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Journal

Home Facelifts & Prop 13

Those buyers who don’t mind a fixer can open up additional possibilities (ignore the part about people not selling and remodeling instead!):

http://www.wsj.com/articles/californias-hot-housing-market-drives-pricey-home-facelifts-1462456812

Justin and Michelle Wilson didn’t have much of a choice when they turned a $1.58 million ugly duckling into a $3 million swan.

There were very few options in Mountain View, Calif., within their $2 million budget, and each house they liked got snapped up in a bidding war. So they settled for a dated $1.58 million beige-and-brown Tudor-style house and gave it a $600,000 makeover that took seven months. Now, the contemporary home’s facade features stucco, stone and steel as well as a striking portico.

“It makes us happy to drive up and come home,” said Mr. Wilson, a 34-year-old financial executive.

While the dynamic is playing out in a number of U.S. cities, California’s plight is particularly intense because of Proposition 13, a 1978 amendment to the state constitution. It set property taxes based on 1975 assessments and capped future property-tax increases at 2% a year.

The catch: When a home in California is sold, the property is reassessed based on its current sale price, resulting in a large tax increase for the new buyer. To avoid this tax hit, many homeowners simply stay put rather than move, which further suppresses the inventory of home listings and keeps prices high.

“Prop. 13 has a strong tendency to keep people in homes longer than they otherwise would be,” said Paul Habibi, a professor of real estate at the Ziman Center for Real Estate the University of California, Los Angeles. “If the market is rising faster than the assessed values, you have all the economic incentive to stay in place,” Mr. Habibi said.

A study released in 2005 by the National Bureau of Economic Research, a Cambridge, Mass.-based think tank, found that in California, on average, homeowners stay put for 1.4 years longer than in other states due to Proposition 13. In coastal cities, the “lock-in effect,” as the study called it, is even higher. Homeowners in Los Angeles stay put over two years longer, and San Francisco homeowners keep their homes over three years longer than homeowners in other states.

http://www.wsj.com/articles/californias-hot-housing-market-drives-pricey-home-facelifts-1462456812

Posted by on May 5, 2016 in Jim's Take on the Market, Remodel Projects | 5 comments

Noncitizen Realtors

welcome

Yesterday, Tom Ferry mentioned that 50% of licensed agents haven’t sold a property in the last year.  Enough already!

An excerpt:

The Golden State opened the gates to real estate licensing for undocumented immigrants in January 2016.

Noncitizens are now able to apply for and obtain a real estate license, a leap forward into economic stability for their households — and headlong into significant opposition from many California residents.

California has made significant strides in immigration reform allowing undocumented immigrants to maintain a better quality of life than in other states. California law allows immigrants with an Individual Tax Identification Number (ITIN) – for paying income taxes – to obtain driver licenses and work permits, attend California colleges with in-state tuition and purchase homes. Immigrants are even able to apply for ITIN mortgages, although lending standards are higher for financing without a social security number (SSN).

Agents can use the new license eligibility law to expand their brokerages and teams, make new industry connections and reach into new California markets. Licensed immigrants bridge the stigmatic gap between California citizens and noncitizens by having direct contact with members of the public, helping immigrants attain better accommodations and assimilate without facing the pompous attitudes of xenophobic “patriots.”

Read full article here:

http://journal.firsttuesday.us/xenophobia-and-the-california-real-estate-licensee/51918/

Posted by on May 5, 2016 in Jim's Take on the Market, Listing Agent Practices, Realtor | 9 comments

Dick Dale

Happy Birthday to Dick Dale, who is 79 today!

Dick Dale… invented surf music in the 1950’s. Not the ’60’s as is commonly believed. He was given the title “King of the Surf Guitar” by his fellow surfers with whom he surfed with from sun-up to sun-down. He met Leo Fender the guitar and amplifier Guru and Leo asked Dale to play his newly creation, the Fender Stratocaster Electric Guitar. The minute Dale picked up the guitar, Leo Fender broke into uncontrolled laughter and disbelief, he was watching Dale play a right handed guitar upside down and backwards, Dale was playing a right handed guitar left handed and changing the chords in his head then transposing the chords to his hands to create a sound never heard before.

https://en.wikipedia.org/wiki/Dick_Dale

Here is Dick playing at the Fiesta Del Sol in Solana Beach in 2011:

Posted by on May 4, 2016 in Wednesday Rock Blogging | 0 comments

Strategic Price Reductions

We’re about halfway through the spring selling season!

The Zillow Group said that it is best for San Diegans to sell their house in March.  But a few years back, I wrote this article suggesting that May is also a good time, because you can pick up on the momentum of others who have already sold around you:

When to Sell Your Home

But it’s also the time of year when active listings may start stacking up.  What happens when houses aren’t selling? Sure, you can just lower the price, but are there more variables to consider?

We were faced with that problem in Santee with the big-view house.

7249-ocotillo-st-008

Though the single-level floor plan and extensive upgrades were desirable, we weren’t getting any bites while listed for $1,199,000.  A bigger two-story house on the other side of the street had closed for $975,000 on March 1st, and the general perception was that the westerly view was preferred (even though obstructed by roof tops at ground level).

