We saw economist Dean Baker comment about the California real estate market from his perch in Washington: “The speculators likely have pushed prices above where the market would put them in some markets,” he said.

Have prices risen too much already?  It doesn’t look like it.  On average this year, NSDCC detached-homes are selling for less, and payments are historically a lot lower than in recent history.

Below are the annual stats, with the mortgage payment based on $1,000,000 sales price with 20% down at 1/2% higher than the Freddie Mac 30Y fixed-rate for the first week of December:

NSDCC Annual Number of Sales and Average $/sf per Price Range, and Diff in Payment:

Year 0-$600,000 $600-$1,200,000 $1,200,000+ Pmt on $800K
167 / $346
1,529 / $388
912 / $660
169 / $332
1,404 / $383
905 / $626
454 / $307
1,379 / $339
627 / $524
575 / $284
1,341 / $334
646 / $541
617 / $281
1,571 / $327
765 / $550

There are still more to add to the 2012 numbers, but the recent pricing momentum shouldn’t change – the 4Q12 average $/sf for each category are all higher; $302/sf, $335/sf, and $574/sf.

Will buyers pay more? Yes!  Buyers are happy to pay more if they find a property that deserves it.


  • The premium locations.
  • The highly-upgraded homes. Buyers like the convenience.
  • The well-handled listings.

To get a sense of the direction of the market, keep an eye on the marginal properties.

When you see crap boxes selling for a premium, or poorly-handled listings still selling, you know that buyers are waiving the white flag and abandoning their principles.  But buyers have been disciplined so far, and I don’t expect that to change.  Can we call it an orderly frenzy? 

Sales remain hot:

NSDCC detached-home closings, December 1-15:

2010: 92, $395/sf

2011: 100, $362/sf

2012: 104, $374/sf

This year’s Dec 1-15 sales should climb to 110+ over the next few days too.  Get good help!

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