The open house extravanganza concluded today with a monster turnout – at least 110 people attended, including 18 realtors who were showing their clients – we’re up to eight offers, all of which are over list price.
Here we are discussing this house, and the market in general:
The blog whiteout earlier today caused me to contact my favorite WordPress expert, Alastair McDermott in Newport, Ireland, on St Patrick’s Day! He came through again!
Today’s open house on Manzanita was a success, with dozens attending and three offers in hand. Here is commentary on the general insanity:
On February 10th, I guessed that by mid-March, enough new listings would be pouring into the MLS that a glut might be forming, and we would be up to five months’ worth of inventory.
| Date | NSDCC Listings | Avg. LP $$/sf |
| Jan 14 | ||
| Feb 4 | ||
| Feb 10 | ||
| Feb 25 | ||
| March 6 | ||
| March 11 | ||
| March 16 |
There were 185 solds in February, so 746/185 = 4.03 months of inventory.
The number of new listings this month look similar to last year, but there is one glaring difference:
| March 1-15 | New Listings | LP Avg $/sf |
| 2012 | ||
| 2013 |
It looks like we’re having another year like 2003! I think that the big pop of appreciation has happened, and sellers are already enjoying much higher pricing. We’ll see more evidence as sales close in the coming months.
Let’s keep track of the activity since the new listing hit the MLS at 9am today:
A video tour of my new listing at 7208 Manzanita, in SW Carlsbad – open this Saturday and Sunday 11am-4pm!
The owners had just started on the kitchen when job charming came along, and it was too good of an opportunity to pass up – so they are transferring out-of-state.
But first they completely remodeled the kitchen with custom built maple cabinets, quartz countertops, new stainless steel appliances and stainless exhaust hood. They also added a new roof, new furnace, new windows, new hardwoods, remodeled bathrooms with tile floors, plus new vanities and fixtures. Wow!
http://www.redfin.com/CA/Carlsbad/7208-Manzanita-St-92011/home/3760944
Housing inventory is now at its lowest level since January 1994; home sales have exceeded listings for the past 25 months; and the upward trajectory in home prices starting at the end of last year continues, according to the latest “US Housing Market Monthly” from Capital Economics.
Home sales are “normal” relative to population, but supply remains low, according to the firm.
Declining foreclosures are contributing to the current environment of tight inventory. In fact, Capital Economics points out the latest data from the Mortgage Bankers Association (MBA) reveals the foreclosure inventory rate fell from 4 percent of mortgages in the third quarter of 2012 to 3.7 percent in the fourth quarter.
The foreclosure start rate has fallen to its lowest level since the second quarter of 2007—about 0.7 percent, according to MBA data.
House prices increased 9.7 percent year-over-year in January, continuing a recent trend, and prices show “no signs of an imminent slowdown,” according to Capital Economics.
Despite these increases, housing affordability remains high. As of December, the National Association of Realtors calculated affordability at 200, meaning a family earning a median-level income has double the amount needed to afford a median-priced home.
“Higher prices and mortgage rates mean that affordability will have worsened since then,” Capital Economics stated in its report. “But the bigger picture remains that the monthly costs of owning a home are currently very low.”
Homes remain undervalued compared to rents, but the gap is closing, according to the economists. In the fourth quarter of 2011 houses were undervalued between 4 percent and 10 percent compared to rents. As of the fourth quarter of 2012, houses were undervalued between 1 percent and 5 percent compared to rents.
Regardless, “house prices can keep rising for a good while yet,” according to Capital Economics, and in fact, rising prices will help prompt some homeowners to sell, helping to boost inventory, according to the firm.
While mortgage rates have risen in recent months, economists at Capital Economics believe they are “a long way from becoming a constraint on the recovery.”
Additionally, changes in mortgage rates may not mean much for a market in which mortgage applications are on the decline. According to Capital Economics, home sales have increased 44 percent since July 2010, but mortgage applications have risen just 16 percent, indicating “investors and cash buyers are still driving the recovery in activity.”
Southern California experienced continued strong growth in home prices and sales last month as buyers shifted toward ritzier abodes in coastal markets.
