This had been on the market for two years before it finally sold for $15,000,000 cash in September. Another Marengo deal; it sold for $7,800,000 in 2014:
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Realtor.com is optimistic about the 2019 real estate market (Sales to be -2%):
“Inventory will continue to increase next year, but unless there is a major shift in the economic trajectory, we don’t expect a buyer’s market on the horizon within the next five years,” says Danielle Hale, realtor.com®’s chief economist. “Unfortunately for buyers, it’s only going to get more costly to buy, especially the most-demanded entry level real estate. To be successful, buyers should think through how they’ll adapt to higher rates and prices.”
2019 Predictions for Home Buyers
Buyers who are able to stay in the market will find less competition as more would-be buyers get priced out, realtor.com® notes. But home shoppers likely will still feel a sense of urgency as buying a home gets more expensive.
“Their largest struggle next year will be reconciling wants, needs and budget versus the heavy competition of 2018,” realtor.com® notes in its report. “Although the number of homes for sale is increasing, which is an improvement for buyers, the majority of new inventory is focused in the mid- to higher-end price tier, not entry-level.”
2019 Predictions for Home Sellers
The market is largely expected to remain a “seller’s market” in 2019, but homeowners will start to see greater competition from others looking to sell. They “shouldn’t necessarily expect to name their price and get it in full—a change from the past few years,” realtor.com® notes. “Above-median priced sellers may find it will take longer to sell and require offering incentives, such as price cuts or other offerings.” But for those sellers who price their homes competitively, they’ll “still walk away with a handsome amount of profit,” just not with the price jumps seen in previous years, realtor.com® notes.Link to Article
From the California Association of Realtors:
C.A.R.’s “2019 California Housing Market Forecast” sees a modest decline in existing single-family home sales of 3.3 percent next year to reach 396,800 units, down from the projected 2018 sales figure of 410,460. The 2018 figure is 3.2 percent lower compared with the 424,100 pace of homes sold in 2017.
“While home prices are predicted to temper next year, interest rates will likely rise and compound housing affordability issues,” said C.A.R. President Steve White. “Would-be buyers who are concerned that home prices may have peaked will wait on the sidelines until they have more clarity on where the housing market is headed. This could hold back housing demand and hamper home sales in 2019.”
The average for 30-year, fixed mortgage interest rates will rise to 5.2 percent in 2019, up from 4.7 percent in 2018 and 4.0 percent in 2017, but will still remain low by historical standards.
The California median home price is forecast to increase 3.1 percent to $593,450 in 2019, following a projected 7.0 percent increase in 2018 to $575,800.
“The surge in home prices over the past few years due to the housing supply shortage has finally taken a toll on the market,” said C.A.R. Senior Vice President and Chief Economist Leslie Appleton-Young. “Despite an improvement in supply conditions, there is a high level of uncertainty about the direction of the market that is affecting homebuying decisions. This psychological effect is creating a mismatch in price expectations between buyers and sellers and will limit price growth in the upcoming year.”Link to C.A.R. forecast
The pundits are chiming in on their housing expectations for next year, and the opinions revolve around one topic: Higher mortgage rates are changing things.
Here are two experts who don’t think the number of sales will change much:
“As we look toward 2019, we are anticipating home sales to decline around 2%. We’re expecting it to be another slightly slower year as buyers continue to wrangle with higher mortgage rates after contending with several years of rapid price growth.” — Ruben Gonzalez, chief economist at Keller Williams
“We’re going to have the same number of transactions, but…rates are going to nudge up to 5 percent; market times are going to expand out to 30 days. You’ll have to have a different set of skills.” – Brian Buffini
For sales to stay the same, then buyers will have to agree that the sellers’ prices are about right. Will sellers list their homes attractively enough, especially early in the selling season?
Or is it more likely that they will add a little mustard to their price in spring, just because they’re not going to give it away?
I want to compare a full 12-month history to prior years, so let’s examine the December 1st to November 30th period – let’s have history guide us:
NSDCC Detached-Home Sales
The 2018 sales are similar to those in 2014, which happens to be the last time rates had popped up 1%.
But then the rates started declining right away, and by the end of 2014 they were back in the 3s, which powered the strong sales between 2015-2017:
(click to enlarge)
But today, rates are much higher – and so are prices:
Something has to give, doesn’t it?
Sellers aren’t going to bend much on price, especially early in 2018 – they won’t believe their prices are wrong until they try them out for months, and maybe longer.
So if most buyers wait-and-see, then sales have to give.
I’m sticking with my prediction that 2019 NSDCC sales will drop 20%, YoY.
I snipped this Zillow forecast (above) in October, 2016. They expected La Jolla home values to go up 2.1% in 2017, which earned a ‘Very Cold’ label.
The La Jolla ZHVI rose 7% in 2017, so their forecast was a tad conservative. The index has been dropping lately, but they are expecting values to flatten:
Other Zillow forecasts – they like Carmel Valley:
You can find more data here (they predict the U.S. market will be +6.4%):
The slowdown started in July, so the November sales count is surely going to reflect the impact – and it does. Sales were down 11% year-over-year:
*S/BD = Sales per business day, which had the same -11% YoY decline.
Let’s put away the panic button for now.
We are coming down the pike now – 2018 is almost over. Let’s spend the next four weeks getting into the best music ever recorded, shall we?
This closed for $9,750,000 cash today!