Happy Memorial Day – to those who have served, and those serving our country – THANK YOU!
We’ve been gone the last couple of days, but didn’t miss much. With sellers pushing higher and higher, the deals are in short supply – it would be a good time for vacation!
Here’s how Shadash described what he is seeing:
I think the crazy pricing is a combo of many things.
1. Sellers really are irrational
2. Sellers have either taken $$$ out of their house or have a bunch of debt they need to cover before selling not allowing them to sell at the market price.
3. Realtors are trying their best to price the market up.
4. Banks aren’t foreclosing allowing sellers to sit on wishing prices
5. Buyers have been waiting on the wings saving up $$$ allowing those that can’t wait any longer to take the plunge even if it doesn’t make sense.
6. When prices were crazy buyers were pushed to the outskirts. Now those same buyers are all starting to focus on the better parts of town creating more competition and pushing up prices.
I’ll add to his list:
7. The irrational sellers are prone to hire the most irrational agent, and together live in fantasyland.
8. Most agents are order-takers, and don’t have the skill or willingness to talk about proper pricing.
9. As a result, we’ll see more range-pricing, the lazy man’s way to real estate.
10. The real deals are going to get even more attention/offers, and prove to be elusive.
11. Mortgage rates under 5% are another boost for buyers, but they’ll be patient – they’ve come too far to overpay now.
12. If buyers are going to pay more money, it’ll only be because they were able to upgrade – usually on location (Shadash’s #6).
If sellers and listing agents would just be reasonable, we could get something done. But when they tack on an extra 5-10% onto the list price, and employ other antics/gimmicks, it is polarizing – and they reinforce the buyers’ patience.
Once they start lowering their price, we should see some real action – maybe July?
Here is a comparison of all detached and attached SD properties listed in April and May since 1999, and the percentage change between the two months:
# of new listings
Yes, there is still a day left in this month, but when the May, 2010 listings are around the lowest of any in the last eleven years, it’s not a flood. But are the homes priced to sell, or priced to sit?
Housingtracker.net publishes the monthly average inventory of houses and condos back to 2007. The change in inventory between January and May can give us a feel for the accuracy in pricing – is the supply of active listings growing, or shrinking?
It was frenzy-like last spring, but this year is a different story. The plus-27% increase this year shows the exuberance of sellers’ pricing – we’re seeing some of the worst list-pricing in history, relative to actual market values.
Some Carlsbad residents have raised concerns over what they believe is a higher than normal rate of cancer in some Carlsbad neighborhoods. The City of Carlsbad has compiled this information from the California State Cancer Registry to help residents understand what is known at this time and where they can go for reliable, factual information.
Is the cancer rate in Carlsbad higher than normal?
Studies done in 2007 and 2008 have not shown an elevated rate of cancer in Carlsbad neighborhoods. Due to concerns raised by local residents, the state has agreed to conduct another study at this time.
When the tragedy occured, I said I would follow-up with ways we can contribute. From the U-T:
The legislation inspired by murdered Poway teenager Chelsea King will probably be considered by the Assembly next week after the Appropriations Committee approved the measure Friday.
Volunteers from the Chelsea’s Light Foundation will be collecting signatures TODAY from 10am to 1pm to support the proposed “Chelsea’s Law” at more than 140 sites statewide, including 80 locations in San Diego County. The goal is to collect 20,000 signatures.
It was noted by Eric in the NCT that sales have been dropping for seven straight months, and clearfund suggested that we examine it further. Above we have the graph of the 25th, 50th, and 75th percentiles of asking prices in San Diego County (from www.housingtracker.net), and the amount of inventory below:
We can see that last summer the inventory didn’t increase much, so instead asking prices shot up, at least in the upper price ranges. Remember last year how there were more sales in August/September than there were in May and June?
This year the inventory is already on the rise, diluting the chances further of sellers hitting the jackpot. Summer is likely to be another dud – at least until sellers start lowering their price.
North SD County Coastal has fared better on the number of sales. Those who follow statistics closely know that there are usually coincidences, but this is an all-timer – we had exactly 210 closings in four out of the last ten months (see red arrows below).
Plus we had an unusual occurance happen in the most recent January/February period in the NSDCC region. Sales around the holidays, which are normally tepid, instead plunged this year, and dragged down the average $$/sf too – see ovals below.
Was it because of the expiring tax credit, which was extended, giving buyers a breather? Or a sign of a real market dip, since obscured by the double cheeseburger and other can-kicking devices?
So far the May closings in NSDCC are totalling 183 – with the late-reporters we might hit the magical 210 again, but not much more. The state tax credit is about cooked, and with asking prices AND inventory rising, we’ll probably be in for a fairly quiet June. How soon will sellers re-adjust?
Have you noticed that the short sales laden with questionable tactics seem to be the ones that have the hardest time closing? Buyers are not tolerant of the unusual – they just want a clean shot at buying a house. Let’s give it to them! P.S. The lender also cancelled the trustee sale this week.
