Old La Costa

Attention downsizers or first-timers!

Check out our new listing of a nicely renovated one-story home on quiet south-facing 7,759sf lot with no HOA or Mello-Roos in the Encinitas school district!

Kitchen has Brazilian Brown quartz counters, modern black soft-close deep cabinets, new refrigerator & dishwasher plus a sleek stainless hood over newer stove/oven! Living areas have been tastefully combined to create an open great room for all! Hardwood floors, newer baths, and even potential for RV or boat parking on the side. But the perfect-sized 64-ft wide flat backyard tops it off, creating the indoor-outdoor Southern California lifestyle you’ve been searching for!

3101 Segovia Way, Carlsbad

3 br/2 ba, 1,542sf

YB: 1978

$859,000

Love the shortcut between the houses to the park:

Alternatives to the MLS

If the MLS goes away, then what?

It probably won’t go away, at least not until it runs out of dues-paying members.

Buyers, sellers, and agents will just choose other more-effective options instead.

Check out this one that provides an investment platform with several choices.  You can invest in cheaper houses in the midwest, throw money into their investment vehicle, or even sell your house:

www.roofstock.com

Who’s going to mind the ease of this purchase?

The ibuyers and other new-age alternatives could keep us at a permanently-high pricing plateau because they will tell you what it’s worth, and make you forget all about getting good help!

12-Month Lows

Good golly mortgage rates are at mid-to-high 3s and the lowest in the last 12 months.

If sales don’t ignite then the list prices are way out of wack!

http://www.mortgagenewsdaily.com/consumer_rates/913853.aspx

Mortgage rates plunged today as the bond market extended its positive reaction to yesterday’s Fed announcement.  The Fed doesn’t set mortgage rates, but the market’s expectation of Fed rate-setting policy has a major impact.  In other words, because the Fed generally confirmed the market’s suspicion that rate cuts could be warranted in 2019, traders were willing to push rates even lower than they already had in advance of Fed day.

Some lenders had already adjusted rate sheets yesterday afternoon to account for the bond market improvements that were already in place.  In those cases, the surge to lower rates wasn’t quite as epic.  But for lenders who kept the same rates intact all day yesterday, there was a huge shift this morning, with the average lender improving by an entire eighth of a percent (0.125%).  Moves of that size only happen a few times a year, and we’ve definitely gone entire years without seeing it happen at all.

The average lender was quoting rates in the high 3’s this morning–mostly in the 3.75-3.875% range.  As the day progressed, bonds bounced and multiple lenders adjusted rates back toward higher levels.  Simply put, bond markets are conveying that all of yesterday’s improvements remained intact, but today’s gains were erased.  If lenders aren’t caught up with that reality by this afternoon, they will be by tomorrow morning (unless bonds undergo a big move overnight).

Loan Originator Perspective

Bonds rallied sharply this AM, then sold off ferociously in after hours trading.  It’s not unusual to see large losses follow rapid rallies.  Today represented a great short term lock opportunity for those close to closing.  It’ll be interesting to see tomorrow’s pricing after today’s huge swings. -Ted Rood, Senior Originator

The Decline of MLS Civilization

The traditional way of selling homes has been picked apart for years now, and the players of the future are emerging. It’s shaping up to be a competition between full-service brokerages vs. Redfin vs. ibuyers.

This article describes the power play, and features Compass as Case Study #1:

https://www.linkedin.com/pulse/how-market-share-creating-competitive-superpowers-real-flachner/

An excerpt:

Compass has traded capital for rapid growth, raising a reported $1.2 billion and a valuation of $4.4 billion. With these resources at its disposal and not shy about losing money for the moment, Compass has been catalyzing growth by offering significant sign-on bonuses, investing deeply in technology, and doubling down on M&A.

Many observers have a hard time understanding how any brokerage can invest so aggressively, often complaining that “it’s not sustainable” – “it makes no sense” – “it’s not a profitable way to do business”.

