SD Case-Shiller, Sept 2012

San Diego’s non-adjusted Case-Shiller Index for September increased for the eighth month in a row, and was +1.4% higher than the previous month – which was the biggest M-O-M gain of the year.

The latest reading of 160.09 was +4.1% higher than September, 2011, and the largest number since September, 2010 when we hit 162.43.

The local momentum should continue too, if our CSI follows the NSDCC trend:

2012 Detached-Home Avg. $/sf

In the early going of 2013, expect fewer sales due to sellers going crazy-high with their list prices to test the market – and buyers picking off the cheapest only because they are the lowest-priced homes for sale, not because they are priced lower than comps.

Here is the percentage-change graph for the last ten years – we’re positive again!

Case-Shiller Home Price Index: San Diego, CA Chart

Case-Shiller Home Price Index: San Diego, CA data by YCharts

Short-Sales Slowing

Those paying attention are seeing realtors continuing to commit short-sale fraud, and about the only hope for it to end is for short sales themselves to run out of steam.  If the debt-tax relief doesn’t get extended (unlikely but possible) and those underwater sense an appreciating-market, we could see short sales go away.

This was one failed attempt – the realtor initially priced this short-sale listing at $475,000, only to raise it to $627,000 once his phone lit up like a Christmas tree.

The mortgage industry has been slow to react, but this article (free w/registration) mentions one paragraph of hope too:

Another developing practice is to look for pricing patterns with realtors. One red flag is when certain Realtors are consistently involved in transactions for properties that sell well below market value. This can indicate that the realtor is providing below-market-value BPOs to influence the asking price.

Could we be done with short sales in the next year or so?

Preliminary November Sales

The latest Case-Shiller Index comes out tomorrow, and CR is expecting the non-adjusted national numbers to start declining, like they usually do this time of year:


Tomorrow’s C-S Index will be the September, 2012 report, and based on weighted same-house sales in July, August, and September.  Because we’ve been having a late season flurry, the San Diego index might beat the odds and keep increasing (slightly) through the rest of 2012.

Here are the November detached-home sales from La Jolla-to-Carlsbad:

Year # of Sales Avg. $/sf

Last week, the county said they were setting volume records for transaction-recordings-for-the-two-days-before-Thanksgiving. Once we complete the remaining five days of this week, plus the MLS late-reporters, this month’s NSDCC detached-home sales should be over 200.

If the $417/sf holds up, we’ll see some startling San Diego Case-Shiller Index reports just about the time that the spring selling season kicks off!


I worked all weekend, and there were realtors showing property everywhere I went.  One house that just had their price reduced by 10% was shown ten times yesterday, and eight more times today!

The intensity seems to keep building, with no break for the holidays.  I don’t know if or how it will translate into more sales, or higher prices, but it should mean that the bidding wars will be exciting next year!

Yet there are plenty of houses not selling.  Usually you can blame the location or condition of the house for not being worth the list price, and once the listing agent and sellers figure it out they can fix it if they prefer – or wait and see if the market will come to them.

But I am also hopeful that the intensity will help weed out some of the out-dated practices too.

I wanted to show a vacant house today, and called with plenty of notice because the remarks said to call to find out the “secret” location of the lockbox.  Of course, not only did the agent not answer her phone, but she didn’t call back until 6pm after we were long gone.

When she called at 6pm she started right in with, “With whom am I speaking?”, and “Who do you work for?”.  Then she broke into the old classic interrogation about wanting to know everything about my client.  “Is he pre-qualified?” “Is he married and have kids?” “Have you been showing him a lot of houses in the area?”

Lady, I’m not making an offer on the house, I just want to know where the lockbox is!

Escalation Clause

A common ploy used to win a bidding war is the “escalation clause”.  One of the agents in the Arroyo Hondo bidding war included this phrase as part of his highest-and-best offer price:

Buyer will pay $5,000 over the highest offer.

