An Insider's Guide to North San Diego County's Coastal Real Estate
Jim Klinge, broker-associate
617 Saxony Place, Suite 101
Encinitas, CA 92024
Klinge Realty
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Jim Klinge
Cell/Text: (858) 997-3801
701 Palomar Airport Road, Suite 300
Carlsbad, CA 92011

Category Archive: ‘North County Coastal’

NSDCC November Sales

The slowdown started in July, so the November sales count is surely going to reflect the impact – and it does. Sales were down 11% year-over-year:

# of Sales
Median SP
Avg. Cost-per-sf
Avg. DOM
Avg. SF

*S/BD = Sales per business day, which had the same -11% YoY decline.

Let’s put away the panic button for now.

Posted by on Dec 6, 2018 in Jim's Take on the Market, North County Coastal, Sales and Price Check | 0 comments

November Panic?

If sellers were feeling a sense of panic about the market – and prices – we would be seeing more new listings hit the market.

Let’s boil it down to one simple comparison.

Are there more listings than usual coming to market?

NSDCC Listings, November

November Listings
Median List Price
# Sold
Percentage Sold

I wouldn’t be too concerned about the median list price being lower. The list prices don’t mean much, and if it weren’t for an extra 13 lower-end listings then the 2018 median LP would have matched last year’s.

More listings, longer market times, and higher failure rates are in our future – and we can handle it!

There have already been ten listings from last month close escrow – five were sold off-market – and another 54 are pending, so somebody’s buying something. Here are three examples:

1. This 2-br house sold for $1,400,000 in March, 2018, and then was advertised as a Coming Soon for $1,695,000. It closed for $1,650,000 a month ago:

Link to Listing

2. Amy and Susan sold this CV house for $51,000 over list, and closed this week:

Link to Listing

3. This Cardiff house backs to the freeway but it does have ocean view – it just closed this week for $1,950,000, which was above the high-end of the range:

Link to Listing

Here is the sales history of the same house:

If sales dropped 20%, we’d still have 80%!

Posted by on Dec 5, 2018 in Coming Soon, Jim's Take on the Market, North County Coastal, Sales and Price Check | 0 comments

Fannie/Freddie Limit up to $726,525

Today the FHFA announced that they have raised the Fannie/Freddie mortgage limit to $726,525 in high-cost areas:

Link to Article

With deductible mortgage interest now capped at $750,000 by the I.R.S., buyers who are concerned about write-offs will want to keep their new loan balance in the $700,000s.

The strict equation is $750,000/80% = $937,500.

If buyers find a house priced higher, they could come up with more cash to make up the difference, or they could get a jumbo loan at roughly the same interest rate and live with the non-deductible interest paid on the loan amount above $750,000.

It makes the ideal purchase price in the $1,000,000-$1,100,000 range.

If the tax reform is a big concern for buyers as some have suggested, the homes priced in the $1,100,000 – $1,500,000 might feel it.  Buyers above that range weren’t expecting as much benefit anyway, and probably won’t be as impacted – but theoretically there are fewer buyers the higher we go.

Out of curiosity, let’s keep an eye on the NSDCC stats.

Today’s NSDCC Actives and Pendings:

$700,000-$1,100,000: 121/72 = 1.68

$1,100,000-$1,500,000: 157/75 = 2.09

$1,500,000-$2,500,000: 243/81 = 3.00

$2,500,000 and higher: 399/44 = 9.07

The market has been healthy up to $1,500,000 roughly, and like Rob Dawg said yesterday, potential buyers may not know the exact impact of the tax reform until they start on their 2018 tax returns in spring.

Let’s come back then and check for impact!

Posted by on Nov 27, 2018 in Actives/Pendings, Jim's Take on the Market, North County Coastal, NSDCC Pendings, Tax Reform | 4 comments

Rolling Into Stagnant City

A year ago, I guessed our NSDCC sales would be down at least 5% in 2018, and it looks like it will be closer to -10%.  While I’m confident that sellers will refuse to lower their price expectations much in 2019, I doubt that home buyers will just go along as they have in the recent past.

The disconnect will probably mean that the 2019 sales of detached-homes between La Jolla and Carlsbad will drop another 20%, which will change the landscape considerably from the robust sellers’ market we’ve enjoyed over the last nine years.

Homeowners waiting for the top of the market will move closer to the exits, and we will probably have 5% to 10% more listings early next year – with no let up in pricing.  Potential homebuyers who are starved for quality guidance will be conservative and adopt the wait-and-see approach.

It guarantees a slow start to 2019, and a real standoff.

The worst part about the real estate industrial complex is that they provide no help whatsoever on how to deal with market conditions.  They push Yunnie up to the microphone every month to report the latest sales counts, but that’s it.

Consumers and realtors are left to their own devices to figure out what to do.

