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An Insider's Guide to North San Diego County's Coastal Real Estate
Jim Klinge, broker-associate
858-997-3801
klingerealty@gmail.com
Compass
617 Saxony Place, Suite 101
Encinitas, CA 92024
Klinge Realty
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Are you looking for an experienced agent to help you buy or sell a home? Contact Jim the Realtor!

Jim Klinge
Cell/Text: (858) 997-3801
klingerealty@gmail.com
701 Palomar Airport Road, Suite 300
Carlsbad, CA 92011


Category Archive: ‘North County Coastal’

2019 Forecasts

We are wrapping up another year, and have eyes on 2019!

Here are guesses from the more prominent real estate prognosticators:

  • National Association of Realtors: Sales +1%, prices +3.1%.
  • Realtor.com: Sales -2%, Median SP +2.2%.
  • California Association of Realtors: Sales -3.3%, CA Median SP +3.1%.
  • KW: Sales -2%

The opinions are fairly universal throughout the industry.  Sales might be down a little, and prices up a little.

But I’m sticking with -20% for NSDCC sales, which by comparison, sounds catastrophic.  We only had a 10% decline this year and everyone was reaching for the panic button, so if it happens, it will feel uncomfortable for most. But the inventory will be there, it just means more of it won’t be selling.

Here is the data for detached-homes between La Jolla and Carlsbad:

Year
# of Listings
Median LP
# of Sales
Median SP
MSP YoY %chg
2012
4,416
$979,990
3,154
$830,000
+1%
2013
4,818
$1,168,445
3,218
$952,250
+15%
2014
4,692
$1,247,923
2,850
$1,025,000
+8%
2015
5,068
$1,295,000
3,079
$1,090,000
+6%
2016
5,171
$1,395,000
3,103
$1,160,000
+6%
2017
4,630
$1,450,000
3,084
$1,225,000
+6%
2018
4,802
$1,498,500
2,760
$1,325,000
+8%

Additional inventory is encouraged….up to a point.

In 2006, the inventory ballooned to 6,046 listings, which was 9% higher than the previous year’s count. The surge in new listings set buyers back on the their heels, and sales plunged 13% in 2006 compared to 2005.

The 2018 counts above are today’s numbers, so a few more will be added.  Using these numbers, listings are up 3% YoY, and sales are down 11%, YoY.

The median sales price is +8% YoY, but that’s for the whole year.  We saw the October Case-Shiller Index be up only 3% YoY, so pricing is decelerating.

The stock market crashed 635 points on Monday, only to go up 1,086 yesterday – and yet the 30-year jumbo rate hasn’t budged (still at 4.41%).

Pricing might drop a little, but the sales go first, so I think we won’t see much change in the NSDCC median sales price in 2019.

Posted by on Dec 27, 2018 in Forecasts, Jim's Take on the Market, North County Coastal | 2 comments

Coma-Meter

Has there been much action this month?

Carmel Valley is hopping year-round, and SE Carlsbad, which has about 10% fewer homes than the CV, is active too.

Del Mar and Rancho Santa Fe?  Not so much.

Here are the number of houses currently for sale, and those that have gone pending this month, by zip code:

Current Active Listings and Pendings Since Dec. 1st:

Area
Zip Code
Actives Today
Pendings Since Dec 1st
Cardiff
92007
14
2
Carlsbad NW
92008
49
12
Carlsbad SE
92009
64
16
Carlsbad NE
92010
21
5
Carlsbad SW
92011
47
5
Del Mar
92014
79
3
Encinitas
92024
73
12
La Jolla
92037
192
12
RSF
92067+91
176
6
Solana Beach
92075
24
3
Carmel Valley
92130
71
20
All Above
All
810
96

January is going to be a quiet month for closings!

Posted by on Dec 19, 2018 in Jim's Take on the Market, North County Coastal | 2 comments

Fed Hike?

A pause in the Fed hikes was looking good.

