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Category Archive: ‘Sales and Price Check’

Buying-Difficulty Gauge

downtown-san-diegoLast week we saw that San Diego was #1 in the nation for least affordable housing compared to the renter’s median income.

This article ranks the Top 10 cities in America by median list price, with the highest eight cities all located in California (San Diego is #7):

http://www.housingwire.com/articles/29729-california-dreaming-be-prepared-to-pay-up

The data is from realtor.com, which not only tracks the median list prices, but they also log the inventory counts for each city.  The MLS coverage may not match up exactly to the metro areas, but let’s compare inventory-to-census populations to gauge the potential competitiveness:

Metro Area
Population
Active Listings
Pop./Actives
Median LP
San Jose
1,892,894
2,023
936:1
$699,000
Oakland
2,632,217
3,082
854:1
$499,000
San Francisco
1,566,101
2,140
732:1
$867,280
Seattle
2,740,536
5,339
513:1
$369,950
Denver
2,697,476
5,586
483:1
$335,000
New York City
8,405,837
17,560
478:1
$377,500
LA-Long Beach
10,017,068
16,238
477:1
$459,990
San Diego
3,176,138
8,569
371:1
$469,000
Houston
6,313,158
19,817
319:1
$225,000
Orange Co.
3,114,363
10,072
309:1
$599,999

Seattle and Denver don’t get mentioned on the highest-priced lists, but the difficulty of buying a home there is duly noted. The actual San Diego residential inventory today is 6,709, or a 473:1 ratio, which would push us up into the same group, and we’d have the highest median LP of those five areas.

Interestingly, the Orange County inventory is 64% higher now than it was a year ago, while the San Diego inventory is only 15% higher Y-O-Y.

http://www.realtor.com/data-portal/realestatestatistics?source=web

Posted by on Apr 21, 2014 in Inventory, Jim's Take on the Market, Sales and Price Check, Tips, Advice & Links | 7 comments

H-Tracker Back on Track

The Department of Numbers, aka Housing Tracker, did correct their local San Diego inventory count this week.

http://www.deptofnumbers.com/asking-prices/california/san-diego/

Previously they were always higher than the MLS, and we thought it was due to them adding FSBOs, new-builds, or whatever else is for sale but not on the MLS.

But they are tracking the MLS very closely now – today’s MLS count is 6,697:

dept o numbers

The asking-price trend looks about right too – sellers’ optimism is increasing - but their corrected asking-price numbers today (all much higher) are going to skew the trend lines for the next couple of weeks.  They were a little behind previously:

dept o numbers asking prices

Get good help!

Posted by on Apr 14, 2014 in Sales and Price Check | 1 comment

San Diego Sales & Prices

Here is the March sales activity reported in a fairly unbiased manner.  But the realtors blamed year-over-year drop on winter?

From KPBS:

http://www.kpbs.org/news/2014/apr/08/san-diego-real-estate-market-shows-improvement/

soldReal estate in San Diego regained some ground in March, with the median price of a single-family home rising 4.3 percent to $490,000, according to the San Diego Association of Realtors.

In a report issued Monday, the local real estate group said the price of a house sold in March was 4.3 percent higher than in February and up 13.4 percent compared with March 2013.

Sales were up 32.5 percent, with nearly 1,800 homes sold last month. But compared with sales in March 2013, sales were down 15.4 percent, according to the association.

Condominium and townhouse prices were up 1.7 percent month-to-month, with the median price at $305,000. Compared with last March, prices were up 7 percent. Sales were up 14.7 percent, with 827 units sold in March.

Compared to last year, sales of condominiums and townhomes were down 17.3 percent.

Year-to-date figures reflect a wintertime slowdown in the market, according to the association.

In the first quarter of the year, nearly 4,500 single-family homes sold, down 18.7 percent from same quarter in 2013. Quarter-to-quarter condominium and townhome sales — 2,300 –  were down 9.6 percent.

Posted by on Apr 9, 2014 in Sales and Price Check | 4 comments

March Sales – Sobering

The March sales will look bleak to the casual observer.

When you compare these preliminary numbers (late-reporters might add another 5% or so) to the frenzied-up March, 2013 counts, the differences are -29% and -22%.

