The recent active-inventory trend looks a lot more like it did in 2010:
It is still very low, with 6,596 attached and detached listings today. But it is 50% higher than it was earlier in the year, and adding that higher November datapoint to his graph would be the only time in this four-year history that inventory kept going up. If there isn’t the usual holiday listing-cancellation fest, and we have a larger group of picked-overs to start 2014, sellers with an itchy trigger finger might rush their decision to list earlier in spring.
Let’s face it; if there is a flood, it means that it might get up to your ankles. But if buyers hesitate, it could be a whole new ballgame.
Will they be patient?
See Rich’s other graphs by clicking on link below:
RealtyTrac reports that the nature of distressed property sales is evolving. In its most recent report on market and distressed sales, the company noted that changing economics are increasing the reliance on more traditional third party purchases at foreclosure auctions rather than the lender/borrower negotiated sale at less than the outstanding loan balance.
“After a surge in short sales in late 2011 and early 2012, the favored disposition method for distressed properties is shifting back toward the more traditional foreclosure auction sales and bank-owned sales,” said Daren Blomquist, vice president at RealtyTrac.
“The combination of rapidly rising home prices – along with strong demand from institutional investors and other cash buyers able to buy at the public foreclosure auction or an as-is REO home – means short sales are becoming less favorable for lenders.”
Happy Day After Thanksgiving, and welcome newcomers!
In case you are new to the blog and just heard about us from one of your relatives over turkey dinner last night, I’ll recap where I think the market is, and what to expect for early-2014 around North San Diego County’s coastal region (NSDCC):
1. We should be in for less frenzy in 2014.
Last year’s fourth quarter was red hot, which propelled the best spring selling season since 2003, when everything was flying off the shelf at any price.
Here are the October/November comparison of NSDCC sales:
# of Sales under $10M
There will be some late-reporters to this year’s totals, but the 427 closings shows that the demand has stayed strong, though this year’s 15% increase in average pricing should temper the enthusiasm of buyers next year.
Recently, I predicted that pricing would fall flat next year, due to profit-driven sellers flooding the market in spring. But reader Mozart disagreed, and thought we will see 7.2% appreciation in 2014 – and most pundits are predicting somewhere in between.
2. The threat of distressed sales is over.
Because bank-owned listings and short-sales have both dropped substantially this year, it appears that banks have stopped foreclosing (either everyone went back to making their payments, or the lending industry has generously adopted the payment-plan philosophy). Without the pressure of losing your home, no one will feel the need to give their house away.
3. There is opportunity with fixers.
The pursuit of turn-key newer homes has been ferocous, and driven by several factors; A) virtually no new homes for sale, B) buyers’ inability to fix things, and C) higher prices lead to higher expectations. As a result, there is less competition for the older fixers – but stay picky about location!
4. Comps have never mattered less.
A big shock to everyone involved, especially given the abundance of data now available. All year, buyers have been waiving their appraisal contingency, and willingly paying well over appraised value. Big Money is always involved, either an all-cash buy or big down payment, and apparently it has come to the point where people value their real estate more than their money.
5. How real estate is sold won’t change much in 2014.
We are close to some sea changes – auction.com is trying to pioneer the auctioning of residential homes as a retail solution, Zillow is dominating the on-line competition, Redfin got another $50 million in VC money to blow, and Berkshire got into the residential market this year – but the focus of 2014 should be on closing sales and building market share before anyone gets around to changing the process.
Stick around, we’ll be in dogged pursuit of the market here at bubbleinfo.com!
Despite a softening market, competition among buyers remained fairly fierce in October, Redfin reported in its Real-Time Bidding Wars release for the month.
Last month, 55.9 percent of offers written by the Seattle-based brokerage’s agents faced competition from other buyers, a decline from 58.3 percent in September. Bidding wars have been on a downward slope since peaking at 79 percent in February.
October was also the third consecutive month to see a drop in competition compared to the same month last year, Redfin said.
Even with the decline, though, competition last month was higher than expected, given the effects of the government shutdown on consumer confidence.
