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:
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.