With all the recent action mentioned in the previous post, it makes you wonder how much the market is fueled by frustration over the selection of homes for sale. Yes, it is the “season”, but is the lack of inventory causing buyers to grab anything, at any price?
More inventory would help satisfy the demand, and help us discover if there is a ceiling to these prices. But adding just a few more houses for sale would only fire up the frenzy.
Here are the number of NSDCC houses listed between Jan. 1 and April 15th:
Number of New NSDCC Listings, Jan 1 to Apr 15
Note how the hot frenzy in 2013 was fueled by having more homes for sale. If we just had an extra 100-200 decent houses for sale now (especially under $2,000,000), they would likely get gobbled up.
Usually around tax day, the real estate market goes into a bit of a funk, and this year it was compounded by the disconnect between our MLS and Zillow – any new listings have to be manually inputted to Zillow, which isn’t obvious to most agents.
In spite of all that, there have been some remarkable new pendings in the last week. A few examples:
1. The neighbor down the street had a smaller lot and no guest apartment but had a more wide open view looking south – yet they struggled for 124 days before finding a buyer who paid $1,349,000 (closed on April 2nd). Then this house lists for $1,599,000 and goes pending the first week:
4. This is a teardown on a 9,771 sf lot with some ocean view in Leucadia listed for $1,299,000. You could buy a brand new house down the street for the same money (or less), yet it only took 26 days for this to go pending:
5. The seller of this house paid $1,575,000 two years ago, which was $80,000 over the list price then. Two weeks ago, they listed it on the range $1,629,000 – $1,699,000, and received eight offers at or above the high end of the range. My clients offered $1,760,000 cash and lost – rumor has it that the sales price is around $1,800,000:
8. In Del Mar, Solana Beach, RSF, and La Jolla there were 17 new pendings, and almost all were lower-enders. The auction happened on Friday night and I didn’t see any last-minute advertising like there was on the other auctions. But it’s pending too:
If you get the feeling that the 2015 market has been a lot like 2014, it’s because it has been, statistically. Using the NSDCC data gathered below, here are the new actives and new pendings from the first 15 weeks of each year, and the number of house sales closed in the first quarter:
1Q Avg $/sf
Are we at a pause before climbing higher? Plateau City? Or are we at the crest of the roller-coaster??
Click on the link below for the complete NSDCC active-inventory data:
It used to make sense that the higher prices went, the more people would sell.
But now here we are at all-time high prices, and not many are interested. It must be due to the lack of other options – not selling looks better than selling.
New Detached-Home Listings Between Jan 1 – Feb 15
# of New Listings
Median List Price
One place where there has been some nice action is the $700,000 – $900,000 range along the I-15 corridor. There has been a steady stream of new product coming to market, and momentum is building as most sell within the first week (catching many sellers and agents by surprise).
When there are only a smattering of new listings like we’re having along the coast, buyers struggle with whether the pricing is real. A few will sell here and there, but more listings would provide more comfort to buyers, one way or another. If they see them selling, then they’d be more likely to jump in!
Reader 97212 thinks that much of the Under-$800,000 inventory is graduating to higher price points, which is true. As buyers grab what they can on the lower end, sellers will keep bumping higher.
The median list price of houses for sale from Carlsbad to La Jolla is $1,995,000, and below that it’s really been hopping. Here are the number of new listings in 2015, and new pendings this year:
# of New Listings, 2015
# of New Pendings, 2015
$1.4 – $2.4M
New pendings this year include properties that were listed last year. These are incredibly hot numbers in a market that has already seen 20% to 30% appreciation over the last couple of years. All it will take is for sellers to be reasonable about reading what the market will bear, and it should continue!
Here’s one of the best listings I’ve ever had – a luxury one-story coastal estate in the gated community of Bella Lago in Aviara. Open this weekend 12-3pm:
Luxury one-story coastal estate and former model home in the prestigious gated Aviara community of Bella Lago, next to the Aviara Golf Club.. This beautiful home has features including: designer finishes, upgraded hardwood flooring, built-in cabinetry throughout, surround sound, electronic shades, water filtration system, three fireplaces, second story bonus room and backyard oasis with an outdoor fireplace, pool, spa, waterfall and putting green. Kitchen loaded with Tibetan Black Quartz from the Dalai Lama, himself. He told me “and when you die, on your deathbed, you will receive total consciousness.” So you’ll have that goin’ for you, which is nice.
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.
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