Plateau City

This is what it feels like in Plateau City. It’s a little bumpy but the pricing looks range-bound.

Sales cool off towards the end of the year – even during the frenzy. Surprisingly, last month might end up being the best of the year for sales, and the market should settle down for the rest of 2023….shouldn’t it?

There are only 157 NSDCC pendings today, so it’s likely that in the 4th quarter of 2023, the monthly sales will slip under 100 per month, which is fine. Everyone will be anticipating the spring selling season!

NSDCC July Sales

The median sales price of houses sold between La Jolla and Carlsbad last month was 13% lower than it was in June, which demonstrates how terrible it is for a gauge.

Obviously, the houses sold are different each month. In July, there happened to be 35% more houses sold that were priced under $2,000,000 than in June (88 vs. 65), which dragged down the median sales price.

The recent sales counts are impressive, and we’ve already had 91 sales this month with two weeks to go!

We will muddle through!

NSDCC Current Conditions

I try to investigate different ways to analyze the market data so readers can grab something pertinent that might help them make a better decision about their real estate needs.

Here’s today’s attempt!

July isn’t done yet but you can see the trend: The high-end isn’t cooking like it was.

Datapoints:

  • More sales on the lower-end causes the median sales price to drop.
  • The lower Median Days On Market is a result of fewer high-end sales.
  • Only 10 sales over $4,000,000 means we’ll probably have around 15 total.

The higher-end homes are notorious for being priced aspirationally, and the data suggests that buyers aren’t going for it like they were previously.

The low end is hot, and the high end is, well, not so much!

NSDCC Second Half of 2023

This article gets into the usual topics for those trying to forecast the future:

https://www.investopedia.com/what-housing-experts-anticipate-for-the-last-half-of-2023-7555067

Their experts think that mortgage rates will ease for the rest of the year, which will cause the inventory of homes for sale to increase. Apparently they are stuck on the whole golden handcuffs theory of why inventory is ultra-low, and when rates drop, then everything will be fine.

Here are their two quotes on the direction of home pricing:

Weak home prices are expected over the summer months, when they are typically at their peak, according to Realtor.com’s Hale.

“Specifically, while June is expected to be the seasonal peak for home prices in 2023, like it is most years, we won’t see as big of a month to month climb as we did in 2022, which will mean ongoing mild declines when we’re comparing home sale prices to one year ago,” Hale said.

The declines are expected to run through the early fall, depending on the Federal Reserve.

“By the time we get to the fourth quarter, mortgage rate and seasonal home price relief could be enough to stanch the declines” Hale added. “On net, we expect average home prices in 2023 to fall 0.6% compared to 2022.”

As supply boosts and mortgage rates and home prices fall, sales are expected to rise through the end of the year, according to NAR’s Yun.

“We’re likely approaching the bottom in home sales with steady improving home sales in the second half of the year and into 2024,” Yun said.

None of their experts (including Robert) offer any data to support their cases, and are just guessing.

Let’s dig a little deeper into the topic, shall we?

To say that the current market conditions are unprecedented is putting it lightly.

NOBODY HAS EVER IMAGINED LISTINGS AND SALES BEING HALF OF WHAT THEY USED TO BE!

But that’s where we are.

The huge gap between the 2023 MLP and MSP suggests that buyers are unwilling to pay the higher prices, but pricing was sluggish in the first two months of the year so there was some lag – just like in 2020 when we had a couple of months of pandemic trouble.

Buyers should really be picky in the off-season, so any thoughts of sales increasing are optimistic. With only the creampuffs selling, pricing should keep rising, except in areas where the only homes for sale are the scratch-and-dent/fixers and where unscrupulous agents doing their dirty work (this is more of a problem for pricing than you might think).

Fewer comps means that one or two sales in either direction will impact the prices for the rest of 2023.

Here’s an example – our La Costa Valley Six had a listing on Sitio Caucho hit the market on June 14th, and it promptly went pending within seven days:

At first, you might think that the new pending sale should close above $2,200,000 and that trend would be bolstered. But Vista Acedera has gotten tired of being left behind, and on Monday they lowered their price from $2,125,000 to $2,050,000.

What’s the trend now?

Lowering their price was smart because they have been on the market since the end of April and summer will be over before you know it. They really want to be the next home to sell – but what will that do to the others left for sale, and the other new listings to come between now and the 2024 Selling Season?

Get Good Help!

NSDCC Monthly Listings, May

They feel like the good old days but it was only 4-5 years ago that we could count on 200-300 listings priced under $2,000,000 to hit the market every month. It caused some complacency and pickiness among buyers, but now that the choices have narrowed so quickly, there is a lingering panic in the air.

Those buyers who only qualify for $1,000,000 are forced to consider other choices further out, and for many that means out of state.

Those in the $1M to $2M market are shocked to see about a quarter of the number of monthly listings we used to see, but at least they still have a shot – though what you get for that money has been greatly diminished. It’s understandable why the frenzy conditions are still happening though.

Thankfully, a lot of affluent people want to live here!

SP:LP Rebound

NSDCC SP:LP Ratio

The hyper-frenzy days of a 109% ratio between the monthly median sales prices and median list prices are probably long gone….much like 3% mortgages!

It is remarkable how the SP:LP ratio has bounced back. Buyers are paying the money if they find a good fit!

Frenzy Monitor

The number of active (unsold) listings has been on the rise, and is now 13% higher than it was a month ago – though I would still characterize the current market conditions as steady.

Compare your stats from this month to last June and July when higher rates had begun to take their toll. The rate-change was rather abrupt, and it was natural for buyers to wait-and-see about the impact which caused the active inventory to soar.

If your area looks similar to last June/July, it’s probably not a good thing.

The activity this year is more normal and typically what happens as the selling season closes out – sellers are too enthusiastic after a couple of hot months and don’t adjust their price expectations fast enough.

There have been 57 closings between La Jolla and Carlsbad this month, which is good. The monthly sales total should finish over 100, but it probably won’t get up to the 168 sales we had in May.

There will be a few more eye-popping sales, but generally the 2023 market is fading away.

New Normal for NSDCC Listings

Yesterday we saw how the number of listings has been dropping in San Diego County. Here’s a look at our favorite market – detached-homes between La Jolla-to-Carlsbad:

*The 64% is the percentage of 1Q23 listings that have closed escrow – more will be added, but the percentage will probably stay in 60s.

It looks like we’re going back to the good old days when there were big spreads between the median LP and median SP, and about a third of the listings not selling – in spite of having half as many listings!

(this year’s listings count should get up to around 1,100, but still scary low)

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