March Sales of Detached-Homes

Year
NSDCC Sales
Avg SP/sf
SD Co. Sales
Avg SP/sf
2010
216
$395/sf
1,883
$249/sf
2011
238
$371/sf
1,883
$238/sf
2012
238
$357/sf
2,001
$228/sf
2013
299
$404/sf
2,202
$266/sf
2014
211
$519/sf
1,710
$319/sf

You can’t blame it on the weather – it’s been spectacular here the last few months.  Rates have been in the 4s and remarkably steady since July, so buyers are accustomed to them now.  Mortgage underwriting might be slightly easier, though case-by-case (FICOs down to 550 for FHA at a few lenders now).

What does inventory tell us?  The Under-$800,000 market around NSDCC is hot, but above that it is murky.

The number of homes for sale between $800,000 and $2.4M has risen 30% since the start of the year, and their avg LP/sf has dropped 5% to 10%:

http://www.bubbleinfo.com/2014/03/31/inventory-watch-more-steady-2/

The simple answer is that more sellers are priced wrong, but heck, this is the priced-to-see-if-we-get-lucky season.  Sellers will probably wait until May before giving up hope.

You can’t blame sellers for being optimistic when the average SP-per-sf is still rising. But sellers who are priced over $1,000,000 and have been on the market for more than 30 days should start sharpening their pencil now, and get going while we know there are plenty of buyers left.

Posted by on Apr 2, 2014 in Jim's Take on the Market, Market Conditions, North County Coastal, Sales and Price Check | 13 comments

No Joke

Happy April 1st – Trulia got in the April Fools’ spirit with this today:

http://www.truluvia.com/

But let’s keep it real here.  C-L expects price increases to continue.

From MND:

http://www.mortgagenewsdaily.com/04012014_corelogic_hpi.asp

Home prices continue to increase by double-digit percentages on a year-over-year basis CoreLogic said today.  The company’s Home Price Index (HPI) for February, an index that includes distressed sales, was up 12.2 percent compared to February 2013.  Thus February becomes the 24thconsecutive month in which there have been annual price increases.

HPI

Including distressed sales, the five states with the highest home price appreciation were California (+19.8 percent), Nevada (+18.5 percent), Georgia (+14.2 percent), Oregon (+13.8 percent) and Michigan (+13.5 percent).  There were no states with negative annual appreciation.

“February marks two straight years of year-over-year gains in national prices across the United States,” said Anand Nallathambi, president and CEO of CoreLogic. “The consistent upward movement in home prices should ultimately prove to be an important stimulant for higher levels of sustained market activity and growth in the housing economy.”

CoreLogic said today’s report introduces a new forecast metric that provides advanced indication of home price trends.  The current forecast is that home prices are projected to increase 0.5 percent month over month from February 2014 to March 2014 and that home prices, including distressed sales, are expected to rise 10.5 percent year over year from March 2013 to March 2014.

“As the spring home-buying season kicks off, house price appreciation continues to be strong,” said Dr. Mark Fleming, chief economist for CoreLogic. “Although prices should remain strong in the near term due to a short supply of homes on the market, price increases should moderate over the next year as home equity releases pent-up supply.”

Posted by on Apr 1, 2014 in Forecasts, Sales and Price Check | 0 comments

Sales As The Leading Indicator

Livinincali left this comment Thursday:

If history is any guide you’d expect sales volume to start dropping before seeing any movement down on price. The sales volume numbers back in winter of late 2012, 2013 were seasonally higher than they have been and that marked the beginning of the price appreciation.  Now it seems as the sales volume have fallen off a bit and price appreciation has moderated.  If sales volume continues to be soft expect appreciation to be minimal this year.  It seems like some segments of the market are still hot but it doesn’t feel like the frenzy of last year around this time where everything in the county was hot.

Historically, sales are the leading indicator, and prices have always followed.

Many are very committed to the fundamentals, and that in itself could help propel the actual market activity – a self-fulfilling prophecy.  A loan rep in the OC named Logan has sparred with me about it on Twitter, and he has included the Trulia economist in the conversation – which is fine by me because they share the same view that history will repeat itself, regardless.

twitterwar

Logan is entitled to one man’s opinion.  But Trulia stories get published everywhere now, and could carry considerable influence with home buyers.  They are a mainstream-media source for market data, and have a responsibility to dig for the truth.