I had a listing last summer at the end of Steinbeck in Carlsbad, a 3,495 square footer with a great view of the ocean/smokestack (like you’ll see at the end of this video).
The seller, who had already moved and wasn’t coming back, really struggled with the idea of selling for only $1,015,000. But he relented after I presented a compelling case, and I promised that in a year or two that he’d be thanking his lucky stars, and that he’d probably want to buy me a beer.
We closed July 29, 2009. Here’s the latest in the neighborhood:
As the national housing market continued to languish, San Diego County values rose 10.8 percent in March compared with 12 months earlier, as a smaller number of buyers chased deals on the most expensive homes, according to the latest update of Standard & Poor’s Case-Shiller Home Price Index.
Since house prices bottomed out in March 2009, the county’s prices have taken a Super Ball-like rebound. Much of that bounce came from a frenzied market of investors and first-time homebuyers looking to buy the cheapest homes, while more expensive homes languished.
But the activity in March flipped that trend on its head: Homes priced under $311,200 fell 0.5 percent, the first monthly drop since May, though still up 11.3 percent since the previous March. Meanwhile, homes priced above $465,686 rose 2.9 percent in March from February, up 7.7 percent from the previous year.
The number of sales recorded in the index fell to 3,192, the seventh consecutive monthly decline, off a third since its last high, in August.
“I think buyers come into the market looking for a great deal, and realize that there are very few,” said Carlsbad real estate Jim Klinge in an e-mail. “The ‘steals’ tend to be extremely elusive due to multiple offers and agent shenanigans, and as a result, the buyers’ focus shifts to making a quality buy that fits most of their needs well.”
Bruce Norris is a very knowledgeable and experienced player in the real estate arena.
His focus is on the buying and selling of trustee-sale properties around the Inland Empire, but he has other related business ventures, including the financing of trustee-sale purchases, and providing a vehicle for investors to participate in the hard-money returns.
He has his own radio show, provides trainings, and even has a blog! Here’s a link to his homepage:
He recently published a 61-page powerpoint presentation – link below. It’s a remarkable research project regarding the current market conditions with plenty of charts and graphs covering the unintended consequences and false indicators that he is seeing:
There are mountains of data in his presentation, but I’d like to address page 59, where it notes that 60% of the buyers went through the listing agent to make their offer.
On page 61 it notes that only 7% of the sales were over $300,000.
I regularly tell buyers who want to pursue homes in the lower price ranges to go direct to the listing agent – that market is too hot/competitive, and the failure rate of offers is extremely high.
You’ve seen the stories here – when we have sold the cheapie REOs in Oceanside that garner dozens of offers, the buyer agents tell the same story, something like this:
“I have written so many offers with this buyer, please take this one, I’m begging you!”
There aren’t that many agents who are going to work for months and months to earn $2,000 to $3,000 after splits and expenses, so I wasn’t surprised to see that the listing agents are representing most of the buyers too.
The big REO listing agents have plenty of buyers’ agents on duty, and most like to put their for-sale signs out prior to MLS-input, so they should be representing the buyers of lower-end listings.
How about in North SD County Coastal?
A check of the last 117 detached sales from Carlsbad to Carmel Valley revealed that 18, or 15% were marked as round-trippers, where the agent represented both seller and buyer. Only a couple looked like they were a result of quick action in the first few days of the listing. There were eight REOs, and none of those were sold by the listing office.
THOUGHTS ABOUT GOING DIRECT TO THE LISTING AGENT
1. It might make the difference when there are multiple offers – you could win the race, but you’ll probably still have to pay top dollar. I don’t think there are many legitimate, professional listing agents that would burn their sellers, and take their own offer when a better one is on the table.
2. Once the listing is stale, and the seller and listing agent are both fatigued but don’t want to lower the price, there might be an opportunity. But I think in both cases (1&2) you could still get the same deal and have your own representation if your buyer’s agent is really good.
3. If you go direct, don’t be surprised if the listing agent is more loyal to the seller, and acts like you owe them a favor. You’d think the listing agent would be grateful – but if they aren’t, it’s because they are uncomfortable with the situation, especially if they burned somebody else to make the deal. And don’t be surprised if they are resistant to sharing the commission either, they’ll think of it as their reward for getting you the deal.
4. If you were working with a buyer’s agent who was helpful, and for whatever reason you decide to go direct, do a little something for your previous agent. If they provided real assistance in your search, consider hiring them separately to consult on the deal, because you might need help along the way. If you feel uncomfortable telling them, then press yourself to at least buy them lunch or do something nice. If you don’t feel uncomfortable burning them, then they didn’t do much to help you anyway.
This is a touchy subject, agents don’t like to talk about it – and I don’t need commenters to load up please. But if there is more real estate revolution, it’ll probably be in this category – having just one agent facilitating the deal. Realtors will have to provide real value, beyond filling out pre-printed forms, and pointing out which room is the kitchen.