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Category Archive: ‘Sales and Price Check’

Just Say It

I like Sean and enjoy his high-quality website – and their monthly report.  But they fall into the same rut as the ivory-tower guys when they want to blame the changes in market activity on non-players.

The priced-out buyers do not make the market – they don’t have a vote any more.  All that matters is how the players who are in the game are responding.

I feel like I mention this every day – the primary reason why sales are down is because the ready, willing, and able buyers think that most of today’s list prices are ridiculous.

Because the mass media has yet to grasp this important fact, from now on I’ll just use a photo of something stinky, and you’ll know it means the story to follow is missing the point.

Like in this case, it’s not that she’s wrong - many buyers have been priced out, and sent to waiting-game purgatory.

But if the industry would harp on the direct and specific reason why more homes aren’t selling (sellers are too optimistic), then maybe we could cause a sea change in home-selling.

Very few people are No one is telling sellers that their price is too high – and if the media talked about it, then sellers might catch on sooner.

Here is the August report from PR:

http://www.propertyradar.com/reports/real-property-report-california-august-2014

An excerpt:

August 2014 sales were the lowest August sales since 2010. On a regional basis, over the past 12 months sales are down 15.7 percent in the Bay Area, 16.7 percent in Southern California, and 18.8 percent in the Central Valley.

“The bloom is definitely off the California real estate rose,” said Madeline Schnapp, Director of Economic Research for PropertyRadar. “The rapid rise in prices over the past two years has outstripped the ability of many would-be California homeowners to purchase.”

The rapid disappearance of distressed properties available for sale has been a key factor depressing sales. Whereas in August 2013 24.0 percent of sales were distressed properties, in August 2014 distressed property sales comprised only 16.7 percent of the total. In August 2011, 54.7 percent of sales were distressed property sales.

The lack of movement in median prices this past month was due mostly to a shift from less expensive to more expensive homes, not a change in underlying home values.

Posted by on Sep 17, 2014 in Jim's Take on the Market, Sales and Price Check | 3 comments

SD Market Trends

SD prices

The graph above shows how San Diego home buyers have been more patient since rates went up last summer.  They finally conceded some ground, pricewise, over the last couple of months to log a 8.8% increase in the median $/sf year-over-year, but it was flatlining for almost 12 months.

The graph below shows how the active inventory increased steadily since spring (blue line), and though it dropped 7% since last month, it is still 3% higher year-over-year.  In spite of my pleas over the last 2 days for sellers to stay on the market, it’s likely that the active inventory will decline sharply through the holidays (like last year):

SD pricing

Posted by on Sep 16, 2014 in Jim's Take on the Market, Sales and Price Check | 1 comment

More on August Sales

Dataquick released the August sales yesterday, and at first glance you might think we should be looking for lifeboats – this is the second month in a row that Dataquick has reported SD sales dropping more than 18%:

http://www.dqnews.com/Articles/2014/News/California/Southern-CA/RRSCA140911.aspx

aug 14

But August, 2013 was probably the last month that buyers were able to lock in a mortgage rate in the 3s, before rates jumped at the end of June.

If you look at San Diego’s 2014 monthly sales, they look consistent and remarkably strong considering that prices have been going up every month.  Here are the MLS counts for all property types in the county:

Jan = 2,116

Feb = 2,271

Mar = 2,778

Apr = 3,321

May = 3,255

Jun = 3,182

Jul = 3,043

Aug = 2,806

If sales fall off the next few months, the blame will be on the holidays, and sellers will expect a vibrant selling season again next spring.

Posted by on Sep 12, 2014 in Sales and Price Check | 8 comments

NSDCC August Sales

This may be a preliminary look, but there won’t be many more late reporters.  Agents are supposed to mark their sales closed within 48 hours, and we’re a week out.  But even considering the typical end-of-summer slowdown, it looks like sales are plunging.

Today, the MLS shows a paltry 234 detached-home sales last month, the lowest August total of the last four years:

Year
# of Sales
Median SP
Avg. $-per-sf
Avg. DOM
Aug ’09
215
$825,000
$373/sf
83
Aug ’10
210
$838,000
$389/sf
63
Aug ’11
240
$825,000
$389/sf
80
Aug ’12
298
$865,000
$381/sf
84
Aug ’13
324
$953,750
$437/sf
40
Jul ’14
268
$1,050,000
$490/sf
45
Aug ’14
234
$1,011,500
$450/sf
46

While we enjoyed some frenzy-like months during the 2014 selling season, it looks like we’re heading back to the far-more mundane pace of 3-5 years ago.

graph (50)

For sellers who tacked on an extra 5% to 10% to your list price:  If it doesn’t work, at least adjust downward fast enough that the urgency stays higher, and you beat the holidays – Halloween is only seven weeks away!

