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Category Archive: ‘North County Coastal’

March Sales – Sobering

The March sales will look bleak to the casual observer.

When you compare these preliminary numbers (late-reporters might add another 5% or so) to the frenzied-up March, 2013 counts, the differences are -29% and -22%.

March Sales of Detached-Homes

Year
NSDCC Sales
Avg SP/sf
SD Co. Sales
Avg SP/sf
2010
216
$395/sf
1,883
$249/sf
2011
238
$371/sf
1,883
$238/sf
2012
238
$357/sf
2,001
$228/sf
2013
299
$404/sf
2,202
$266/sf
2014
211
$519/sf
1,710
$319/sf

You can’t blame it on the weather – it’s been spectacular here the last few months.  Rates have been in the 4s and remarkably steady since July, so buyers are accustomed to them now.  Mortgage underwriting might be slightly easier, though case-by-case (FICOs down to 550 for FHA at a few lenders now).

What does inventory tell us?  The Under-$800,000 market around NSDCC is hot, but above that it is murky.

The number of homes for sale between $800,000 and $2.4M has risen 30% since the start of the year, and their avg LP/sf has dropped 5% to 10%:

http://www.bubbleinfo.com/2014/03/31/inventory-watch-more-steady-2/

The simple answer is that more sellers are priced wrong, but heck, this is the priced-to-see-if-we-get-lucky season.  Sellers will probably wait until May before giving up hope.

You can’t blame sellers for being optimistic when the average SP-per-sf is still rising. But sellers who are priced over $1,000,000 and have been on the market for more than 30 days should start sharpening their pencil now, and get going while we know there are plenty of buyers left.

Posted by on Apr 2, 2014 in Jim's Take on the Market, Market Conditions, North County Coastal, Sales and Price Check | 13 comments

Sales As The Leading Indicator

Livinincali left this comment Thursday:

If history is any guide you’d expect sales volume to start dropping before seeing any movement down on price. The sales volume numbers back in winter of late 2012, 2013 were seasonally higher than they have been and that marked the beginning of the price appreciation.  Now it seems as the sales volume have fallen off a bit and price appreciation has moderated.  If sales volume continues to be soft expect appreciation to be minimal this year.  It seems like some segments of the market are still hot but it doesn’t feel like the frenzy of last year around this time where everything in the county was hot.

Historically, sales are the leading indicator, and prices have always followed.

Many are very committed to the fundamentals, and that in itself could help propel the actual market activity – a self-fulfilling prophecy.  A loan rep in the OC named Logan has sparred with me about it on Twitter, and he has included the Trulia economist in the conversation – which is fine by me because they share the same view that history will repeat itself, regardless.

twitterwar

Logan is entitled to one man’s opinion.  But Trulia stories get published everywhere now, and could carry considerable influence with home buyers.  They are a mainstream-media source for market data, and have a responsibility to dig for the truth.

The Twitter war above got started over this article, which is now being published by media outlets everywhere:

http://www.latimes.com/business/realestate/la-fi-home-prices-20140326,0,4729002.story#axzz2xIS4jHJV

Suggesting that bubbles are forming in areas where prices rising faster than those incomes is shallow and incomplete.  Let’s consider additional facts.

Do reports of fewer sales have to be contributed to stagnant incomes, un-affordability, employment, economics, DTI, etc., that will drive prices down, or are there other explanations?

1.  It was predicted here six months ago that people would be comparing 2014 sales to the ultra-hot frenzy months of 2013, and claim the sky is falling.  You could say that the low rates of 2013 alone were driving people to buy; now that higher-and-steady rates aren’t driving the market, sales look pretty similar to recent years – IN SPITE OF HIGHER PRICES.

Detached-Home Sales Between Jan. 1 – March 15:

Year
NSDCC Sales
Avg $/sf
SD Co. Sales
Avg $/sf
2010
360
$377/sf
3,428
$237/sf
2011
412
$376/sf
3,476
$234/sf
2012
450
$367/sf
3,987
$226/sf
2013
518
$389/sf
4,423
$255/sf
2014
459
$500/sf
3,518
$312/sf

Take out the 2013 frenzy-driven era, and sales look similar, or better, than previous years, even though pricing is substantially higher.

2. A preliminary sign of a market top would be more homes not selling, and inventory rising. If inventory was rising steadily, AND sales were flat or declining, then a call for lower prices would be obvious.  But the inventory is about the same as last year:

SD inventory

A big difference that is critical to the equation is that 2013 sellers were caught off-guard at rapid rebound in pricing.  But the word is out now, and the 2014 sellers are VERY WELL AWARE of the improved market/higher pricing.  Yet sales are strong.

