Hat tip to Rob Dawg for sending in the news that one of the most engaging architects of our time has passed away at age 97. Harry lacked formal architecture training, but that didn’t stop him from designing 100+ houses. My favorite is the Sandcastle (above), the house he built himself from reclaimed woods and other parts found at the junkyard. He lived there for the second half of his life, and he used to sit up in the tower to do his designing!
Here are quick interview questions plus a Vimeo film linked at the bottom with clips of the Sandcastle interior (at the 9:15-min mark) and his 1958 Mercedes Benz 190SL that he converted to electric power:
These are excerpts from Scott G’s newsletter yesterday:
The most recent migration headlines concern Silicon Valley. The narrative: It sucks and everyone is leaving. Venture capitalists who built their fortunes in the Valley say they’re “over” it. The Bay Area is “crashing” and has become “unhinged” with wokeness. “San Francisco is Detroit and Miami is the future,” claimed a recent VC transplant. Elon Musk relocated Tesla from California to Texas, saying California state laws were “fascist.” Newspapers across the country report on a “tech exodus,” with quotes and anecdotes from aggrieved tech workers. California’s dead. (So is New York.) Tech’s moving to Texas and Florida, and the money will follow.
We’ve been to this movie before — it’s called bullshit. In 2005, Silicon Valley was losing its edge and hemorrhaging jobs. In 2009 it was shrinking, on the brink of death. In 2010 it was on the brink of death again. In 2012 the Golden Age of the Valley was over. In 2014, San Francisco was declared the next Detroit. However, the next Detroit has HQs within a 15 mile radius whose combined market caps rival the GDP of Germany and Japan combined. I know, apples/oranges … both are fruit. You get the idea.
Ninety-seven percent of startups stayed in the Bay Area in 2020. Of the 1.2% that moved, a fifth went somewhere else in California, and another fifth went to New York. The Valley still dominates the startup scene. Last year firms domiciled in the Bay Area received over a third of total U.S. venture capital funding. Austin and Miami received 1.5% and 1.4%, respectively — less than Seattle, Philadelphia, or D.C. I don’t believe a city can sustain a robust technology sector unless it has a world-class engineering school (e.g., Berkeley, Stanford, etc.). Also, declining quality of life and overwhelmed infrastructure is an apt descriptor of … Miami. And Miami’s population actually declined in 2021.
The tech exodus narrative is a distraction. The real domestic migration trend is…..less migration. Specifically, people aren’t moving. In 1948 roughly a fifth of Americans changed residences. That number has been steadily declining since. During the pandemic, we read opinion pieces about everyone quitting their job and moving to Maine. There was a feeling that migration habits were changing; in reality the song remains (increasingly) the same. In 2021, only 8.4% of Americans moved — an all-time low.
It’s been happening for several decades, though nobody can figure out why. An aging population and a younger cohort described as the “complacent generation” are factors, but there must be more. Lack of portable health care and a decline in the lifestyle once sought in the West could also be explainers. My theory is that, like everything else, mobility has become a luxury item costs can only be borne by college grads (who are themselves increasingly anchored by student loan debt).
The problem isn’t that a tech Karen is leaving the Bay Area, it’s that not enough people are leaving any area. “Remote Work” should be called “Work from Home” as it’s decreasingly remote, just at home. Six in 10 people who move stay within their county; eight in 10 stay in-state.
The squeeze is coming from several directions, and all are rooted in the fact that there isn’t enough business to go around. Thankfully, half of the realtors are of retirement age, and will drift away naturally.
The pending class-action lawsuits will likely de-couple the commissions, and sellers won’t be paying a bounty to buyer-agents like they have since the beginning of time. Agents who can justify their value and services can always contract with buyers, and we’ll see where that goes. But it won’t go very far.
There are also forces within the industry that are deliberately putting the squeeze on. Opendoor has developed a nice little package of exclusive listings presented to buyers at a 2% savings if they don’t mind just placing their order online:
Because the people who put this together have never been realtors, it never occurs to them that paying a buyer’s agent has value. Homebuyers who get good help are going to feel more comfortable paying more the home, and conversely, with no help, they will want to pay less to compensate.
Is the tease of a 2% discount enough? We will see. But it’s another example of the pressure to squeeze out the buyer-agents, and Opendoor thinks they are passing the savings along to the buyers. But does any seller want to have buyers floating around, hoping to figure out the buying details on their own and cope with buyer’s remorse? No! It’s why the I-Pay-One companies never last because they don’t get it – buyers need and want help.
Instead, what has developed during a raging seller’s market is the thought that eliminating buyer-agents is a good thing. The message is clear – we don’t respect what you do, we don’t think we need you, and we don’t care what you think about it.
Redfin has no respect either.
On homes that they own – and can pay any rate – they are down to 1.75%:
They are giving buyer-agents the double middle-finger salute, and they don’t care what you think about it. Another option would be for them to pay a healthy commission and earn some respect for themselves, but that doesn’t occur to them either.
It would be worth it to champion the value that buyer-agents bring to the table, but nobody appears interested in that angle. Instead, they think the cost-cutting somehow justifies it, without considering – if it results in buyers paying less, then did you get anywhere?
I mentioned the strategy we employed on Avenida Sierra.
After a low-priced new listing came on the market at $1,350,000 the day before we were going to launch, we lowered our list price from $1,595,000 to $1,395,000 to ensure that we were as attractive as any of the six competing listings (four of which had hit the market in the previous week).
Because the $1,350,000 was only seven doors up the street, we had to go head-to-head. You can’t just shrug it off – if we would have launched at $1,595,000, all we would have done is help them sell!