It does make sense, however, if you consider the superpowers that a company gains by reaching the tipping point first and thus becoming a single, dominant company that can 1) grow by making the market and 2) differentiate and dominate through data.

For Compass, San Francisco is ground zero for this strategy, where the firm has about 36% of the market. Compass has expanded its local footprint quickly through acquisition, the latest being the March acquisition of Alain Pinel with its1,300 agents and $12.2 billion in 2017 sales volume—the third such acquisition in 8 months. According to Compass, the company is not only the biggest brokerage in the Bay Area, “it is now the largest residential brokerage in the country by sales volume, growing from $15 billion to more than $35 billion between January 2018 and January 2019.”

Compass has realized that market share makes their brokering power bigger. With more listings and more buyers, they can bolster your exclusive “coming soon,” “off-market,” and “in-house” transactions that the competition can’t match, creating a “FOMO” (“fear of missing out”) effect in both customers and agents.

If you’re a consumer or an agent looking at the screen below from compass.com, which shows Compass’ exclusive off-market and coming soon listings, how could you not work with Compass?

No alt text provided for this image

These tactics fuel the incentives for buyers to work with Compass because Compass has the exclusive listings. And that means sellers have to work with Compass because they have all the active buyers working with their brokerage. And finally, agents will have to work with Compass because that’s where the action is. Boosting agent recruitment then brings in more listings and buyers, fueling that superpower growth loop.

If you want access to the market, you now have to go to the company who has the greatest ability to make the market, and that, in San Francisco, is clearly Compass.

Compass is working off this specific strategy:

  1. Hire the top listing agents in each market area.
  2. Create a search portal that rivals Zillow and Redfin.
  3. Offer Compass Concierge to get homes in top condition prior to selling.
  4. Offer exclusive listings on compass.com for days/weeks in advance of MLS input.
  5. Use strategy to attract buyers & sellers, and recruit more listing agents.

The not-so-obvious critical step is the creation of a national search portal that intends to be the dominant real estate website in America.  The current version has a ways to go before deserving that attention, but after another year or two of development it could be worthy.

Notorious Rob explores Andrew’s article further here:

https://notorious-rob.com/2019/06/does-thanos-i-mean-realscout-want-a-war/

The Cranberries

We know that lead singer Dolores O’Riordan was preparing to finish their latest album when she unfortunately passed away in January, 2018.  The band had enough vocals to complete the songs, which they did and their last album was released in April.

There are several songs on it that are haunting, but for this to be your last song is stunning:

She left behind three kids, ages 12, 16, and 20.

https://www.rollingstone.com/music/music-album-reviews/cranberries-in-the-end-review-819134/

Ain’t it strange
When everything you wanted
Was nothing that you wanted
In the end
Ain’t it strange
When everything you dreamt of
Was nothing that you dreamt of
In the end
Take my house, take the car, take the clothes
But you can’t take the spirit, take the spirit, take the spirit
But you can’t
Ain’t it strange
When everything you wanted
Was nothing that you wanted
In the end
Ain’t it strange
When everything you dreamt of
Was nothing that you dreamt of
In the end
Take my house, take the car, take the clothes
But you can’t take the spirit, take the spirit, take the spirit
But you can’t
Take the spirit, take the spirit, take the spirit
Ain’t it strange
When everything you wanted
Was nothing that you wanted
In the end

Top 20 Cities

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At this rate, the median price in 2039 will be $2,988,000! Hat tip to Richard!

San Diego County residents who bought homes in the 90s are reaping the benefits of a hot housing market.

Homebuyers who purchased their properties 20 years ago are “sitting pretty” in 2019, according to a study by GOBankingRates.

The study ranked 15 California cities by property appreciation rates. Six of the top 10 increases were in the San Francisco area. Two Los Angeles-area cities, Santa Monica and Newport Beach, finished first and second on the list, respectively.

The only San Diego County city on the list of top 20 locations for home appreciation was Encinitas.

