The new Alta Del Mar neighborhood in Carmel Valley is providing some guidance for the rest of San Diego’s North County Coastal region.
There are 100+ people on the ADM lender-pre-approved list to pay $2,000,000 to $2,500,000 for semi-custom tract houses. Those on the list will get sorted out as Pardee drips out a few houses here and there over the next 2-3 years. In the meantime, they are still shopping around.
Here’s what they see:
All the other 92130 tract houses are cozying up under $2,000,000, with virtually no houses left under $1,000,000. After holding steady at around $330/sf for the last few years, the Carmel Valley detached homes closed this year are already averaging $350/sf, and screaming higher. The average list price of pendings is $378/sf, and not many sellers have to settle for less.
Those in Del Mar proper feel mighty superior to that inland Alta Del Mar, plus they don’t appreciate them stealing the tony Del Mar name – and obviously someone must pay. Virtually everything west of Crest Rd. starts around $2.5 million now. Same for those sellers west of Nardo in Solana Beach.
La Jolla and Rancho Santa Fe? If you want a good-quality estate in either town, expect to pony up $3,000,000+, and most everything under $2,000,000 needs work.
Cardiff, Encinitas, and Carlsbad offer some relief price-wise, but anything decent flies off the market quickly. The 92024 solds are averaging $394/sf this year, and Carlsbad’s 92011 solds are $319/sf, both 10% higher than last year’s average.
“With rates now relatively low, this could be an auspicious time to buy a house with a fixed-rate mortgage. That could make good sense for people who aren’t out to bet on the housing or mortgage markets but are instead focused on settling into a home for the long term.”
It might be an “auspicious” time to buy … if someone can find a home for sale (there is so little inventory in many areas).
Will the frenzy continue? NSDCC sales have had an inverted relationship with the inventory. When plenty of homes are coming to market, buyers are picky and sales are slower. As inventory got tighter, sales increased.
In particular, look at March, 2012 – it was the peak month for new listings last year, and as supply dropped during the critical April-June selling season, sales took off:
The amount of inventory plays a vital role, and is a leading indicator.
It would appear that the intensity of the frenzy this year will be determined by how many new listings come to market between April and June.
How are we doing so far?
NSDCC New Listings:
Year
1stQtr
April 1-15
2009
1,425
256
2010
1,412
268
2011
1,476
281
2012
1,270
196
2013
1,282
262
No wonder last year ended up so hot – new listings in 1Q12 came out lower than previous years, and never got rolling.
This year we got off to a similar start, helping to stoke the frenzy further.
Here are the 98 new NSDCC listings that hit the market between April 1-15 between $700,000 and $1,200,000 (the MLS only allows 100 flags at a time). The 38 in yellow are already pending:
Efforts to revamp U.S. immigration laws may bring at least one unintended benefit for the economy: The nascent housing recovery will probably get an added boost.
The number of foreign-born homeowners will increase by 2.8 million in the decade ending 2020, compared with a 2.4 million gain in the previous 10 years, according to a Mortgage Bankers Association study that didn’t assess the potential impact of any new legislation.
Research by a group of Hispanic real-estate agents concludes the increase could be even bigger if undocumented workers were put on a path to citizenship.
Passage of an immigration bill may generate about 3 million more homebuyers over the next several years, according to a report last week from the National Association of Hispanic Real Estate Professionals in San Diego.
Yadira Ortiz of San Marcos, California, is a case in point. The 24-year-old lab technician arrived from Mexico in 1993. She and her husband bought their first house in December, a $308,000 three-bedroom, two-bath property.
Ortiz, who has two daughters, said she was inspired by her parents and considers her home an investment to “help our children in the long term.”
“I appreciate that my parents decided to come here and give us a better future,” Ortiz said. “They have worked hard and they don’t get paid that much but they have their own home, they can afford their home. I saw how hard they were working and I decided to do the same thing.”
Four new listings of canyon-front Carmel Valley tract houses have hit the market in the last week. They joined three other similar active listings nearby, creating a full selection for buyers.
One agent commented that they have a canyon-front listing in Derby Hill coming up shortly, which will make it eight active listings – and potentially reaching a saturation point.
Another agent remarked, “But we have comps now”, which is true. One closed for $1.755 last week, and another listed at $1.895 is pending.
Will those be enough to keep buyers jumping?
A flood of new listings in any area should delight buyers, causing them to gobble them up….or will they consider it frenzy overload, especially at these new price points?
The Torrey Hills/Carmel Country Highlands area already has to contend with the new homes being sold at nearby Alta del Mar.
