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Category Archive: ‘Market Conditions’

ASG and KK

kayla klinge 25

We’re wrapping up the celebration of Kayla’s 25th birthday! (yesterday)

She was born on the day of the 1991 All-Star Game.  I got to hold her in my arms and watch baseball on TV from Day One!  The game was in Toronto, and Benito Santiago and Tony Gwynn both started for the National League!

https://en.wikipedia.org/wiki/1991_Major_League_Baseball_All-Star_Game

We had some random thoughts:

  1. How many people have lived in their current residence longer than any other house in their life?  I’ll say most.  The novelty of moving has worn off, and appreciating what you have is the new orange.  Shall we say an equal impact on supply and demand – and drying up both?
  2. Every house on the market for more than 7 days is probably a fixer – sellers should do improvements in advance. Buyers are schooled by HGTV, and want perfection. If you have a superior home in a terrific location, you’ll get offers right away as long as your price is within reason.
  3.  The Joys of Homeownership.  Whether the home is owner-occupied or a rental, let’s expect to spend $1,000 per month, on average, for repairs and improvements. You can cruise for a few years, but eventually you can expect to replace the furnace, air conditioning, water-heater, dishwasher, and refrigerator every ten years.  Carpet, paint, and landscaping every five years.  Sure, if you or your tenants don’t mind living in squalor, it’s not a problem. But if you want to sell for top dollar, you need top-dollar improvements.
  4.  You can judge the listing agent’s experience by the MLS comments.  The market isn’t hot enough that you can bluff me into thinking that your listing is so great that you’ll have multiple offers by tomorrow. Just make it easy to show, would you?
  5. We are overdue for a media onslaught. Any disruption in the positive housing trends are sure to be exploited by national media types. Don’t listen to anybody who doesn’t have on-the-ground examples to back them up.
  6.  The ‘Sold before Processing’ listings are of great convenience. There is fantastic efficiency for a listing agent to quickly shuffle a deal into escrow and move on to the next sale, and avoid having to deal with those messy bidding wars.
  7.  It seems like Zillow is enthusiastically supporting their big-spending realtors.  Zillow needs to go next-level and just openly promote their favorite agents.  There will be more lines in the sand to be drawn.
  8.  The unstable current events should make you conscious of your home’s security.  Do you feel secure at home?  Make your home defensible, or consider moving!
  9.  Revolution is going to come, so we should take charge. Take the gun issue.  Both sides should submit their solution, and a compromise hammered out.  Something has to change.
  10.  If unrest continues, it is probably good for real estate.  More people will buy a house to hunker down – to “cocoon”, and drive demand.

Wondering what to do?  Either you can settle at today’s prices, or take your chances during the next spring selling season with the new president!

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Posted by on Jul 10, 2016 in About Kayla, Jim's Take on the Market, Kayla Training, Market Buzz, Market Conditions | 0 comments

Presidential Elections and Real Estate

home price growth

C.A.R. analysis finds presidential elections have little impact on California housing market

Prospective home buyers want current presidential candidates to address housing affordability

Presidential elections have historically had little or no negative impact on the California housing market, according to findings by the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.).

“Transitory political events such as presidential elections don’t drive the housing market,” said C.A.R. President Pat “Ziggy” Zicarelli. “Market fundamentals such as housing inventory, affordability, interest rates, job growth, and consumer confidence are the real factors that influence the housing market.”

In an analysis of home sales dating back to 1990, the average growth in home sales during an election year is usually either slightly higher or lower each month than in non-presidential election years. Notably, sales growth is rarely negative during an election year, and there is no evidence of a systematic negative impact on home sales or prices stemming from election season. In fact, C.A.R. found that growth in home sales at the end of an election year actually outperforms non-election years by 7.1 percentage points.

On a monthly basis since 1990, California home sales contracted by roughly 2 percent during the last four months of the year.

However, during the past five election cycles, sales in the final months of the year picked up, rising by 5.3 percent on average compared with -1.8 percent during non-election years. With the exception of December 2004, every single month of the final quarter saw robust growth in home sales during election years.

The pattern for California home prices is similar. C.A.R. also found little evidence of a negative effect on home prices during an election year. In fact, home price growth in California during the past five election cycles was slightly better than the long-run average of 5.6 percent.

