Top 20 Toughest Markets


More evidence of the local listing count plunging….and seller price expectations rising!

The top 20 toughest housing markets includes a diverse geographic mix of larger established metros and up-and-comers where housing is still relatively affordable. They are concentrated in three regions of the country — eight metros from the West, six from the Midwest and six from the Northeast. None of the markets are located in the South, which dominates the list of top 20 easiest markets to find a home.

California led the national list of toughest housing markets, with six of the top 20 toughest markets coming from the state. Ohio followed with three markets — Columbus, Cincinnati and Akron — making the top 20 toughest markets list.

The scarcity of homes is reflected in the market prices, and the trend in most of the toughest markets is toward even fewer homes for sale. The average median listing price for the top 20 toughest markets was $480,830 in January, 40 percent higher than the average median price of the top 100 largest markets. In addition, 17 of the top 20 toughest markets began 2020 with double-digit annual declines in available inventory, with a handful of markets seeing more than a 30 percent drop, including San Jose, San Francisco, Seattle, Salt Lake City and San Diego.

Link to Article

NSDCC January Listings and Sales

Our January sales count of detached-homes between La Jolla and Carlsbad was impressive, and comparable to the good old days!

NSDCC January Sales & Listings

Year
# of Sales
Median SP
Avg. Cost-per-sf
# of New Jan. Listings
2013
185
$845,000
$379/sf
410
2014
182
$1,072,500
$501/sf
413
2015
166
$1,221,500
$511/sf
405
2016
171
$1,092,000
$553/sf
471
2017
175
$1,180,000
$518/sf
394
2018
151
$1,320,000
$573/sf
426
2019
152
$1,300,000
$532/sf
419
2020
183
$1,430,000
$607/sf
339

In spite of all-time record pricing, the number of January listings really dried up, compared to previous Januarys – and 40% of last month’s listings are already pending or sold. How you feel about the inventory shortage depends somewhat on your price range too – here is the recent history:

NSDCC Number of January Listings by Price Range

Year
# Under-$1M
$1M – $2M
$2M – $3M
Over $3M
2013
186
123
50
56
2014
159
150
56
57
2015
138
162
50
62
2016
128
205
85
70
2017
101
163
71
71
2018
69
206
86
69
2019
74
201
66
85
2020
45
157
74
73

For those hoping to buy a house priced under a million, the dwindling number of listings is daunting. But the inventory over $1,000,000 has been relatively stable – no big surge there.

Median Sales Prices by Area

It’s been ten years since the bottom of the market.

Let’s see how the annual median-sales-prices of detached-homes have changed:

Town or Area
Zip Code
2009
2014
2019
10yr % chg
Cardiff
92007
$785,000
$1,180,000
$1,408,000
+79%
NW Carlsbad
92008
$587,000
$740,000
$999,500
+70%
SE Carlsbad
92009
$690,000
$825,000
$1,085,000
+56%
NE Carlsbad
92010
$528,750
$650,000
$830,000
+57%
SW Carlsbad
92011
$696,500
$850,000
$1,113,050
+60%
Carmel Valley
92130
$855,000
$1,090,000
$1,345,000
+57%
Del Mar
92014
$1,350,000
$1,625,000
$2,000,000
+48%
Encinitas
92024
$720,000
$955,000
$1,409,000
+96%
La Jolla
92037
$1,450,000
$1,640,000
$2,100,000
+45%
RSF
92067
$2,325,000
$2,476,596
$2,550,000
+10%
Solana Beach
92075
$1,075,000
$1,326,000
$1,462,500
+36%
NSDCC MSP
All Above
$815,000
$1,013,000
$1,325,000
+63%
NSDCC Sales
All Above
2,204
2,813
2,801
+27%

Takeaways?

  1. Everywhere’s a million!
  2. Most areas had their median sales price rise more in the second half (2014-2019).
  3. The number of sales is very impressive, given the run-up in pricing (we had 2,781 sales in 2018).
  4. Pricing in the Ranch has averaged +1% per year, which proves we can live with flat pricing for 5-10 years.
  5. Encinitas is less like Carlsbad and more like its ritzy neighbors to the south. Maybe it’s the culture?

https://encinitasca.gov/Home/City-Calendar/ctl/ViewEvent/mid/774/OccuranceId/3336

Median SP:LP

The SP:LP ratio has been very consistent for those selling a home under $2,000,000 – you can expect to get pretty close to your asking price.  Above $2,000,000 is a different story.

Mortgage rates had averaged 3.99% in 2017. You can see how the lower-end buyers became less concerned about getting a discount as rates started rising in early 2018 (they reached 4.59% in May, 2018):

This is another place that listing agents manipulate the data. When marking their listings as sold, many will lower the list price to match the sales price in order to make it look like they sell their listings for ask.

What The ‘Experts’ Think

This is a price survey that ranks the over/under for each metro to the 2.8% value growth expected nationwide.  I’ll take the over for San Diego!

The Zillow Home Price Expectations Survey sponsored by Zillow and conducted quarterly by Pulsenomics LLC, asks more than 100 economists, investment strategists and real estate experts for their predictions about the U.S. housing market. The Q4 survey also asked panelists to rate their 2020 expectations for home value growth compared to the nation in 25 large markets.

