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Category Archive: ‘Market Conditions’

Spring Fever

oc

The real estate market around Orange County is similar to ours in San Diego, and they are feeling the seasonal surge like we are currently.  Mortgage rates under 4% are certainly contributing to the fever – live it up while you can!

http://www.ocregister.com/articles/market-652959-year-thomas.html

An excerpt:

January buying was slow, too. Then all of a sudden – with no major change in pricing or mortgage rates or the broader economy – shoppers stopped shopping and started making offers.

“I’d like to know what buyers are thinking. Why did they start pulling the trigger now?” Thomas says. “It’s like we’ve gone from 5 miles per hour to 65 in a very short distance.”

Thus, the big question for Orange County’s housing market has gone from “When will it wake up?” to “How long can this surge last?”

Will February prove to be just a short-lived, unexpected rush of buyers wanting to start the year in a new home? Did folks get overly anxious about the possibility of potentially higher home prices or costlier mortgages later this year?

Or is this the market breakout where improved housing fundamentals, most notably a healthy job market, nudged buyers to act? Is there a growing flock that’s tired of renting or having roommates – parents or otherwise – and have joined the traditional hunt for home ownership?

Posted by on Mar 4, 2015 in Jim's Take on the Market, Market Conditions, Spring Kick | 8 comments

Bubble or No Bubble?

thorn

This article is talking about Oakland, California, but these conditions exist up and down the coast.  Thornberg has been one of the more level-headed bubble analysts:

http://ww2.kqed.org/news/2015/02/18/is-the-bay-area-in-a-bubble-and-will-it-burst

An excerpt:

“This is not a bubble,” says Chris Thornberg, an economist in Los Angeles.

Though he’s just one guy, we called him because he has the dubious distinction of having predicted the 2008 market crash. His colleagues used to call him “Dr. Doom.”

He says that the money flooding the Bay Area isn’t built on speculation like the last boom.

“These are people with real money, with real incomes,” he says. “They have enough money to live in whatever cities and neighborhoods they want, so if there’s not enough high-end housing, they’ll just gentrify lower-income neighborhoods.”

And while the growth may slow, it won’t stop, Thornberg predicts. He believes the solution is a matter of adding to the housing supply. As more units come on the market, prices become more reasonable for everybody, he says.

But others argue that without policies making sure some of the housing is affordable, it’s not going to make any difference for middle-class and poor people.

“That’s completely wrong,” Thornberg says. “The evidence tends to suggest that for the most part, when you start layering rule after rule after rule on real estate developers, ultimately you end up simply hurting the supply worse.”

So what should Eaton do?

Thornberg’s answer? Buy now. Anything you can get.

Posted by on Feb 19, 2015 in Bubble-Era Pricing, Forecasts, How Hot?, Market Buzz, Market Conditions | 11 comments

Not So Hot

It’s happening everywhere you go, and it’s in every conversation with agents – the market is buzzing with “lots of activity”.

What does that mean?  Does it mean anything?

Here’s what it means:

  • Buyers are giddy about getting a 3.75% jumbo rate.
  • Agents are giddy about driving around.
  • Sellers are giddy about selling for more than the last guy.

Sellers and agents who have lots of showings think their house is red hot, and they demand a premium – or at least they aren’t coming off their price much.

But they should be more realistic about those who aren’t offering.

If you have 10-30 showings and only 1-3 offers, it means the vast majority of buyers thought your home was over-priced.

Just because there are a lot of lookers doesn’t mean the eventual buyer will pay your price either.

Here are stats on the NSDCC closings so far this year:

Houses Closed Under $1,000,000

SP:LP = 96.3%

Average days on market: 51

Houses Closed Over $1,000,000

SP:LP = 92.5%

Average days on market: 86

Buyers want to pay a reasonable price, and those averages show that they are being patient.  Of the 192 closed sales so far in 2015, only NINE PAID OVER LIST!

All participants need to be smart about how the market works now.  You get a flood of interest in the first two weeks, and then the activity drops off to nearly zero – and those occasional showings are being used to sell the house down the street.  Be smart, read the market signals, and keep egos in check.

