More Bubble Talk
Another professor commenting on the prospects of another bubble, and the renter’s society:
Another professor commenting on the prospects of another bubble, and the renter’s society:
We saw that last month’s NSDCC closings looked weak, compared to September, 2012 (254 vs 289). But look how October has started, and there will be late-reporters adding to this year’s total:
Oct. 1-10 Closings | ||
2011 | ||
2012 | ||
2013 |
The inventory is staying under control, though there have been more cancellations/withdrawns/expireds in the last 30 days than in the same period last year (203 vs 156).
The UNDER-$1,200,000 Market:
Date | ||||
April 29 | ||||
May 5 | ||||
May 9 | ||||
May 18 | ||||
May 23 | ||||
May 30 | ||||
June 5 | ||||
June 11 | ||||
June 17 | ||||
June 24 | ||||
July 1 | ||||
July 8 | ||||
July 15 | ||||
July 22 | ||||
July 29 | ||||
Aug 5 | ||||
Aug 12 | ||||
Aug 19 | ||||
Aug 26 | ||||
Sep 2 | ||||
Sep 9 | ||||
Sep 16 | ||||
Sep 23 | ||||
Sep 30 | ||||
Oct 7 | ||||
Oct 14 |
The OVER-$1,200,000 Market:
Date | ||||
April 29 | ||||
May 5 | ||||
May 9 | ||||
May 18 | ||||
May 23 | ||||
May 30 | ||||
June 5 | ||||
June 11 | ||||
June 17 | ||||
June 24 | ||||
July 1 | ||||
July 8 | ||||
July 15 | ||||
July 22 | ||||
July 29 | ||||
Aug 5 | ||||
Aug 12 | ||||
Aug 19 | ||||
Aug 26 | ||||
Sep 2 | ||||
Sep 9 | ||||
Sep 16 | ||||
Sep 23 | ||||
Sep 30 | ||||
Oct 7 | ||||
Oct 14 |
It doesn’t appear that the government shutdown is having much effect:
Weekly NSDCC New Listings and New Pendings
Week | ||
May 30 | ||
June 5 | ||
June 11 | ||
June 17 | ||
June 24 | ||
July 1 | ||
July 8 | ||
July 15 | ||
July 22 | ||
July 29 | ||
Aug 5 | ||
Aug 12 | ||
Aug 19 | ||
Aug 26 | ||
Sep 2 | ||
Sep 9 | ||
Sep 16 | ||
Sep 23 | ||
Sep 30 | ||
Oct 7 | ||
Oct 14 |
You don’t have to watch the video to hear the usual report – the market appears fine; we had 100+ people come to open house over the weekend, and buyers are engaged.
What price they are willing to pay is not so obvious.
The investors are providing the floor, most buyers are happy to pay a little under retail, and those paying all the money without a fight are those who are satisfied that they are getting enough extras to make up for it.
In other words, the market is balancing out, and buyers are feeling more confident that they can wait for the right deal.
(pardon the realtor-grade lighting)
Houses that are more than 10-15 years old, or have trees in the front yard should have the sewer line checked periodically. Affordable Drain charges $185 for the camera scan, and have been very reliable: http://www.affordabledrain.com/
Those who are fond of adobe homes and/or our architectural heritage can check out the Adobe Home Tour today, featuring the Weir Brothers:
http://events.r20.constantcontact.com/register/event?oeidk=a07e89e6t9gbfadc2b1&llr=tosrxicab
Here is the full history of the Weir Brothers, known for their custom homes in Rancho Santa Fe and throughout the county, thanks to our friends at Modern San Diego:
http://www.modernsandiego.com/WeirBrothers.html
Jack Weir turned over the company to his son Robert in 1988, who is still building homes – inlcuding the Razor in La Jolla, which did sell for $14.1 million at the bankruptcy auction:
https://www.bubbleinfo.com/2011/02/25/razor/
My new listing in Park Village, south of the 56 freeway and just two exits east of Carmel Valley – open this weekend 12-3pm:
Home prices will go up and down, but another bubble/crash event is unlikely to happen. We live in a world where artificial markets are supported by the government, and until that changes, the housing market should be relatively rangebound.
Under what conditions would these prices be sustainable?
After all, in most areas around NSDCC, we are back to peak prices, or higher. Many homeowners can sell today for their highest price ever – yet inventory remains relatively tight.
For pricing to sag or crash, it would take negative pressure. But most of that has been relieved, and there’s little threat of losing your house any more:
The housing crisis caused most people to gain a new appreciation for their house, and housing needs in general. As a result, we have low inventory because people don’t want to move – they don’t need to, it’s expensive to move, and for the most part, you have to leave town to make it worth it.
What could cause a sustainable market? Exactly what we have in place now – a content homeowner base with little need to sell/move.
The current inventory is stocked with elective sellers, who will only sell if they get their price. Rancho Santa Fe is a template.
Forget the higher price point and just look at the dynamics to test the theory. There have been very few distressed sales in the 92067, which is what we have today throughout NSDCC. With at least 90% of the sellers on the market by choice, they sit and wait for their price – or forget it, they aren’t moving. They’re not going to give it away, that’s for sure!
Detached-Homes | Avg DOM of 2013 Solds | Months’ of Inventory |
SD County | ||
NSDCC | ||
RSF |
In spite of what realtors want you to believe, it doesn’t take longer for higher-end properties to sell – it takes longer for the sellers to get their price right. This attitude is permeating throughout the marketplace, and with no external pressure to sell, you can see why.
Are the lower-priced sellers subject to more of the economic swings? Yes, definitely, but with Big Gov behind you, nobody will have to panic-sell again.
If you can’t make your payments, you can wander through the loan-mod process for months, and then test the market at your price for months or years before the bank gets around to foreclosing.
The only possible threat is the baby-boomer generation having to sell to survive, but there are enough other ways to get money without selling that a big liquidation event is unlikely.
Expect bigger inventories of over-priced turkeys, waiting happily for as long as it takes for their jackpot to roll in!
My new listing in Carlsbad’s Rancho Carrillo – open Saturday from 12-3pm:
I hate the videos that start with a 30-second commercial, but this is the gambler’s house on Carlsbad Blvd., asking $29,000,000. Doug had this listed over the last couple of years, but now an Orange County realtor has it, and you can tell. He says the private beach access is “absolutely unheard of”:
Below isn’t the best youtube of this local San Diego band, but you might recognize the location and/or the MTV host, featured at the 4:35-minute mark. RFTC is playing at the House of Blues on Halloween: