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Are you looking for an experienced agent to help you buy or sell a home? Contact Jim the Realtor!

Carlsbad
(760) 434-5000

Carmel Valley
(858) 560-7700
jim@jimklinge.com


Category Archive: ‘Thinking of Buying?’

Seller & Buyer Testimonial

A key point here is that the local neighborhood experts gave them no chance of selling for the price they wanted, even after making improvements.

It sold for full price, on the first day:

Many thanks to our clients for doing this!

Posted by on Sep 3, 2017 in About the author, Bubbleinfo Readers, Bubbleinfo TV, Jim's Buyer Representation, Jim's Take on the Market, Remodel Projects, Repairs/Improvements, Thinking of Buying?, Thinking of Selling?, Why You Should Hire Jim as your Buyer's Agent, Why You Should List With Jim | 3 comments

The Big Stagnation

 

On the Facebook bubbleinfo, in response to the idea that the bubble won’t be bursting, Matt asked ‘what constitutes the big stagnation when it happens’.

My response:

The Big Stagnation? You’ll know it when you see it.

We used to consider 6 months’ of inventory to be normal, but the new norm is probably 3 months with most of San Diego being 1-2 months today. Rancho Santa Fe is our exception, and has 8 months’ of inventory currently (only because there was a slew of sales last month). I think we can consider stagnation being any market with more than 6 months’ worth of inventory, and/or 100+ average days on market (Avg. DOM in RSF now 129 days).

When the market slows, most of the homes not selling can be explained – bad locations, inferior condition, etc.  Start worrying when you see houses that have it all, including a decent price, not selling.

Other outside influences that might cause the market to stagnate include:

  1. Mortgage rates get back into the 5s. Rates have been under 5% since the end of 2009, which seems like a million miles ago.  Buyers would want to stall their plans for at least six months to see if sellers would compensate by lowering their price.
  2. An occasional bad comp.  This happens today when a lowball sale occurs (usually an inside job), and buyers and sellers wonder if it is real.  Because there is usually scant information about it, the bad comp ends up being a mystery, and we forget after a few months, but another seller has to go first to prove it was an anomaly.
  3. Immigration is halted.  This would have seemed impossible up until a few months ago, but if it happened, we could feel a significant impact on the demand side.
  4. Recession hits locally.  An economic slowdown may not bring more supply right away because those out of work would wait 1-2 years before they believed they couldn’t get another job, and decide to move.  A more immediate impact would be felt on the demand side – we’d be losing buyers right away.

The prime reason for a market stagnation is the resistance that sellers and agents have about lowering their price – they would rather wait and see if it will be different tomorrow.

We might see a 5% or 10% drop without much fanfare, because most every seller around here has gained more than 30% appreciation since 2009 and wouldn’t feel it much.  They might give up a couple of bucks, but if a heavy discount is needed to sell, they will dig in.  It is very likely that the only reason they are selling is to hit the big-money jackpot.

A stagnant market could last for months or years – they tend to last until people subscribe to the fact that price will fix anything!

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Posted by on Sep 2, 2017 in Jim's Take on the Market, Market Conditions, Thinking of Buying?, Thinking of Selling?, Tips, Advice & Links, Why You Should Hire Jim as your Buyer's Agent, Why You Should List With Jim | 2 comments

No Chance of Bubble Bursting

I was asked yesterday about the chances of the bubble bursting.

My answer was, “No chance”.

But these things run in cycles, and eventually won’t the market will cool off?

Yes…..some day…..and when it happens, our market will stagnate, rather than see prices decline.  Sellers would need to be desperate to sell for less, and there are too many other alternatives and stop-gaps in place now to prevent desperation.

A. Reverse mortgages – The H.U.D. backed down the loan-to-value last week, but for anyone who is 62 or older, the reverse mortgage will be a viable – though costly – alternative to selling and moving. The average borrower at current interest rates will be able to borrow roughly 58% of the value of their home, down from 64%, and allows them to take the equity out of the house through lump-sum withdrawals, regular payments, or a line of credit.  The loan does not need to be paid off until the borrower dies, sells the house, or moves.

What about the younger, working folks who don’t qualify for a reverse mortgage and could be impacted by the next recession?

B. The foreclosure rules have changed, and the banks would rather let you slide, than kick you to the curb.  Don’t feel like making your payments for months or years?  No problem, just send in what you can, and they will kick around your loan-mod application until things get better.

Want to sell quick?

