Our friend and previous seller Tom T is putting the finishing touches on his latest project, and it’s a gem – it will be ready next week!
Category Archive: ‘North County Coastal’
The California Association of Realtors predicted that statewide sales in 2018 would increase 1%, and the California median sales price would rise 4.2%.
My guess was for the San Diego County detached-home sales to drop 5%, and the median sales price to rise 5% in 2018. How are we doing?
Here are the detached-home sales and median price for the first nine months of the year in San Diego County:
SD County Detached-Home Sales, January through September
It may seem like the sky is falling, but we should just appreciate how great we’ve had it over the last few years, and accept that we’re going to have fewer sales from now on. Here are the stats for La Jolla-to-Carlsbad:
NSDCC Detached-Home Sales, January through September
It’s going to be harder to sell your home.
Get Good Help!
How did your area do last month, and for the first eight months of the year? It would be sufficient to just keep close to 2017, which was a good year for sales:
|Town or Area|
Total NSDCC sales for the first eight months are down 8%, which isn’t the end of the world. The median sales price is up, and the average cost-per-sf is down:
NSDCC median sales price, August, 2017: $1,245,000
NSDCC median sales price, August, 2018: $1,325,000
NSDCC average $$/sf, August, 2017: $549/sf
NSDCC average $$/sf, August, 2018: $534/sf
You would think that the high-dollar areas might be showing some struggle, but in August, both La Jolla and Rancho Santa Fe had great months.
In May, 2018, there were 13 sales in the 92067!
The NSDCC Pendings by price range vs last week:
|$1.0M to $1.5M|
|$1.5M to $2.0M|
Wow, the Over-$2.0M market is on fire!
The total number of pendings is down to where they were in February, so the off-season has begun. What can we expect the rest of the year?
NSDCC detached-home sales compared to 2017:
|Third of Year|
This year’s selling season was plagued with wildly over-priced listings, so no surprise that the number of sales dropped off year-over-year.
I think we’ll see a rebound of sorts, and sales in the last third of 2018 only be about 5% less than in 2017. Anyone trying to sell during the off-season should be more motivated, and as a result, be priced more competitively. We’ll see!
Hat tip to Rob Dawg who sent in this example of what’s happening in most markets – lower-end prices are holding, and it’s softer in the higher-end markets.
But because the higher-end sellers typically have more horsepower, and aren’t going to ‘give it away’, prices could just stagnate, instead of dropping.
You could call it a levitating market too, and many will think that it’s just a matter of time before pricing turns south.
Here are reasons why prices are sustainable:
- We have newer agents representing the buyers. Even if they have nine years experience, they’ve never seen anything but a seller’s market. If their buyers don’t like the price, they just pass on the house, instead of making a low offer.
- Rarely is a seller motivated enough that they might consider a lowball offer. You’re lucky if you get a call back, let alone a counter-offer.
- Agents are looking to provide less service, not more. The trend is to capture the consumer’s contact info, send it to the call center, and have dialers hound them until they buy or die.
- Buyers are so used to pressing a button to transact everything else that they don’t even know they need good help. All buyers and newer agents know how to do is to find a decent house and process the order.
- With traditional, discount, and disrupter agents all offering less expertise, the fixers stand virtually no chance of selling – they are too much of a turnoff to buyers who are essentially do-it-yourselfers. It’s too easy to skip them.
- If fixers aren’t selling, then just the good-to-excellent homes have a chance, and buyers are typically willing to pay close to list for those.
- If there were a couple of sales in the neighborhood that were lower, the vast majority of potential sellers would quit, rather than panic. When their motivation is already suspect, it won’t take much for them to wait until some mystical time in the future when they can sell for that extra 5% to 10%.
- Buyers who go straight to the listing agent are in effect, unrepresented, and will just end up paying retail.
- Off-market properties would only sell if they get their price.
- Sellers who can’t get their price can always rent for astronomical prices, and try again next year.
Combine those together and it’s easy to see how prices will stall, or could even drift upward with only the creampuffs selling. The inventory counts won’t matter either, because if they grow, it will just mean a sea of OPTs lying around, nothing more.
With a healthy economy and no foreclosures, there isn’t any pressure on sellers to dump and run. Besides, where are they going to go in such a hurry?
It will be a binary market – buyers will say yes or no. Pricing should stay about the same, but if buyers were to dig in, then sales could be affected. Keep an eye on the sales count – they are the precursor, and they’ve been holding up nicely the last couple of months (at least between La Jolla and Carlsbad).
The NSDCC sales in May and June were down 20% YoY, but July and August bounced back nicely this year. We had 11 more sales in July this year, compared to July, 2017, but there was one extra day in 2018. How did we do in August (which had the same number of business days as last year)?
NSDCC Detached-Home Sales, August
It’s remarkable that we’re hanging this close to last year!
We saw the NSDCC sales in May and June be 20% fewer than they were in 2017. We had 11 more sales in July this year, compared to July, 2017, but there was one extra day in 2018.
How are we doing so far in August? Can we just hang close to the mean this month, have a decent September, and cruise into the holidays?
NSDCC Detached-Home Sales, August 1-15
If sales stay within 10% of the previous year, we should be fine. We’re looking for disaster signs, not just the usual bouncing around (see previous years).
$1.3 million gets you a decent Carlsbad tract house east of the I-5 these days!
Who is selling?
Over the last few years we’ve seen that most home sellers are the long-time owners, and that trend is continuing.
On the left are the years when the sellers purchased the home they sold between July 26 and August 3rd of this year:
|0 – 2003|
|2004 – 2008|
|2009 – 2011|
|2012 – 2018|
The increasing trend of recent purchasers selling might just be from the additional years in the last category. It was 2012-2015 when this graph began, and now it covers seven years – almost twice as many.
Are those sellers moving up or down? Or cashing out?
The younger boomers:
- Probably moved up a couple of times, not sitting on family homestead.
- Are used to moving more.
- Are more physically capable of moving.
- Have a little less connection to the neighborhood.
- Still have some adventure left in them.
But the younger boomers:
- Are more likely to still be working.
- Are more likely to still have kids at home.
- Are more capable of modifying their home.
- Don’t need assisted living.
With long-time owners providing the bulk of the inventory, we should expect older homes for sale that need fixing, or at least some updating. Yet the current trend is for buyers getting more picky, not less.
|DOM = 0|
Here is some data to help calibrate the slowdown fears.
These NSDCC detached-home inventory counts are from the first week of April, and the last week of July, plus a look at the closed sales for the first seven months of the year:
The 2018 numbers don’t look much worse than in recent years. Once the July sales are finalized, this year’s sales count should be close to 1,700.
This is the time of year when the OPTs are stacking up, which makes it look like garbage time, and easier for buyers to go on vacation instead. It also makes it tougher for the decent buys to stand out.