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Category Archive: ‘Market Conditions’

Best Time in History

She’s not even a realtor!  From

Housing guru Ivy Zelman told CNBC’s “Fast Money Halftime Report” on Monday that “now” is the best time to buy a house.

“It’s the best time in the history of our country with mortgage rates that are below 4 percent that [renters] can actually lock in their fixed cost and create wealth for themselves,” she said.

The founder and chief executive of Zelman & Associates is known for calling the housing peak in 2005 and the housing bottom in 2012.

Zelman said this housing cycle is like a “tale of two markets.”

She said the entry-level market is beginning to accelerate, and builders’ trepidation is slowly beginning to fade as more people are beginning to move to the suburbs.

The market would seem to be in agreement with her on that. The SPDR S&P Homebuilders ETF was trading up more than 1.15 percent Monday morning, and on pace for its best day since Sept. 22, when the XHB gained 1.11 percent.

On the other hand, she said the luxury markets in some cities are in the beginning see “a little bit” of a correction.

When asked about whether millennials will ever buy homes, Zelman said they are beginning to buy houses, but mainly those who are starting a family.

“What we’re seeing is that they want to go to the suburbs, millennials are buying and we have nearly 75 million of them just beginning to come through the pipeline,” she said.

Posted by on Oct 24, 2016 in Jim's Take on the Market, Market Conditions | 1 comment

Home Buyers Paying Cash


Back in the foreclosure era, cash buyers were everywhere, gobbling up all the deals. Many pundits thought that once the investors pulled out, the market would collapse.

But a funny thing happened on the way to the apocalypse.

It turns out, buyers love to pay cash!

They are buying the higher-end properties too, which is understandable – nobody is spending their last million or two on a house.  These cash buyers probably had at least 5x the sales price in the bank!

NSDCC Detached-Home Sales, First Nine Months (Jan – Sept.)

Cash Sales
Median SP
Non-Cash Sales
Median SP
Cash %

The depth of the affluence isn’t surprising, it is the breadth.  There have been 1,465 NSDCC house sales that have closed for more than $1,000,000 this year!

It puts pressure on the financed buyers. In virtually all bidding wars, the financed offers are ignored, and just the cash offers get entertained. Financed buyers would be smart to lower their sights and pick off a fixer.

Posted by on Oct 17, 2016 in Jim's Take on the Market, Market Buzz, Market Conditions, North County Coastal | 0 comments

Ideal Market Conditions


Rich has posted his September report here:

It is remarkable how similar this year’s inventory has been to last year’s – and the trajectory is virtually identical as well.

Sales have been strong too, in spite of the higher pricing:


Judging by those graphs, market conditions are ideal – could it get any better?

I think so!  If we had about 10% more inventory, the demand would soak it up and probably cause prices to go up faster too.  I say 10% because it wouldn’t be that noticeable – if there was a 20% or more increase in inventory, buyers would most likely adopt a wait-and-see attitude because historically, we are overdue for a correction.  But it’s been different this time – higher prices haven’t brought more sellers to market.

Rich is also back at the Voice of San Diego!

Posted by on Oct 13, 2016 in Jim's Take on the Market, Market Conditions, Sales and Price Check | 0 comments

San Diego Not In Bubble


Here is some real bubble talk – by experts!

In the last four years housing prices, according to CoreLogic’s Home Price Index (HPI) have risen 40 percent.  So, are we heading toward a repeat of the 2005-2006 housing bubble?  In a two-part analysis in the current issue of CoreLogic’s MarketPulse, Mark Liu, principal economist, offers some reassurance.

First he defines just what a bubble is, using the words of Nobel Laureate Economist Joseph Stiglitz.  “If the reason that price is high today is only because investors believe that the selling price is high tomorrow – when ‘fundamental’ factors do not seem to justify such a price – then a bubble exists.”  Under that definition Lieu says, the high price growth rate alone is not evidence of a housing bubble.

Instead one must identify fundamental factors in housing markets and see whether the price growth rates can be justified by these factors and then identify metrics to capture the belief that the selling price will be high tomorrow.

Liu puts two metrics for measuring the fundamental factors; price to income and price to rent, and two for capturing Stiglitz’s speculative belief.  He calls those the Flipping Index and the Fraud Index.

In the price-to-income view of housing economics there is a stable relationship in the long run between house price and income. CoreLogic’s Market Condition Indicators show that the long-run sustainable HPI is derived from the historic relationship between home prices and disposable income per capita coupled with the principle that home prices cannot outpace growth in household income forever.  Over shorter periods home prices can exceed or fall below the long-run trend but not over a longer time because housing becomes unaffordable.  At that point demand decreases causing home price growth to either slow or decline and realign with income levels in each market.