And Get Good Help!

SD prices15

 

Posted by on Feb 10, 2015 in Jim's Take on the Market, Market Buzz, Market Conditions, North County Coastal | 0 comments

Market Experiences

One week into the selling season….how’s it going?  With our spectacular weather and both Tiger and Phil out of the golf tournament, the streets were flooded with home lookers this weekend.

A few experiences so far:

1.  An agent selling his own house gets seven offers within the first three days on the market.  He counters all with a set price that is $8,000 below his list price, and gives the full three days to respond.  Less than 24 hours later, he emails the losers that he has accepted an offer.  No curiosity what the others might bring?

2.  A listing agent – who has no sales on the MLS – lists a house for 5% over the last model-match sale.  She hopes that buyers will ignore that the comparable sale was fully upgraded and had no road noise when hers doesn’t.

We offer just under the comp’s sold price, but she won’t counter – you see, she’s had ‘lots of activity’.

3.  Another agent on her first sale says she will respond to our offer last night after the weekend open house. At 9:32pm last night, she responds to my inquiry by saying that she too had lots of activity, and multiple offers – and ‘we will not be accepting your offer’.

Don’t you at least counter everyone to see what they might have left in the tank?  Our offer was 5.9% under list, and at comp value.

4.  Remember a week ago when we sent in our best offer and the listing agent countered it $5,000 higher?  The agent, who sells a solid two homes per year, called back yesterday, wondering if I might kick in the $5,000, or if we could split it.

It’s too late now – your bone-headed grab for less-than-1%-more-on-price repulsed the buyers, and they forgot all about you by now.  She also divulged that the multiple-offer bidding war consisted of an offer contingent on selling another property, and an offer lower than ours.  Meanwhile, this week her sellers will be entering Month Six of sitting on their vacant house, and approximately $2,500 per month payment.

5.  With no serious nibbles on my Del Mar Heights listing – and not many desirable replacements to consider – my seller withdrew the listing this week after 35 days.  Another example of why the inventory is low – the best alternative for many is to stay put, rather than pay outrageous rents, take out a new 30-year loan, or leave town.

Get Good Help!

Posted by on Feb 9, 2015 in Bidding Wars, Jim's Take on the Market, Market Conditions | 4 comments

San Diego Housing Indicators

San Diego Payrolls

Read the full article on San Diego housing here:

http://journal.firsttuesday.us/san-diego-housing-indicators-2/29246/

An excerpt:

Before end users can provide sufficient support for the housing recovery, they will need to acquire income; and that means jobs and wage increases. San Diego continues to outpace the state’s jobs recovery, which is good news for San Diego’s housing industry.

The number of individuals employed in San Diego County in 2014 saw a rapid increase of 3.3% (44,500) from one year earlier. Unlike much of the state, San Diego has far surpassed the level of jobs held prior to the 2008 recession. However, with the working-aged population increase of roughly 250,000 individuals in San Diego County since 2007, the real jobs recovery which will bring on mass wage increases isn’t expected until around 2019.

http://journal.firsttuesday.us/san-diego-housing-indicators-2/29246/

Posted by on Feb 6, 2015 in Local Flavor, Market Conditions | 2 comments

Smaller Yards Preferred

yards

A good discussion of the trend towards bigger houses on smaller lots – hat tip to daytrip!

http://www.latimes.com/home/la-hm-0131-outdoor-space-20150131-story.html

Excerpts:

One point generally acknowledged is that many people today do not want the expense and hassle of a big yard. “It’s not practical to have a big lawn these days,” Tighe says. “People are rethinking that, rightfully so.” But they do still want something of a yard, just not the way we think of it.

“That backyard in a sense becomes an important room as part of the house,” says Radziner. “We can live outside if we do it right. Our clients are more interested in the quality of the space rather than the quantity of the space.”