C. Discount your price 20% to 30%, and a flipper will cash you out in a week.  But that doesn’t tank prices, because the flipper will apply some lipstick and sell it for retail in the next 2-3 months, keeping the neighborhood values afloat.  Could flippers get stuck with some dogs?  Yes, but they are flush and full of ego – how many do you see already who just keep re-freshing their listing at the same price, and holding out for those six-figure gains?  Plenty.

Don’t want to discount?

D.  There are thousands of realtors who will take your listing at any price and hope for the best.  This is how the market will go stagnant – and Rancho Santa Fe is the example, where today there are 213 houses for sale.  They just wait for someone to come around and pay the seller’s price.

The best reason of all for why our housing market won’t burst are the high rents.  If the next recession hits hard, and distressed homeowners think about cashing out, they need to leave town to make it worth it.  If they want to stay in the same neighborhood, the rents are so high that it makes more sense to stay put.  Remember how the layoffs at Qualcomm caused a big concern around Carmel Valley?  Yet prices haven’t tanked – and the 92130 has 85 active listings and 61 pendings today.

Everyone who financed a purchase in the last few years had to qualify through strict guidelines, and, as a result, the affluent have ruled the market.  They won’t get the jitters if the ride gets bumpy; no, they are in for the long haul.

Stagnant City is the worst that will happen.

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Posted by on Aug 31, 2017 in Jim's Take on the Market, Thinking of Buying?, Thinking of Selling?, Why You Should Hire Jim as your Buyer's Agent, Why You Should List With Jim | 12 comments

One-Story vs. Two-Story

The other day, an appraiser mentioned to me that he had just completed a study comparing the prices of one-story houses vs. two-story.

He had done a similar study ten years ago, and found that the premium being paid for a one-story then was about 5%.

Today, he found that the premium is about 14% – more than double!

We speculated whether it would double again over the next ten years.  When you consider how short the existing supply of one-story homes is today, and that builders are still addicted to the two-story model, it is pretty easy to guess the premium will increase further!

Here’s a sample of houses sold between La Jolla and Carlsbad this year.

NSDCC Houses Between 2,500sf and 3,500sf Sold 2017 YTD

# of Stories
# of Sales
Avg SF
Avg $$/SF
Median SP
One-Story
104
2,918sf
$623/sf
$1,450,000
Two-Story
532
2,973sf
$450/sf
$1,163,173

You can get a better ‘deal’ on a two-story home, but as boomers get older and unload two-story houses, that market could get glutty, and the quality one-story houses be even more sought-after.

Posted by on Aug 28, 2017 in Jim's Take on the Market, Market Conditions, One-Story, Thinking of Buying?, Why You Should Hire Jim as your Buyer's Agent | 7 comments

Our Clients’ Experience 2

I appreciate our clients who are willing to go on camera to express their thoughts about their experience – thank you Eddie89!

A key point for buyers in a bidding war is to know when to increase your bid, and by how much.  I help you determine which houses are worthy of a higher bid – and most aren’t, so you will lose a few!

Posted by on Aug 27, 2017 in About Kayla, About the author, Bubbleinfo Readers, Jim's Take on the Market, Klinge Realty, Thinking of Buying?, Why You Should Hire Jim as your Buyer's Agent | 2 comments

Housing Jitters

The economists like the housing market, but they are known to play it safe.

How about the consumers?

I’d prefer to survey the active home buyers and sellers in our area to get the best reading on our future.  But here are the sentiments of 1,079 American adults over the age of 18 who were surveyed last month:

Fifty-eight percent of homeowners say that they expect there will be a “housing bubble and a price correction” in the next two years – up 12 percentage points since April.

Looking across the country, residents in hot housing states are particularly jittery. The top five states where residents believe the market is approaching a “housing bubble” include:

  1. Washington (71 percent)
  2. New York (68 percent)
  3. Florida (63 percent)
  4. California (59 percent)
  5. Texas (58 percent)

While experts have long suggested living in a home for more than seven years could lower a homebuyer’s exposure to market fluctuations, only 37 percent of millennials in the survey plan to live in next home they buy for more than six years, making the so-called “rule of seven” less relevant to the next generation of serial homebuyers.

“Beyond the jitters, I see in our survey an increasingly informed nation of homebuyers, who understand the risk of the market,” said Melendez. “To those concerned about a price correction, or waiting to time the market, I recommend a proactive approach. Have an exit plan, then anytime you find a home you love is a good time to buy.”

Read full article here:

LINK

How do you feel?  Leave your thoughts in the comment section!

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Posted by on Aug 17, 2017 in Forecasts, Jim's Take on the Market, Market Buzz, Market Conditions, Thinking of Buying?, Thinking of Selling? | 7 comments