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

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Insatiable Appetite for Housing

It seems the majority of people are buying for the long-term – adjustable-rate mortgages are only 7% of the total loans made (ten years ago it was 35%).  The chief economist for the MBA remains bullish – from CNBC:

Not enough for-sale signs in front yards are driving residential home prices higher, the chief economist at the Mortgage Bankers Association said Tuesday.

The stubborn lack of gain in average hourly earnings, seen in last week’s release of the latest government employment report, has been well documented. Wages in February grew at a less-than-expected 0.1 percent, representing a 2.6 percent advance on an annualized basis.

Adding insult to injury for homebuyers with stagnated earning power, national home prices rose 6.2 percent annually, according to the latest S&P CoreLogic Case-Shiller’s most broad survey. Prices nationally are now 6 percent higher than their 2006 peak before the housing crisis.

“The major constraint in the market right now is the lack of supply,” Fratantoni said. “The absolute number of units on the market is near an all-time record low.”

Fratantoni said homebuilders are trying to increase their pace of construction but “not fast enough.”

Mortgage rates around four-year highs are “a bit of a headwind,” Fratantoni said. “[But] tempering demand a little bit is not really going to be a problem” in this real estate market.

This insatiable appetite for housing is happening even before the peak of the millennial generation reaches first-time homebuyer age, he said.

“There’s just going to be this wave of housing demand hitting the economy over the next four to five years. And we think it’s going to bolster steady growth over that time period,” Fratantoni said.

Link to Article

Posted by on Mar 13, 2018 in Interest Rates/Loan Limits, Jim's Take on the Market, Market Conditions | 2 comments

‘Coming Soon’ Update

Zillow started their ‘Coming Soon’ feature in the summer of 2014, so by now the gimmick is maturing.  Agents have worked every angle of it, and consumers have seen it all too.  Everybody comes to their own conclusions.

Here’s how one consumer described it to me yesterday:

Interesting tactic.  Post a ‘Coming Soon’ sign for two weeks and then drop it on to the MLS when it doesn’t sell.

Makes me immediately think the price is too high.  Couldn’t get it sold as a “Coming Soon”, so now trying the traditional way.

It looks over priced especially after the pictures.

The listing agent could have been playing it straight and was really holding back all buyers until the house was ready, but who would know?  The consumer’s conclusion is that it must be over-priced – is that in the seller’s best interest?

Consumers have never been so skeptical of agent tricks, and are jumping to their own conclusions.  Because agents don’t define their Coming Soon strategy, the rest of us just assume there is none, or the agent is just shopping for his own buyers before MLS input.

A tactic like this burns up any urgency there might be for the home – the necessary ingredient for it to sell for top dollar.  Buyers don’t feel the need to step up because the house isn’t on the open market.  Then once the listing is inputed onto the MLS, those who saw the failed Coming Soon campaign are rewarded for their patience – and will likely wait longer.

The ‘Coming Soon’ campaigns are good for one thing:

The listing agent occasionally pocketing both sides of the commission, while ignoring their fiduciary duty to their sellers.

Posted by on Mar 13, 2018 in Jim's Take on the Market, Listing Agent Practices, Why You Should List With Jim, Zillow | 5 comments

Zillow Bending

This post was generally positive about Zillow’s future, but a commenter left this remark about Zillow puffing their counts:

Interesting that you repeatedly quote ‘according to management’ – did it cross your mind that Zillow management exaggerate performance with over stated Average Monthly Unique Users?, or how they use EBITDA instead of GAAP for earnings so that $114M of share based compensation is excluded?

The 152M ‘Average Unique Users’ in Q4 reported by Zillow is substantially overstated compared to 83.2M MUU’s reported by Comscore (  Even Zillow admits they duplicate MUU’s with the following statement buried in the SEC Form 10-Q Filing:

“Measuring unique users is important to us because our marketplace revenue depends in part on our ability to enable real estate, rental and mortgage professionals to connect with our users, and our display revenue depends in part on the number of impressions delivered to our users. Growth in consumer traffic to our mobile applications and websites increases the number of impressions and clicks we can monetize in our marketplace and display revenue categories. In addition, our community of users improves the quality of our living database of homes with their contributions, which in turn attracts more users.”

