The media has begun its assault on the weakening real estate market, but is it weak? Not really, at least not around here.
Over the last nine years, NSDCC detached-home sales have averaged 223 closings per month, and up until last year, there was only one month that totaled over 300 sales – the 304 in June, 2005.
The red line below shows that recently we have had several months around the 300-sales-per-month mark:
Back in the last frenzy, the 2002-2003 era, we averaged 319 sales per month, but it was at an average $325/sf. Now that we are over $400/sf and hitting roughly the same monthly sales counts, there isn’t anywhere to go except down.
We have experienced elevated levels of sales over the last year or so – rarely have we ever sold 300 houses per month. If we settled in at 275 sales per month that averaged $375/sf, it would be a healthy market. But statistically it will look like the sky is falling, compared to where we are now.
Diana: The enormous drop in July new home sales really shocked the market and today the bears are taking on the bulls in force. Let’s recap for a second.
July new home sales dropped over 13% month to month. existing home sales actually bumped up a healthy 6 .5%. why the skep? New home sales numbers are based on signed contracts in July and existings are based on closings which were contract signed in May or June.
If you take a look where rates went from May through July, the jump from 3.5 to over 4.5% according to (doomer) analyst Mark Hanson made houses 15% more expensive and it is just the rates. Home prices up over 8% from a year ago ascoreding to a new report today from Lender Processing Services and this is a lower reading than others like Case-Shiller. They claim a larger survey sample and more accurate way of accounting for the impact of distressed sales on home prices, we know fewer stressed sales and you have rising rates and rising home prices and I call it a toxic cocktail for housing on the new home numbers.
Seabreeze partners says housing ‘blew up’ and others claim it is just seasonal.
One more factor is investors. They have been fueling housing for the past few years and pumping up prices in the hardest hit markets and they made up just 16% of buyers in July according to the realtors and that’s down from 22% in February and first time buyers are not filling in, not coming back and still at less than a third of the market and should be over 40%.
So the bulls are saying, well, one month does not a trend make.
I will say I have never heard more bears out than I have today, not in the last couple years anyway.
CNBC: Diana, stick around while we talk about this with Mike Murphy, our resident housing bull. It is undeniable at this point it is having an impact if you listen and look at Diana’s report and the charge that she showed. you have a serious issue, investors dropping off and first time home buyers.
Murphy: Here is one thing I point out. the numbers don’t lie. you talked about rising mortgage rates. I would argue, being bullish on this space, I would argue that mortgage rates have risen and that’s the past, and going forward, there is nothing out there really to tell you that rates are going to continue to rise and they have leveled off here and we also know and I think this is a key point, we know that the administration is very focused on keeping the housing recovery going. would you agree?
Diana: Yeah, but I would argue that you saw this jump up in rates two months ago and that had a lot of people on the fence jump off and jump into housing and worry that rates were going to go even higher and so you did have that bump up in sales that we saw through the summer and I wonder if that’s not going to be pulling numbers forward from the fall home sales. I just got off the phone with Glenn Kelman and he is seeing a huge slow down in existing home buyers now and says arm chair investors who are using credit are getting out. We may think that mortgage rates aren’t going much higher, but a lot of folks out there think they still may.
Santana brought the Latin Rock Fusion to Woodstock. They started at 2:00 pm on Saturday, the 16th of August, 1969. Relatively unknown for the audience, Santana hit the nerve of the party crowd quite well.
Their debut album Santana was released in the same month. The band had just played local gigs in the San Francisco area so they were relatively unknown. Their set was powerful and magical at the same time.
Carlos Santana claimed he was tripping on LSD throughout most of the performance and was hallucinating that his guitar was a snake; nevertheless, he performed flawlessly. He was 22 years old at the time.
Reprinted with permission from the SD Daily Transcript:
The California Coastal Commission will consider an appeal of a permit granting Mitt and Ann Romney the right to demolish their existing 3,900sf La Jolla house and build a more-than 11,000sf mansion on Sept. 11.
The Romney plans at 311 Dunemere Drive call for a two-story over basement home with an attached four-car garage, hardscape, and retaining walls, with an existing pool, spa, and seawall to remain on a 17,860sf beachfront lot. The Romneys acquired the existing home for $12 million in 2008.
The new plans would add an elevator for the Romneys’ automobiles and about 3,600sf of basement area, and would roughly double the main living area of the home.
Read the story of the former neighbor from across the street appealing the unanimously-approved permit even though he sold his4,141sf house for $3,560,000 in 2012 and moved to Monterey (click on link below):
Headlines everywhere are touting how rising rates are slowing down the real estate market. The experts jump to conclusions, and the media loves bad news. One of our favorites is front and center today – Lawrence Yun. From cnbc.com:
“The modest decline in sales is not yet concerning, and contract activity remains elevated, with the South and Midwest showing no measurable slowdown,” NAR chief economist Lawrence Yun said in a statement. “However, higher mortgage interest rates and rising home prices are impacting monthly contract activity in the high-cost regions of the Northeast and the West.”
