The spring selling season is wrapping up.
I think it’s already over, but there will likely be a flurry of activity during the next couple of weeks in the under-$800,000 market, It will be impressive if we see a group of sellers who waited until now to list their homes for sale to catch peak urgency. Any seller who thinks their house is worth $7-something should list today for $799,000 and see if they get tax-credit lucky.
But I think that most of the tax-credit buyers have already secured their purchase, and have closed or are in escrow – with many jockeying for a May closing and their double cheeseburger.
With much of the demand pulled forward, the next 60-90 days are likely to be a long flat spot – especially with so many sellers who insisted on packing that extra 5% to 10% of icing on top of their retail-priced cake. They are being overly-optimistic about today’s buyers/frenzy, and slow to reduce their prices. It will probably be like last year, where the total of September and October sales (205, 175) of North SD County Coastal detached homes was higher than May and June (167, 179), with sellers lowering their prices as summer winds down.
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Buyers came out firing the first of January, and 3+ months later the inventory is picked over. In NSDCC there are 1,085 detached active listings, and 938 of them (86%) have been on the market more than two weeks – they should start lowering their price to get in the game. But instead they will likely want to wait another month or two, thinking it’ll get better, later.
The inventory is so thin that buyers can see all the homes in their target area within a day or two, and then they just monitor the new listings. This puts intense focus on every new listing, but sellers and listing agents mis-interpret all the early action as their price is too low – and they hold out. A week or two later the visitors have dried up, and the listing gets stale, relative to how wrong the list price is.
A very aggravating practice that has been growing (besides the insane booties) are the agents who insist on throwing their new listing on the MLS, but then add that it can’t be seen for days or weeks. They are burning all of their prime urgency, and buyers forget about them by the time they are available to be seen. Anything a listing agent does to dissuade buyers is shooting themselves in the foot, but apparently few think about that, and just follow the herd.
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I think mortgage interest rates are a concern to buyers, but as long as rates stay under 6%, it’s likely that buyers will tolerate them. Buyers who have been in the hunt for months or years aren’t going to give up, but they’ll probably be pickier, and expect better pricing. Doubtful that sellers will listen, and another reason for the Big Stalemate to start right about now.
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No big surge of short sale detached listings in North SD County Coastal yet either. There were 31 listed in March, and 5 the first week of April. With HAFA being aimed at Fannie/Freddie loans only, any benefit is likely to miss SoCal. Both WFB and Bank of America are offering webinars, conference calls, etc., but until they waive the right to pursue any deficiencies, the whole package will be a nothing-burger here. More fuel for the Big Stalemate, with buyers hoping for more drama, and sellers burying head in sand.
JtR, take yo’ shoes off if you don’t like booties, ya big whiner. 😉 I always think people have no pride in their flooring when they let me take my dust tar stained shoes all over their designer carpet.
Hi Jim,
I’d love to hear your thoughts on a couple of observations I’ve made. All of this is in the Peñasquitos/RB area around the $700k price range:
– I see lots of properties go contingent/pending, but lots of them seem to fall out and go active again. So far it seems like only a subset of properties are actually making it all the way to closing. Do you see problems with buyers not getting financing or properties not appraising? Are there a small pool of buyers making multiple offers?
– It feels like REOs are starting to pick up. Several properties that I’ve been watching as SSs (and one that I had an offer on) that have been dragging on month after month have just been foreclosed on in the last month. It some cases the banks seem to be letting the current occupants stay there. The empty ones are getting listed with zero/minimal clean-up.
– Good lots (views), decent-nice house, regular sale seems be the ones that are going fast at higher prices and getting all the way to close. Bad locations are languishing, even with aggressive pricing.
– Kind of feels like both inventory and buyer interest is still on the rise. Maybe it’s the last burst as you say above.
Thanks for your thoughts on any of the above.
“The spring selling season is wrapping up.”
What?! I’m still waiting for it to arrive! Seriously.
I just heard a second hand story about a listing agent submitting a very low short sale offer to the bank to stall the bank from foreclosing. This caused the listing to be marked contingent.