Buyers will want somebody else go first.

Who will go first?  With the rise in mortgage rates, we have already lost almost the entire move-up market.  My rule-of-thumb is that if you want to stay in your same area, you have to spend 50% more than what your house is worth to make the move.  In other words, if your house is worth a million, the houses you see listed for $1.1 or $1.2 million nearby aren’t enough of an upgrade – you only get, what, one more bedroom?

But if you bought that home for $800,000 with a mortgage rate of 3.5%, the thought of having to spend $1,500,000 with a 5% mortgage rate will send your head spinning:

Purchase Price
Loan Amount
Mortgage Rate
Mo. Payment w/taxes

Your home’s appreciation generated the bigger down payment, but you have to pay more than twice as much monthly, and it isn’t fully tax deductible either. How many people NEED to move that bad?

So if the move-up market is comatose, then who’s left?

Those who don’t own a house here yet – the first-timers and newcomers.

They are at a disadvantage from being new the area, and are probably somewhat unfamiliar to the game – so it’s likely that they will be conservative. But the 2019 market will be entirely dependent upon them paying what the sellers want, or close.

I doubt we’re going to see fewer listings next year, so if there are 5% to 10% more listings – all with optimistic prices – and buyers are waiting to see what happens, there will be many more for-sale signs around.  That alone will cause buyers to pause.

Only the vastly-superior homes will be selling, and everyone will struggle to get the price gap right between the creampuffs and dogs.  The fixers will need heavy discounts, but thankfully, there is a floor.  I’ve probably taken 100 inquiries on my Brava listing – the flipper/investor action is still strong, though they are slightly more conservative about next year too.

Realtors could provide the solutions, but will they?

Here are the typical responses to taking a higher-priced listing:

SELLERS:  “Let’s add a little mustard to my list price.”

TOP AGENT: “The market is soft, and virtually all active listings are priced above what the market will bear. An attractive price will help to set us apart, and our expertise will help to clinch the sale in a timely fashion.”

REGULAR AGENT: “Let’s try the value range pricing!”

NEW AGENT: “What the heck, we can always lower the price later!”

Will the home sellers be sufficiently motivated to price their home sharply?  For those who have been waiting for the top of the market, the answer is no.  They are only selling if they can get their price – especially if they plan to move up in the same area.

We’re headed for a showdown – who will blink first?

There will be a healthy market for for the well-location remodeled homes, but the rest will sit a while before they figure it out – and many will not.

Annual sales dropping 20%?

We’ve been here before, and survived it.  We will survive this round too – we don’t have the shock of a market driven by no-qual loans all of a sudden shifting to qualifying-only, like we did in 2008:

NSDCC Detached-Home Sales
Year-over-Year Change

Where will prices go? It will be a very soft landing, because without foreclosures and short sales, there won’t be desperate sellers dumping on price – they will wait it out instead.

Heck, they’ve waited this long, what’s a couple more years?

It will be case-by-case though. There will be a few great deals, some retail sales, and a lot of standing around.  Welcome to Stagnant City!

Get Good Help!

Posted by on Nov 21, 2018 in Forecasts, Jim's Take on the Market, Market Conditions, North County Coastal, Thinking of Buying?, Thinking of Selling?, Why You Should Hire Jim as your Buyer's Agent, Why You Should List With Jim | 7 comments

Will Home Sellers Panic?

Wolf takes a linear view of the housing market on his blog, which doesn’t always factor in the emotional components involved in the decision-making, which is fine.  His content tends to be more on the alarmist, doomer side – like in this case where is his comparing the changes in year-over-year percentages to really magnify the concern:

I’m all for being on the lookout for seller panic.

What are the two simple signs of panic?

  1. New listings flooding the market.
  2. Many homes selling for radical discounts below recent comps.

Those are the two most obvious signs of seller panic.  Comparing the YoY percentage of active listings is interesting, but doesn’t tell us enough.

Here is the graph of the NSDCC new listings for September-October, and how they compare to previous years.  There are no real signs of panic here, and, if anything, it shows us that comparing to last year is measuring against one of the lowest amounts ever:

What aren’t signs of panic:

  1. A growing inventory of unsold homes.
  2. More price reductions.

We are going to get comfortable with a larger inventory of homes for sale.  The more unsold homes lying around means that sellers aren’t very motivated, because they didn’t price aggressively in the beginning and they still think their price must be right.

On #2, more price reductions don’t tell you much.  Wolf touts a recent surge, but most price reductions aren’t lopping off big chunks – they are usually 1% or 2% off, which are too small to change anything and they will have to keep doing more.  By the time they knock off 5% to 10% from their original and overly-optimistic list price, they will feel like they are giving it away and change course (rent it, reverse-mortgage it, or wait until next year).

Could there be sellers motivated enough to dump on price? Very unlikely.

