We saw yesterday that we had 5% fewer January listings year-over-year, giving the impression that sellers aren’t rushing their homes to market.
But we came into 2019 with more leftover listings from last year – and they are already starting to pile up:
Active Listings, First Week of February
Last year we were overdue for some slowdown, but were able to survive lower January sales because the inventory heading into the selling season was so thin that urgency was higher among buyers, which kept the party going.
This year we had fewer sales even with higher inventory, which means the selling-success rate is dropping steadily. Once more unsold listings start stacking up, the urgency among buyers will diminish.
This is the same data as yesterday, but over three years instead of five, and shows how the 2018 selling season didn’t pop like in previous years:
Click to enlarge
Mortgage rates went over 4.5% in May which helped to discourage sales, but you can see how the initial surge barely got past March. Even if rates stay where they are today, we could have a muted sales season just because we are already loaded with listings.
Just yesterday we see news that the housing inventory is already way higher than it was last year, and certain doom must be ahead.
But we can live with more houses laying around unsold, as long as at least some are selling to help give direction to all.
We can probably break it down to two categories:
Is nothing selling, and doom is on the way?
Or are just the creampuffs selling?
Here’s our first sales count of 2019.
NSDCC Detached-home Sales, January:
(as of 11am on 2/3)
Whoa now – I’ve been talking a 20% decline, and December sales were pointing that way. But by the time all of the sales get recorded onto the MLS, we should match last year’s January count, and probably do better!
Just what we expected – more homes for sale, and more priced wrong:
Only six months following the most competitive home buying season of all time, January data shows the U.S. housing market is off to a slower start in 2019. Although home prices are increasing, 15 percent of U.S. listings had price cuts in January, and declines in days on market have significantly decelerated since last year.
The U.S. housing market is off to a slower start this year in many markets, compared to the rapid acceleration we saw last January. Although the market is slowing, it’s important to remember that we’re coming off of four straight years of inventory declines that pushed the market to a record low availability of homes for sale. The real metric to keep an eye on is entry-level homes, which are the key to getting today’s market back in balance. These homes are still in short-supply.
We have been having a surge in the market – the total pendings count went up a net 11% this week! The new-listings count slowed down too – see below (it was almost tied last week).
The inventory change was almost all on the low-end. There are 14 fewer active listings today, and 15 more pendings. In the area between La Jolla and Carlsbad, there are roughly 300,000 people, and today we only have 68 houses for sale listed under $1,000,000 – and NO houses under $665,000.
Have you joined the contest yet? Click here to register your guess of how many total listings we will have between Jan 1 and Feb 28 – the closest will receive four tickets to a Padres game!
NSDCC New Listings Jan 1 to Jan 22:
This will be the last week to enter the contest, or to revise your guess!
The 2019 total-listings count fell behind lately, which means potential sellers are in no rush to get their house on the market. Unless it was painfully obvious to them that the market is under siege (there’s no sign of that), then the list prices are going to hold – or possibly rise in the coming months. Three of the four inventory groups below have substantially higher list-price-per-sf than they did at this time a year ago!
Ryan posted the history of real estate cycles in Sacramento County, so here are the same years for North San Diego County’s coastal region for comparison. Human nature tends to flow in the same direction everywhere, and as a result, our history looks a little like his:
Number of Sales
Median Sales Price, Annual
At the time it seemed like sky was caving in, but looking back we only had two bad years (2008 and 2009) in the last twenty. There was some scuffling around as we found our way in 2006-2007, and 2010-2012, but given that our market had been injected with the most exotic financing ever known to man, and then tanked by foreclosures and short sales, I think we did pretty good to survive it as well as we did.
With 90% of the NSDCC active listings priced over $1M, all we need is wealthy people to keep coming here to buy their forever home. We’re still cheaper than the LA/OC and Bay Area, so we look attractive to downsizers.
Our pricing may bounce around, but without brainless bank clerks dumping properties for any price, who else is going to cause a collapse? We could run low on the number of buyers – and if we did, all it would do is cause a protracted descent; re: soft landing over years.
Here’s a conversation I had yesterday with a guy who is 80+ years old and who has lived in his house since the 1960s:
Him: Convince me why I should sell my house.
Me: How are you getting around?
Him: I ride my bike to the store.
Me: Do you need the money?
Me: Have you ever dreamed about buying a house on the lake and fishing the rest of your life?
Me: Are you married?
Me: Did you know that if you did sell, you’d have to pay six-figures in taxes? How would that make you feel?
Him: What? I only paid $19,500! I’d never pay that much in taxes!
Me: What happens upon your demise?
Him: My daughter will inherit – she grew up here, and will likely move back in. But I told her if she doesn’t move in, it’s ok with me to sell it.
Me: Do you have a family trust?
Me: Did you know that if she sells the house, she will pay no tax?
Him: You’re kidding? If I sell it, I have to pay the tax man six-figures, but if she sells it, she pays nothing? Jim, I think we have the answer!
There will be occasional sales where sellers hire bad agents and get taken advantage of, but there won’t be an avalanche of desperate sellers dumping for any price. It would take a tsunami, earthquake, or terrorist event at the border to cause a drastic shift in housing – which could happen!
Here’s the latest photo of the nuclear waste being stored right on the surf at San Onofre. All we need is one crack in a storage cask…..
Without a catastrophic event, what’s the worst we can expect?
Maybe 5% drop in pricing in the short-term?
Any more than that, and sellers will just wait it out.
Would you like some guidance on what to expect in the Spring Selling Season?
Let’s monitor how many new NSDCC listings are hitting the market!
If the negative media hype is starting to worry sellers, they will hurry up and list their home early. If we see a surge of new listings in the first two months of the year, it means a buyers’ market is forming.
If we have about the same or fewer listings in early 2019, then sellers will just shrug off any concerns and wait their turn.
Here are the counts of listings inputted onto the MLS in January and February from the last few years:
NSDCC New Listings, Jan & Feb
Median List Price
The average is 813 listings, and with the last two years both being lower, it would take a significant YoY increase to worry most participants. But at least we’ll know first!
Put your guess in the comment section of how many new listings we’ll have in January and February, and on March 15th we’ll see who is closest.
The winner will get four tickets to a Padres game! The photos here were taken from the seats, and I’ll have about ten dates available.
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