Mortgage rates are the same everywhere, and your location isn’t what determines whether sellers and buyers are coming together.
Experts postulate about who or what to blame, and not on how to fix it.
You can blame any reason on the list for fewer sales:
Rising rates (they have stalled)
Jim the Realtor
If Lawrence Yun was actually a realtor and looked a little deeper – or the media would ask more questions – then eventually the reason that pendings are down anywhere would be discovered:
Sellers aren’t adjusting their price enough to satisfy the buyers.
Lawrence Yun and others are always quick to blame external events, but as our spokesman, he should offer the solution – price will fix everything!
An excerpt from cnbc.com’s interview with Robert Shiller:
CNBC: We have the twenty-city up double-digits for the fourth straight month. what do you make of that?
RS: Well, obviously, we are in a housing recovery, at least for the short term. I have always been less sanguine about this one, but housing is a market with momentum, and right w the momentum is up.
CNBC: Professor Shiller, it looks like there are some peaking in the rates, but I mean the spike in rates, but you say that of only six cities where the prices were rising faster than a month last, and so is that some diminution of the game?
RS: Well, there are some, yeah, there are some weakening signs and the starts are down, and especially in the single-family realm. i think that there is a chance that there is weakening, and there is a all of the fear about the thing that is a cloud over the housing market right now.
CNBC: You seem reluctantly positive, and you have seen it for a long time. I mean, you almost feel like you want to say, ah, it is not for real.
RS: Well, none of this is for real. The housing market has gotten very speculative and it goes through the big cycles. Take California for example. It is and up and down and up and down and decade by decade and it does not go anywhere, but a roller coaster, and that is the way that the markets have become. So for a long-term buyer, the fact that they are going up now does not mean a lot about where it is going to be when you finally sell.
CNBC: We have seen big disappointments and you have mentioned the starts a and the new home sales also disappointing and the soften ing in the terms of the purchase mortgage applications, do you see those trends continuing through the back half of the year?
RS: I think that there is a risk of a weakening housing market. It is a speculative market, and this has been not by research, but by irrational exuberance and that can suddenly change. It is a story, and evolving story, and nobody who can really predict this for sure. It is risky.
Jim the Realtor is legit - I interviewed three brokers; he said list price should be $100,000 higher than the other two brokers; listed it with him and had all cash (no financing) offer in two days, five day contingency period, closing in two weeks - and it closed at his recommended list price. I could not recommend anyone more than I recommend Jim the Realtor.
When we moved to San Diego in 2005 we rented a big house on Mt. Soledad (La Jolla) with 180 degree ocean views for the same payment as a mortgage on a dump in Chula Vista. Clearly something was wrong. Yet, the media was full of the usual happy-talk nonsense, so I was glad to find Jim's blog. I've followed his honest assessments and data since.
We decided to sell and move to AZ at Thanksgiving. Dec. 1st we met with Jim to sell our home. We closed today (29 days later). Jim orchestrated a feeding frenzy -- we had 25 showings in 2-1/2 days, multiple offers, and sold for well over asking price. I'd say he earned his commission! We have owned and sold homes in 5 different States always using experienced, productive, full-time realtors. Jim outshines them all.
You don't decide to sell and close 29 days later over Christmas (with COVID lockdown) without some miracles. Donna was amazing at performing lots of those miracles and ensuring that everything was done right and on time. They are a terrific team with a very responsive and professional network.
Where do we begin..2020 has been a year for everyone. When COVID hit and shut down both my husband and my businesses, we were left with a mortgage and very little income coming in. We were stressed, scared and felt stuck. We made the hard decision to sell our home and move out of state. We contacted the Klinges' and spent a good hour going over what we hoped we could accomplish. Jim and Donna came over with comps in hand and suggestions on improvements to get our house ready for the market. It was overwhelming to think about, but Donna was there and one step ahead in every scenario. Basically we just approved what they suggested and Donna handled literally everything. We placed our house on the market and within the first day we had multiple offers well above asking price! We couldn't believe it. We were overjoyed! Jim countered the offers to weed through them, and everyone came back with way more. It was amazing, and we are ?? sure it was because of the staging and repairs the Klinges suggested we do.
