Are local home prices off to the races?
We are attracted to the sensational stories, where houses are selling for more than 10% over recent comps. A solid $650,000 offer wasn’t enough to win the bidding war on this house, even though the last three model-match sales were $576,000, $591,000, and $605,000 in September-November of last year.
But statistically, the average price-per-sf looks much more mundane, and demonstrates how specific home buyers are about values, and how much they are willing to pay.
Here are the monthly cost-per-sf averages, splitting the NSDCC into two parts:
NSDCC North – Cardiff, Carlsbad, and Encinitas:
(The current averages for January, 2013 are tacked onto the end of the 2012 purple trend line)
Average prices look remarkably range-bound until recently (this month), and it will take a few more months to know if the pricing increase will stick. It appears that Y-O-Y changes in sales may level off, or start dropping. In the last two Januarys we’ve had 85 and 89 sales in NSDCC-North, and only 64 have closed this year with four days to go.
NSDCC South – La Jolla, RSF, Del Mar, Solana Beach, and Carmel Valley:
A big surge in November and December, but so far the average pricing of the 56 sales in January are right back in line with the range/trend (the last two Januarys had 64 and 66 sales).
November’s Case-Shiller Index will be released on Tuesday. The local SD Case-Shiller Index has increased nine months in a row, with October’s reflecting a 6% increase year-over-year. It was noted last month that Tuesday’s report should be eye-popping (as much as +10% increase Y-O-Y), and just in time to inflate seller expectations for the spring selling season.
Hopefully it will cause more sellers to list their home for sale. In areas where there is a surge of listings, buyer expectations could soften unless the list prices are reasonable enough that they cause some sales momentum.
Yes, it’s true – your price causes the sale, and how your agent handles it determines if, and how much, it goes up or down from there.
I can spend $1,000,000 on advertising and do open house every day, but if the price isn’t right, it isn’t going to sell.