Tired of all the taxation? Move to Monaco!

Monaco is home to nearly half of all Formula 1 drivers:

• Lewis Hamilton
• Max Verstappen
• Charles Leclerc
• Lando Norris
• George Russell
• Valtteri Bottas
• Sergio Perez
• Nico Hulkenberg
• Alex Albon

This is primarily because of three reasons.

Taxes: Monaco has no income tax, no wealth tax, no local tax, no property tax, and no capital gains tax.

Privacy: There are 12,000 millionaires living in Monaco — 1/3 of the entire population — so F1 drivers don’t have to deal with crazy fans. And with the government requiring written permission for all professional photography, there are also fewer paparazzi.

Location: The Nice airport is only 15 miles from Monaco, which is especially important because F1 drivers will travel over 75,000 miles this year alone.

And it doesn’t hurt that Monaco’s weather is incredible, and the views are equally spectacular.

NSDCC Listings, YTD

NSDCC Listings, Jan 1 – May 15

Can we use statistics to describe the market conditions today?

This chart above helps a little. Even though the number of listings is drastically lower than it used to be, apparently the market has been adjusting – mostly by price!

I mentioned that it seemed like everything is priced $200,000 more than it was last year, and the median list price reflects a similar number. Buyers aren’t taking the full plunge though, and the 85% SP:LP is a sign of normalizing (buyers having more negotiating power).

The frenzy that caused virtually everything to sell is long gone, and we’ll probably be back to having 30% to 40% of the listings not selling. This chart doesn’t show the number of refreshed listings where agents cancel and then re-input right away to “refresh” it – but be on the lookout. We will be seeing more of those this year.

Statistically, the market conditions look fairly healthy. Though different than the recent past!

Zillow Lowers Forecasts

Zillow has every reason to be the nation’s real estate cheerleader since they derive the bulk of their income from realtors. They had been predicting 3% to 6% appreciation locally this year….at least up until two weeks ago.

Something has changed:

Carlsbad NW – 92008

Carlsbad NE – 92010

Carmel Valley – 92130

Encinitas – 92024

Carmel Valley out in front with a +2% over the next year? Yikes!

It means they think that everywhere else will be flat, at best.

I’ll post the other areas when received.

DOJ Speaks Up

The elimination of buyer-agents continues:

The U.S. Department of Justice broke its silence in court on Tuesday on the impending changes coming for the real estate industry in the wake of settlement agreements by major brokerages and the National Association of Realtors in what experts say was a statement Realtors should heed.

During a status hearing for a case in Massachusetts, Jessica Leal, an attorney for the DOJ, said the regulator would neither support nor oppose the NAR settlement agreement, which will lead to sweeping rule changes this summer. “We believe offers of compensation should not be made anywhere, but certainly not on the MLS,” Leal said.

Without any advertised commitment to pay them a commission, what will buyer-agents have to endure? At best, the seller-paid commission will be a moving target, and many, and probably most times it will end up being peanuts. Any agent who expects to be a successful buyer-agent will have to become experts at having their buyers pay them.

But even if an agent can get buyers to sign a commission agreement, the process of buying a home around here is very difficult.  I have an entry-level buyer right now who is making full price, all-cash offers, and over the last 45 days has struck out six times in a row.

Buyer-agents are being squeezed out by several market forces, and who will mind? The lack of transparency and the games the listing agents play are so unsavory that buyers and their agents will have to be extremely motivated to succeed just to eventually buy something. Agents won’t want to represent buyers under these circumstances, and just quit instead.

The real issue now is that buyers HAVE to hire a buyer-agent in writing to buy a house. Once they figure that out, will they investigate the choices carefully, or just grab someone? Or have Aunt Bea handle it? Or just go to the listing agents? Once the frustration sets in, going to the listing agent will seem like a way to improve their chances.

But the old-school listing agents will cop an attitude and either not want to do dual agency at all, or they will want the buyers to be unrepresented. Progressive listing agents will encourage buyers to come to them directly, and it is inevitable that it will become the prevailing trend. It’s how the commercial brokers do it, and it’s mostly because agents don’t like other agents – not because it is what’s best for the buyers and sellers.

These agents discuss some of the pitfalls here. They have built a realtor team of 51 agents since covid, and have sold 448 homes in Connecticut over the last 12 months – so they are in the game. But they don’t come up with any perfect solutions – because there are none:

In other words, it’s going to be a mess of a market as agents turn their focus on getting buyers to sign an exclusive agreement. It will just complicate further what is already a very challenging environment.

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