Why does a frenzy only last for a year? Because of the sellers’ disease.
Reader Sue left this comment:
In Carmel Valley, I’ve seen some very premium Lexington’s go for a high price ($1.9m) but they were on extremely large view lots. Afterwards, it seemed like anyone with a Lexington or Derby Hill priced their home at simply ridiculous prices ($2 million or more!) and now I seem these homes sitting unsold on the MLS. Excluding the few extraordinary homes, other CV homes seemed to have increased in price maybe $100-$150k in the past 2 years, but I don’t see prices going up the $300k that sellers have priced into them (versus prices from 2 years ago). And the more homes that sit on the market, the lower their prices will be.
We’ve noticed more CV canyon-front homes coming on the market in 2013. It used to be that you could expect to find one around $1,500,000, but this year a couple of sellers created new highs and now many are jumping in, hoping to capitalize on the good fortune.
One of the signs of a stalling frenzy is how sellers price their homes based on the active listings, not the solds.
Sure, there has always been some of that built into every seller’s price, but today’s euphoria is causing some huge pops in list prices.
CV Canyon-Front Scorecard:
13 active listings between $1.659 and $2.195 million.
3 went pending in April, none pending in May.
2 closed over $1.7M this year.
Everyone is hanging their hat on this sale – it closed for $1,900,000 last month:
http://www.sdlookup.com/MLS-130011204-5265_Raven_Hill_Point_San_Diego_CA_92130
Because one buyer paid a premium for a house that had everything going right for it doesn’t mean that there are dozens waiting to PAY THE SAME. There are buyers waiting, but they want to pay less, and hope that a glut is forming that will cause sellers to lower their price.
It is a timing issue too.
Sellers all think that this is the prime-time selling season, and their lucky buyer will be walking through the door any minute. They are ignoring how much competition there is, and how many aren’t selling.
A smart seller would drop their price now and be the first one out, but it’s more likely that they will all wait until mid-summer. In the meantime, expect the frenzy to die down a bit.
Not to mention the other 18 for sale betweeen $1.5 and $2.2 that aren’t canyon-front. Buyers in this range have 31 homes to consider, plus wait for their number to come up at Alta Del Mar.
Looks like a bubble in the high end in CV. I think at some point a buyer is thinking 2M for a tract home in suburbia is nuts. Go elsewehre for that price range, carlsbad, encinitas.
This same house in 4s…would be 875k-950k, with similar yard/pool/landscaping/sq footage/build quality/upgrades. 4s would rent for $4k-5k/month… CV would have to rent for 7k-8k/month, for the numbers to work.
Jim,
In NSDCC, when we do Apples to Apples comparison for the same house, which would command more premium … Unobstructed Panoramic Canyon/Open Space Views Vs Unobstructed Panoramic Ocean Views? or are those priced the same?
Sellers can’t be that stupid if there living in a 1.5 to 2 million dollar home
It’s not stupid, it is being umaware of the market and how it works.
We’re talking about stuff that most realtors ignore, let alone sellers. How many of these listing agents are telling their sellers, “We’re up to 12 competitors, it might be smart to be the first one out”.
They are having buyer showings, threats of offers, and good news throughout the media – that deal has to be right around the corner, doesn’t it?
Did my own unscientific look at the 92130 without regard to neighborhood. Looked at active, pending and the solds over last 90 days for 4br places with more than 3000 square feet and max price of 1.5. Seems like a sweet spot in the “mid market” carmel valley folks. Doesn’t address the super high-end or the smaller places. There were 46 sold at $336 a foot average, 35 days on market. There are 25 pending at $351 a foot average, with average 17 days on market so far. There are 27 active averaging $375 a foot, and 28 days on market so far. This would seem to echo JTR’s notion. The $336 a foot already incorporated the first phase of the bump up, and the pendings show the continued rise, and the actives are starting to get stale as buyers are hesitating on taking the next leap up. For what its worth.
I got more scoop today on these.
2-3 more likely to open escrow shortly, and a fourth seller who turned down a “strong” offer.
I call this “the Phoenix Phenomena”. Here the same thing. Just because a marginal fool bought a home 50% above comps doesn’t mean every other buyer will, or can.
I’ll never get used to “million dollar” and “tract home” appearing in the same sentence.
THAT SAID… that $1.9M place is about as nice as a tract home can get. SWEET!!!!