CoreLogic calculates the gap between actual HPIs and their long-run sustainable levels and defines an overvalued market as one in which the home price is more than 10 percent above its long-run sustainable level.  Using this metric Liu identifies 31 markets among the top 100 Core Based Statistical Areas (CBSAs) that are overvalued.  These include Seattle, Portland, and areas in California, Texas, and especially Florida.  He puts that number in perspective with historical similarities; there were 21 overvalued CBSAs in 2002, 45 at the beginning of 2004, and 70 in January 2006.  Therefore, if the country is indeed heading toward another bubble, which he doubts, it is currently at a stage equivalent to 2003.

Read full article here:

Posted by on Oct 4, 2016 in Jim's Take on the Market, Market Conditions | 5 comments

Mortgage Rates Dropping

rates sept 27

Are you still thinking about packing it in for 2016?

Mortgage Rates maintained their recent winning streak today, falling for the 5th straight day.  The average lender is now offering the best rates in nearly 2 months.  You’d have to go back early August or late July (depending on the lender) to see a better combination of rate and upfront cost.

Read more here:

Posted by on Sep 27, 2016 in Interest Rates/Loan Limits, Jim's Take on the Market, Market Conditions | 0 comments

Soft Market? How Soft?

Our local market has been feeling ‘soft’ lately, and I mentioned earlier that it might be good for a 5% to 10% discount off list price….or off the last comps?

It is more a seasonal thing really.  The sellers keep pushing the list prices higher all year, and buyers get exhausted by the end of summer.

You can see below how the gap between the average list prices and sales prices widen towards the off season – the Septembers are marked in red:

Discount percentage graph

The motivated sellers will adjust as needed, and we’ll all be fine.

It looks like they already are, generally speaking:


The reason you don’t see many sales close at big discounts is because you have to offer 15% below list to have a shot at buying at 10% below. The vast majority of sellers will laugh you out of the house with offers at 15% off. It’s too easy for them to think it will be better in springtime, and wait.

It’s why you see 5% to 7% discounts off list in the first graph – that is all the sellers will tolerate because they’re convinced that their list price is ‘right’.

While it might feel ‘soft’ because houses aren’t selling like they used to, don’t worry. Sellers who need to sell will re-calibrate over the next 30 days, and set the tone for next spring.

The big question is – “will buyers pay more in spring?’ If yes, it will be only for the vastly superior homes. Anything that is inferior in any way – especially the fixers – will need to be sharp on price to sell.  It’s doubtful that they will get any more than they could have gotten this year, and it may take last year’s prices to move some of them.


Posted by on Sep 24, 2016 in Jim's Take on the Market, Market Conditions, North County Coastal | 1 comment

Negotiable Now


Here are examples of real estate deals in the Bay Area, where buyers are happy just to get a break on the price.

Here are excerpts:

In the Bay Area housing market, it appears to be a game of cat and mouse.

Sales of single-family homes in August crept up ever so slightly from the year before as many buyers took a wait-and-see attitude, challenging sellers to negotiate — something unheard of in the overheated market of 2015.

Could a price break be coming to the region after years of steady appreciation? Perhaps.

“Outside hotly contested areas, we’re seeing price adjustments of a kind we haven’t seen in some time,” said Timothy Ambrose, treasurer of the Bay East Association of Realtors. “Buyers start thinking, ‘Well, should I wait?’”

But hang on, he and other experts warned. The regional market is a complicated one, with techies still driving up home prices in micromarkets from Palo Alto to Oakland’s Rockridge neighborhood. And this wouldn’t be the first time the overall market has slowed in late summer, as children go back to school and families call off their house hunts.

The Silicon Valley market is unpredictable, said Pacific Union agent Wendy Kandasamy, based in Palo Alto: “The market is so dynamic. It’s hard to say with certainty when a property will sell.”

She called August — typically the doldrums for home sales — an anomaly, ticking off details of five sales for $5 million and up. One five-bedroom house in Palo Alto sold for $7,795,000 — almost $1,900 per square foot, a figure Kandasamy called “extraordinary.”

Yet in lower price brackets, she said, buyers have backed off and sellers find themselves negotiating.

Her client Clifford Chao can attest to that. A Google engineer, he and his wife, Jackie Ling-Chao, who also works in tech, spent months house hunting. With one young child and another on the way, they wanted something larger than their downtown Mountain View condominium.

Initially they set their budget between $1.8 and $1.9 million, but that wasn’t getting them the house they wanted in a top school district. So they decided to stretch the budget. “It’d be painful, but we could,” Chao said.

And then the unexpected occurred: He noticed that “certain houses that should be getting 10 offers suddenly couldn’t sell. It was only happening in this one price range of between $2.1 and $2.4 million. Everything seemed to tumble, sometimes by about 10 percent.”

The couple watched, waited and successfully bid on an Eichler-style home in Palo Alto: four bedrooms with a spacious backyard on a 7,000-square-foot lot. It listed for $2.3 million. After a previous buyer backed out of a deal, Chao and his wife grabbed it for $2.17 million.

“I think we did get a little bit lucky,” he said. “It’s what we wanted — perfect.”

