See You In My Dreams
Mom and Dad with sister Kathy
Mom smoked half her life and made it to 90! Pall Mall non-filters for many of those!
This one’s for her:
Over List, May
Almost one-third of last month’s buyers paid over the list price…..for the fourth month in a row! Either sellers are being smart about pricing attractively, or a fair amount of the buyers and buyer-agents haven’t gotten the memo about the tougher market conditions.
Sales and pricing are holding up too.
The median sales price is almost identical to last May, and sales were higher:
Future Demand
Our head cheerleader is back at it.
He is predicting that sales and pricing will increase this year, which is optimistic:
Here are the local YoY comparisons:
It’s been a miracle that sales and pricing this year have kept up with the 2024 numbers. Any Fed rate cuts are going to come too late (September/October) to save the real estate market this year, but hopefully they will provide some juice for the early-2026 market.
I think a pattern is developing.
The first quarter of 2024 and 2025 were hot, then we muddle through the rest of the year. The same will probably happen next year too, where the surge of inventory bogs down the market by the second quarter. There aren’t enough buyers for every listing!
There isn’t anything that price won’t fix, and something has to give.
Either sales or pricing will need to be sacrificed. Or both
Yunnie is like Cramer where if you just do the opposite, the results are better.
I’ll guess that our local sales will finish this year at -6%, and pricing at -3% YoY.
Inventory Watch
Last week I thought inventory might have peaked for the year?
The dip from the previous week was all from high-end listings, some of which are now being refreshed and coming back on as new listings. Even though the lower-end inventory is rising steadily, at least the actives-to-pendings ratios show where the action is:
Under-$3M: 236 actives/82 pendings = 2.88
Over-$3M: 333 actives/54 pendings = 6.17
The quartiles are at their lowest points of 2025, yet it may not be enough:
Are there reasons for hope? The stock market has regained its losses from Liberation Day (which is huge), rates aren’t going up, and there are plenty of choices for home buyers who have guts. But you need to dig out the deals – they won’t be obvious.
Vista Valley Closing
Here’s an example of how home sellers can get jammed up by lower sales in the surrounding area and the market turning. During the frenzy, any lower-priced sales nearby were shrugged off by the anxious buyers who just wanted to get any house at any price. Not now.
Our listing at 29482 Vista Valley was the best custom estate on the golf course when it was built in 1987 – and it still is today. The house across the street – and not on the golf course – sold last June for $1,985,000 so at least I had one comp, although aged.
We hit the open market on January 22nd listed for $2,250,000.
The 2025 market was off to a fast start, and we had good activity – but no offers.
The Gopher Canyon corridor is a rural area like Bonsall/Fallbrook and it has some fine custom estates mixed with more-modest homes. Unfortunately, there weren’t any of the fine estates selling in 2025 and by April/May there had not been any sales above $1,900,000 nearby.
Plus, the new-home tract at the bottom of the hill is owned by the same guy who owns the golf club. They have sold 55 of their 60 new homes with club-membership options included, and over 90% of them closed under $1,500,000.
The only other sale within the golf estates was this 2br disaster. They did no improvements to sell it, no staging, and just dumped on price. Ouch:
I wasn’t getting any help from the surrounding sales!
We waited until mid-March to lower the price. Within a week after Liberation Day, it was obvious that it was impacting the market. We lowered another $100,000:
Finally we found retirees from Ohio who want to join their family here. Their agent was smart to float $1.6 and $1.7 prices by me, because her buyers were like most and wondering how much can they get away with! I told her to not bother.
She submitted a $1,800,000 cash offer, take it or leave it.
To be faced with having to accept an offer that was $450,000 under our initial list price was excruciating mentally, but it was our only offer in 100 days and there wasn’t any reason to think it will get better later. The sellers had some regret about not going on the market last summer like we had discussed, but that’s water under the bridge now.
We took the deal.
Though the house was mostly in original condition, it was immaculate. It had been a lightly-used and well-maintained vacation home for 30 years. How much could be wrong?
The home inspection did confirm – not much wrong here! But the roof had not been replaced, and Mr. Buyer had a previous roof history so he insisted.
They got roof-replacement quotes from $50,000 to $100,000, and in spite of me telling them that we weren’t going to do anything for them, they asked for another $25,000 off the price.
It was a smart move – do we ditch them and go for the two in the bush? No.
We took it, and it closed for $1,775,000, or 21% below the original price.
