MB Mike asked a follow-up:
In terms of timing, what does your crystal ball say 2014 will bring? Better to wait a year to sell?
Yes, wait if general market conditions are your guide.
Real estate is reported as ‘up’ or ‘down’, and it will be ‘up’ for a while.
The media loves real estate, and will be following it closely in order to sensationalize every bump and wiggle. The more good news that buyers see and hear, the higher their anxiety, and the more they will pay to end the struggle.
The current frenzy conditions feel exactly like they did in the 2003 run-up. Here’s the Case-Shiller Index (seasonally-adjusted):
I think we will experience the same trajectory as we did in 2003, and maybe faster if inventory grows at the perfect rate – which is more inventory please, but not too much. 😆
There are going to be pocket areas/markets that show 10%-20% appreciation in the first half of 2013.
They are the lower-priced segments of premium areas – homes under $900,000 in Carmel Valley, the $600,000-$700,000 market in Rancho Penasquitos, and the under-$700,000 market in Carlsbad are examples.
Yet, you can go to Rancho Santa Fe’s $3,000,000+ market and find 119 active listings – and four have closed in the last 30 days.
When to sell is relative to your location, price range, and what you are selling. Here are the Three Amigos discussing it:
Let’s also note that you won’t see the bad news coming that could derail your quest for the extra pop, because bad news always sneaks up on you. Examples:
1. Flash flood of competing sellers nearby.
2. A sudden increase in mortgage rates caused by market forces, which the Fed can’t control.
3. Realtor fraud, creating a low comp or two.
4. Natural disasters – earthquakes, etc.
5. Man-made disasters – nuclear war by the North Koreans, etc.
Any of those reasons would cause buyers to quit chasing the pricing stampede, and get back on the sidelines to watch and wait for prices to go down. Many people, mostly the W-2 employees, have already been priced out of the areas they thought they could afford, and are left searching for alternatives; which amount to inferior neighborhoods, hitting the lotto, or waiting.
Don’t rely solely on what you see here at Bubbleinfo.com. We specialize in selling superior products in premium areas, and the examples seen here are the cream of the crop. Generally the demand is very deep currently, but it will dry up in the more-standard areas first.
Get good help!
Us W-2 wage slaves may be getting priced out…again….but the upside is that I have NO stress about my current living and financial situation.
ain’t nothing wrong with that.
Saw this after I responded to Joe.
Very cool graph. After recessions, the index consistantly increases.
Based upon your collective discussion, another big factor (#6?) regarding rate of appreciation is the relative size, shape and price of your home.
Yes, and in the video we discuss the possible product bubbles.
I think ‘when to sell’ is different for every seller, and there are many variables. I’ll go into more detail on the various factors in the next post.
“…mostly the W-2 employees, have already been priced out…”
Is this the new normal? Can we sustain housing proces without the participation of W-2 employees? Is this a side effect of an eroded middle class or will we see the market bubble and pop every decade or so from here on out?
Funny….Might be time to consider a new site name. How about “bullinfo.com”, or maybe just “bullfo.com”?
Is this the new normal? Can we sustain housing proces without the participation of W-2 employees?
It’s the new abnormal, and a market reserved for the affluent.
W-2 employees are welcome in Vista and Oceanside, and their $$ will go a long ways.
But if you had your heart set on buying a newer tract house in Carlsbad in the $500,000s, your dream just flew right out the window within 3-4 months’ time. A comparable or nicer house in Vista or Oceanside feels like the booby prize.
Have you seen these in NE Carlsbad, right across the street from the new high school?
http://www.foothillscarlsbad.com/
They couldn’t give them away 2-3 years ago, and now they have campouts for new phase releases.
We’ll agree to disagree beforehand. 2013 is going to be an interesting year one way or another.
Love your last comment, Jim. San Diego definitely becoming the land of the affluent.
tj,
I think anybody who is thinking of selling in the near future should list their house for sale today, and not risk it.
Yes, “prices” might go up for a couple of years, but if market fundamentals ever kick in, the party is over.
This is the most illogical market ever, so for the analytical folks it’s a nightmare. Guys like this:
http://www.zerohedge.com/news/2013-03-18/buy-rent-party-over
But when I say a deep buyers’ pool, I mean it – buyers loaded with cash everywhere I go.