Due to unforeseen dishonesty from the buyers lender, we hit a big hurdle when trying to close. We had already moved out of state and were shocked when three days before closing the lender dropped a bombshell on the buyers and us. However, Jim and Donna handled it like veterans, not afraid to play hard ball and represent their clients. After a few phone calls with us, and several between Donna and the lender, they had a plan B-Z to make sure we were taken care of. In the end we closed with even more money than we ever thought possible and with very little work from us. The Klinges handled this entire "2020" worthy event with the utmost professionalism and did everything in their power to not only make this as smooth as possible for us, but we also walked away with more money from the sale of the house than we ever hoped for. After working with Jim and Donna, you don't ever use anyone else. They are hands down the best team to represent you in any scenario.
Working with Klinge Realty Group was a great experience! They are very responsive, professional and knowledgable about the real estate market! I would definitely recommend Klinge Realty Group.
Jim and Donna Klinge made the sale of our condo extraordinarily easy. They know the market and gave us sound advice backed by details and very considerable experience, reflected both in the initial pricing and subsequent negotiations. They work together as a team and are always available to talk. We had a few challenges with our property and they were able to coordinate the resolution to everything, including items that I would not think would ordinarily be their responsibility to handle. They made the whole process effortless on our part. They are folks with high integrity and we cannot recommend them highly enough.
Review for Member: Donna Klinge
I cannot believe there are no reviews of Donna yet, ugh!! She is the secret sauce of the Jim Klinge/Donna Klinge combo! I will touch on Jim here, but Donna is why I'm so totally loyal to these two (no offense to Jim :)).
I consider myself a rather savvy buyer/seller. I've bought/sold 7 times in about 15 years. On the buy side, Jim is the PERFECT combo of: completely digitally savvy (he will pull data all day long until you feel comfortable with your chosen house, area, school district, anticipated appreciation rate...anything!), he's super well respected and known in the area by other agents, an amazingly cool but strategic negotiator, is totally devoid of desperation for a sale/commission, and more.
Then once you get into contract phase, Donna literally handles every last and final detail in a concierge-like manner -- totally shielding you from the daily back and forth, noodling and annoyances of the buyer's requests. She solves it ALL; it's miraculous what that woman accomplishes over and above what is even expected in a buy/sell transaction.
On the sell side, Jim and Donna do the same, but even moreso. Donna in particular truly takes everything off your plate: she'll manage getting the house painted, the carpets replaced, she'll go on site (as she Jim both did for me when selling our rental properties) to work with the renters and make sure the house is ready to show -- freeing me to have to take time off of work to do so. They work with A+ integrity, too, so you know you are serving all parties fairly and lawfully throughout.
A home purchase/sale is the most considered you'll ever make. HIRE A SAVVY AGENT, not a friend!, and get what you need out of the transaction. Jim and Donna are our agents for life.
Jim and Donna Klinge are by far the most professional, personable and responsive realtors I have ever worked with. They provide VIP concierge level service in every area of the process of selling your home. My home was marketed so successfully that we received an offer the day after our first and only open house. Thanks to Jim's pricing and negotiating, our house is now the highest sold in our community. Jim's vast experience means he has worked with several realtors and knows the market all over north county. Donna is AMAZING in processing everything in the transaction. She scheduled trades people to work on the house in preparation for the sale as well as the repairs needed before closing. She communicated clearly every step of the way about what would be happening. She took the weight off my shoulders for the whole process. I will always use Jim and Donna for my future real estate needs and I whole heartedly recommend them to anyone buying or selling a home.
Jim and the team at Klinge Reality are without a doubt the best in the business! Not only was Jim helpful and extremely knowledgeable, he was patient and determined to help me find my first home. Jim and his team have been in the business for many years, and it shows. Jim is a wealth of knowledge and was my biggest proponent despite the temperature of the competitive market. I ended up getting the perfect property in my dream neighborhood all thanks to Jim. From the day my offer was accepted, Donna was a real lifesaver. She was extremely helpful, responsive, and knowledgeable when it came to every minute detail, and held my hand through the process. As a first time home buyer I had no idea what the process would entail, but Donna curtailed every concern I came across and made the escrow process feel seamless. Jim and Donna provided me the best home buying experience, and I am very grateful for all they did for me. It was truly a pleasure to work with Jim and Donna and I am already looking forward to the next time we work together!
Review for Member: Richard Morgan
Richard is an amazing realtor! He has high integrity and genuinely cares about his clients and their needs. Richard paid close attention to what I was seeking in a home and was very patient in our search to find it. I would highly recommend Richard and will use him for future transactions. Truly a different kind of realtor experience!
Could not be happier with my experience with Jim and his team. He helped me sell a very unique and challenging property. Throughout the entire process he was always available, honest, transparent, trustworthy, and always put my interests as a seller first. A (rare) true professional! During close of escrow Jim went above and beyond to complete the deal. It would not have been possible without his experience, fantastic team, and pure dedication. Highly recommended!
Thanks Jim and Donna Klinge!