Let’s consider the sellers who might be motivated – the Big Three:

Death – for those who inherit, this is their lottery.  Not only will they hold out for crazy money, but one of them could probably use a residence so there are other alternatives to giving it away.

Divorce – what was once 100% equity is now 50%, and each spouse will want/need every dollar to split between them.  If they can’t sell for enough to make everyone happy, well then everyone has to live somewhere. One of the spouses could occupy until the market ‘improves’.

Job Transfer – renting instead of selling is always an option, especially for those who think they might want to return some day.

Sellers who aren’t in the Big Three categories are definitely not going to give it away, so the worst that will happen is a slight downward trend in pricing.

Reasons given why the market will tank, and how sellers feel about them:

  1. Affordability – sellers don’t care.
  2. Higher rates – ‘not my problem’.
  3. More inventory – ‘I only have one to sell’.

Sellers get a vote!

Posted by on Nov 17, 2018 in Jim's Take on the Market, Market Conditions, North County Coastal | 1 comment

Months of Active Inventory

Rich’s latest report is out!

The worrisome spike last month did flatten out, but it does make you wonder if we should adjust our sights.

I agree with Rich that the months of active inventory will probably be rising from now on.  But if the coastal market had 3 or 4 months of active inventory, it wouldn’t be a bad thing.  Rancho Santa Fe is 7+ and doing fine.

Click here for the full report:

Posted by on Nov 10, 2018 in Graphs of Market Indicators, Jim's Take on the Market, Market Conditions, North County Coastal, Rich Toscano | 3 comments

Inventory Watch

There are times when the general market is in a funk and homes aren’t selling – when it’s easy to think, “Oh this is it, we’re cooked”.

There are also times when the market erupts, and a series of homes that have been languishing for months and/or homes that appear overpriced go pending – which then triggers additional pendings nearby.

Our market is having one of those surges right now!

Not just a couple here and there – we have had dozens of NSDCC homes go pending in the last 10-14 days that have been listed for months, or priced so high you’d think they don’t have a chance.

You sure want to be on the market when that happens!

Richard and I both sold our listings featured here on Friday, and in my case, Tom’s house was the third one listed over $900,000 in South Oceanside to go pending in the last week!

Get Good Help!

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Posted by on Nov 5, 2018 in Inventory, Jim's Take on the Market, Market Conditions, Market Surge, North County Coastal | 0 comments

NSDCC Monthly Sales History

Yesterday we heard the ‘stunning’ news that September sales dropped 13% year-over-year in Southern California.  What about locally?

There were 208 detached-home sales between La Jolla and Carlsbad this year, which was 20% below September, 2017. But once you factor in the extra business day, it was really -12%, which isn’t outrageous.

The sales and pricing stats will be more bouncy now that we’re pulling into Stagnant City.  We already had two other months this year (May and June) that had -20% sales YoY, and we bounced right back and had more sales the next month (July was 271 vs 260) and about the same in August (275 vs 279).

The NSDCC sales last month (Happy November!) have already matched those in 2015, and once the full count is in, should be close to those in 2017 (we did have an extra day this year). I bet that won’t make the doom-doom report!

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

Inventory Watch

Now that the media is trumpeting a slower housing market every day, you’d think there might be more sellers hitting the panic button and listing their house for sale this year, rather than wait for the Glut of 2019.

But this week, the number of new listings dropped 32%!  The count from the previous week was 101, but we only had 69 new listings in the past seven days.

The number of pendings is holding up too (+1 this week).

Let’s compare the exact time in question when things started feeling different towards the end of the selling season.

NSDCC Sales between Aug 1st and Oct 15:

Number of Sales
Median LP

In 2014, mortgage rates had been coming down – from 4.43% in January to 4.04% in October – and the median sales price was 24% lower too.  Yet we had more sales in 2018!

By the Spring of 2019, you can bet that any talk of a year-end slowdown will be shrugged off and blamed on the holidays – and that next year’s pricing will be right back to (overly) optimistic.

Buyers – it won’t get better next year!

Get Good Help!

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Posted by on Oct 29, 2018 in Inventory, Jim's Take on the Market, Market Conditions, North County Coastal, Thinking of Selling? | 3 comments

NSDCC September Sales

Our NSDCC sales in May and June were down 20% each, but then we bounced back in July and August to match the sales from 2017.

But the sales last month were disappointing (down 20% again):

NSDCC September Sales

# of Sales
Avg $$/sf
Median SP
Median DOM

The whole region is following the example set in Rancho Santa Fe, where sellers wait patiently for months or years before the market catches up with them.

We can say our market has been “Rancho-ed”.

Posted by on Oct 16, 2018 in Jim's Take on the Market, Market Conditions, North County Coastal, Sales and Price Check | 1 comment