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Category Archive: ‘North County Coastal’

Mid-Summer $1M Market

Summer 2015

The OC Register is reporting that million-dollar sales in Orange County are down 12% this mid-summer.  We’re watching the sales counts closely, because we know that is the leading indicator for the market.

How about our north county coastal region?

The OCR only looked at zip codes that had a $1,000,000 median sales price, which in our case, excludes all four zips in Carlsbad.

Here are the stats on the Encinitas-to-La Jolla sales over $1,000,000 (where 91% of the active listings today are over $1M) between July 13th and August 11th:

Year
# of Sales
Median SP
Avg $/sf
Avg SP
Avg DOM
2013
107
$1,560,000
$570/sf
$2,021,119
57
2014
111
$1,600,000
$593/sf
$1,849,571
62
2015
121
$1,500,000
$585/sf
$2,062,434
56

Our $1M sales count was up 9% YoY, instead of down – yippee!  But nobody in this market should get giddy about pricing in general – it is flat, at best.

Posted by on Sep 1, 2015 in Del Mar, Jim's Take on the Market, La Jolla, North County Coastal, Rancho Santa Fe, Sales and Price Check | 0 comments

Low Inventory Driving Markets

sf

Could prices keep going higher?  Yes, due to the lack of inventory.  It is a game-changer that we haven’t experienced before – usually as prices rise to new levels, sellers tend to flood the market to get out at the top.

Not this time.

Our local NSDCC inventory has been steady – no big rush by sellers to cash in, mostly because they have nowhere to go that is any better.

NSDCC Total Detached-Home Listings, Jan 1 to Aug 15

2004:  3,671

2005:  3,706

2006:  4,369

2007:  3,823

************

2012:  3,151

2013:  3,471

2014:  3,403

2015:  3,474

Could it continue?  Yes, it could.  We all know about how the San Francisco market has been fetching extraordinary prices.  Yet, their inventory is not exploding – instead, it’s going down.

From the WSJ:

A scarcity of listings is sending prices to new highs. In June, the number of new listings in San Francisco was down 23.1% from a year prior, according to the San Francisco Association of Realtors. The average listing spent 26 days on the market, compared with 31 days in June 2014. Median sales prices were up to $1.177 million—a 12.1% jump from a year ago. Real-estate agents say bidding wars are most common on properties priced below $2.5 million, and that buyers often make offers on numerous properties—anywhere from two to 20—before finally winning one.

Read the full story here, with many bidding-war examples:

http://www.wsj.com/articles/in-san-franciscos-bidding-wars-home-prices-go-ballistic-1440683103

Posted by on Aug 28, 2015 in Bidding Wars, Inventory, Jim's Take on the Market, North County Coastal | 9 comments

Frenzy vs. Frenzy Sales Overlay

Every day we hear some pundit talking about the latest real estate bubble forming.  Can we learn anything from comparing recent sales to those during the bubblicious 2004-2007 era?

graph (56)

Sales were dropping precipitously in 2005 and 2006 after the 2003-2004 run-up.  There was one last blowout at the end of 2006 and into 2007 when Countrywide began pushing the no-doc, 100% financing up to $1,500,000.

When Angelo took away the punch bowl in the middle of 2007, the party was over – you can see how sales tanked, beginning in August, 2007.

One big difference when comparing these two eras is that the neg-am teaser rate in 2007 is today’s 30-year fixed rate.  When the teaser rate went away, and people had to qualify again, the market collapsed.

It doesn’t look that way today.

This year, sales have been strong, in spite of the San Diego Case-Shiller Index rising 42% since January, 2012.  If we hit an unsustainable stretch, the first indicator will be sales dropping off, like they did at the end of 2007.

Posted by on Aug 22, 2015 in Bubble-Era Pricing, Frenzy, Jim's Take on the Market, Market Buzz, North County Coastal, Thinking of Buying?, Thinking of Selling? | 4 comments

Fall 2015 Reality Check

LA

We can talk, can’t we?

Houses that have been on the market for more than 60 days (which includes 507/1,079 = 47% of NSDCC active listings) missed the hot season.

Buyers presume,

“If it hasn’t sold by now, something is wrong with the house, or the price.”

Some people use the days-on-market statistic has a primary search feature. Even if the list price has been reduced, just the longer market time can cause buyers and agents to miss the longer-listed properties.

So not only are those listings easier to pass up, the buyer pool in general is shrinking due to the time of year.  It’s too easy for them to pack it in.

It’s going to get tougher for the older listings to find a buyer, unless they get aggressive on price.  But how many sellers will knock 5% to 10% off their price?  Not many.

Hypothesis:

1.  The list price has to be at least 10% wrong if not selling for months.

2.  Most unsold listings aren’t that far off.  Buyers would be interested in many of the active listings at 10% to 15% under list.