“We count a unique user the first time an individual accesses one of our mobile applications using a mobile device during a calendar month and the first time an individual accesses one of our websites using a web browser during a calendar month. If an individual accesses our mobile applications using different mobile devices within a given month, the first instance of access by each such mobile device is counted as a separate unique user.”

“If an individual accesses more than one of our mobile applications within a given month, the first access to each mobile application is counted as a separate unique user. If an individual accesses our websites using different web browsers within a given month, the first access by each such web browser is counted as a separate unique user. If an individual accesses more than one of our websites in a single month, the first access to each website is counted as a separate unique user since unique users are tracked separately for each domain. Zillow, StreetEasy, HotPads, Naked Apartments and (as of June 2017) measure unique users with Google Analytics, and Trulia measures unique users with Adobe Analytics (formerly called Omniture analytical tools)”.

Another interesting aspect of Zillow is how a handful of Investors control 60% of the shares and even when Executives dump huge amounts of shares the share price goes up. Are these investors acting in concert with the executives? so that there are buyers in the market knowing that executives are bailing out? Take a look at the major institutional investors and consider how easy a stock like Zillow can be manipulated by relatively small purchases in the market.

Finally, Zillow is a consistently Loss Making business with $443M in accumulated Losses in the 6 years since its IPO and losses of $149M in 2015, $107M in 2016 and $94M in 2017. Put that in context of Facebook making a massive investment in Real estate and Redfins growth substantially higher than Zillows and you have to question the long term viability of Zillow whose business model is to incrementally increase costs greater than the additional revenue generated.

Full Disclosure: I am a Zillow cynic who takes issue with Zillow imposing inaccurate Zestimates on millions of homes and refusing all reasonable requests to correct the erroneous valuation despite fundamental flaws in the proprietary Zestimate algorithm.

Link to Article

I also remain skeptical about anything Zillow says, or any other disrupter.

Posted by on Mar 12, 2018 in Jim's Take on the Market, Zillow | 3 comments

Inventory Watch – Spring Selling Season

The spring selling season is underway!

This week we had 100+ new listings for the first time since July, and the number of pendings has increased from 280 to 339 over the last month.  Here is the breakdown of how the action has improved in the last 30 days:

NSDCC Detached-Home Listings Under $1,000,000

# of Actives
Avg. LP/sf
Avg. DOM
# of Pendings
Feb 12
Mar 12

$1,000,000 – $1,500,000

# of Actives
Avg. LP/sf
Avg. DOM
# of Pendings
Feb 12
Mar 12

$1,500,000 – $2,000,000

# of Actives
Avg. LP/sf
Avg. DOM
# of Pendings
Feb 12
Mar 12

Over $2,000,000

# of Actives
Avg. LP/sf
Avg. DOM
# of Pendings
Feb 12
Mar 12

The Over-$2,000,000 market had a 41% increase in pendings in the last 30 days!

Read More

Posted by on Mar 12, 2018 in Inventory, Jim's Take on the Market | 0 comments

State Says ‘Build More Housing’

From the mayor:

This week at SANDAG (the county’s regional transportation board), we heard for the first time the amount of housing the state is proposing for our county in the next eight-year housing cycle. I hope you’re sitting down – it’s 21,000 new homes annually, which is more than three times the 7,000 homes that San Diego County is currently producing each year.

The total number countywide is 171,685 housing units for the 2021-2028 housing cycle. Each city’s allotment from the California Department of Housing and Community Development (HCD) won’t be determined until 2019, as the proposed methodologies are still in draft form. Once SANDAG assigns Encinitas our new housing numbers, scheduled for October of 2019, Encinitas will have 18 months to update our housing plan for state approval.

Read More

Posted by on Mar 11, 2018 in Encinitas, Jim's Take on the Market, The Future | 9 comments

San Diego Peak-to-Trough-to-Now

The trough for San Diego was April, 2009.

Interestingly, only four of the 10 largest metros in the study – Washington D.C., Seattle, Austin and Denver – are considered overvalued. This indicates that despite the growth in home prices in metros like San Diego and Boston, other economic factors such as low unemployment, people choosing to rent, and access to high-paying jobs, have kept these regions within the normal range.

Read full article here

Posted by on Mar 10, 2018 in Bubble-Era Pricing, Frenzy, Jim's Take on the Market | 0 comments