3.  This year’s sellers are more elective.  They didn’t have to sell last year, and waited until they could get even more money this year – and they are only selling if they get their price.  Yet sales are strong.

4.  Every seller wants more, not less.  It is the sellers’ creed – tack on a little extra to what the last guy got.  Yet sales are strong.

5.  If prices did falter, sellers just wouldn’t sell.  The ego of a seller is powerful, and selling for any less than ‘their price’ is ‘giving it away’.  Sellers will avoid that at all costs, and just cancel their listing instead.  You’ll know that pricing is heading downward when you see inventory dry up further.  Yet sales are strong.

6.  There is absolutely NO threat of distressed sales undermining the market.  Of the 1,180 NSDCC listings this year, 12 have been short-sales, and one has been an REO.  Yet sales are strong – stronger than when buyers could have gotten a deal.

7.  Multiple offers are everywhere. I can only speak about the north-coastal region of San Diego County, but everywhere I go, there are multiple offers – even on houses that aren’t that great.  You will see bidding wars dry up before sales start to drop.  Yet sales are strong.

8.  We have never seen the inventory sustain at levels this low.  There is an awareness and appreciation about one’s home that is superseding price – people aren’t interested in moving, no matter what they could get for it. The Z-man said yesterday that the low inventory is due to 20% of the country being underwater.  Did he interview each one of those people?  They could have short-sold anytime over the last few years if they wanted to move – but they didn’t.

In summary, buyers are ready, willing, and able to buy homes today – at these prices, and these mortgage rates.  There would be as many – if not more – sales this year, than in 2013, if there were just more decent homes to sell at today’s prices.

Homes that aren’t selling today are the ones priced outrageously – anything close to the right price is selling. Hopefully it means there is a price ceiling - and we have arrived at the unaffordable plateau for now.

Sellers are insisting that we stay at these prices, or higher – they aren’t backing down. For now, buyers are agreeing.  I haven’t seen any house sell for less than the comps this year – have you?

Until the bidding wars dry up, and then sales start to falter when compared to non-frenzy months, then prices should hang around these levels.

Posted by on Mar 29, 2014 in Frenzy, Jim's Take on the Market, Market Buzz, Market Conditions, North County Coastal, Sales and Price Check | 13 comments

Feb. Sales – Glass Half Full

jim at last year's frenzyIt was noted in the media this week that February homes sales were the at the lowest count in 18 months – yes, a frenzy will do that to you!

http://www.cnbc.com/id/101511116

Sales are going to be ‘sputtery’, and struggle to keep up with previous frenzied months when prices rise sharply.  When prices and rates both rise substantially, you’d think it would put a real damper on sales – but around NSDCC they have held up remarkably well:

NSDCC Detached-Home Sales

Year
Jan. Sales
Feb. Sales
Jan. Avg $/sf
Feb. Avg $/sf
2005
206
184
$500/sf
$480/sf
2006
169
189
$559/sf
$519/sf
2007
157
155
$489/sf
$482/sf
2008
115
131
$474/sf
$485/sf
2009
114
105
$419/sf
$370/sf
2010
137
143
$368/sf
$376/sf
2011
149
166
$366/sf
$377/sf
2012
155
184
$374/sf
$358/sf
2013
185
187
$379/sf
$400/sf
2014
181
176
$498/sf
$483/sf

Let’s remember that these are completely different sets of buyers and houses.  The recent consistency, and resiliency, is remarkable!

P.S. The preliminary numbers for this month look much lower than last year (we had 298 sales in March, 2013, which was 25% higher than in 2012).

This will probably continue for the next few months – any comparison to the max-frenzy months of 2013 is going to look dismal.  But the sky isn’t falling, and price will fix anything.  Get good help!

Posted by on Mar 22, 2014 in Market Buzz, Market Conditions, North County Coastal, Sales and Price Check | 1 comment

Frenzy – It’s Baaaack

Can you feel it?  The frenzy, creeping in on you?

Those watching closely may have noticed how the market has ’picked up’ over the last week or two.

We’ve had more buyers than sellers for a while now, so that alone doesn’t constitute a frenzy.  In a low-inventory environment, you should have multiple offers on every quality property.

It’s the velocity.

