Long Cool Woman

“Long Cool Woman in a Black Dress” was a song by the rock and roll group, The Hollies, and released on February 1, 1972 as a single on the Parlophone Records label.

It was released soon after Allan Clarke, who was featured on lead guitar as well as lead vocal had left the group, from their album “Distant Light” (1970). As the group had just left EMI/Parlophone and signed with Polydor, they did not promote the song. However it became a No. 2 hit in the United States, their greatest ever singles success there. It was inspired and in the style of the rock and roll group Creedence Clearwater Revival, and on being reactivated by EMI in Britain a few months later, it reached No. 32.

The song is notable in that it features Clarke playing rhythm guitar, something he rarely did (Clarke came up with the song’s signature guitar rhythm that opens the song).

Sold Pricing vs. The Peak

Yesterday we saw that the January average list-price-per-sf in NSDCC was the same as the peak in 2006.

How does the pricing of closed sales compare between 2006-2007 and now?

Let’s use a larger sample size to smooth out the highs and lows.  Here is the average cost-per-sf for the October 15th-to- January 15th periods:

Town or Area 2007 Avg $/sf 2013 Avg $/sf Price chg since peak
La Jolla
$703/sf
$716/sf
+2%
Carmel Vly
$370/sf
$334/sf
-10%
Carlsbad
$327/sf
$275/sf
-16%
Encinitas
$462/sf
$372/sf
-19%
Del Mar/SB
$856/sf
$626/sf
-27%
Cardiff
$675/sf
$485/sf
-28%
RSF
$653/sf
$430/sf
-32%
Totals
$464/sf
$398/sf
-14%

La Jolla is leading the way, with a higher cost-per-sf today than in the 2006-2007 era! The rest have a ways to go, but the NSDCC sellers are out on front with their average list price at $551/sf!

There were 33% more sales this year than in 2006-2007, which is shocking when you compare the difference in mortgage qualifying. But the start rate on your neg-am loan then, is your 30-year fixed rate now!

Sales during the October 15th-to-January 15th period:

Town or Area 2007 Sales 2013 Sales %chg since peak
RSF
41
66
+61%
La Jolla
64
92
+44%
Del Mar/SB
46
66
+44%
Cardiff
16
23
+44%
Carlsbad
223
318
+43%
Carmel Vly
97
112
+15%
Encinitas
106
114
+8%
Totals
679
906
+33%

There isn’t any shortage of demand in RSF, it’s just a price thing.

Flood of Lookers in CV

The last sale of this model was $305,000 in November, so this short-sale is well under-market, listed for $260,000.

The owner-occupant buyers who are competing with the hordes of investors roaming the land in search of rental properties should help push this substantially over list price:

1.43 Acre REO

Maybe the banks will start helping with our inventory problem.

It looks like the former owner of this house on Crest stopping paying in 2009, but BofA just foreclosed on January 11, 2013.  Hopefully it’s because the bank senses an opportunity, and we’ll see more REOs?

Peak Pricing Is Back

We’re at the stage where everything sounds like good news for housing – after being pummeled for years with bad news, it is a welcome relief for the casual observer. But it is mostly feel-good emotions, without much detail on how it will play out.

A snippet from the Bloomberg story today on existing home sales:

“This isn’t worrisome at all,” said Stuart Hoffman, chief economist at PNC Financial Services Group in Pittsburgh, who projected a drop to a 4.95 million annual rate. “For the first time in a while, it looks like it’s a sellers’ market as much as it’s a buyers’ market. I suspect prices and sales will go up again in 2013.

But without foreclosures or short-sales to rely on for inventory, we are dependent on the elective seller.  When they catch a soundbite like that one, it empowers them to wait until prices rise further, or list now and shoot for the moon.

The new listings of NSDCC detached-homes between January 1-17:

Year #New Listings LP Avg. $/sf
2004
203
$488/sf
2005
224
$526/sf
2006
366
$552/sf
2007
338
$537/sf
2008
278
$490/sf
2009
261
$520/sf
2010
256
$518/sf
2011
303
$458/sf
2012
241
$461/sf
2013
228
$551/sf

The inventory keeps dropping, while sellers’ expectations keep rising.  Something has to give, and it’s likely to be the buyers’ willingness to keep chasing these prices – at this rate, we’ll be above peak pricing before too long.

Who will keep the buyers in check?

  • Appraisers don’t get paid enough to over-inflate values. They will bring in a higher price if it is within reason, but they aren’t going to do any favors.
  • Mortgage underwriters are still conservative, and have the right to whack an appraiser’s value if they think it is out-of-line.
  • Friends and family are going to tell them they are crazy paying that much.

The smart sellers are those that list for a reasonable price about 1% to 5% above comps – they will look like a deal, compared to the rest, and the resulting bidding war should run it up further!

Market Thoughts

Myself and others have had thoughts and observations about the new year, and what is happening around town.  Here are a few:

1.  Prices are moving much faster than normal.

2.  Prices would have dropped much faster, and bottomed earlier, without government intervention.  Are we just catching up now?

3.  The media has a limited vocabulary, and uses the word “bubble” very generously – you’ll be hearing it a lot this year.

4.  As long as 1-year t-bills are paying 0.14%, investors will keep buying real estate.

5.  “Renting is looking more and more attractive.”

6.  “OK, will wait on the sidelines.”

7.  “The problem is that all the prime ones have so many buyers.  It’s no fun to go into bidding wars on any property that remotely looks interesting.  Another Solana Beach villa (3bd/2ba) with a range of 390k/410k went pending in 2 days.  Looks like we may not have got the one we offered even at $325k…  It’s getting crazy.”

(we had offered full price $295,000 cash for this 2br/2ba, 1,120sf condo and lost – there were eight realtor business cards left there in less than 24 hours, and it wasn’t on the market previously).

8.  It is early in the season for the market to be this hot.

9.  We see multiple sets of buyers at every new listing.

10. Alta Del Mar is “disappointing, and over-priced”. (Grand opening is March 9th but they are pre-selling)

11.  Jakob commented yesterday, “Interesting times.  For Dec, there were 3281 sales in San Diego County, highest Dec on record, and just 2551 new listings, lowest Dec on record. So record high sales, record low listings.”
graph (16)

We are off to a strong start too, though the statistical price increase over two years seems reasonable compared to the bidding wars we see everywhere.

Here are the San Diego County residential sales closed between January 1-15:

Year #Sales Avg $/sf
2011
922
$225/sf
2012
853
$220/sf
2013
923
$250/sf

Select a realtor who has frenzy experience!

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