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Category Archive: ‘North County Coastal’

Fewer Repeat Buyers, Yet Still Cooking

At first, this article below mentions that there has been 50% fewer repeat home buyers:

http://www.builderonline.com/newsletter/repeat-home-buying-has-fallen-drastically_c

Tight credit is making it hard for homeowners to trade up and out of their starter homes, according to findings from the Urban Institute’s latest Chartbook.

Researchers looked at GSE & FHA loans (which made up the majority of the mortgage market except in 2004-2006) and noticed that starting in about mid-2007, the share of first-time home buyers has been consistently between 50% and 60%. Between 2001 and 2007 the share was much lower, with just 40% to 50% of borrowers buying for the first time. They took a closer look to determine if repeat home buying had truly fallen off or if there were just more purchase loans being made by first time home buyers and the same number of repeat buyers still active in the market.

Researchers found that while there were the same number of first-time home buyers in 2001 and 2015 – 1.3 million, there were about ½ as many repeat home buyers: 1.8 million vs. just over 900,000 in 2015.

Repeat home buying took a big tumble and just kept falling after 2007. And it’s no coincidence that this happened at the same time it started to become really difficult to get a mortgage anywhere in the U.S. and hard to build home equity, thanks to dropping home prices.

In spite of fewer repeat buyers, their link to the most recent data showed that San Diego-Carlsbad HPI still went up almost 50% in the last seven years!

7-2016

They said repeat buyers declined 50% between 2001 and 2015, but we had MORE sales between La Jolla and Carlsbad, in spite of almost 2x the pricing:

NSDCC Detached-Home Annual Stats

Year
Total Number of Listings
Total Number of Sales
Median Sales Price
2001
5,842
2,926
$570,000
2015
4,910
3,024
$1,098,000
% chg
-16%
+3%
+93%

Posted by on Sep 28, 2016 in Jim's Take on the Market, North County Coastal, Sales and Price Check | 2 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:

sdtrend

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.

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

Inventory Watch

sp1

The inventory dropped across the board this week, but it still feels bloated – the decline was only 1.7%, leaving 1,072 houses for sale.

Anyone who has their house priced on the higher-end and has been trying to sell for months should cancel and wait until next year so we can focus on the sellers who want and need to sell for what the market will bear.

At least then we would have some certainty about market value – with hundreds of listings lying around not selling, we really don’t know anything except what they aren’t worth.

(There are 523 NSDCC active listings priced above $2,000,000, and 45 have sold in the last 30 days).

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

Read More

Posted by on Sep 19, 2016 in Inventory, Jim's Take on the Market, North County Coastal | 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.

Under-$800K
NSDCC Active Listings
Avg. LP/sf
DOM
Avg SF
Sept. 14, 2015
94
$398/sf
38
1,979sf
Sept. 12, 2016
63
$408/sf
36
1,903sf
$800,000-$1.4M
NSDCC Active Listings
Avg. LP/sf
DOM
Avg SF
Sept. 14, 2015
286
$413/sf
58
2,886sf
Sept. 12, 2016
277
$438/sf
51
2,891sf
$1.4M – $2.4M
NSDCC Active Listings
Avg. LP/sf
DOM
Avg SF
Sept. 14, 2015
274
$562/sf
82
3,785sf
Sept. 12, 2016
306
$598/sf
74
3,554sf
Over $2.4M
NSDCC Active Listings
Avg. LP/sf
DOM
Avg SF
Sept. 14, 2015
414
$0/sf
126
0sf
Sept. 12, 2016
445
$0/sf
128
0sf

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

NSDCC August Sales

You say the market is soft, and it’s just a price thing.

How do you know?  Check the sales count.

Last year was hot, and yet this year we’ve matched the 2015 August sales.  It doesn’t look like we have any structural issues here, it’s just a price thing.

NSDCC August Sales

Year
# of Detached-Home Sales
Median Sales Price
2011
240
$825,000
2012
298
$865,000
2013
324
$953,750
2014
277
$1,050,000
2015
272
$1,034,500
2016
272
$1,199,500

“But Jim, those August sales reflect decisions made in June and July, and now it’s September”.  OK, then let’s simplify my sellers’ rule-of-thumb.

If you are getting lookers and offers, your list price is close. If you are getting lookers but no offers, your price is probably 10% wrong.  How do you know? Because if the price was within 5% of being right, you’d be getting offers.

A buyer said, “I’m not asking anyone to lose money, I’m just asking the sellers to not gouge me as much”.