The Twitter war above got started over this article, which is now being published by media outlets everywhere:

http://www.latimes.com/business/realestate/la-fi-home-prices-20140326,0,4729002.story#axzz2xIS4jHJV

Suggesting that bubbles are forming in areas where prices rising faster than those incomes is shallow and incomplete.  Let’s consider additional facts.

Do reports of fewer sales have to be contributed to stagnant incomes, un-affordability, employment, economics, DTI, etc., that will drive prices down, or are there other explanations?

1.  It was predicted here six months ago that people would be comparing 2014 sales to the ultra-hot frenzy months of 2013, and claim the sky is falling.  You could say that the low rates of 2013 alone were driving people to buy; now that higher-and-steady rates aren’t driving the market, sales look pretty similar to recent years – IN SPITE OF HIGHER PRICES.

Detached-Home Sales Between Jan. 1 – March 15:

Year
NSDCC Sales
Avg $/sf
SD Co. Sales
Avg $/sf
2010
360
$377/sf
3,428
$237/sf
2011
412
$376/sf
3,476
$234/sf
2012
450
$367/sf
3,987
$226/sf
2013
518
$389/sf
4,423
$255/sf
2014
459
$500/sf
3,518
$312/sf

Take out the 2013 frenzy-driven era, and sales look similar, or better, than previous years, even though pricing is substantially higher.

2. A preliminary sign of a market top would be more homes not selling, and inventory rising. If inventory was rising steadily, AND sales were flat or declining, then a call for lower prices would be obvious.  But the inventory is about the same as last year:

SD inventory

A big difference that is critical to the equation is that 2013 sellers were caught off-guard at rapid rebound in pricing.  But the word is out now, and the 2014 sellers are VERY WELL AWARE of the improved market/higher pricing.  Yet sales are strong.

3.  This year’s sellers are more elective.  They didn’t have to sell last year, and waited until they could get even more money this year – and they are only selling if they get their price.  Yet sales are strong.

4.  Every seller wants more, not less.  It is the sellers’ creed – tack on a little extra to what the last guy got.  Yet sales are strong.

5.  If prices did falter, sellers just wouldn’t sell.  The ego of a seller is powerful, and selling for any less than ‘their price’ is ‘giving it away’.  Sellers will avoid that at all costs, and just cancel their listing instead.  You’ll know that pricing is heading downward when you see inventory dry up further.  Yet sales are strong.

6.  There is absolutely NO threat of distressed sales undermining the market.  Of the 1,180 NSDCC listings this year, 12 have been short-sales, and one has been an REO.  Yet sales are strong – stronger than when buyers could have gotten a deal.

7.  Multiple offers are everywhere. I can only speak about the north-coastal region of San Diego County, but everywhere I go, there are multiple offers – even on houses that aren’t that great.  You will see bidding wars dry up before sales start to drop.  Yet sales are strong.

8.  We have never seen the inventory sustain at levels this low.  There is an awareness and appreciation about one’s home that is superseding price – people aren’t interested in moving, no matter what they could get for it. The Z-man said yesterday that the low inventory is due to 20% of the country being underwater.  Did he interview each one of those people?  They could have short-sold anytime over the last few years if they wanted to move – but they didn’t.

In summary, buyers are ready, willing, and able to buy homes today – at these prices, and these mortgage rates.  There would be as many – if not more – sales this year, than in 2013, if there were just more decent homes to sell at today’s prices.

Homes that aren’t selling today are the ones priced outrageously – anything close to the right price is selling. Hopefully it means there is a price ceiling - and we have arrived at the unaffordable plateau for now.

Sellers are insisting that we stay at these prices, or higher – they aren’t backing down. For now, buyers are agreeing.  I haven’t seen any house sell for less than the comps this year – have you?

Until the bidding wars dry up, and then sales start to falter when compared to non-frenzy months, then prices should hang around these levels.