3.  Sellers are reluctant to chop that much off their price.

4.  Buyers have to take the initiative.

My game plan here:

Posted by on Aug 20, 2015 in Bubbleinfo TV, Listing Agent Practices, 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 | 2 comments

NSDCC July Sales

Last month’s sales blew the doors off – more sales at higher prices!

But notice how pricing has been leveling off:

July Detached-Home Sales between La Jolla and Carlsbad

Year
# of Sales
Avg. $/sf
Median SP
Avg. DOM
Avg. SF
2012
258
$365/sf
$850,000
76
2,902sf
2013
297
$418/sf
$930,000
40
2,999sf
2014
271
$451/sf
$1,018,000
46
3,086sf
2015
309
$457/sf
$1,025,000
41
2,952sf

Posted by on Aug 12, 2015 in Jim's Take on the Market, North County Coastal, Sales and Price Check | 4 comments

Qualcomm Layoffs and Real Estate

qcom

http://www.nytimes.com/2015/07/23/technology/qualcomm-earnings-q3.html

The Qualcomm press release today:

http://247wallst.com/technology-3/2015/07/22/qualcomm-to-fire-15-of-staff-after-cutting-outlook-adding-directors/

An excerpt:

The company expects to fire about 15% of its semiconductor business’ full-time staff, significantly reduce its temporary workforce, and streamline its engineering organization.

They expect to layoff around 4,500 people company-wide.  What does that mean for the local real estate market?  Let’s point out the general changes:

1. YOU DON’T HAVE TO MAKE YOUR PAYMENTS.

A result of the financial crisis – banks are equipped to let you ride for months or years without making payments.

2.  CUSHION

There will be severance packages, plus stock and stock options to live on.

3.  ONLY RECENT PURCHASERS WOULD FEEL THE SQUEEZE.

If a Q-employee bought their home more than 3 years ago, they have plenty of equity, and have probably re-financed at a low rate.  Payment amounts are tolerable, especially compared to rents in the same area.

4.  MICKELSON EFFECT

Phil Mickelson made a big stink about the state tax he has to pay (probably around 13%) – but you haven’t heard a peep out of him since. Why?  My guess is that his wife put her foot down, and told him they aren’t moving anywhere.  The same thing would happen here – even if a spouse or both are laid off, they will exhaust all avenues to maintain the same lifestyle and kids’ upbringing.  Selling the house would be the absolute last resort.

5. BANK OF MOM AND DAD

The kids have been very successful up to now, and the grandparents will drain a few accounts to help keep the grandkids’ lifestyle in place.

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

There would be loads of buyers today of homes priced at 20% under today’s values.  If that is the floor, then about 10% off would be a retail-price target.  We could have a few different factors contribute to a similar discount (Fed move, Grexit, unknown factors, etc.), but we already endured the most severe downtown in the history of real estate and the premium areas didn’t take much of a hit.

Let’s use Carmel Valley as the target market to follow:

May + June stats
# of Sales
Avg. $/sf
Median SP
Avg. SF
2007
96
$391/sf
$1,003,750
3,117sf
2012
113
$323/sf
$883,000
3,076sf
2015
97
$405/sf
$1,235,000
3,183sf

A mass exodus of elderly or foreign homeowners is much more of a concern – they’re urgency is higher, they have less reasons to stay, and they can probably afford to dump.

Posted by on Jul 22, 2015 in Carmel Valley, Jim's Take on the Market, North County Coastal, Sales and Price Check | 11 comments

NSDCC Months’ of Inventory

foot traffic

These guys are making the pitch for why potential sellers should list their home (with Jim) and sell now, using NAR stats that show foot traffic is up, and inventory is down:

http://www.keepingcurrentmatters.com/2015/06/29/two-graphs-that-scream-list-your-house-today/

Historically its been said that six months’ worth of inventory is ‘normal’ and demonstrates a healthy market.  But it doesn’t take into consideration the buyers’ behavior in a tight-inventory environment, and how the internet has supercharged the dissemination of new listings.

I’d say about 3 months of inventory would indicate a healthy market today.

Let’s break it down by price range too, because different segments are hotter.

NSDCC Detached-Home Inventory:

Price Range
# of Active Listings
# Sold in June
A/S = Months’ of Inventory
0-$800,000
111
66
1.7
$800-$1.4M
299
164
1.8
$1.4M-$2.4M
280
71
3.9
$2.4M and up
398
30
13.3

Sellers can adjust accordingly – the lower your price point, the more likely you will be able to sell for retail, or retail-plus. If you are in the upper region, you should undercut the competing listings nearby because, well, how should we say it, your market is bloated-plus.