Will buyers start to hesitate when they see more listings?
This could happen in any area. If you are thinking of selling and see inventory growing around you, well, you know what to do – call Jim the Realtor!
In the previous post I mentioned that when I represent sellers, I give price coaching to agents during a bidding war.
What is price coaching? It is giving hints about the competing bids.
Let’s use the Manzanita case for an example.
Once a highest-and-best offer came in above $700,000, I started telling the other agents that it would take more than $700,000 to win. It gives others a number to shoot at, rather than the guessing game that feels like a black hole.
I was also very specific that we were not going to let this linger, that we would select a winner on Monday afternoon, which we did.
Putting parameters around the game helps bidders decide their fate. It is much easier for buyers to say “yes” or “no” to going over $700,000, then to just let them wander around, price-wise.
Once we had three people willing to go above $700,000, I kept giving hints until all bidders said that they had reached their maximum.
This is the opposite of what most agents do. Most agents will put a note in the MLS that says, “there are multiple offers, send in your best offer”. They also make it clear that they aren’t going to tell you how many offers there are, what price it will take to win, or even what their process is to select the winner. This is the sealed-bid method.
The sealed-bid process encourages bidders to offer less than their valuation of the item, because everyone wants a deal, and there is no fear of loss to push them to their maximum.
My method creates the closest thing to an auction/open bidding, which is the most effective way to find top dollar.
There are no rules or guidelines on how agents are supposed to handle a bidding war, so every seller and agent are their own. Get good help!
This is the house where the owners had just paid $565,000 in September and began their remodel of its mostly original condition. Then job-perfect came calling, and off to the midwest they went.
But not before completing all of the upgrades, including new kitchen, bathrooms, roof, hardwood floors, etc – close to $70,000 worth.
When we listed for $649,000, they were hoping to break even.
I had planned for open house both Saturday and Sunday, and had enough calls immediately upon MLS input that I also conducted an impromptu Friday afternoon open house too, for those who couldn’t wait.
By the end of Sunday we had eight offers, and I politely asked all to make their highest-and-best offers. Unlike most listing agents, I give price coaching – and was telling people that it appeared it would take more than $700,000 to buy the house.
If you help give buyers a number to hit, it makes it easier for them to say yes or no. If all they have is a black hole, somebody who really wants it – and has the ability to pay whatever it takes – could short themselves. Buyers and agents are always appreciative of having some clue to what it will take to win.
On Monday afternoon, the sellers and I huddled at the house to make the decision. It came down to two – a cash offer of $724,000, or $731,000 with 50% down payment with no appraisal contingency that also included a bank statement showing that they could comfortably make up the difference.
We took the higher deal.
The extra $7,000 isn’t a lot of money, but cash buyers have the same remorse as anyone else – and there was no guarantee that the cash deal would have closed any easier.
The appraisal came in at $695,000, though there were no comps in the neighborhood over $600,000 in the last six months.
Because the buyers were putting down 50%, the appraised value didn’t matter much to the lender, though they were paranoid enough to insist upon an appraisal review just for their records in case Fannie/Freddie questioned it.
I did keep in touch with the agent who wrote the cash offer, and they were standing by in case the appraisal became a problem.
I told everyone from the beginning that the appraisal was going to be short – my guess was $690,000 – so there was no surprise when it did. The appraisal was a technicality needed for the bank’s file – it didn’t change anything for the buyers who were planning to put down the same amount of cash anyway. It was understandable that there had been a shortage of recent comps.
(There had been the usual smattering of fraudulent short sales over the last 12 months, but their impact will dwindle by the end of this year.)
The new inventory has been fairly steady here in the middle of the prime selling season. Another 89 new listings since the last reading, and their list prices averaged $526/sf. We had 74 new pendings whose list prices averaged $357/sf, and their median DOM was 16 days on market:
Date
NSDCC Active Listings
Avg. LP $$/sf
Jan 14
649
$722/sf
Feb 4
667
$716/sf
Feb 10
679
$713/sf
Feb 25
678
$719/sf
March 6
727
$703/sf
March 11
744
$698/sf
March 16
746
$703/sf
March 23
755
$712/sf
March 31
752
$717/sf
April 5
780
$704/sf
April 11
780
$710/sf
April 17
792
$699/sf
There is a rolling blob of over-priced turkeys being ignored, while a healthy under-current of selling is happening all around. Of the 74 new pendings, 32 of them were in the tonier La Jolla-to-RSF area.