Posted by on Sep 9, 2016 in Jim's Take on the Market, North County Coastal, Sales and Price Check | 0 comments

Buy/Sell Now or Later?

median cost per sf

What now?

Summer is over, and the so-called spring selling season is six months away.

Is it worth waiting?

Sellers want to believe that springtime is when all the young families with 2.2 kids will be looking to pay retail-plus.  But that belief ignores the trend – prices been fairly flat around higher-end areas.  Look at the graph above.  The only area that is a good bit higher today than in January is Rancho Santa Fe, which has been on a roller-coaster the last couple of years.

Predictions for next year?  From Zillow:

Zillow SD prediction 2017

Zillow was more pessimistic about 2016 too, so the +1.7% may end up being conservative.  But prices are already setting all-time records, so it is hard to imagine another big pop next year.

We as an industry aren’t used to flat pricing – the drama of violent price swings is much more exciting!  But flat pricing does make it easier, because it eliminates one of the major variables about moving.

If you are going to sell or buy at roughly the same price now or next spring, then which is better?

THE BEST TIME TO BUY OR SELL IS WHEN NOBODY ELSE IS!

If you are buying and come across the right home at the right price, you sure don’t want any competition to screw it up for you!  There will be less competition during the next 4-5 months!

If you are selling in a flat market and have other active listings around you, what if one of them needs to sell worse than you do?  They could undercut your spring-selling-season-2.2-kids-retail-plus program, and leave you hanging.

Remember our Glendale realtor with the line out front?

glendale

There weren’t any good comps nearby all year – a great time to sell when nobody else is!  They ended up with 18 offers (6 were cash) and they had two cash buyers who wanted it so bad that they were willing to pay more than $100,000 over list price!

Thankfully there weren’t any good comps nearby to screw that up!

 

Posted by on Sep 6, 2016 in Bidding Wars, Forecasts, Jim's Take on the Market, North County Coastal, Sales and Price Check | 0 comments

2016 Year-to-Date

2016-07-27 09.20.08

Two-thirds of 2016 is complete – how did we do?

Our local NSDCC market is comprised of 59,119 single-family residences between La Jolla and Carlsbad (according to our MLS tax rolls).  Last year we only sold 3,024 of them, and the way 2016 is going, we will sell fewer this year, in spite of all-time record prices!!

Here is how the first eight months compare for each year – there will be a few extra added to the 2016 totals.  You will notice how remarkably consistent our market has been!

NSDCC Jan-Aug
Total # of Listings
Total # of Sales
Median SP
2012
3,335
2,033
$826,000
2013
3,685
2,291
$930,000
2014
3,565
1,947
$1,022,000
2015
3,677
2,115
$1,090,008
2016
3,764
2,009
$1,165,000

There have been 2% more listings this year than in 2015, and sales declined 5%.

When things were just starting to unravel in 2006, there were 4,602 listings between January and August – I think our bubble conditions are in check.

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Posted by on Sep 1, 2016 in Jim's Take on the Market, North County Coastal, Sales and Price Check | 0 comments

Existing Home Sales, July, 2016

nar

Our N.A.R. head cheerleader does his best at fabricating a believable story behind the 3.2% drop in existing-home sales:

Lawrence Yun, N.A.R. chief economist, says existing sales fell off track in July, after steadily climbing the last four months.  “Severely restrained inventory and the tightening grip it’s putting on affordability, is the primary culprit for the considerable sales slump throughout much of the country last month”, he said. Realtors are reporting diminished buyer traffic because of the scarce number of affordable homes on the market, and the lack of supply is stifling the efforts of many prospective buyers attempting to purchase while mortgage rates hover at historical lows.

He needs to follow me on twitter.  I’ve already pointed out twice that there were 9% fewer days in July than in June – and sales only dropped 3.2%?  Sounds like a positive to me.

But instead he feeds his typical bather to America, and leaves it up to the consumers what to make of it.

He should also point out that 2015 was a hot market, with summer sales exceeding those during the super-frenzy of 2013.  Yet sales over the last four months have been close or surpassed those in 2015!  Even with the two fewer days, look how July, 2016 compares to previous years – it was better than 2013!

Yunnie needs say, “Remember, real estate is local”, to end all of his speeches.  This national data and his blunder of an explanation shouldn’t have any impact on local market conditions.  But they could make a difference if casual readers just grab a headline and decide to pack it in for the year.  Thanks Yunnie – you’re supposed to be on our side!