The escalation clause is an accepted form of negotiating, because most agents don’t give it much thought – it’s just looks like another trick in an environment full of gimmickry.  I think most listing agents would allow it to determine the winner too.

I didn’t.  Why not?

  • In a $1,110,000 sale, every buyer would pay $5,000 more to win.
  • I had already gone around the horn with each agent to get them to submit their highest-and-best offers, and I didn’t want to jostle them more and risk losing them.  Buyers don’t like bidding wars, and if they feel like they are being played, they might bail – which isn’t good for the seller.
  • The escalating buyer may be a reluctant buyer, because he got stuck with somebody else’s price + $5,000. I don’t want him to blow out later, or load up on repair requests out of spite.
  • Buyers deserve a fair contest.

I discussed it with my seller, and he agreed – no escalation clause. I relayed that to the escalating agent, and told him that his current price was in last place, and to feel free to submit a higher number.  They didn’t, which made me think that they might not have closed if they felt like they got stuck with a much higher price point.

I think listing agents should consider the pitfalls before employing any exotic terms – but do they think it out?  My goal is to close the original escrow, because if the first deal blows up, you can’t predict that the next one will be at the same price – and historically they are usually less.

Here are other realtor viewpoints – note the cavalier attitudes:


Their comments show how the typical listing agent thinks – that the highest price automatically wins.  If you are a buyer, it might be worth trying if you think that the listing agent is weak and inexperienced, but if you are on the seller’s side, give it some careful thought.

Glimpse of the Shadow Inventory

Here is a video tour of a few houses in the shadow inventory – ones that are bank-owned, but not listed for sale, but presumably coming to market at some point.

Yes, you could consider the 412 SFRs on the NOD and NOT lists as part of the shadow, but who knows if they will ever get foreclosed.  The same goes for those in default but not noticed – starting January 1st they can’t receive a notice until they have been through the entire loan-mod process.

As recently as the first half of 2010, there were 270 homes on average being foreclosed every week in San Diego County.  Now it’s down to around 100 or so per week:

San Diego County Trustee-Sale Results

There are only 16 SFRs in our La Jolla-to-Carlsbad region that are bank-owned, but not on the market.  Occupants were probably offered cash-for-keys, but those who prefer to pay lawyer fees instead can probably extend their stay for quite a while.

Here are five off-market REOs, and one listed for $699,900, well under it’s opening bid of $967,632:

More Jumbos

Demand for new mortgages is finally revving up—among big spenders, anyway.

Home sales using a jumbo mortgage had year-over-year growth of 7.9% through September, compared with 2.7% for nonjumbo sales, according to an analysis for The Wall Street Journal by mortgage-technology company FNC.

It’s the latest sign that jumbo loans, defined as $417,000 and up in most places ($625,500 and up in high-cost areas), are boosting sales of luxury homes across the U.S.

Homes sold in major metro areas with a loan of $1 million or more were up almost 28% through September compared with the same period last year, the highest total since 2008, according to real-estate information company Dataquick.  Similar sales with loans of less than $1 million rose 8.5%.

“There’s no question that the increased availability of jumbo loans is stimulating home purchases on the high end,” says Guy Cecala, publisher of Inside Mortgage Finance.

Home buyers and their brokers say jumbos make it possible to compete in coastal cities where the cost of entry can easily go north of $1 million. Behrooz Torkian, 39, and his wife, both physicians, landed a jumbo loan this summer after being turned down three times in prior years, allowing them to buy a three-bedroom cottage-style home in Los Angeles for $1.645 million with a 20% down payment. “We thought we would get a lot less house for what we had,” he said.

Dr. Torkian said offering a larger down payment helped this time around, but he also sensed that lenders were more receptive. The couple, who have two young children and are first-time buyers, got a 30-year fixed loan carrying a rate of 3.75%. “It came a little as a surprise that the loan was so easy to get approved,” he said.


While loans below the conforming threshold far outnumber jumbos, their rate of growth these days is slower. Here are some reasons why.


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