First, the WSJ posted an editorial on Sunday – a snippet:

If you think your job is tough, consider Federal Reserve Chairman Jerome Powell. He’s signaled for months that the Fed will raise interest rates again this week, but economic and financial signals suggest he should pause. Meanwhile, Donald J. Trump is beating him up almost daily not to raise rates.

What to do? The right answer is to ignore the politics, inside and outside the Fed, and follow the signals that suggest a prudent pause in raising rates at this week’s Open Market Committee (FOMC) meeting. Get the monetary policy that best serves the economy, and the politics will work itself out. Get the policy wrong, and Mr. Trump will be the least of Mr. Powell’s political worries.

Josh agreed in his tweet above, and it looked like we had a shot!

Trump could have just let it go…..but noooo, he had to tweet one more time:

In case the Fed is looking around for evidence, consider our recent home sales:

End-of-Year Detached-Home Sales and Pricing

Category
2017
2018
% change
NSDCC # of Sales, 10/1 – 12/15
600
537
-11%
NSDCC Median SP, 10/1 – 12/15
$1,200,000
$1,350,000
+13%
SD County # of Sales, 10/1 – 12/15
4,637
3,886
-16%
SD County Median SP, 10/1 – 12/15
$615,000
$640,000
+4%

The Fed is going to be tempted to make their rate decision based on politics, and show Trump who the boss is. Median pricing is like politics – it makes you want to make decisions based on less-relevant data.

Keep your eyes on sales – they are the precursor of what’s ahead.

Even if the Fed skips this rate hike, we are still going to see sales plummet next year.  They could help make it a softer plummet though!

Posted by on Dec 18, 2018 in Forecasts, Interest Rates/Loan Limits, Jim's Take on the Market, North County Coastal, Sales and Price Check | 0 comments

2019 Market Outlook

Above is the summary of yesterday’s housing and economic outlook sponsored by First American Title.  Click here for the full report:

SoCal Outlook Dec 2018

Let’s mention those who will be making the market in 2019:

  1. Those with the least amount of experience and education.
  2. Those who don’t own a home here yet.

People in these two categories aren’t hampered by the over-analysis that comes with owning a home here currently.  Those who already own a home in San Diego have paid less, and have a lower mortgage rate.  We are trying to make sense of giving that up, and paying more!

It’s a burden that thwarts most attempts to move by current homeowners.

But those who don’t study it too hard, or don’t already own a home will forge ahead.  They have already decided that buying a home make sense in this environment, and have their own personal consequences if they don’t buy.  They aren’t going to be talked out of it either.

Figure out how many people are in that group, and you can predict the future.

Here are the categories:

  • First-timers
  • Down-sizers
  • Up-sizers with strong needs
  • Incomers from out-of-county/state/country
  • Affluent people

Everyone else will enjoy their comfortable spot on the fence and wait-and-see what these folks will do.  Let’s acknowledge though that people in these five groups aren’t tethered with the same restraints as the rest of us – it’s just a matter of how many people are in these groups.

How many?  My guess is 80% of those who bought in 2018.

Posted by on Dec 13, 2018 in Forecasts, Jim's Take on the Market, Market Conditions, North County Coastal | 5 comments

NSDCC November Sales

The slowdown started in July, so the November sales count is surely going to reflect the impact – and it does. Sales were down 11% year-over-year:

Year
# of Sales
Median SP
Avg. Cost-per-sf
Avg. DOM
Avg. SF
S/BD*
2013
187
$1,030,000
$474/sf
58
2,960sf
10.4
2014
173
$985,000
$489/sf
63
3,071sf
10.2
2015
196
$1,173,750
$518/sf
54
3,067sf
10.9
2016
244
$1,235,908
$531/sf
51
3,046sf
12.8
2017
218
$1,200,305
$522/sf
46
3,093sf
11.5
2018
194
$1,310,000
$568/sf
55
3,067sf
10.2

*S/BD = Sales per business day, which had the same -11% YoY decline.