I can’t imagine this being legal. But I wonder if this practice is prevalent and if it may be a reason why so many homes get marked pending but then later become active again. (A possible explaination of WTFTM’s question.)
Blur, I agree if this was the bounce for the year then this year is going to be ugly. At least the stock market is making me money (for the moment at least).
I don’t understand why an agent would put a house on the MLS if it isn’t ready to be shown. Fix the stuff first, then list it. I don’t understand why this is so difficult.
“I just heard a second hand story about a listing agent submitting a very low short sale offer to the bank to stall the bank from foreclosing. This caused the listing to be marked contingent.”
This could be an explanation, but my sense (and that’s all it is) is that most of the the transactions I’m looking at are honest attempts to sell the properties. Generally the pricing I’m seeing on the SSs is what I’d expect to see (lower than a traditional sale, but not giving it away). I attribute the SSs not closing to basic problem of trying to get everyone to agree to the deal, especially the junior lein holders who are usually getting pennies on the dollar. Agreement doesn’t happen, or buyers find something better and walk and then you might have to start all over again.
Forgive my ignorance, but what’s the significance of under-$800k?
Mark,
My guess would be that with 20% down, you get under the $697k mark.
Mark,
The 8K Fed tax credit only applies to houses below 800K. It ends at the end of April. So last push the next 3 weekends.
Skeptic,
Thanks. That makes sense. I had looked up info on the tax credit before, and I didn’t notice that limit. Looks like it might have been added when the tax credit was renewed.
its going to be interesting to see if they extend the tax credit again.
As of right now the odds are they will not extend it -but in the fall they will come out with another similar program-leaving this summer to be a somewhat non-government interefered with market(except for the CA 10k state tax exemption)
vegasandre, welcome back – I bet you’ve been busy!
I’ll start with the ridiculous booties routine. They all seem to come in size 3 or smaller, and then agents must wash and dry them 100 times, because they never fit my size 11s.
So yes, I take my loafers off, rather than bootie up. It allows me to feel how cheap and worn the carpet is, and discourages me from going out back, which if you have a crappy backyard, then I’ll understand the booties idea.
But you see them more in the higher-end big-backyard homes, being seen by buyers who wear $500+ pairs of shoes. They don’t need booties, they don’t walk through the tar or dog poop right before they come in – it’s insulting to slow them down at the door, and then discourage them from going out back. If they do go out back, then they drag in whatever water/dirt you have out there whether they wear booties or not.
If it’s a culture thing, fine, no problem. But it’s usually a sign of a listing agent on automatic pilot, just doing what everyone else does without thinking for a moment why.
I’d hit open houses all day long for booty.
JtR, people with $500 shoes are above walking in dust, pollen and never set foot on street tar. LOL!
Also, thanks for the word picture about you big “feet”. :)!
Thanks Jim
yeah the REO has been slowly trickling out here in vegas -but thats about it right now. We are at about 1/5 the inventory as the height.
Got same booties issue is sunny Fla too.
Anyway We were just out checking houses in free falling High end SE Florida Last week(Boca and Jupiter).
The funny part that I saw was that at every single listing regardless if it was vacant or occupied- the listing agent had to meet us at the home.
Didnt see any reason for this .Not only was it a hassle because it was so difficult to schedule all the houses,make appts and be on a tight exact schedule-it was funny how clueless the listing agents were about the homes and the area,pricing etc. When asking my agent why they did this- he said it was stupid -mostly out of custom. He said the owners expect the list agents to “work” for their commission.
He he . Okay . so your market(high end) is free falling and you are making it almost impossible to show your listing? makes a ton of sense to me.
anyway they had the booties in many homes there too. And of course I was wearing flip flops and shorts(my customary real estate agent attire work or play)
i’d like a double cheeseburger for something under $150K this month. so if any agent out there wants to make a quick commission then send me email this week and tour whatever’s out there early mornings at 8am M-F. I guess realtors like the big bounty, so having a hard time finding anyone excited about my ready (tho small) cash that btw just happens to be burning a hole in my pocket.
it didnt publish my email so any truly excited realtors out there can txt me at 6196189688