It was the cumulation of all the bad things that can happen:
- Being a higher-end home in a more modest area
- Being a custom-estate but buyers think it’s dated because kitchen isn’t white
- Having a good golf view but not enough to compensate for above
- Bad break with Liberation Day
It’s a good example of buyers who found a suitable home but wanted/needed the deal to be more attractive to get them to buy it. They had planned to move any time in the next year, so no rush. On our side, the outcome didn’t feel great but our sellers had already purchased a replacement home near their daughter and had no reason to fight what had become obvious after 100 days of trying.
Price War?
I didn’t miss anything while I was gone.
There were no new pendings around our new listing in San Marcos – even though there are plenty of choices! The house for sale that is three doors down dropped their list price by $50,000, but all that does is balance out the competiton and slightly diminish my advantage of being the best value on the market.
On our Lindbergh listing, we’re going to hang tough as long as we can.
With so much competition and virtually no buyer activity, lowering the price might not do anything. The $50,000 drop by the neighbor was virtually unnoticeable. But if others start lowering too, then the price war is on and the first one out wins.
We’re not used to seeing that, or having to deal with it!
At this point, everyone is just hoping for a lucky sale. The house across the street had lowered their price already to $1,799,900 but no open houses scheduled for this weekend means they are going to leave it up to me and the $1,649,000 neighbor to conduct the price discovery.
This is my first example of three listings that got caught in the post-Liberation Day malaise, and they will demonstrate some of the real-life decisions that sellers are making in the current environment.
We have a lot riding on this one – it’s Natalie’s first listing!
Clare F. Klinge 1934-2025
My Mom joined my Dad in heaven yesterday. She lived a full and complete 90 years – we made sure of that!
More than anything, what she enjoyed the most was being our Mom.
Like me, she married her sweetheart from her fraternity-sorority days. They met at Cal in the 1950s when things were normal there, and had four kids in 6.5 years, which seemed fairly normal then too.
Raising us was a challenge but nothing she couldn’t handle.
My Dad’s passing in 2010 was tough, but she carried on and enjoyed another solid 15 years with family and being Clare!
She is survived by her four kids, eight grandkids, and a 5-month old great-grandkid.
I love you Mom!
Trendy Tuesday – Natalie
Is it possible to own real estate in your 20s?
My boyfriend Ryan and I have talked about our desire to buy property for as long as I can remember. We just celebrated our 7-year anniversary and I think we’ve talked about homeownership the entire 7 years. As we grow older (and get closer to 30), I can’t help but wonder if it’s even possible to own real estate in your 20s – specifically in desirable places like coastal Southern California.
As of now, I have zero interest in owning anything out of state – dealing with tenants and property management from afar seems daunting and like a pain. But as we all know, prices in our area are soaring and with high interest rates, owning either my primary residence or an investment property doesn’t seem all that beneficial if rents aren’t increasing as quickly as home prices. Why take out a loan that will result in a $5,000+ monthly mortgage payment when our rent is under $3,000?
A sizable down payment is almost a necessity with the current rates. Sure there’s FHA loans, but only putting 3.5% down doesn’t help my situation unless I can afford a large monthly mortgage plus the insurance, property taxes, HOA fees, maintenance, etc. I’d rather wait until I have a larger sum to put down.
So how are people actually buying homes at a young age?
I have a friend who received a grant that gave him $50k towards his down payment, so he ended up buying a fixer and thus had more cash to put towards renovations. The program is no longer accepting applicants, but see here for more info.
In a recent survey, 60% of Gen Z and 57% of millennials who purchased homes said they couldn’t have done it without family support.
As “starter homes” are becoming increasingly expensive, younger buyers are opting for condos or the less desirable areas. The cheapest single family home listed for sale in Carlsbad at the time of this writing is $925,000. If you go out to Escondido, you can get a SFR for less than $600,000!
All in all, it’s still possible to purchase real estate in your 20s; it just requires extra assistance, widening the search, settling for what might not be your “dream home,” and careful planning!
I’m sure we will share if I do buy something before I hit 30 – stay tuned!
Market 2025
Realtor Attrition
Nykia Wright, the CEO of the National Association of Realtors, said this week that she expects a $32 million drop in revenue next year.
The NAR agent fee is $156 per year, so she must expect 205,128 realtors to retire/quit by 2026 – which would be about 15% of the agent population.
A couple more years like this and it’s going to get serious!