Alain Pinel agent Mark Wong also finds the market to be mixed. On the one hand, he identified six homes that sold last month in Cupertino for between $200,000 and $417,000 over the asking price, the latter example attracting 23 offers. Yet such bidding battles are no longer the rule, and with the market’s long-range prospects unknowable, he has advised some clients to get off the fence.

His clients Shue Pun, a marriage and family therapist, and her husband, Heman, a graphic artist, decided to sell their Cupertino townhouse, where they lived for 13 years and raised their son, who now works in Southern California. The townhouse is in an excellent school district, but sits on a busy street — part commercial, part residential — and Wong told them it likely wouldn’t sell for the $1.2 million or so that they had anticipated.

Listing it for just under $1.1 million, they held an open house that attracted 110 visitors — but no offers. “A real disappointment,” Shue said.

But a few weeks later, a couple with two young children — “a perfect fit” — bid $1.05 million. The Puns, who purchased the townhouse 13 years ago for $520,000, accepted the offer and now plan to buy a house in San Jose, close to their church.

Like the Bay Area weather, the region’s real estate market varies from town to town and neighborhood to neighborhood, said William Doerlich, president-elect of the Bay East Association of Realtors. He estimated that upward of 50 percent of his clients work in tech.

“They’re tired of the $4,500 apartment in Potrero Hill” in San Francisco, Doerlich said, so they move to the East Bay, preferably close to BART and in a “walkable” district, and they “gobble up” houses, whether in Oakland or Dublin.

Or in Fremont, where his client Erin Suth — unwilling to go along with $1,300 in monthly rent for her 480-square-foot apartment in Castro Valley — found an old cottage house on a spacious lot. Built in 1924, it was completely renovated: new plumbing, new granite counters in the kitchen, a flagstone front porch. It listed for $430,000.

Suth, who is 26 and a regional manager for a recruiting company — not even a techie — bid $450,000 and now owns her first house. “It’s darling,” she said.

Posted by on Sep 21, 2016 in Jim's Take on the Market, Market Conditions | 4 comments

DOM Matters


Our local market has been healthy/strong since 2009, with virtually every property in North San Diego’s Coastal region having risen 30% to 50% in value.

But the slowdown is here, which probably means prices are going to flatten out.

Sellers and agents who priced too high over the last few years just had to wait “until some nice family came along”.  But the reality was prices were rising fast enough that they eventually caught up.

But what happens in flatsville?  Prices take much longer to catch up – if they ever do.  With mortgage rates at record low levels – can market conditions be any better than what we’ve seen lately?  Probably not.

The days-on-market is going to matter now.

Buyers have been willing to ignore the longer DOMs because they knew prices were rising fast – and they were frustrated.  But in a slower market, buyers gain confidence and don’t mind waiting to see how it all shakes out.

Bottom line?

You want to sell in the first 30 days on the market.

The pricing history of each house, and the amount of time it’s been on the market is public knowledge.  Once you roll into flatsville, the homes languishing on the market for months will get ignored.  Buyers are more skeptical, and the longer a house is on the market, the less they want to pay!

Other things will matter too. Curb appeal and interior improvements, ease of showing, reputable listing agent, and attractive price will all be scrutinized closely by prospective purchasers who are looking for any reason NOT to buy.  Staying on the fence will become the new sport.

Is it a big deal?  Not to those who don’t need to sell. Buyers will still come around, and you might get lucky.

But rising prices have been provided the ‘luck’ because they caused buyers to ignore market signals – they just wanted to buy something before it got worse.

The shift in the market is subtle, and many won’t notice.

But the educated buyers are paying attention, and now hesitating over the little stuff.  The number of days on the market will be their primary data point, so do everything possible to ensure a prompt sale!

Get Good Help!

Posted by on Sep 16, 2016 in Jim's Take on the Market, Market Conditions, Why You Should List With Jim | 1 comment

Inventory Watch

We are hearing the same hesitations from buyers that we heard last year, and it’s probably a seasonal thing – people wonder if there will be turbulence during the real estate off-season.

NSDCC Active Listings
Avg. LP/sf
Avg SF
Sept. 14, 2015
Sept. 12, 2016
NSDCC Active Listings
Avg. LP/sf
Avg SF
Sept. 14, 2015
Sept. 12, 2016
$1.4M – $2.4M
NSDCC Active Listings
Avg. LP/sf
Avg SF
Sept. 14, 2015
Sept. 12, 2016
Over $2.4M
NSDCC Active Listings
Avg. LP/sf
Avg SF
Sept. 14, 2015
Sept. 12, 2016

Sandicor stops publishing the full data set once the count goes over 400.

The data looks similar enough to last year, that we should expect a similar result – no market tanking in the off-season, just an occasional seller who lets one go cheap.

If prices did roll back 5% to 10%, would anyone notice? They’d still be record territory, and unattainable for most.

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

Read More

Posted by on Sep 12, 2016 in Inventory, Jim's Take on the Market, Market Conditions, North County Coastal | 0 comments

‘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