On average, panelists said they expected U.S. home values to grow by 2.8% in 2020. The share of panelists saying they expected a market to outperform that average was weighed against the share saying they expected it to underperform to create a net score.

Of the 14 markets with positive scores, 11 come from Texas or elsewhere in the Southeast or Southwest. The exceptions are DenverMinneapolis and PortlandSeattle was the most polarizing market, with an even 40% of panelists each expecting it to overperform and underperform.

Of the 10 markets that earned negative scores, meaning more panelists expected them to underperform than overperform, six were in California. A group of expensive markets in the state — San FranciscoSan Jose and Los Angeles — are expected to perform the worst. Cincinnati and Sacramento round out the bottom five.

“Having subjected buyers to a crucible of fierce competition for multiple years, many West Coast markets hit an affordability ceiling that set off declining home values in the most expensive of these,” said Skylar Olsen, Zillow’s director of economic research. “Indeed, this price correction — a clap back from having appreciated with too much exuberance in the recent past — pushes many previously hot markets to the bottom of our experts’ list. At the top of the list are metros still providing relative affordability and thriving, amenity-rich communities that appeal to younger adults willing to make a move. These features, plus the ability to grow and add housing in the future, are attractive propositions for employers and employees alike.”

Many panelists expect home values in San Jose and San Francisco to continue falling in 2020, and some expect more markets in California to join them. Sixteen panelists out of the 42 that selected at least one metro said home values will fall in Los Angeles, and twelve said the same about San Diego and Riverside.

NSDCC December Sales

Mortgage rates were the best they’ve been in December since 2012. How were sales?

We had a nice pop in sales compared to 2018, but that’s about it:

NSDCC December Sales

Year
# of Sales
Median SP
Avg. Cost-per-sf
2015
258
$1,094,500
$477/sf
2016
240
$1,150,000
$502/sf
2017
225
$1,215,000
$573/sf
2018
199
$1,460,000
$560/sf
2019
224
$1,405,000
$586/sf

How much momentum are we carrying into the new year from the last couple of months?

The market has felt very active, but looking at the stats, we’ve only beat last year’s count by 13%…..which isn’t saying much, given how much lower rates have been (-20% YoY):

NSDCC November + December Sales

Year
# of Sales
Median SP
Avg. Cost-per-sf
2015
454
$1,107,500
$495/sf
2016
484
$1,199,995
$517/sf
2017
445
$1,215,000
$549/sf
2018
397
$1,375,000
$563/sf
2019
429
$1,350,000
$577/sf

Hopefully, the 2020 sellers are noticing that there haven’t been the big gains in pricing recently – but those who are willing to sell for about the same as what the last guy got should do fine!

NSDCC November Sales

We’ve never had a soft landing before, but this is how I imagine one would look – mortgage rates drop just enough to have sales and pricing level out:

Year
# of Sales
Median SP
Avg. Cost-per-sf
Median DOM
2014
173
$985,000
$489/sf
34
2015
196
$1,173,750
$518/sf
38
2016
244
$1,235,908
$531/sf
28
2017
220
$1,208,487
$524/sf
27
2018
197
$1,300,000
$566/sf
29
2019
201
$1,345,000
$569/sf
28

We could have done better (see 2016), but it could have been much worse too. In 2014, when pricing was substantially lower, we only had 173 sales – which goes to show you that pricing isn’t the only component.

Speaking of pricing, the median sales price has rebounded over the last two months instead of tapering off, like it usually does. It’s over $100,000 higher than last November! (Coastal North includes Oceanside):

It looks like an early surge is likely in 2020, after that….who knows?

NSDCC Sales, October

Our market was slumping towards the end of 2018, so no surprise that the numbers this year look so good.  But the pace since 2013 is remarkable, and for last month’s sales to only be down 10% vs. 2013 is incredible, given how strong our market was then:

NSDCC Detached-Home Sales, October:

Year
# Sales
Avg $/sf
Med $/sf
Med SP
Med DOM
2013
266
$495/sf
$383/sf
$957,500
32
2014
244
$467/sf
$387/sf
$978,754
39
2015
223
$473/sf
$406/sf
$1,075,000
25
2016
275
$524/sf
$424/sf
$1,100,000
30
2017
259
$533/sf
$439/sf
$1,194,500
29
2018
238
$568/sf
$484/sf
$1,384,634
37
2019
239
$602/sf
$490/sf
$1,425,000
32
Diff since 2013
-10%
+22%
+28%
+49%
0

The statistics should remain solid for the rest of the year, though the local Case-Shiller Index will probably be slightly negative.  It’s 2020 that will be less predictable!

4Q Uptick?

A positive forecast from our friends at JBREC:

Our proprietary model using Google search trends shows a bottoming & re-acceleration in resale and new home sales growth YOY into year end. Lower mortgage rates, better affordability, and an easy comp vs. last year’s dreary 4Q help these YOY stats.

You would think that the sales slump at the end of 2018 would make this year’s comparison look rosy, but it looks like we’ll be lucky just to match the 2018 sales around Coastal North SD County. We need 62 more sales reported for October, 2019 just to match last year – which had been 5% lower than the year before:

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