Posted by on Feb 2, 2015 in Market Buzz, Market Conditions | 3 comments

Multiple Offers Down

2015-01-19 12.35.48

We have demand – the pending-home index is rising! From C.A.R.:

http://www.car.org/newsstand/newsreleases/2015releases/dec2014pending

Pending home sales posted higher on a year-over-year basis for the first time since January 2013 and as expected, declined from the previous month due primarily to a seasonal slowdown toward the end of the year, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today.

Additionally, with the specter of a better economy, greater job growth, and increasing household formation, C.A.R.’s new Market Pulse Survey found that many REALTORS® expect market conditions to improve in 2015, as does C.A.R.

• In the fourth quarter of 2014, the vast majority (87 percent) of REALTORS® expected market conditions to either improve or stay the same over the next year.

• More REALTORS® (61 percent) closed a transaction in the fourth quarter of 2014, compared to the first quarter (53 percent).

• In an indication of stabilizing home prices, fewer homes (24 percent) sold above asking price in the fourth quarter of 2014, compared to 46 percent in the first quarter.

• Homes selling below asking price rose from 19 percent in the first quarter of 2014 to 48 percent in the fourth quarter, indicating home sellers’ expectations moved more in line with buyers’ expectations toward the end of the year and competition between sellers attempting to appeal to affordability-strapped home buyers increased.

• More than half (58 percent) of properties received multiple offers in the fourth quarter of 2014, down from 69 percent in the first quarter.

Posted by on Jan 24, 2015 in Jim's Take on the Market, Market Conditions | 6 comments

SD Lower Tier Is Hotter

SD Tiered

The ivory-tower opinion below is blaming speculators for a mini-bubble, but around here I’d say that over 90% of the home sales were regular, organic real estate transactions in 2013.  Prices may fall in the coming months (slightly), and if they do, it will be because buyers are being patient and picking off only the best buys.

http://journal.firsttuesday.us/california-tiered-home-pricing/

Home prices displayed mixed signals in Los Angeles, San Francisco and San Diego in the single month of October 2014. Prices dipped in San Diego, remained roughly level in Los Angeles and rose slightly in San Francisco. Low-tier property prices are still on average 10% higher than one year earlier. Mid-tier and high-tier prices are 6% higher.

As in 2010, today’s price movement is the tail end of a mini-bubble, set into motion some 18 months earlier. This price rise was produced by short-lived speculator interference in 2013 (not a tax stimulus, as in 2009). This pricing activity is under pressure from insufficient personal incomes, rising fixed-rate mortgage (FRM) rates and new construction.

Prices are expected to fall in the coming months, likely bottoming in mid-2016 and retreating toward the mean price trendline. The cooling of speculative fever and continually rising mortgage rates will prolong the falling trend in sales volume, pulling prices down in turn. Remember, real estate prices track and run with bond prices due to interest rate movement. A lag time of up to 12 months exists due to expectations of continued recent price movement — the sticky price phenomenon.

The graph tells the story – the higher-end market is ‘soft’, and only those with precision pricing are selling.

Posted by on Jan 8, 2015 in Forecasts, Market Conditions, Sales and Price Check, Same-House Sales | 2 comments

LOW Rates, Better Terms

mortgage rates

Not only did jumbo 30-year fixed rates hit the lowest I have ever seen yesterday, but more creative terms are coming out too.

These terms were sent to me yesterday by a local lender:

Just priced a 30 year fixed 1.2 million loan and it’s 3.625 with no points.

We have a 95% purchase money with loan amount up to $850,000.  The 5/1 is 2.75%, 7/1 is 3.00% and the 10/1 is 3.25%.

AND we have a 30 year fixed jumbo up to 1.5 million at 90% with no mortgage insurance.  The rate is 5.125 with no points.

The fantastic rates and terms available should help buyers get off the fence, and buy a little more house than they could have 6-12 months ago.

This will help the low-down folks too:

http://dsnews.com/news/01-07-2015/report-president-announce-reduction-fha-premiums

Posted by on Jan 7, 2015 in Interest Rates/Loan Limits, Jim's Take on the Market, Market Conditions | 1 comment