“While many Americans paused their home-buying and selling plans during the shutdown, overall demand in October was more robust than expected, with home tours and offers rebounding once the government reopened,” said Redfin analyst Rachel Musiker. “This unexpectedly strong demand paired with dwindling inventory likely kept competition from falling even further in October.”
Out of the 22 markets reporting, Boston saw the biggest drop in competition, with 61.3 percent of offers facing bidding wars—down from 70.1 percent in September.
San Diego, meanwhile, experienced the biggest increase in bidding wars, with 63.0 percent of offers competing against multiple bids compared to 56.1 percent the month prior.
For the most competitive areas, interested buyers still have to adopt aggressive tactics, including offering all cash. Mia Simon, a Redfin agent operating in Silicon Valley, tells a story of a bidder vying for a home priced just above $1.4 million:
“There were only three other offers, but they were all above $1.8 million. Although my client’s offer was not the highest overall, it was the highest of the all-cash offers,” Simon said.
“Today’s Silicon Valley home buyers realize that they long missed out on the bottom of the market, but many believe that home prices will rise even more in 2014, so they will do whatever it takes to get a home under contract before the spring,” she added.
At the same time, the less competitive markets are seeing a shift in the buyer/seller dynamic. For example, in Washington, D.C.—where 44.0 percent of Redfin offers went against other bids in October—sellers are working harder to gain attention.
“I’ve recently received a few phone calls from agents whose listings I have shown to my clients,” said agent Philip Gvinter, who works in the nation’s capital. “They’re trying to gauge my clients’ interest in the home, and some simply ask what it will take to get my client to write an offer. It’s been more than a year and a half since I’ve received a call like that.”
Hat tip to daytrip for sending this in, fromcnbc.com:
At a brand new housing development in Irvine, Calif., some of America’s largest home builders are back at work after a crippling housing crash. Lennar, Pulte, K Hovnanian, Ryland to name a few. It’s a rebirth for U.S. construction, but the customers are largely Chinese.
“They see the market here still has room for appreciation,” said Irvine-area real estate agent Kinney Yong, of RE/MAX Premier Realty. “What’s driving them over here is that they have this cash, and they want to park it somewhere or invest somewhere.”
Yong’s phone has been ringing off the hook, with more than 5,000 new homes slated for the nearby Great Park Neighborhood. Most of the calls are from overseas, but prospective buyers are not looking solely for financial returns on the real estate.
“We are seeing a lot of Asians who are buying as an investment, but their kids are going to school here, so kids live in the home. They are looking at it more as an investment in education,” said Emile Haddad, CEO of Fivepoint Communities, developer of the Great Park Neighborhood.
That is Brian Yang’s plan. Speaking from his home in China, Yang said he purchased a home in Irvine this year, but he will wait five years, until his daughter turns 10, before moving his family to the U.S. He has several reasons for taking the leap.
“Education in America is very good and world class, so the first one is for education, and I think the second one is for the property appreciation,” explained Yang.
While American secondary schools and universities are a big draw for the majority of Chinese buyers in California, Yang, and many of his colleagues, are also concerned about China’s political instability, inflation, even pollution. They are paying all-cash for real estate in California, using it as a safe-haven for their wealth. Yang was reluctant to talk about the money, but he admitted, “I feel the same way to some extent.”
For now, Yang is renting out the four-bedroom home, and, he said, getting a 5 percent return on the investment.
A reader suggested that the Inventory Watch needed more categories, and you can see why below. The lower-end is ultra-thin, and the high-end is full with the Wait-and-See sellers. The Over-$2,400,000 market has had 249 closings this year, and there are still 340 active listings, or a 15-month supply.
The $1.4 to $2.4 category is the Carmel Valley premium market, so I started with that and created the other categories from there:
North SD County’s Coastal Region (La Jolla-to-Carlsbad)
The UNDER-$800,000 Market:
NSDCC Active Listings
The $800,000 – $1,400,000 Market:
NSDCC Active Listings
The $1,400,000 – $2,400,000 Market:
NSDCC Active Listings
The OVER-$2,400,000 Market:
NSDCC Active Listings
An interesting twist is continuing. Buyers tend to gravitate towards the new listings, hoping to find a hot buy. But new pricing must be fairly unattractive – of the 183 new listings this month, only 35 have gone pending (19%).
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!