 

Posted by on Sep 8, 2014 in Jim's Take on the Market, North County Coastal, Sales and Price Check | 12 comments

San Diego is #5 in U.S.A.

From the latimes.com:

http://www.latimes.com/business/realestate/la-fi-orange-county-3rd-priciest-market-20140812-story.html

An excerpt:

Orange County is the third-most-expensive housing market in the country, with two other chunks of the Southland ranking in the top 10.

That’s according to a new report out Tuesday from the National Assn. of Realtors, which measured the median price of homes sold in the second quarter. Orange County’s median — the point at which half of homes sold for more and half for less — hit $691,900 in the quarter, trailing only the San Jose and San Francisco metro areas.

The San Diego area ranked fifth at $504,200 and metro Los Angeles — Los Angeles County — ranked ninth at $420,300. Even the relatively inexpensive Inland Empire sat 21st — pricier than Miami; Austin, Texas; or Chicago — with a median of $274,600.

http://www.latimes.com/business/realestate/la-fi-orange-county-3rd-priciest-market-20140812-story.html

Posted by on Aug 27, 2014 in Sales and Price Check | 0 comments

July Sales & Prices

Thanks to the folks who sent in the Property Radar press release yesterday regarding the July sales in California.  They mentioned that median prices fell in 13 of the state’s largest 26 counties:

https://www.propertyradar.com/reports/real-property-report-california-july-2014

But they didn’t say which counties!

According to our MLS, the median price of July detached-home sales in San Diego County rose 8% year-over-year, from $480,000 to $517,750 – though sales declined 19%.

Both sales and the median price in SD County look like they are topping out:

Month
# of Sales
Median SP
July 2013
2,402
$480,000
Apr 2014
2,126
$487,500
May 2014
2,161
$495,000
Jun 2014
2,116
$522,000
July 2014
1,942
$517,750

Are you thinking of selling and are worried you missed the prime market? It could get more sluggish next year – sell when everyone else isn’t!

Posted by on Aug 21, 2014 in Jim's Take on the Market, Sales and Price Check | 2 comments

Sales Effectiveness

When comparing active listings to pendings, we have called a 2:1 ratio ‘normal’.  It goes the same for total listings-to-solds; only half the listings sell in a normal market (which can be an abrupt lesson for sellers to realize that there’s a 50% chance of failure).

This isn’t a perfect measure below because it’s comparing the total listings taken in the same period as the sales closed (between Jan. 1 and July 31) but the sales include some listings from the previous period.  But to be able to gauge this year’s performance, it’s close enough – we’re comparing the ratios.

When the percentage gets around 60%, it’s frenzy time.

NSDCC Detached-homes Sold between January 1st and July 31st, and the Total Listings taken between January 1st and July 31st:

Year
Listings Sold
Listings Taken
Ratio of Solds/Total
2000
1,936
3,203
60%
2001
1,714
3,878
44%
2002
2,252
3,811
59%
2003
2,201
3,590
61%
2004
2,107
3,438
61%
2005
1,829
3,445
53%
2006
1,593
4,081
39%
2007
1,642
3,582
46%
2008
1,238
3,464
36%
2009
1,136
3,339
34%
2010
1,455
3,474
36%
2011
1,512
3,510
43%
2012
1,735
2,950
59%
2013
1,967
3,268
60%
2014
1,686
3,170
53%

We’ve had 14% fewer sales YoY, offset somewhat by 3% fewer listings.

For now, the market appears to be in good health – though our 53% is the same as it was in 2005. Note how the number of total listings tightened in 2003-2005, then popped loose in 2006 – will that happen next year?

Jumbo mortgage rates are in record territory, which should help keep the market alive the rest of the year:

Mortgage rates Aug 15

Posted by on Aug 16, 2014 in Inventory, Jim's Take on the Market, Sales and Price Check | 7 comments

More on July Sales

San Diego

Hat tip to Dennis for the cnbc.com report on July home sales in San Diego:

http://www.cnbc.com/id/101919762

Their report references the DQ report from Wednesday:

2014 July sales

Downer Diana noted that last month’s total was a three-year low, but didn’t mention that the frenzy started in the second half of 2012. As long as we are comparing to frenzy months, the 2014 totals will be lower – no frenzy now.

