There are a few surprising factors contributing to the meteoric rise in prices:
A. Cash offers might get you the win, but not a deal.
Back in the day if you offered cash, you sought a hefty discount – and usually got it. Over the last 60 days, 25% of the NSDCC detached-home closings were cash sales, and the average SP:LP was 97%. Of this group, 24 of 148 had to pay over list price to win – a group whose avg. sales price was $1,542,105.
B. There appears to be no reluctance to reward flippers.
Everyone used to despise flippers, and both buyers and appraisers would throttle their valuations. These days flippers are being rewarded six figures for new carpet and paint, and many who have added real improvements have gotten $250,000+ without any trouble.
C. Tight credit hasn’t slowed price increases.
The San Diego Case-Shiller Index for May was +17.3% year-over-year (latest available). The average pricing of NSDCC detached homes sold in May was only +9% year-over-year, but in Oceanside the average pricing in May was +19%, and in Vista it was +37% year-over-year – areas where financing is more prevalent.
D. The internet doesn’t create instant appraisers.
Glenn from Redfin said HERE that even though he keeps coming up with new gimmicks, people viewing his website just want to know bed & bath counts, and square footage. Buyers get the feeling that they are more educated – but are they using it wisely? Judging by some of the crazy prices being paid, they are ignoring the readily-available data.
Things of no surprise? NAR isn’t making a difference, generally realtors have very little to say publicly, and sellers keep pushing the envelope:
Oceanside + Vista sales in May = 173, and 18 were cash.
44 times a day,
Yea but your walking distance to the train station and other stuff.
I keep hearing “REO’s are selling for retail” and “flippers are making six figs per flip”, which begs the question: Where are flippers getting their deals?
Buyers are pricing properties at exorbitant prices out the gate, that way when they negotiate and drop prices they still end up with very high price. In CV I notice that the starting price is something of the order of $420-$430 per sq ft for any property with no frills, so that they can settle for $400 per sq ft
Booty, flippers generally work with a REO agent that can steadily feed potential flips to the flippers. The said flipper then use the same agent when it comes time to sell the flip. The agent gets his/her palm greased twice in the process, so they keep feeding the flipper.
So there are “REO agents” selling exclusively to flippers for massive discounts to retail?
Yes don’t get me started.
Haha ok no worries. Jeebus I didn’t know this.
It’s not just REOs. There are good prominent agents that have no problem with spoon feeding their listings to flippers before MLS input.