We’ve seen it happening over the last few months, and Mozart noted that the third-tier list prices keep rising.
According to housingtracker.net, the third tier median list price today in San Diego is $875,000, which is 13% higher than TWO MONTHS AGO, and 33% higher than January, 2008.
(link to housing tracker)
Here’s an example of the optimism on the street. I don’t blame the guy for trying, but it sure seems like the odds are stacked against him:
There have been 21 closings this year of houses over $1,000,000 in Carlsbad, about 4 or 5 per month. There are 130 for sale, or a two-year supply – plenty for everyone!
Good stat re “high-end” closings in C-bad, Jim. I am doing my own informal tracking of the $1 mil-plus market as I expect to be a move-up buyer when the high-end comes down in a few years. Here is my count on the # of current $1 mil-plus listings and # of $1 mil-plus closings in the last 3 months in the following neighborhoods:
La Jolla 321/42
Mission Hills 69/2
PB/MB 88/7
Solana 85/6
CV 122/22
Del Mar 46/19
As you can see, with the execption of Del Mar there is relatively little moving in this tier. Something has got to give. I think it’s going to be price.
That looks to me like an increase in the number of high-end lists percentagewise to low-end lists that is skewing the distribution higher. Because it also pulled up the median, while the 25% percentile line continued along trend. This would indicate even more would-be sellers are listing at the high end, hence even more signs of distress, not optimism.
cara is right. Inventory in the upper end is pushing up the 25% price median.
I think the seller of the $1M+ forgot to mention the house comes with 2 Ferrari’s, 24K gold platted faucets, subzero appliances, security guard 24-7, etc…
I doubt if it will sell for over 900K within the next 90 days.
The uptick on median price is due to the higher end homes entering the market. This is the false bottom some discussed a while back because one can say, homes sales and median price are increasing – better buy now or be forever priced out.
Jim,
I expect the high end sales to languish because the “move up” market is virtually dead. The low end homes that are on fire are mostly first time buyers and investors looking for cash flow. The sellers are mostly banks or underwater short sales moving in with Mom and Dad or cousin Johnny. Neither of those buyers (investors, first timers) look to the high end, generally.
Is there anyway to track the high end closings to see how many pendings or recent closings have/had previous sale contingencies ? Since the first time homes are all highly discounted from peak and are selling like hot cakes due to low prices, it would seem that few low/middle sellers can “move up” to larger homes because their current home has lost far more in percentage terms than the higher end they aspire to buy.
I assume very few renters go from renting to $1m homes.
Is there any data or method to track the typical high-ish end buyer ($800k to $2.5m market segment) ?
FW,
You’d be surprsied how many high-end buyers are former-renters. I’d guess at least 50% of the ones I’ve seen lately. Most are just in between houses though.
I think we’d see a bustling high-end market at about 10% to 20% below today’s list prices. There are plenty of buyers, just waiting.
I agree with that Jim.
Thanks Jim for the insight. I generally agree with the 10-20%. I think just 10% would get more offers going, especially if the S&P rally holds and all those techie option holders start turning options to cash.
I also see a trend of 1-2x new listing in certain areas for every 1 closed. It’s a cat and mouse game between current listers and future listers. Nobody wants to be the first to sell at the 10% discount.
Dead cat bounce, interest rates rising guaranteed to curtail any rally in the housing market….
This is a well documented mix issue.
With lower tier properties scarce due to the ended moratorium and the Alt-A swamp coming on, the high-end is trying to get out.
We saw a similar move in late 2006/mid 2007. Check history from Housing Tracker.
Chuck
high end is screwed. You can count on it. whatever the price was in 2001 it will be again in 18-24 months. Honestly are there any kind of loans available for that stuff anyway? Out here in vegas we have no financing on higher end REOS and homes-nada. Its a cash only market.
Jim whats the basic loan program for the higher end cali homes ?
I would not pay more than $200/sqft for these houses.
Interesting comparisons. I found the $1M home on this street to be well-upgraded, but $250-300K more in value? Don’t think so…maybe $100.
But some knife-catchers, er, people will pay a premium for “move-in ready” so let’s see.
This is a mix shift.
Low-price stuff is selling fast, so it doesn’t stay in the listings long.
High-end sellers are trying to get lucky, and the homes aren’t moving, so they stay listed.
If rates jump to 5.5% or more, everyone’s screwed.