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Category Archive: ‘Thinking of Buying?’

Selling Early

In the previous video, Brandi mentioned that sellers enjoy a real urgency early in their listing period.  Today’s market is a good example – because every decent buy gets snapped up right away, all new listings get immediate attention.

The North SD County coastal region has been hot up to around $1,400,000 - homes priced above that have a much different supply-and-demand curve.

Here are the current active and pending listings of NSDCC detached homes:

Price Range
# of ACT
# of PEND
A/P Ratio
OVER $1.4M

On the lower end, literally half of the pendings found a buyer in the first 15 days on the market.

This dynamic can be used by both sellers and buyers.  Sellers who price sharply from the beginning can help create a fever pitch, and have a bidding war push the sales price higher.  Buyers who see homes on the market for more than 15 days know that something might be missing.

Posted by on Feb 19, 2014 in Actives/Pendings, Jim's Take on the Market, Thinking of Buying?, Thinking of Selling?, Tips, Advice & Links | 0 comments

MID Ideas

While everyone is looking forward to Christmas tomorrow, let’s sneak in one last article this year on the MID, this from the Reason Foundation:

Here are excerpts:

The mortgage interest deduction (MID) is never left alone for very longIn Unmasking the Mortgage Interest Deduction: Who Benefits and by How Much? Economists Dean Stansel and Anthony Randazzo lay out their arguments for eliminating the popular deduction from the tax code.  Written for the libertarian Reason Foundation, the article examines the history and reasoning behind MID, looks at the financial impact on individuals, the housing market, and tax collections, and presents alternatives which they say would more evenly distribute tax benefits and help the economy.

“The least distortionary income tax system is the one with the broadest possible tax base and the lowest possible marginal tax rates. Consider that if the tax base was broadened to include the $1.2 trillion in itemized deductions for 2011, the average tax rate could be reduced by nearly one-fifth, from 17.3 percent of taxable income to 14.2 percent.”

Stansel and Randazzo say such a reduction in marginal tax rates would directly increase the reward for productive (income- generating) activity. As a result, closing loopholes such as the MID and lowering overall rates would likely lead to a more prosperous economy with higher economic output and incomes.

One defense of MID is that is helps increase homeownership which is usually viewed as a societal good.  But the authors maintain the MID fairly ineffective at this.

Renter households that would prefer to own “if they had just a bit more financial flexibility,” tend to be low income and thus less likely to itemize their deductions.  So, instead of increasing the homeownership rate, the MID increases the amount spent on housing by consumers “who would choose to own anyway, subsidizing spending on housing rather than homeownership.”  If the MID had a significantly positive effect on homeownership, they contend we would expect to see a faster and continuous increase in homeownership, rather than a gradual increase and subsequent decline.


The MID encourages consumers to use debt rather than their own assets to finance home purchases.   This creates a distortion in how financial capital is allocated, which leads to greater amounts of mortgage debt.  The paper frequently quotes economists James Poterba and Todd Sinai who estimate taxpayers could reduce their mortgage debt by nearly 30 percent by using other financial paper assets, (savings or brokerage accounts) to pay off loans.  If all non-housing assets, such as retirement accounts, trusts, and annuities, were liquidated to pay off mortgage debt, Poterba and Sinai estimate that the reduction could be 70 percent.

Furthermore, the marginal effective tax rate for owner-occupied housing in 2003 was only 2 percent, compared to 18 percent for noncorporate investment and 32 percent for corporate investment.  By creating favorable tax treatment for housing compared to other investments, the mortgage interest deduction encourages individuals to over-invest in housing, contributing to housing bubbles.   The Federal Reserve Bank of Philadelphia estimate that government incentives for homeownership, including the MID, have skewed distribution of resources so much that the American housing stock is 30 percent larger than it otherwise would be.

This over-investment means less capital is put toward productive assets in the rest of the economy, like machines and equipment used to produce goods and services. If there are fewer productive assets, there will be less economic growth and a lower standard of living.

In 2011, only about 32 percent of income tax returns filed with the IRS contained itemized deductions and about 21 percent of itemizers do not take the MID.  The percentage of taxpayers claiming a MID has been relatively stable at between 21 and 26 percent since 1991.

Read the full article with solution ideas here:

Posted by on Dec 24, 2013 in The Future, Thinking of Buying? | 1 comment

NSDCC November Sales

2014Comparing this year’s November sales to the peak years, we can see that last year was a real anomaly, caused by the frenzy kicking into high gear.

You can also see how average pricing trailed the sales count in 2005 and 2006, only to have Angelo goose the market with the no-down, no-doc neg-ams up to $1,500,000 for one last burst in 2007.

With last month’s sales re-calibrating lower, and using the historical trend as a guide, shouldn’t we see the average cost-per-sf start to top out – and be dropping in 12 months?

North SD County’s Coastal November Sales and Avg. $/sf

Avg $/sf
Avg. SF

Of course, this is the new normal.  It’s possible that November sales slowed down because buyers became more picky, and fewer homes were deemed worthy.  This waiting-buyer demand is hard to measure – if you are in that group, let us know your thoughts!

Posted by on Dec 7, 2013 in Jim's Take on the Market, Sales and Price Check, Thinking of Buying? | 4 comments


People are clamoring for more on the La Costa Town Square:

Arterro is the name of the Davidson tract. From their website:

Located off Rancho Santa Fe Road just east of La Costa Avenue, Arterro is a 22-acre residential element of La Costa Town Square, a planned 285,000-square-foot shopping center being developed by the Safeway division on 83 acres.

“A big plus for our homeowners is the ability to walk to several markets and other specialty services,” said Davidson, who noted that the anchor tenant is a 60,000 square foot Von’s store. La Costa Town Square is scheduled to open in mid-2014.

Arterro is on track for a Early 2014 opening.


Posted by on Nov 14, 2013 in Bubbleinfo TV, Builders, Davidson, Thinking of Building?, Thinking of Buying?, Why You Should Hire Jim as your Buyer's Agent | 3 comments

Seasonal Homebuying

Hat tip to daytrip for sending in this article about the benefits of buying a home in the Fall.  Articles written by casual observers tend to be lightweight, but there are a couple of good thoughts to glean, especially those on discounts.  Here is an excerpt, Reason #5:

The market isn’t the only place where homebuyers can get a seasonal discount this time of year. Census Bureau numbers indicate that fall, and September in particular, is a low point for home and garden stores such as Home Depot and Lowe’s. If the house listing you love is a kitchen upgrade or central air system away from being a dream home, home stores and builders are discounting their inventory around this time of year and letting a lot of your essentials go cheaply.

Read the full article here:

Posted by on Oct 3, 2013 in Thinking of Buying? | 1 comment

Hang In There

Sellers have been on an incredible winning streak over the last 12 months.  Here are some words of encouragement for potential home buyers:

In the off-season, people get distracted by school, football, and the holidays. If the market softens up a little (meaning more OPTs), buyers will be tempted to check out for the rest of the year.

When the market is indifferent, buyers should be on the edge of their seat.

Posted by on Sep 1, 2013 in Thinking of Buying?, Why You Should Hire Jim as your Buyer's Agent | 1 comment

Why Home Prices Will Hold or Go Up

Home buyers are hoping that higher rates will cause prices to come down, and while it could certainly happen – here are reasons why they won’t:

  • Prices have increased so much, so fast, that sellers are emboldened.  If it would have taken the 5-10 years to bottom out like many predicted, there would be more seller fatigue.  But today’s disappointed sellers will be more likely to think that the next rise in prices in right around the corner – and they will wait, rather than dump.
  • Rents are rising; which puts pressure on buyers to buy and sellers to stay.
  • Loan mods are working.  They might be temporary, and there are probably a number of defaulters getting a free ride, but with higher prices, those psuedo-homeowners will do whatever it takes to hold out longer to see if they can cash in…again.
  • The media keeps saying that it is still cheap, historically.
  • Lenders keep getting more creative. The mortgage industry is known for its hybrids – you hear them pushing more of the 5, 7, & 10-year adjustable loans now, and the piggybacks (where the buyer gets a 1st and 2nd mortgage to lower the down payment required) are back!
  • REOs and short sales are over, and nobody is going to ‘give it away’ now.
  • How homes are sold is changing.  You saw on video where Spencer said that his Zillow is already the national MLS, and other players have to be licking their chops when they see the buffoons at NAR stumbling all over themselves.  Google could be a game-changer too – click HERE to see their patent for ‘software applications for real estate multiple listing services’. The excitement will help to propel sales.
  • Inventories may be up, but you don’t see many quality buys.

All factions are lined up in support of housing, and today’s buyers are comfortable with looking long-term.

The higher prices/rates are reasoned away by the pull of the ultimate goal – owning a home in which to raise the family.  The most-motivated buyers are the ones buying, and with prices only going up at 1% at a time, a few more bucks won’t slow them down.

Posted by on Aug 14, 2013 in Jim's Take on the Market, Market Buzz, Market Conditions, The Future, Thesis, Thinking of Buying?, Thinking of Selling?, Why You Should List With Jim | 21 comments