Posted by on Mar 29, 2014 in Frenzy, Jim's Take on the Market, Market Buzz, Market Conditions, North County Coastal, Sales and Price Check | 13 comments

Feb. Sales – Glass Half Full

jim at last year's frenzyIt was noted in the media this week that February homes sales were the at the lowest count in 18 months – yes, a frenzy will do that to you!

http://www.cnbc.com/id/101511116

Sales are going to be ‘sputtery’, and struggle to keep up with previous frenzied months when prices rise sharply.  When prices and rates both rise substantially, you’d think it would put a real damper on sales – but around NSDCC they have held up remarkably well:

NSDCC Detached-Home Sales

Year
Jan. Sales
Feb. Sales
Jan. Avg $/sf
Feb. Avg $/sf
2005
206
184
$500/sf
$480/sf
2006
169
189
$559/sf
$519/sf
2007
157
155
$489/sf
$482/sf
2008
115
131
$474/sf
$485/sf
2009
114
105
$419/sf
$370/sf
2010
137
143
$368/sf
$376/sf
2011
149
166
$366/sf
$377/sf
2012
155
184
$374/sf
$358/sf
2013
185
187
$379/sf
$400/sf
2014
181
176
$498/sf
$483/sf

Let’s remember that these are completely different sets of buyers and houses.  The recent consistency, and resiliency, is remarkable!

P.S. The preliminary numbers for this month look much lower than last year (we had 298 sales in March, 2013, which was 25% higher than in 2012).

This will probably continue for the next few months – any comparison to the max-frenzy months of 2013 is going to look dismal.  But the sky isn’t falling, and price will fix anything.  Get good help!

Posted by on Mar 22, 2014 in Market Buzz, Market Conditions, North County Coastal, Sales and Price Check | 1 comment

NSDCC February Sales/Pricing

The average pricing for February increased 21% since last year, yet remarkably, sales haven’t dropped off much – what other industry could be so price insensitive?

Year
Feb. Sales
Avg $/sf
Avg DOM
30Y Mortgage Rate
2006
189
$482/sf
64
6.25%
2012
174
$375/sf
92
3.89%
2013
188
$399/sf
68
3.53%
2014
169
$484/sf
55
4.30%

It looks like we’ve been on a comfortable plateau over the last six months:

mocostgraph2

We didn’t see the step-up from the $430-$440/sf range until mortgage rates popped last summer.  Have we found the happy price-point for mortgage rates in the low-to-mid 4%s, or just levitating?

Posted by on Mar 4, 2014 in Jim's Take on the Market, North County Coastal, Sales and Price Check | 6 comments

Predicting Sales Prices

The Federal Reserve Board has come up with a new way to analyze pricing trends. They are emulating the Case-Shiller Index, but applying it to the list prices of properties marked pending to predict the eventual sales prices:

http://www.federalreserve.gov/pubs/feds/2014/201416/201416abs.html

Abstract: We construct a new “list-price index” that accurately reveals trends in house prices several months before existing sales price indices like Case-Shiller. Our index is based on the repeat-sales approach but for recent months uses listings data, which are available essentially in real time, instead of transactions data, which become available with signiffcant lags. Our index methodology is motivated by a simple model of the home-selling problem that shows how listings variables such as the list price and marketing time help predict the final sales price. In a sample of three large MSAs over the years 2008-2012, our index (i) accurately forecasts the Case-Shiller index several months in advance, (ii) outperforms forecasting models that do not use listings data, and (iii) outperforms the market’s expectation as inferred from prices on Case-Shiller future contracts.

Full paper (761 KB PDF)

An ideal price predictor would combine these two trends:

SD list prices vs inventory

http://www.deptofnumbers.com/asking-prices/california/san-diego/

The lowest inventory seen was February, 2013, and no surprise that when combined with the lowest rates ever that the market reached full-frenzy mode.

They show now that San Diego inventory is about 13% higher than last February, and the list prices have been fairly flat for the last few months.  Because sellers want more than the last guy, sales prices should keep increasing, at least at a moderate rate.

Posted by on Feb 28, 2014 in Inventory, Sales and Price Check | 3 comments

Pricing Plateau, Or?

Yesterday we saw that the San Diego Case-Shiller Index has been essentially flat since mortgage rates went up at the end of June, 2013.

Those higher rates may have tempered the frenzy around the coast too, as sales started dropping off in August.  But the average pricing has kept rising, now up to $498/sf last month (a 19% increase since July’s $418/sf):

NSDCCmonthlygraph

Which segment is driving the average-pricing up?

It’s the higher-end!

Below is the graph for the Under-$1,400,000 market, where pricing has been flat since August – and last month was a blip; the average for February is $385/sf currently:

NSDCC UNDER $1.4 monthly

 

It’s a rich man’s game – get good help!

 

Posted by on Feb 26, 2014 in North County Coastal, Sales and Price Check | 6 comments