Get Good Help!

Posted by on Jul 8, 2015 in Jim's Take on the Market, Market Buzz, Market Conditions, North County Coastal, Sales and Price Check | 0 comments

NSDCC Sales in June

june

Here’s a comparison of the last four Junes to those at the previous peak.  Last time, the number of sales started declining, indicating trouble ahead.

In 2015 it appears that pricing has tapered, but sales are still looking strong – late reporters could make last month’s sales total the best of the foursome:

Year
# of Sales
Avg $/sf
Median SP
Avg DOM
Avg SF
2004
376
$455/sf
$975,000
37
2,966sf
2005
304
$483/sf
$1,049,500
53
3,004sf
2006
264
$492/sf
$1,026,600
64
2,968sf
2007
267
$501/sf
$1,050,000
57
3,098sf
Year
# of Sales
Avg $/sf
Median SP
Avg DOM
Avg SF
2012
339
$368/sf
$867,500
76
3,158sf
2013
333
$453/sf
$1,025,000
46
3,008sf
2014
322
$481/sf
$1,077,850
44
3,036sf
2015
324
$484/sf
$1,097,500
38
2,963sf

Sales are just the indicator – higher mortgage rates will be one of the main causes of market slowing when it happens. You hear it on the street already – buyers are preparing for a slower market, and they want to price it in now.

Posted by on Jul 7, 2015 in Jim's Take on the Market, North County Coastal, Sales and Price Check | 0 comments

Second Half of 2015

We have entered the second half of 2015 with a full head of steam – in the first half of 2015, NSDCC detached-home sales were up 5% YoY!

Is there a natural cooling off in the second half?  Not really.

Second-half sales have been influenced by mortgage rates recently.  We had a resurgence in the second half of 2012 when both rates AND prices were declining – sales were 14% higher than in the first half.  Once we bounced back over 4% in mid-2013, sales cooled down until rates dipped back into the threes in January of this year.

Here are the half-year stats, starting with a reflection back to 2007, the previous high point of the median sales price:

Half-Year
# of Sales
Median Sales Price
Median Days on Market
1H2007
1,387
$1,000,000
47
2H2007
1,092
$1,000,762
51
1H2012
1,477
$815,000
51
2H2012
1,677
$845,000
44
1H2013
1,670
$919,950
21
2H2013
1,548
$980,000
29
1H2014
1,431
$1,020,000
24
2H2014
1,419
$1,025,000
31
1H2015
1,507
$1,125,000
23

Lately, rates AND prices have been trending upward, which suggests market slowing, plus the inventory is picked over!

Currently, two-thirds of the NSDCC houses for sale have been on the market for more than 30 days, and unless those sellers get aggressive about pricing, sales are likely to taper off as rates and prices stay flat or rise for the rest of 2015.

Posted by on Jul 2, 2015 in Jim's Take on the Market, North County Coastal, Sales and Price Check | 0 comments

The Haves

I heard an interesting comment the other day on broker caravan.

The listing agent said, “Maybe we’re all undervalued?”, as he sat on his $6,000,000 listing with nobody else in attendance.

If you judge it by the weather, he could have a point.  If we have the best weather in the U.S.A., then we should have the highest-priced real estate.

It probably means that rich folks from around the world who are retiring will be giving strong consideration to the San Diego area.  Retirees are going to be drawn to where the grandkids live first, and if the ‘kids are in the general Southern California vicinity, then San Diego might be considered for retirement.

Either that is happening, and/or our employment base is stronger than ever.

Two days ago, we saw that the NSDCC sales this year between January 1st and June 15th were 7% higher than last year.

NSDCC is the coastal area between La Jolla and Carlsbad that has a population of around 300,000 people.  Carlsbad makes up about a third of the population and sales in the area, and realtors and buyers alike consider it a quality lower-priced alternative to the affluent Encinitas-La Jolla stretch.

Here is the breakdown of those January 1st-June 15th sales:

Category by Area
2014
2015
% chg
Carlsbad # of New Listings
812
868
+7%
Carlsbad # of Closed Sales
462
493
+7%
Carlsbad Median SP
$769,500
$800,000
+4%
La Jolla-Enc # of New Listings
1,660
1,631
-2%
La Jolla-Enc # of Closed Sales
797
859
+8%
La Jolla-Enc Median SP
$1,300,000
$1,375,000
+6%

The number of sales in Carlsbad corresponded with a similar increase in listings.  But look at the higher end market – the year-over-year sales were 8% higher, in spite of 2% fewer listings!  The median price increased nicely too.

This is an affluent area, and real estate is booming – could it be undervalued?

Posted by on Jun 26, 2015 in Jim's Take on the Market, North County Coastal, Sales and Price Check | 6 comments