How did it turn out?
We received multiple offers, and I ran our sales price up to $1,550,000!
It is easier to go up on price, than down!
We are the only listing that has been marked pending too:
I raised the list price to reflect the sales price, and send a message to others that more is possible!
We knew at the beginning of June that we wouldn’t get to 200 sales, just by the number of pendings:
NSDCC June Listings and Sales
# of Listings
# of Sales
Our precipitous drop in the number of listings has to be considered when examining the current market conditions – and not only are there fewer listings than ever, but the quality of the homes coming to market is on the lower end. People are hanging on to the best homes!
After rates and prices have doubled, if you are going to buy a home now, you want to hold out for a good one! Yet we have fewer quality choices than ever before.
More on one of the proposals to spend the state’s budget surplus. It doesn’t make the homes any cheaper, so home buying will still be limited to the affluent who can afford the payments:
First-time buyers often rely on family gifts to afford the down payments on their homes. Now California Legislators want the government to fill the role of generous relative.
Lawmakers are proposing creating a billion-dollar fund in this year’s state budget that would provide California’s first-time buyers either all of the money they need for a down payment, or very close to it, in exchange for partial ownership stakes in those residences.
Atkins said the California Dream for All program is aimed at creating opportunities for lower- and middle-income buyers in a rapidly rising market, including those who have faced racial and economic barriers to homeownership.
“The California Dream for All program will give more people the chance to break free from the cycle of renting,” Atkins said last month. “This has the ability to change people’s lives.”
The proposal is the subject of negotiations between the Legislature’s Democratic supermajority and Gov. Gavin Newsom, also a Democrat, on how to spend a projected budget surplus of $97.5 billion. The legislature passed a budget on Monday that includes the proposal, though negotiations with Newsom continue on a final overall spending plan.
A spokesman for the governor declined to comment on the proposal, citing the ongoing negotiations. It was not included in the governor’s original budget nor in his May revised budget.
The housing proposal – which would call for issuing revenue bonds of $1 billion a year for 10 years to create the fund — is the largest in a slew of proposals intended to promote homeownership this year. The proposal also includes $50 million in the budget this year, and $150 million per year after that to pay for the administrative costs of the program and the interest costs of the revenue bonds.
The program envisions helping some 7,700 borrowers a year, according to estimates made by the program’s designers based on home price projections. A start date for the proposed program has not been indicated.
You can still buy a Village Park home in the $800,000s! This one feels like a detached-home too, and is surrounded by greenbelts. One-story, new flooring and paint, private backyard, 2-car garage, air-conditioning, laundry room, plus the primary bedroom suite has a fantastic travertine shower and huge walk-in closet! A house across the street is listed for $1,900,000 – this is the right neighborhood! Walk to the Park Dale Lane Elementary School and the Village Park Recreation Club too – enjoy all the benefits of the Village Park clubhouse, pool/spa, & tennis courts in this dog-walker’s paradise with flowing green belts throughout the area. Wow!
My guess is we’ll be 400+ at the end of the year, or about the same as February. A flat-pricing environment is the easiest of all the choices for buyers and sellers – just sell for the same amount as the last guy.
San Diego Non-Seasonally-Adjusted CSI changes
Home price increases slowed ever so slightly in April, but it is the first potential sign of a cooling in prices.
Prices rose 20.4% nationally in April compared with the same month a year ago, according to the S&P CoreLogic Case-Shiller Index. In March, home prices grew 20.6%. The last slight deceleration was in November of last year.
The 10-city composite annual increase was 19.7%, up from 19.5% in March. The 20-city composite posted a 21.2% annual gain, up from 21.1% in the previous month.
In a change from the last five months, when most of the 20 cities saw month-to-month price gains, only nine cities saw prices rise faster in April than they had done in March. Cities in the South continued to see the strongest monthly gains, including Charlotte, North Carolina; Tampa, Florida; Atlanta, Dallas and Miami.
“April 2022 showed initial (although inconsistent) signs of a deceleration in the growth rate of U.S. home prices,” Craig Lazzara, managing director at S&P DJI, wrote in a release. “We continue to observe very broad strength in the housing market, as all 20 cities notched double-digit price increases for the 12 months ended in April. April’s price increase ranked in the top quintile of historical experience for every city, and in the top decile for 19 of them.”
Tampa, Miami and Phoenix continued to lead the pack with the strongest price gains. Tampa home prices were up, with a stunning 35.8% year-over-year price increase, followed by Miami, with a 33.3% increase, and Phoenix, with a 31.3% increase. Nine of the 20 cities reported higher price increases in the year ending April 2022 versus the year ending March 2022.
Cities with the smallest gains, although still in double digits, were Minneapolis, Washington and Chicago.
Not only are these price gains for April, but the index is a three-month moving average. The average rate on the 30-year fixed mortgage just crossed the 5% mark in April after rising from around 3% in January. By June it had crossed 6%.
“We noted last month that mortgage financing has become more expensive as the Federal Reserve ratchets up interest rates, a process that had only just begun when April data were gathered,” said Lazzara. “A more challenging macroeconomic environment may not support extraordinary home price growth for much longer.”
The housing market is already cooling, with slower sales and reports of price drops among some sellers. The supply of homes for sale has also increased steadily, as more listings come on the market and homes already on it sit longer. Active inventory last week was 21% higher than it was the same week one year ago, according to Realtor.com.
“For buyers and sellers, the road ahead will require more flexibility in pricing, brushing up on negotiation skills, and acknowledging that market conditions today are different than even six months ago,” said George Ratiu, senior economist at Realtor.com.