the height of the home shopping season – historically most concentrated during the summer months – shifted earlier this year as buyers sought to get ahead of the competition. But sooner or later, tight supply and rising prices should take their toll.

Our forecast for existing home sales points to a 1.9 percent decline from June to 5.46 million units at a seasonally adjusted annual rate (SAAR) (figure 1). This would place existing home sales down 0.3 percent compared to a year earlier.

Read full report here:


Posted by on Aug 22, 2016 in Forecasts, Jim's Take on the Market, Market Buzz, Market Conditions, Zillow | 2 comments

Who Could Benefit from Vancouver Tax


In the previous post I mentioned that Carmel Valley has been red hot this year.  It might get hotter!

One of my favorite clients sent me a blurb from UBS where their advisors think California could benefit greatly from Vancouver’s recent 15% transfer tax imposed on foreigners buying real estate there.  The additional tax could cause buyers to look elsewhere – like around here!

A Vancouver agent who got caught with his hand in the cookie jar said this:

Stewart told CKNW that his overseas clients are already backing away.

“A lot of them have decided to buy elsewhere because of the tax. A lot of people have put purchase plans on hold, pretty much indefinitely, because of the tax,” he said.

He is under scrutiny so he may have popped off in order to save himself.  But 15% on a multi-million dollar purchase is a boatload of money!

Should foreign buyers purchase a home in San Diego County for more than $2,000,000, they will be reported to the Financial Crimes Enforcement Network – thanks Wendy for sending this in:

But the United States hasn’t imposed a transfer tax or even mentioned what they will do to foreigners who pay cash for homes costing more than $2,000,000.  As long as it is a legit purchase, what can they do?

But I wouldn’t be surprised to see a bunch of homes around here worth $1,500,000 – $2,000,000 all of a sudden coming to market for $1,999,999!

Posted by on Aug 11, 2016 in Jim's Take on the Market, Market Conditions | 0 comments