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: