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Jim Klinge
Cell/Text: (858) 997-3801
701 Palomar Airport Road, Suite 300
Carlsbad, CA 92011


Will Home Sellers Panic?

Wolf takes a linear view of the housing market on his blog, which doesn’t always factor in the emotional components involved in the decision-making, which is fine.  His content tends to be more on the alarmist, doomer side – like in this case where is his comparing the changes in year-over-year percentages to really magnify the concern:

I’m all for being on the lookout for seller panic.

What are the two simple signs of panic?

  1. New listings flooding the market.
  2. Many homes selling for radical discounts below recent comps.

Those are the two most obvious signs of seller panic.  Comparing the YoY percentage of active listings is interesting, but doesn’t tell us enough.

Here is the graph of the NSDCC new listings for September-October, and how they compare to previous years.  There are no real signs of panic here, and, if anything, it shows us that comparing to last year is measuring against one of the lowest amounts ever:

What aren’t signs of panic:

  1. A growing inventory of unsold homes.
  2. More price reductions.

We are going to get comfortable with a larger inventory of homes for sale.  The more unsold homes lying around means that sellers aren’t very motivated, because they didn’t price aggressively in the beginning and they still think their price must be right.

On #2, more price reductions don’t tell you much.  Wolf touts a recent surge, but most price reductions aren’t lopping off big chunks – they are usually 1% or 2% off, which are too small to change anything and they will have to keep doing more.  By the time they knock off 5% to 10% from their original and overly-optimistic list price, they will feel like they are giving it away and change course (rent it, reverse-mortgage it, or wait until next year).

Could there be sellers motivated enough to dump on price? Very unlikely.

Let’s consider the sellers who might be motivated – the Big Three:

Death – for those who inherit, this is their lottery.  Not only will they hold out for crazy money, but one of them could probably use a residence so there are other alternatives to giving it away.

Divorce – what was once 100% equity is now 50%, and each spouse will want/need every dollar to split between them.  If they can’t sell for enough to make everyone happy, well then everyone has to live somewhere. One of the spouses could occupy until the market ‘improves’.

Job Transfer – renting instead of selling is always an option, especially for those who think they might want to return some day.

Sellers who aren’t in the Big Three categories are definitely not going to give it away, so the worst that will happen is a slight downward trend in pricing.

Reasons given why the market will tank, and how sellers feel about them:

  1. Affordability – sellers don’t care.
  2. Higher rates – ‘not my problem’.
  3. More inventory – ‘I only have one to sell’.

Sellers get a vote!

Posted by on Nov 17, 2018 in Jim's Take on the Market, Market Conditions, North County Coastal | 0 comments

Selling Early

Earlier we saw how a fresh new listing gets more traffic, and that buyer interest dies off quickly:

Yet historically about 3/4s of the sellers insist on testing the market for weeks or months, just to make sure. Buyers don’t mind waiting, because they usually get a better price when they do.

Realtors get criticized for just wanting a quick sale, but the data shows that selling earlier in the listing period means getting closer to the list price.

The first group here are those houses that sold during their first 10 days on the market, and the second group are those that sold after 11+ days:

NSDCC detached-homes sold between September 1st and October 31st:

#Sales DOM 10-
#Sales DOM 11+

Buyers are demanding a slightly larger discount today, plus sales are also down 15% YoY so a few sellers aren’t budging – but they’re not selling either.

It’s probably never been so important to be sharp on price. Just don’t add any extra mustard!

Posted by on Nov 16, 2018 in Jim's Take on the Market, Listing Agent Practices, Sales and Price Check, Why You Should List With Jim | 2 comments

Brava Again

The buyers cancelled the second escrow on Brava yesterday.

We have had a dozen cash offers, so after the first cancellation I went back to the others and got them to bid it up to $690,000, which is a miracle when the highest offer was $675,000 in the first round.

Other agents since have said, ‘oh, you picked the wrong buyer’.  But I’m going to give the high bidder a chance to close every time – I think I have that obligation.  If they would have stuck, I would have been a hero.

There is more of a chance that end users will hang in there, but with flippers it tends to be cut-and-dry, and all about the money.  There has been some concern about the 2019 market being soft(er), but it’s not stopping them from wanting to buy.  They just want to fine-tune the price!

This is a neighborhood with zero lot lines, which you can see in this photo (in yellow).  Each home has the exclusive use of one side yard, instead of splitting both sides.  You can touch your neighbor’s house, but it does give you more usable space.

I don’t think there will be a noticeable discount needed for the flipper to resell a zero-lot-line house. There are several neighborhoods in Carlsbad, Encinitas, and Carmel Valley that have the zero lot lines, so it’s not that rare.

Posted by on Nov 15, 2018 in Bidding Wars, Flips, Jim's Take on the Market, Listing Agent Practices | 1 comment

My Best Listing Ever

My new listing in Rancho Santa Fe! Authentic Old-Spanish custom estate with a legal 2-br guest house on 2.3 acres! Oozing with charm and character borrowed from the old California missions, this sensational one-story has open-beam ceilings, custom cabinetry, wine cellar, 4 fireplaces, and plenty of natural light! Newer infinity-edge pool/slide, outdoor party room, 3-stall barn, tack room, 2 arenas, and on horse trail. Secluded on gated flag lot, and on sewer too. Guest house has newer kitchen & HVAC plus a 2-car garage – wow! Trophy property!

LP = $3,995,000:

2br/1ba Guest House

Guest House interior

Posted by on Nov 12, 2018 in Bubbleinfo TV, Jim's Take on the Market, Listing Agent Practices, Rancho Santa Fe, Why You Should List With Jim | 7 comments

Thank You Veterans

November 11, 1918 is generally considered the end of World War I.

On the 11th hour of the 11th day, of the 11th month, the battlefields of Europe fell silent after more than four years of fighting. In 1938, Congress declared Armistice Day a holiday, and, in 1954, the name changed to Veterans Day to honor the veterans.

Veterans Day is the day set aside to thank and honor living veterans who served honorably in the military – in wartime or peacetime.

Posted by on Nov 11, 2018 in Jim's Take on the Market, Military | 0 comments

Months of Active Inventory

Rich’s latest report is out!

The worrisome spike last month did flatten out, but it does make you wonder if we should adjust our sights.

I agree with Rich that the months of active inventory will probably be rising from now on.  But if the coastal market had 3 or 4 months of active inventory, it wouldn’t be a bad thing.  Rancho Santa Fe is 7+ and doing fine.

Click here for the full report:

Posted by on Nov 10, 2018 in Graphs of Market Indicators, Jim's Take on the Market, Market Conditions, North County Coastal, Rich Toscano | 3 comments