With all the recent action mentioned in the previous post, it makes you wonder how much the market is fueled by frustration over the selection of homes for sale. Yes, it is the “season”, but is the lack of inventory causing buyers to grab anything, at any price?
More inventory would help satisfy the demand, and help us discover if there is a ceiling to these prices. But adding just a few more houses for sale would only fire up the frenzy.
Here are the number of NSDCC houses listed between Jan. 1 and April 15th:
Number of New NSDCC Listings, Jan 1 to Apr 15
Note how the hot frenzy in 2013 was fueled by having more homes for sale. If we just had an extra 100-200 decent houses for sale now (especially under $2,000,000), they would likely get gobbled up.
Usually around tax day, the real estate market goes into a bit of a funk, and this year it was compounded by the disconnect between our MLS and Zillow – any new listings have to be manually inputted to Zillow, which isn’t obvious to most agents.
In spite of all that, there have been some remarkable new pendings in the last week. A few examples:
1. The neighbor down the street had a smaller lot and no guest apartment but had a more wide open view looking south – yet they struggled for 124 days before finding a buyer who paid $1,349,000 (closed on April 2nd). Then this house lists for $1,599,000 and goes pending the first week:
4. This is a teardown on a 9,771 sf lot with some ocean view in Leucadia listed for $1,299,000. You could buy a brand new house down the street for the same money (or less), yet it only took 26 days for this to go pending:
5. The seller of this house paid $1,575,000 two years ago, which was $80,000 over the list price then. Two weeks ago, they listed it on the range $1,629,000 – $1,699,000, and received eight offers at or above the high end of the range. My clients offered $1,760,000 cash and lost – rumor has it that the sales price is around $1,800,000:
8. In Del Mar, Solana Beach, RSF, and La Jolla there were 17 new pendings, and almost all were lower-enders. The auction happened on Friday night and I didn’t see any last-minute advertising like there was on the other auctions. But it’s pending too:
Fannie interviews 1,000 people every month, and then leaves it up to their ivory-tower guy to explain it to the masses. Here’s my conclusion from my own personal survey: buyers are being cautious due to prices going up so fast.
Consumer attitudes toward housing appear to have stalled somewhat amid a recent dip in confidence regarding personal finances and income growth, according to results from Fannie Mae’s March 2015 National Housing Survey™.
Among those surveyed, the share who expect their personal financial situation to improve over the next year fell to 41 percent last month, while those who said their household income is significantly higher than it was 12 months ago fell to 22 percent.
Additionally, the share of respondents who said they would buy a home if they were to move decreased 5 percentage points to 60 percent – a new all-time survey low.
On the bright side, the share of consumers who believe now is a good time to sell a home reached a new survey high of 46 percent, narrowing the gap with those reporting it is a good time to buy, perhaps signaling a more balanced housing market.
“Consumers are being patient prior to entering the housing market. Our March survey results emphasize how critical attitudes about income growth are to consumers’ outlook on housing,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “We’ve seen modest improvement in total compensation resulting from a strengthened labor market. However, income growth perceptions and personal financial expectations both eased off of recent highs, consistent with Friday’s weak jobs report. Simultaneously, the share of consumers expecting to buy on their next move has declined. We believe the recent setback in consumer sentiment should be short lived if early signs of income growth bear out and occur in proportion to expected interest rate increases. Meanwhile, the wait for housing expansion continues.”
Mortgage rates on Friday dropped back to 3.62% (avg. jumbo was 3.57%!), which should help fuel the final Spring Kick of the selling season. The end of the school year is within sight, and there are lots of lookers. My listing on Monroe in Old Carlsbad was shown steadily for the first three weeks on the market, but no offers. Then we got three over Easter weekend!
Click on the link below for the complete NSDCC active-inventory data:
On top of today’s announcement that February pendings were up 3.1%, our local NSDCC market has kicked it up a notch lately. We had 84 new pendings last week, and 81 this week – we averaged 60 per week in February!
Click on the link below for the complete NSDCC active-inventory data:
The month of March is wrapping up next week, and we’re heading into the Easter/Spring Break period. Local buyers who might take some time off will be offset by the out-of-towners coming in for a look.
The market seems very balanced currently, and our ‘market health’ gauge is supportive.
Historically, we’ve called it a healthy market when Active Listings-to-Pendings have been at a 2:1 ratio, and here’s the count today in North SD County’s coastal region:
Ratio = 1:78:1
It’s the lower end of the market that is really hot. Of the 440 pendings, 71% of them are listed under $1,500,000.
Only 37% of the actives are priced under $1,500,000!
While there has been a steady flow of new pendings, I haven’t seen many that were a surprise. I think buyers are being patient, and are hoping that there will be better offerings later – much like sellers are hoping there will be higher-payers later.
Mortgage rates are holding steady too, which means April could be the month that those buyers and sellers who are in tip-toe mode come closer together!
It’s remarkable how strong the data is for homes sold around North San Diego’s coastal region. Most impressive is the number of sales in spite of higher pricing – there isn’t much drop-off!
These are houses sold between February 1 – March 15
# of Sales
Yesterday, the guy on CNBC who has predicted the last couple of bond-market moves said that he expects the 10-year yields will be down to 1.50% in the next few months, which should push mortgage rates under 3.50%. Waahoo!
The real estate market around Orange County is similar to ours in San Diego, and they are feeling the seasonal surge like we are currently. Mortgage rates under 4% are certainly contributing to the fever – live it up while you can!
January buying was slow, too. Then all of a sudden – with no major change in pricing or mortgage rates or the broader economy – shoppers stopped shopping and started making offers.
“I’d like to know what buyers are thinking. Why did they start pulling the trigger now?” Thomas says. “It’s like we’ve gone from 5 miles per hour to 65 in a very short distance.”
Thus, the big question for Orange County’s housing market has gone from “When will it wake up?” to “How long can this surge last?”
Will February prove to be just a short-lived, unexpected rush of buyers wanting to start the year in a new home? Did folks get overly anxious about the possibility of potentially higher home prices or costlier mortgages later this year?
Or is this the market breakout where improved housing fundamentals, most notably a healthy job market, nudged buyers to act? Is there a growing flock that’s tired of renting or having roommates – parents or otherwise – and have joined the traditional hunt for home ownership?
It used to make sense that the higher prices went, the more people would sell.
But now here we are at all-time high prices, and not many are interested. It must be due to the lack of other options – not selling looks better than selling.
New Detached-Home Listings Between Jan 1 – Feb 15
# of New Listings
Median List Price
One place where there has been some nice action is the $700,000 – $900,000 range along the I-15 corridor. There has been a steady stream of new product coming to market, and momentum is building as most sell within the first week (catching many sellers and agents by surprise).
When there are only a smattering of new listings like we’re having along the coast, buyers struggle with whether the pricing is real. A few will sell here and there, but more listings would provide more comfort to buyers, one way or another. If they see them selling, then they’d be more likely to jump in!
I mentioned on video that my phone has been blowing up the last couple of weeks, and other agents are reporting the same thing. The graduation season is over, and July is only five days away!
Are buyers fired up because of USA Soccer?
Part of the action may be due to the lack of new listings – there still hasn’t been any flood of sellers:
NSDCC Detached-Home New Listings in June
2010 = 533
2011 = 503
2012 = 436
2013 = 478
2014 = 388 (so far)
The next 30 days should be lively – buyers are making their last push to buy/clean/move and get settled before school starts up again. If you are thinking of selling, it’s a great time to hit the market – contact me today!
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