Here are signs of frenzy-building:

1.  It’s been hot.  A year ago, the frenzy was just becoming obvious – but at this point, the market has been hot for the 18 months.

Both buyers and sellers are expecting a frenzy now.

NSDCC Feb.
#Sales
Median SP
Median DOM
2011
166
$844,000
60
2012
184
$795,000
69
2013
184
$900,000
25
2014
172
$906,500
24

All three indicators from last month are pointing to more frenzy.

2.  How fast listings go pending.  With listing agents riding high on their horse, you typically see them play around for 7-10 days before a new listing gets marked pending.  It seems like more listings are going pending faster – and it’s about the same as last year (though this year’s haven’t all closed):

NSDCC 2/22 to 3/7
# Pendings with DOM<6
# New Pendings
%
2013
42
136
31%
2014
35
119
29%

3.  The percentage-paid-over-list-price.  It’s been standard to see homes sell for 5% to 10% over list price, but it can get crazier.

This was a fascinating – though extreme – example.  A great-looking house with fantastic view, but it is right on La Costa Ave. and located in an area with terrible soil quality:

http://www.sdlookup.com/MLS-140009811-2662_Galicia_Way_Carlsbad_CA_92009

Look how steep the hill is – it looks like it could slide down the hill any day:gal

From the remarks: This property is for cash buyer, builder, or investor. Home has compaction and soil issues. Only shown to qualified buyers.

The soils problem must be serious, given their initial list price of $500,000.  Yet it sold for $685,000 cash, or 37% over list price and closed in ten days.

It must have been worth it to someone, and probably worth close to that for many, but it is the percentage that gets me.  With the problems, wouldn’t you try to buy it for 10% or 20% over list?

4.  It’s March.  The wait-and-see buyers haven’t had any indications of inventory flooding the street – in fact, we’ve had fewer new listings this year than last (between Jan. 1 and March 5th):

Year
# New Listings
LP Avg $/sf
2013
886
$494/sf
2014
858
$541/sf

Buyers are getting antsy – for them, there aren’t any signs of relief.

It is a great time to sell – contact Jim the Realtor to get started today!

(858) 997-3801 cell or jim@jimklinge.com.

Posted by on Mar 8, 2014 in Frenzy, Jim's Take on the Market, Market Buzz, Market Conditions, North County Coastal | 8 comments

NSDCC February Sales/Pricing

The average pricing for February increased 21% since last year, yet remarkably, sales haven’t dropped off much – what other industry could be so price insensitive?

Year
Feb. Sales
Avg $/sf
Avg DOM
30Y Mortgage Rate
2006
189
$482/sf
64
6.25%
2012
174
$375/sf
92
3.89%
2013
188
$399/sf
68
3.53%
2014
169
$484/sf
55
4.30%

It looks like we’ve been on a comfortable plateau over the last six months:

mocostgraph2

We didn’t see the step-up from the $430-$440/sf range until mortgage rates popped last summer.  Have we found the happy price-point for mortgage rates in the low-to-mid 4%s, or just levitating?

Posted by on Mar 4, 2014 in Jim's Take on the Market, North County Coastal, Sales and Price Check | 6 comments

Is Another Frenzy Coming?

Unlike last year, buyers aren’t jumping at every listing – we just saw that the SD inventory is up about 13% compared to last February.

Though every talking head reminds us that rates are still ‘historically low’, nobody is going to buy a house today just to lock in the rate.  If anything, buyers are willing to wait-and-see if a further rise in rates might drive prices downward.

It is a more-cautious market, yet sales are streaming in – here’s how the NSDCC sales for January/February compare to previous years:

Year
# of Sales
Avg SP/sf
Avg DOM
2006
358
$500/sf
65
2012
339
$366/sf
94
2013
373
$389/sf
66
2014
338
$496/sf
53

Will this selling season get up to frenzy-speed like last year?

Or just settle in at a more-leisurely pace?

We’ll know in the next 30-45 days. There is a natural lull around April 15th, and momemtum will have to be flowing by then to push a frenzy for another couple of months.

What will it take?

More listings priced reasonably – which sounds far-fetched, on both counts – and buyers willing to pay more than last year.