The local scoop:

Detached-Homes
July, 2013
July, 2014
July, 2015
June, 2016
July, 2016
NSDCC # of Sales
297
271
313
298
262
NSDCC Median SP
$930,000
$1,018,000
$1,025,000
$1,204,500
$1,125,000
SD Co # of Sales
2,401
1,992
2,437
2,360
2,151
SD Co Median SP
$480,000
$513,750
$550,000
$565,000
$562,000

NSDCC detached-home sales in July dropped 12% compared to June, with 9% fewer business days. With higher prices, sales should be declining – and for them to drop a net 3% sounds good to me. House sales in San Diego County dropped 9% month-over-month – let’s call it even.

P.S. Regarding his comment that realtors are reporting diminished traffic, it’s because you are sitting on over-priced listings. Lower the price and get in the game, or go get another listing!

Added later – looks great:

months supply

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Posted by on Aug 24, 2016 in Jim's Take on the Market, North County Coastal, Sales and Price Check, Why You Should List With Jim | 3 comments

NSDCC Actives/Pendings

windansea

In June, we checked the local markets by comparing their active-to-pending ratios, which historically have been relatively ‘healthy’ when around 2.0.

Since then, the ratios in four of the eleven areas have improved (gone lower), including Del Mar, La Jolla and Rancho Santa Fe – wow!

Area
Zip Code
June ACT/PEND
Aug ACT/PEND
June Ratio
Aug Ratio
Cardiff
92007
21/9
28/8
2.3
3.5
Carlsbad NW
92008
45/23
54/24
2.0
2.3
Carlsbad SE
92009
113/69
120/59
1.6
2.0
Carlsbad NE
92010
13/18
17/19
0.7
0.9
Carlsbad SW
92011
53/34
47/32
1.6
1.5
Del Mar
92014
73/23
68/27
3.2
2.5
Encinitas
92024
108/81
118/66
1.3
1.8
La Jolla
92037
221/46
215/49
4.8
4.4
RSF
92067
247/30
246/39
8.2
6.3
Solana Bch
92075
26/9
31/8
2.9
3.9
Carmel Vly
92130
132/80
116/64
1.5
1.8
All Above
All
1,052/428
1,060/395
2.5
2.7

Most importantly, there hasn’t been any explosions of additional active (unsold) inventory in a month when we usually see the peaks of the year.

Posted by on Aug 17, 2016 in Actives/Pendings, Jim's Take on the Market, North County Coastal | 1 comment

Higher-End Inventory

orangeco

Our favorite doomer went off again this week, focusing on how the high-end inventory has grown recently in the hot markets:

http://mhanson.com/8-9-hanson-house-supply-surging-time-highs-toxic-trend-change-suddenly-focus/

The graph above shows the inventory of Orange County homes listed for $1,300,000 or higher (San Diego wasn’t included but is similar to the OC).

Mark likes to believe that prices have to fall – his quote:

In other words, higher-end real estate prices have much more air underneath them than lower-end prices have air above them. The resulting house price compression will accelerate taking all price bands lower until the higher-end housing market can catch a macro bid.

Here is how inventory in our higher-end areas have changed since May 26, 2015:

Area
5/26/15 Actives
Today’s Actives
Diff
Del Mar & Solana Beach
73
99
+36%
Encinitas
91
110
+21%
La Jolla
185
218
+18%
RSF
237
275
+16%
Carmel Vly
116
126
+9%

Yep, our inventory in the tonier parts of town is higher but it has been so low lately that an extra 20-40 or so houses on the market in each area isn’t going to hurt much.  These are the only numbers I have for comparison, and May vs. August isn’t that great either – there is more build up of the unsuccessful sellers in every August.

Most importantly, the high-end sellers have more horsepower – they can hold out longer, and in most cases, will only sell if they get their price.

Rancho Santa Fe has been the harbinger of what we can expect elsewhere – lots of listings sitting around not selling, but few lowering their price – they are happy to wait.

Unless we get a surge of boomer liquidations, the worst thing that will happen is the whole high-end market will go stagnant.

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

If you have concerns, just buy in Carmel Valley. In the first 7 months of 2015, there were 276 houses sold in the 92130, and this year there were 321 – a 16% increase!  And that doesn’t include the 100+ new CV homes sold this year.

Carmel Valley pricing statistics have been flat though. The average cost-per-sf only went up from $413/sf to $419/sf, and the median sales price actually went down from $1,178,000 to $1,124,000.  It’s probably a reason why they’ve had so many sales!

Posted by on Aug 11, 2016 in Carmel Valley, Jim's Take on the Market, Market Conditions, North County Coastal | 0 comments