Let’s consider how last month’s sales of San Diego detached homes compare to previous years:

Year
# of SD Detached-Home Sales in July
2000
1,958
2001
2,291
2002
2,364
2003
2,871
2004
2,603
2005
2,338
2006
1,644
2007
1,470
2008
1,979
2009
2,170
2010
1,777
2011
1,900
2012
2,211
2013
2,402
2014
1,905

The July, 2014 sales look pretty good, given how high prices are now, and how fast they rose. Higher mortgage rates helped to cool off the frenzy too.

As a community, we should prefer a non-frenzy environment.

But the media insists that something is wrong. Diana said, “California is often seen as a barometer for the rest of the nation’s housing market. If that is the case, then housing this fall is not looking good.”

It looks good to me!

We know that when sales start declining, prices usually follow. But Rob Dawg noted this benefit here – payments are still cheaper than before:

The typical monthly mortgage payment Southland buyers committed themselves to paying last month was $1,602, down from a revised $1,616 the month before and up from $1,537 a year earlier.

Adjusted for inflation, last month’s typical payment was 34.4 percent below the typical payment in the spring of 1989, the peak of the prior real estate cycle. It was 46.3 percent below the current cycle’s peak in July 2007.

http://www.dqnews.com/Articles/2014/News/California/Southern-CA/RRSCA140813.aspx

In some areas we will probably see a few homes sell for less – neighborhoods where long-time owners have loads of equity and can still make out nicely at 5% to 10% under comps. But with so little pressure, it’s more likely that sellers will cancel and wait until next year, rather than dump on price.

Sales will probably keep dropping with the only folks selling are those who deserve a premium price – the turnkey homes in good locations – which in turn will slow any price declines.

Posted by on Aug 15, 2014 in Jim's Take on the Market, Market Conditions, Sales and Price Check | 2 comments

Slowing Sales

We are still getting reports that year-over-year sales are declining, and that means something is wrong or bad.  Below they are comparing the counts to last year’s frenzy numbers and are crying wolf.  But what do you expect when the frenzy is over?

Our local stats look great – this year NSDCC has about the same number of July sales as we did two years ago, when prices were 20% lower (some late-reporters still coming too).

NSDCC Sales, July
# of Det. Home Sales
Median Sales Price
2001
291
$575,000
2002
347
$640,000
2003
430
$745,000
2004
351
$975,000
2005
281
$1,045,000
2006
220
$1,006,000
2007
255
$1,050,000
2008
222
$898,000
2009
237
$800,250
2010
223
$833,000
2011
231
$825,000
2012
258
$850,000
2013
297
$930,000
2014
250
$1,017,500

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

From the U-T:

http://www.utsandiego.com/news/2014/aug/03/housing-market-flashes-caution/

Persistent sales slowdown keeps the local recovery fragile, raising odds of relapse

A time-tested signal of weakness in the housing market is flashing yellow.

When you compare the number of home sales (which are highly seasonal) with those from the same month a year earlier, this key measure has declined in San Diego County for nine consecutive months through June — with five at double-digit rates.

Statewide trends are similar, with 11 straight months of year-over-year sales declines, according to the latest figures from DataQuick, a company that tracks transactions reported to county governments.

“My sellers are in complete shock. We’re getting no calls, no inquiries. It’s like the market just went away,” said Kimberly Dotseth, a San Diego real estate broker. “Buyers think prices are too high.”

An exception is the lower-priced segment of the market, where homes listed for $400,000 or less are still receiving multiple offers and quick sales. This supports the view that high price might be a primary factor discouraging many sales, rather than other factors such as tough lending standards or too few homes on the market.

In the history of housing markets, downturns typically have begun with sales weakness that sometimes ended up forcing down prices, but not always.

This holds back the wider economy, even if home prices don’t fall in the near future — as they have twice since 2006. That’s because low sales activity reduces a giant source of spending for remodeling, decorating and new construction.

Given the trauma of the last decade, the condition of the local housing market is a serious subject.

Read the full article here:

http://www.utsandiego.com/news/2014/aug/03/housing-market-flashes-caution/

Posted by on Aug 5, 2014 in Jim's Take on the Market, Market Conditions, North County Coastal, Sales and Price Check | 2 comments