In 1999, the median home value in Encinitas was $343,500. The figure now stands at $1,198,000, marking a 248.8 percent increase in value over 20 years, the study reports.

The five-year rental income on an Encinitas home is $229,688, according to the study.

See our interactive map of top California housing markets for home value increases:

Google Commits to Housing

I’m glad to see a major corporation doing something for housing, though they take a beating on Twitter – many of the comments are negative.  FYI – their net income was almost $9 billion in 4Q18.

An excerpt from their press release:

Today, Google is one of the Bay Area’s largest employers. Across the region, one issue stands out as particularly urgent and complex: housing. The lack of new supply, combined with the rising cost of living, has resulted in a severe shortage of affordable housing options for long-time middle and low income residents. As Google grows throughout the Bay Area—whether it’s in our home town of Mountain View, in San Francisco, or in our future developments in San Jose and Sunnyvale—we’ve invested in developing housing that meets the needs of these communities. But there’s more to do.

Today we’re announcing an additional $1 billion investment in housing across the Bay Area.

First, over the next 10 years, we’ll repurpose at least $750 million of Google’s land, most of which is currently zoned for office or commercial space, as residential housing. This will enable us to support the development of at least 15,000 new homes at all income levels in the Bay Area, including housing options for middle and low-income families. (By way of comparison, 3,000 total homes were built in the South Bay in 2018). We hope this plays a role in addressing the chronic shortage of affordable housing options for long-time middle and low income residents.

Second, we’ll establish a $250 million investment fund so that we can provide incentives to enable developers to build at least 5,000 affordable housing units across the market.

In addition to the increased supply of affordable housing these investments will help create, we will give $50 million in grants through Google.org to nonprofits focused on the issues of homelessness and displacement. This builds on the $18 million in grants we’ve given to help address homelessness over the last five years, including $3 million we gave to the newly opened SF Navigation Center and $1.5 million to affordable housing for low income veterans and households in Mountain View.

Kayla Update

Kayla was in town last week for her sister’s college graduation.  We didn’t get a chance to put it on video, but we did discuss what it’s like to sell homes in Manhattan!

Her team has several listings, and she does open houses regularly.  The format there is quite different – they only do open house for an hour, and don’t use any signs, so the only people who come are those who see the advertising.

But it works – she has sold two homes to buyers who came to the open house, and bought it!

The negotiation process is unbelievable though.  In California she got used to making written offers on our standard forms that have a three-day expiration date built into the boilerplate.

But in New York City, they negotiate verbally, which leaves it wide open for the listing agent to take days or longer to respond.  It might be worth waiting to see if there were other offers if it’s a new listing, but I wouldn’t want to frustrate a ready, willing, and able buyer in a shaky market.

Once they come to an agreement between buyer and seller, they memorialize it by email.  Then the lawyers go to work, and 2-4 weeks later they finally deliver contracts for signature.  It seems like an environment ripe for shenanigans, because nothing is signed until then.

There is one other head-shaker.

They don’t do dual agency.  Instead, when she brings the buyer for one of their own listings, they sign a form saying that they are unrepresented – no agency!  I would imagine that there still has to be some assistance provided to get the deal closed, but technically their lawyer is the only one that is on their side officially.

I asked her about the Compass broker who said on camera that the home values in Manhattan have dropped 10% in the last year, and she said it’s probably true on the higher end, but entry level (under a million) is still hot.  Here’s an example – she sold this home while she was here, and got within 3% of list:

https://www.corcoran.com/nyc-real-estate/for-sale/midtown-east/330-east-49th-street-apt-14c/5748871

Because a 1br/1ba, 759sf home with a HOA fee of $1,335/mo that’s priced at $899,000 is out of reach for many, the rental market is hot too.  Kayla has helped a couple of people from San Diego find a good rental!

If you, or someone you know is thinking of moving to the Big Apple, contact her – she’d love to help bubbleinfo readers!

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