Let’s put away the panic button for now.

Posted by on Dec 6, 2018 in Jim's Take on the Market, North County Coastal, Sales and Price Check | 0 comments

November Panic?

If sellers were feeling a sense of panic about the market – and prices – we would be seeing more new listings hit the market.

Let’s boil it down to one simple comparison.

Are there more listings than usual coming to market?

NSDCC Listings, November

Year
November Listings
Median List Price
# Sold
Percentage Sold
2013
223
$1,159,000
137
61%
2014
267
$1,199,000
167
63%
2015
299
$1,399,000
163
55%
2016
284
$1,354,999
163
57%
2017
252
$1,600,000
162
64%
2018
292
$1,499,500

I wouldn’t be too concerned about the median list price being lower. The list prices don’t mean much, and if it weren’t for an extra 13 lower-end listings then the 2018 median LP would have matched last year’s.

More listings, longer market times, and higher failure rates are in our future – and we can handle it!

There have already been ten listings from last month close escrow – five were sold off-market – and another 54 are pending, so somebody’s buying something. Here are three examples:

1. This 2-br house sold for $1,400,000 in March, 2018, and then was advertised as a Coming Soon for $1,695,000. It closed for $1,650,000 a month ago:

Link to Listing

2. Amy and Susan sold this CV house for $51,000 over list, and closed this week:

Link to Listing

3. This Cardiff house backs to the freeway but it does have ocean view – it just closed this week for $1,950,000, which was above the high-end of the range:

Link to Listing

Here is the sales history of the same house:

If sales dropped 20%, we’d still have 80%!

Posted by on Dec 5, 2018 in Coming Soon, Jim's Take on the Market, North County Coastal, Sales and Price Check | 0 comments

Fannie/Freddie Limit up to $726,525

Today the FHFA announced that they have raised the Fannie/Freddie mortgage limit to $726,525 in high-cost areas:

Link to Article

With deductible mortgage interest now capped at $750,000 by the I.R.S., buyers who are concerned about write-offs will want to keep their new loan balance in the $700,000s.

The strict equation is $750,000/80% = $937,500.

If buyers find a house priced higher, they could come up with more cash to make up the difference, or they could get a jumbo loan at roughly the same interest rate and live with the non-deductible interest paid on the loan amount above $750,000.

It makes the ideal purchase price in the $1,000,000-$1,100,000 range.

If the tax reform is a big concern for buyers as some have suggested, the homes priced in the $1,100,000 – $1,500,000 might feel it.  Buyers above that range weren’t expecting as much benefit anyway, and probably won’t be as impacted – but theoretically there are fewer buyers the higher we go.

Out of curiosity, let’s keep an eye on the NSDCC stats.

Today’s NSDCC Actives and Pendings:

$700,000-$1,100,000: 121/72 = 1.68

$1,100,000-$1,500,000: 157/75 = 2.09

$1,500,000-$2,500,000: 243/81 = 3.00

$2,500,000 and higher: 399/44 = 9.07

The market has been healthy up to $1,500,000 roughly, and like Rob Dawg said yesterday, potential buyers may not know the exact impact of the tax reform until they start on their 2018 tax returns in spring.

Let’s come back then and check for impact!

Posted by on Nov 27, 2018 in Actives/Pendings, Jim's Take on the Market, North County Coastal, NSDCC Pendings, Tax Reform | 4 comments

Rolling Into Stagnant City

A year ago, I guessed our NSDCC sales would be down at least 5% in 2018, and it looks like it will be closer to -10%.  While I’m confident that sellers will refuse to lower their price expectations much in 2019, I doubt that home buyers will just go along as they have in the recent past.

The disconnect will probably mean that the 2019 sales of detached-homes between La Jolla and Carlsbad will drop another 20%, which will change the landscape considerably from the robust sellers’ market we’ve enjoyed over the last nine years.