But another factor was that there have only been two houses in the history of Santee that sold for $1,000,000 or more.  One of those was in 2008 – not exactly a usable comp.

The house directly across the street was also listed for sale, at $1,228,000 for a two-story that was 12% larger.   With us at $1,199,000, it was a standoff – neither stood out as the obvious buy.

The key point?

A standoff means somebody has to go first.

When there are multiple houses for sale that are all priced about the same, it’s too easy for buyers to go into paralysis – and wait for the sellers to go first.

So after 30 days on the market, we lowered our list price by $80,000 to $1,119,000.  At $109,000 under the neighbor, we looked like the better buy on paper.  We had been keeping a steady open-house schedule, and the following weekend I found our buyer.

After we went pending, the house across the street did lower his price to $1,149,000, and he found a buyer a couple of weeks later (still pending today).

Who won?

Both sellers won, in my opinion.

We consciously took the more-certain route by being the first to lower our price, and dropped it enough that the gap between us helped to make us look more attractive.  Then once we were pending, someone took comfort in knowing they wouldn’t be the only buyer on the street over a million, and bought his house.

A secondary point is how quick we moved. After 30 days we didn’t have any significant action around our $1,199,000.  Rather than keep waiting and hoping for more weeks or months, we agreed on the more aggressive plan.

If we hadn’t, we’d be sitting around today with about 100 days on the market.  At that point, potential buyers got you – they know your price is wrong, and the first price reduction might get ignored.  Then sellers are chasing down the market as the selling season starts to run out of gas – don’t get in that position!

Get Good Help!

Posted by on May 4, 2016 in Jim's Take on the Market, Listing Agent Practices, Market Conditions, Spring Kick | 0 comments

NSDCC April Sales

april

It was concerning that the NSDCC sales in March had dropped off considerably year-over-year.  But we had a good bounce back in April – and when you look at the numbers this way, it’s obvious that March, 2015 was unusually frothy:

Monthly Detached-Home Sales, Carlsbad to La Jolla

Year
March Sales
April Sales
Difference
April Median Sales Price
2012
238
272
+34
$807,500
2013
299
303
+4
$955,000
2014
219
258
+39
$1,052,500
2015
294
278
-16
$1,090,500
2016
246
281
+35
$1,129,197

Sales are staying strong, in spite of how prices keep climbing. (???)

The lower-end is where you would think affordability would matter most, but that’s where prices are rising the fastest!

SDtiered

Posted by on May 3, 2016 in Jim's Take on the Market, North County Coastal, Sales and Price Check | 0 comments

Best Places to Retire

apache

For most baby boomers, it takes leaving town to really make it worth selling.

But where do you go?

If you still want to stay around SoCal, places like Idyllwild, Julian, or Running Springs are all within a half-day drive.  If you don’t mind going further, places like Prescott and Payson, AZ are at a high enough elevation that you get out of the heat.

Or check one of these spots:

http://www3.forbes.com/investing/25-best-places-to-retire-in-2016/

Posted by on May 2, 2016 in Boomers, Jim's Take on the Market | 0 comments

Buffett Says No Bubble

warren

For the vast majority of Americans who just skim the real estate headlines, a quote from Warren Buffett should keep the party rolling.  But does he qualify as a cheerleader now that he owns one of the biggest realtor companies? And this photo they used – is that a perp walk?

http://fortune.com/2016/04/30/warren-buffett-there-is-no-bubble-in-real-estate/

An excerpt:

Warren Buffett says now is a good time to buy a house, though not as good as it was four years ago. Still, Buffett says he thinks the chances of housing prices collapsing are very low.

“I don’t see a nationwide bubble in real estate right now at all,” says Buffett.

Buffett made remarks at the annual meeting Berkshire Hathaway, which took place on Saturday in Omaha. “In Omaha and other parts of the country people are not paying bubble prices for real estate,” says Buffett.

Earlier in the day in response to a question about banks, Buffett said he did think derivatives are a “ticking time bomb.” But when it comes to housing and mortgage loans, Buffett said, while real estate was certainly a problem in 2008, he didn’t think that would be the source of the next problem for the financial system. “I don’t think we will have a repeat of that,” says Buffett.

Posted by on May 2, 2016 in Forecasts, Jim's Take on the Market, Market Conditions | 1 comment

Inventory Watch

2016-04-10 15.18.59

The number of listings priced under $800,000 grew from 26 to 33 this week – an explosion of 27%.  But seriously, the average LP/sf did get back up to $409/sf, which isn’t the first time.

The curious statistic is the cost-per-sf of the next category.  Since we’ve been tracking over the last 2+ years, the average LP/sf has been as high as $470/sf for those listings between $800,000 and $1,400,000, but today it’s down to $418/sf – the closest it’s been to the category below.

It probably means that the sluggishness is starting lower and lower.

Click on the ‘Read More’ link below for the NSDCC active-inventory data:

Read More

Posted by on May 2, 2016 in Inventory, Jim's Take on the Market, North County Coastal | 0 comments