The median price in the six-county Southland rose nearly 21% from February 2012, real estate information provider DataQuick said Wednesday.
A total of 15,945 homes and condos sold in February — the highest volume for the month in six years. The percentage of absentee buyers, those buying investment or vacation properties, hit a record high of 31.4%.
Buyers also purchased more high-priced homes in the Southland’s coastal markets, while fewer homes sold in lower-cost Riverside and San Bernardino counties that have become havens for investors.
Bargains are getting hard to find.
“The low-hanging fruit has been picked in the Inland Empire,” said Stuart Gabriel, director of UCLA’s Ziman Center for Real Estate.
Buyers in Southern California paid a median of $320,000 last month, marking the 11th straight month of year-over-year increases. The median sales price is the point at which half of homes sold for more and half sold for less; it is influenced by the types of homes selling as well as a general change in values.
Although values are rising, a large portion of the gains can be chalked up to a decline in low-priced sales, such as foreclosures, and increases in higher-end sales, said Christopher Thornberg, founding partner at Beacon Economics.
“I don’t think these double-digit numbers are legit,” he said.
Buyers are also driving up prices by outbidding one another.
“Everybody is trying to buy. They are trying to beat out higher interest rates,” Thornberg said. “All these people should have been buying a few years ago.”
Median prices remained essentially flat compared with January. The real test of the recovery will come as the spring home-selling season begins in earnest.
“March and April will offer a better view of how broader market trends are shaping up this year,” Walsh said. “One of the real wild cards will be how many more homes go up for sale. More people who’ve long been thinking of selling will be tempted to list their homes at today’s higher prices.”
Tight supply has played a major role in rising prices. But as prices increase, more homeowners can escape their negative equity positions, enabling them to sell their homes and potentially loosening supply. Walsh said that “should at least tame” rising values.
In February, more sales of upscale homes also helped drive median prices higher. The number of move-up homes sold at prices from $300,000 to $800,000 jumped 33.4% year-over-year. The volume of homes that sold for more than $800,000 rose 62.7% compared with February 2012.
http://www.latimes.com/business/realestate/la-fi-home-prices-20130314,0,4139174.story
The sharp drop in homes for sale poses a tough choice for buyers: Jump in now and compete with hordes of others or wait until inventory improves.
If you buy now, you might have to pay above asking. But if you wait, you could end up paying an even higher price and a higher interest rate if you need a loan. That’s because inventory won’t improve until prices rise enough to get more homeowners to sell and more builders to break ground.
The inventory shortage is especially acute in California. Of the 30 largest housing markets, the four with the biggest drops in homes listed for sale on Zillow in February compared with February of last year were Sacramento (48 percent), Los Angeles, San Francisco (41 percent) and San Diego.
Although listings are increasing on a month-to-month basis as the busy spring season gets under way, Trulia Chief Economist Jed Kolko predicts they won’t start rising on a year-over-year basis for a year or more.
The result is stories like this:
A 1,500-square-foot home on Clipper Street on San Mateo’s east side, advertised as a “heck of a wreck,” attracted 97 offers in the first eight days, says listing agent Claire Haggarty of NBT Realty Services.
The home was listed in mid-January at $375,000, which Haggarty considered “a little under market.” It sold for $510,000 in an all-cash deal with no inspections, no contingencies and a 10-day close.
At some point, prices will rise enough to shake lose more inventory, but it won’t happen immediately.
Based on what’s happening around the country, Kolko says inventory tightens fastest in the first 12 months after prices hit a bottom. “Everybody wants to buy at the bottom and nobody wants to sell at the bottom,” he says.
How do you handle paying for a big remodel?
In this case, the buyers bought the home with FHA financing and used their cash for the remodel, which included all new plumbing and electrical too:
In the end, you get a new house with huge yard and no fees!
Here are the “before” photos from the first day we saw it:
For those who were thinking of sauntering in to this new development later this year to buy a house, it doesn’t look good. Those on the waiting list won’t be peeling off to buy similarly-priced resales around Carmel Valley, because there is no comparison:
Are you looking for an experienced agent to help you buy or sell a home?
Contact Jim the Realtor!
CA DRE #01527365, CA DRE #00873197