Here are the new-listings counts, and the LP-per-sf for each area:

Total Number of NSDCC Detached-Homes Listed Between Jan 1 – Feb 28

Area
Zip Code
2013
2014
Carlsbad SE
92009
192, $276/sf
190, $321/sf
Carlsbad SW
92011
105, $288/sf
94, $336/sf
Carmel Valley
92130
163, $378/sf
169, $422/sf
Del Mar/Solana
14+75
117, $635/sf
130, $715/sf
Encinitas
92024
142, $460/sf
156, $510/sf
La Jolla
92037
247, $691/sf
209, $681/sf
RSF
67+91
109, $540/sf
99, $595/sf
Totals
All Above
1,075, $478/sf
1,047, $513/sf

The numbers are similar enough that they could be considered noise: 3% fewer listings at +7% higher list pricing with 10% fewer sales in the first two months of 2014 (though that will be closer to -5% with late-reporters).

I think buyers will be more picky as time goes on, and the bidding-war firefights will dwindle as sellers keep pushing higher.

A more-leisurely frenzy for the next 1-2 months?

Posted by on Mar 1, 2014 in Frenzy, Jim's Take on the Market, North County Coastal | 5 comments

Pricing Plateau, Or?

Yesterday we saw that the San Diego Case-Shiller Index has been essentially flat since mortgage rates went up at the end of June, 2013.

Those higher rates may have tempered the frenzy around the coast too, as sales started dropping off in August.  But the average pricing has kept rising, now up to $498/sf last month (a 19% increase since July’s $418/sf):

NSDCCmonthlygraph

Which segment is driving the average-pricing up?

It’s the higher-end!

Below is the graph for the Under-$1,400,000 market, where pricing has been flat since August – and last month was a blip; the average for February is $385/sf currently:

NSDCC UNDER $1.4 monthly

 

It’s a rich man’s game – get good help!

 

Posted by on Feb 26, 2014 in North County Coastal, Sales and Price Check | 6 comments

Back To Peak

Whether you look at individual sales or market data, we are back to the highest prices ever seen in the hottest areas of town.  I couldn’t get these all on one, but looking at two graphs might be easier anyway.

Carmel Valley, Encinitas, and Carlsbad are approaching new peaks:

San Diego Median Sale Price / sq. ft.

San Diego Metro Median Sale Price / sq. ft.

Area
Peak Med. SP/sf
Latest Med. SP/sf
Carmel Valley
$401/sf, Jul 2005
$392/sf
Encinitas
$452/sf, Jan 2006
$436/sf
Carlsbad
$332/sf, Jul 2005
$314/sf

Big money attracts a lot of takers if you are selling powerball tickets – but if you have to sell your house to get it, most aren’t interested.

No flood of inventory yet, in spite of near-record prices being available!

Posted by on Feb 20, 2014 in Jim's Take on the Market, North County Coastal, Sales and Price Check | 2 comments

January Sales Wrap-Up

Sean at propertyradar.com does a nice monthly report on California real estate sales and pricing – and the latest was published yesterday:

http://www.propertyradar.com/reports/real-property-report-california-january-2014

This graph helps illuminate how hot the frenzy was last year throughout the state – where both sales and median prices were on a tear the first half of the year (May was the peak for median price).  But both dropped off in the second half too:

PR median

PropertyRadar said California sales in January were down 18.7% from December, and 11.8% from January, 2013.  The C.A.R. released this today, saying that San Diego County sales in January declined 22% in both M-O-M and Y-O-Y comparisons:

http://www.car.org/newsstand/newsreleases/2014releases/jan2014sales?view=Standard

But this year around NSDCC, we are tracking about the same amount of closed sales as last year for the Jan. 1 – Feb. 14 period, even though the median sales price has risen 18%, from $863,750 to $1,015,000.

There are going to be conflicting reports, and speculations presented as facts.  But in affluent, desirable areas, the market should stay ‘hot’.

Possibilities:

A.  The spring selling season doesn’t produce a whole lot more inventory.  Sean’s report mentions how sellers don’t want to list unless they know they can find the next house, which is probably true.

But there is also a group of homeowners – those previously underwater, and those empty-nesters – who will decide that staying put isn’t so bad, and they give up the thought of selling.  For many, it beats the hassle of trying to figure out all the pieces to have moving make sense.

B.  Prices keep rising (list prices are in a full gallop), and some buyers quit.

Long-time lookers have to cope with major sticker shock to buy the same house they wanted 2-3 years ago.  Will they?  Can they?  Many are hoping for a miracle, but prices are going the wrong way for the lucky buy.

Summary:  We are experiencing the highest prices ever, and the intensity is rising.  With A & B above taking out players on both sides, we should see higher prices on fewer sales.  Get good help!

Posted by on Feb 19, 2014 in North County Coastal, Sales and Price Check | 1 comment