Homeowners waiting for the top of the market will move closer to the exits, and we will probably have 5% to 10% more listings early next year – with no let up in pricing.  Potential homebuyers who are starved for quality guidance will be conservative and adopt the wait-and-see approach.

It guarantees a slow start to 2019, and a real standoff.

The worst part about the real estate industrial complex is that they provide no help whatsoever on how to deal with market conditions.  They push Yunnie up to the microphone every month to report the latest sales counts, but that’s it.

Consumers and realtors are left to their own devices to figure out what to do.

Buyers will want somebody else go first.

Who will go first?  With the rise in mortgage rates, we have already lost almost the entire move-up market.  My rule-of-thumb is that if you want to stay in your same area, you have to spend 50% more than what your house is worth to make the move.  In other words, if your house is worth a million, the houses you see listed for $1.1 or $1.2 million nearby aren’t enough of an upgrade – you only get, what, one more bedroom?

But if you bought that home for $800,000 with a mortgage rate of 3.5%, the thought of having to spend $1,500,000 with a 5% mortgage rate will send your head spinning:

Purchase Price
Loan Amount
Mortgage Rate
Mo. Payment w/taxes
$800,000
$640,000
3.5%
$3,674
$1,500,000
$1,200,000
5.0%
$7,942

Your home’s appreciation generated the bigger down payment, but you have to pay more than twice as much monthly, and it isn’t fully tax deductible either. How many people NEED to move that bad?

So if the move-up market is comatose, then who’s left?

Those who don’t own a house here yet – the first-timers and newcomers.

They are at a disadvantage from being new the area, and are probably somewhat unfamiliar to the game – so it’s likely that they will be conservative. But the 2019 market will be entirely dependent upon them paying what the sellers want, or close.

I doubt we’re going to see fewer listings next year, so if there are 5% to 10% more listings – all with optimistic prices – and buyers are waiting to see what happens, there will be many more for-sale signs around.  That alone will cause buyers to pause.

Only the vastly-superior homes will be selling, and everyone will struggle to get the price gap right between the creampuffs and dogs.  The fixers will need heavy discounts, but thankfully, there is a floor.  I’ve probably taken 100 inquiries on my Brava listing – the flipper/investor action is still strong, though they are slightly more conservative about next year too.

Realtors could provide the solutions, but will they?

Here are the typical responses to taking a higher-priced listing:

SELLERS:  “Let’s add a little mustard to my list price.”

TOP AGENT: “The market is soft, and virtually all active listings are priced above what the market will bear. An attractive price will help to set us apart, and our expertise will help to clinch the sale in a timely fashion.”

REGULAR AGENT: “Let’s try the value range pricing!”

NEW AGENT: “What the heck, we can always lower the price later!”

Will the home sellers be sufficiently motivated to price their home sharply?  For those who have been waiting for the top of the market, the answer is no.  They are only selling if they can get their price – especially if they plan to move up in the same area.

We’re headed for a showdown – who will blink first?

There will be a healthy market for for the well-location remodeled homes, but the rest will sit a while before they figure it out – and many will not.

Annual sales dropping 20%?

We’ve been here before, and survived it.  We will survive this round too – we don’t have the shock of a market driven by no-qual loans all of a sudden shifting to qualifying-only, like we did in 2008:

Year
NSDCC Detached-Home Sales
Year-over-Year Change
2005
3,014
2006
2,626
-13%
2007
2,479
-6%
2008
2,037
-18%
2009
2,223
+9%
2010
2,461
+11%

Where will prices go? It will be a very soft landing, because without foreclosures and short sales, there won’t be desperate sellers dumping on price – they will wait it out instead.

Heck, they’ve waited this long, what’s a couple more years?

It will be case-by-case though. There will be a few great deals, some retail sales, and a lot of standing around.  Welcome to Stagnant City!

Get Good Help!

Posted by on Nov 21, 2018 in Forecasts, Jim's Take on the Market, 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 | 7 comments