Once they all get settled, then we still have the first-timers and low-down payment buyers to satisfy. They will be shut out for the foreseeable future with the big-cash buyers kicking them to the curb today – hopefully they will be able to handle the higher prices once it is their turn.
Real estate seems to be the current destination for yield in this low rate environment. In addition the low rates allow the previous $500K buyer to start moving up into the $600K range. I see rising rates as the big problem for the market after an initial panic to buy or forever be priced out. The pool of w2 buyers shrinks as the rates go up and the speculator investors start wanting out when there’s better yielding assets available.
If you have a top notch upgraded property you can probably wait. If you have the 1970’s deferred maintenance dog you might not get a better time to sell.
Oh, I totally agree with that.
Any potential sellers out there… strike while the iron is hot, because psychology can turn down just as fast as it turned up. The market’s given you a rare second chance — call Jim now!
Price to income and price to rent ratios still look low?
Wait until Gov/Fed decides to take over the Mortgage market completely allowing interest rates to hit 0%. Or how about an expansion in “benefits/gift money” given to first time home buyers so they can get into the housing market.
If something like this happens the market will go crazy again. Personally I believe now that the QE x Whatever mentality has become excepted by the people political powers will keep it going indefinitely.
@Booty Juice
“Price to income and price to rent ratios still look low?”
I think it is totally irrelevant now. It is all about “how much is my monthly payment”. Even when prices were lower these past couple of years the price to income metric was high. This is from Wikipedia for Carlsbad in 2010:
“The median income for a household in the city was $85,146, and the median income for a family was $100,932.”
I don’t think it is totally irrelevant.
It gives the blogosphere something to talk about while rich people gobble up all the loot.
@Shadash
“Wait until Gov/Fed decides to take over the Mortgage market completely allowing interest rates to hit 0%.”
I couldn’t agree more. I am convinced low rates are here to stay for years. The “economy” is way too dependent on low rates for all purchases. You can get 0 – 2% financing on higher end luxury cars now. I have to imagine that mortgages will fall again for no other reason than…..why not?
@JtR
HA! Well said.
An incredible outpouring:
http://fox5sandiego.com/2013/03/19/thousands-attend-mass-for-wrong-way-crash-victims/#axzz2O260FF2G
Rates have been falling for over 30 years. Assuming that they can’t go any lower isn’t the same as concluding that they’ll materially increase.
You can’t help but think that this will play a role at some point – probably with older folks who finally get back in the black who then sell and move to Montana, or in with the kids:
In the San Diego-Carlsbad-San Marcos metro area, 24.0 percent, or 141,039, of all residential properties with a mortgage were in negative equity as of the fourth quarter of 2012, according to CoreLogic
I completely agree with the “stairs/no stairs” product bubble. I just closed on my one-level condo in Carlsbad last week with Klinge Realty. It was quite challenging to find a place with no stairs. I can’t imagine what it’ll be like 10, 20 or 30 years from now trying to buy a single-level home.
My home buying experience was exceptional, especially since I’m half way across the country. Richard, Donna and the rest of the Klinge Realty team were extremely customer focused, pro-active and service oriented. Thank you!
Jean, Thank you. It was a pleasure working with you. Here is an update on some of the repairs.
http://youtu.be/xJK2rU80zK4
We’re not even 50 and we won’t buy a two-level place… at least, not without an elevator.
Single story is where it’s at. I have purchased and sold quite a few properties in La Jolla and PB over the last few years and for the over 30 crowd these properties have sold quicker and for a premium. I’m only in my 30s and never thought stairs would carry a negative impact for so many…especially when they can add great views.
As far as sell now or wait, that’s easy for me. If you can’t accept a 10% plus decline from today’s prices then sell now. Yes, the market could still go up in the near future, but I can think of many more reasons why it could go down. It is an illogical market.
The market is so different from area to area and SFR vs Condo or Multiple Unit. As Jim mentioned, the appetite for SFR in RSF over $3MM isn’t that strong right now because only owner users are going to purchase. A property at $2MM or less in RSF or La Jolla is going to attract owner users, long
term investors, and flippers.
La Jolla is also seeing a lot of cash buyers but many of them are either owner users, flippers, or vacation rentals. Not many of these recent buyers want to try long term rentals and I don’t blame them considering the hassle.
Great site Jim and a straight forward successful realtor like you is hard to find but appreciated. I’ve been following for
couple years but this is my first post.