The effects were most pronounced during the final months of the year when demand – and therefore, upward pressure on prices – were boosted by roughly 5.6 percentage points following the elections.

http://www.car.org/newsstand/newsreleases/2016releases/presidentialelections?view=Standard

Posted by on Jul 8, 2016 in Jim's Take on the Market, Market Conditions | 0 comments

Second-Half Outlook

trend

After seeing these two articles:

http://www.builderonline.com/money/economics/consumers-pull-back-from-home-market-in-june_o

Home buyers and sellers can drive one another up a wall

and hearing that a buyer just blew out of an offer negotiation due to the seller wanting to replace the washer and dryer with an older set, it’s time for a chat.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

The lower mortgage rates are starting to clog the system with refinancings, and closings are being delayed.  Additional volume probably just exposes the weaknesses in each lender’s pipeline, and there isn’t much that they can do to improve it on the fly.

Threats of delays will add to other second-half difficulties:

  1.  Can we agree that the more-motivated buyers have already bought a home this year?  Those deals go down easier.  In the second half – which last year was just as fruitful as the first half – prices are higher than ever.  Combine with less-motivated buyers, and it’s tougher to bring deals together.
  2.  The buyers’ squeeze for better quality has exhausted the supply.  What’s left are more of the inferior houses for sale – and tougher deals.
  3.  Those in the business who enjoyed a frenzy-like selling season should consider changing gears.  Expect fewer bidding wars, and…gasp…lower offers.
  4.  The political circus is a distraction, and a likely reason for buyers to give up and quit looking.

If we can work together to find ways to make, and keep, sales together, the better for all.  Mortgage rates in the low-3s should help!

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Posted by on Jul 7, 2016 in Jim's Take on the Market, Market Conditions | 0 comments

NSDCC May/June Sales

hot market

A good way to measure the strength of the spring selling season would be to examine home sales that close in May and June.  In spite of medians that have jumped 30% or more in just five years, and a low-end market that has evaporated, sales in May/June of this year were very strong:

NSDCC House Sales, for May/June

Year
# of Sales
Median SP
Median Cost-per-SF
# of Sales Under $800,000
2012
628
$850,000
$317/sf
282
2013
695
$975,000
$372/sf
231
2014
591
$1,000,000
$388/sf
167
2015
623
$1,125,000
$402/sf
138
2016
607
$1,209,000
$419/sf
98

It’s not the low-end that is carrying this market – it is the affluent.  It’s why the market will likely keep going – people have more money than houses!

You can also see how difficult it is to downsize.  Those who are looking to pocket a big windfall – hopefully the entire $500,000 tax-free amount – will recognize how hard it is to stay around the coast.

Of the 98 sold under $800,000, only 31 of them were single-story!

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Posted by on Jul 6, 2016 in Jim's Take on the Market, Market Conditions, North County Coastal, Spring Kick | 0 comments

Wait to Buy?

sd2016

A potential buyer mentioned that the market was feeling bubbly, and they were wondering if they should wait to buy until things settle down later this year.

First, let’s describe what we need.

We need to find the right house at the right price with the right sellers and the right listing agent.

Any of the four can screw up your chances of securing the right buy.  If the price is right, but it’s not the right house, would you buy it?  Probably not.  If the rest is good is good but the sellers need a 90-day rentback and prefer that their 8 dogs and cats never leave the house, you may not buy it either.

Getting all four to line up is a formidable challenge.  As a buyer, you need to keep looking 12 months out of the year just to have a shot.

Other notes:

  1.  In the off-season, the selection isn’t as good.  But you only need one, so keep looking!
  2.  Stay in the game just to keep your chops up.  If you stop looking, but then come across a house that might be a fit, you may not recognize it because you haven’t been watching lately.
  3.  Being active in the marketplace keeps you analyzing where and what you are willing to compromise.  You don’t want to make a mistake here.
  4.  Generally, the pricing isn’t going to change.  We will see more than 90% of the sellers using today’s comps and tacking on the usual 5% or so to determine their list price.  If there was a downturn, it wouldn’t be obvious until sales decline for an extended time.

Keep plugging – it’s only takes one!

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Posted by on Jul 2, 2016 in Jim's Take on the Market, Market Conditions, Thinking of Buying?, Why You Should Hire Jim as your Buyer's Agent | 4 comments

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