4Q13 Sales Prediction

by | Nov 12, 2013 | Forecasts, North County Coastal, Sales and Price Check | 6 comments

Can we get a sense of the early-2014 market by how this year is winding up?

We thought mortgage rates dipping back into the 3%-range again would be a boost, and it looked like we were headed that way.  Two weeks ago, the 30-year fixed rate was 4.10%.

Today’s 30-year fixed rate?  4.42%.

Sales are a precursor to the direction of prices.  The second half of 2012 was spectacular, with both the NSDCC sales and average pricing skyrocketing – and the frenzy was on.

Statistically, the frenzy conditions have carried through the third quarter of 2013, but it looks like we’re going to experience some drop off, at least in the sales counts:

Year
3Q #Sales
3Q Avg. $/sf
4Q#Sales
4Q Avg. $/sf
2009
681
$379
643
$408
2010
653
$374
576
$382
2011
699
$383
582
$367
2012
845
$373
832
$401
2013
881
$440
321*
$500*

*Quarter-to-date

We are off to a good start this quarter, though currently 16% below the sales closed in the same period last year (we will still have late-reporters).

If we close the same amount of sales between today and 12/31/13 as we did in the same period last year, the 4Q13 total will only be 769, which would be an 8% decline.  It’s not that suprising that sales could falter, with the Y-O-Y average pricing up 25% and a huge bump lately.

Will 4th quarter sales this year be able to match last year?

We will need 511 more closings by 12/31/13 to tie last year’s 4Q sales count.

Current pendings: 308

Current contingents: 55

Number that went pending after 11/12/12 and closed by 12/31/12: 154

Total: 517

Of the 308 pendings, 119 of them are still in their 17-day inspection period.  If 25% of them fail, ten percent of the remaining pendings drag into 2014 before closing, and half of the contingents fail to close by year-end, then we will close around 430 sales the rest of the 4th quarter.

321 + 430 = 751 closings in 4Q13, or roughly 10% less than 4Q12.

No one is going to mind that small of a dip in sales, especially those who compare to any previous year besides 2012. We should sail into 2014 in relatively good shape.

Yesterday we saw that the current inventory is in a slight seasonal decline.  What could screw up a boisterous Spring-2014 selling season? If the inventory spikes higher with OPTs, or we run out of buyers who are willing to pay $500/sf.  We will see!

I will break down the sales and $/sf by zip code later.

Zeeesh

by | Nov 11, 2013 | The Future

The Z-team is up to 65 million visitors per month, and claims that they are still a friend to agents. If so, some leadership would be appreciated – come up with a bidding-war online platform or something:

Some Gave All

by | Nov 11, 2013 | Military

The first 2,500 Americans of the more than 6,700 who have given their life in Iraq and Afghanistan – thanks to all veterans for your service and preserving our freedom!

Inventory Watch – More Steady

by | Nov 11, 2013 | Inventory

The lower-end sellers remain confident, as their list prices stayed at $408/sf for the third week in a row.

The UNDER-$1,200,000 Market:

Date
NSDCC Active Listings
Avg. LP/sf
DOM
Avg SF
April 29
201
$384/sf
36
2,599sf
May 5
195
$381/sf
36
2,633sf
May 9
207
$387/sf
35
2,624sf
May 18
241
$397/sf
33
2,566sf
May 23
236
$397/sf
34
2,529sf
May 30
230
$391/sf
35
2,591sf
June 5
229
$393/sf
35
2,577sf
June 11
239
$390/sf
34
2,569sf
June 17
246
$389/sf
36
2,577sf
June 24
255
$397/sf
36
2,535sf
July 1
244
$401/sf
38
2,526sf
July 8
256
$398/sf
38
2,530sf
July 15
269
$403/sf
38
2,486sf
July 22
258
$401/sf
39
2,442sf
July 29
262
$386/sf
39
2,493sf
Aug 5
287
$393/sf
38
2,495sf
Aug 12
300
$391/sf
40
2,521sf
Aug 19
304
$395/sf
41
2,491sf
Aug 26
308
$392/sf
41
2,469sf
Sep 2
304
$395/sf
41
2,453sf
Sep 9
303
$402/sf
40
2,453sf
Sep 16
309
$395/sf
39
2,463sf
Sep 23
311
$398/sf
40
2,431sf
Sep 30
293
$398/sf
42
2,448sf
Oct 7
280
$394/sf
43
2,451sf
Oct 14
278
$398/sf
43
2,432sf
Oct 21
273
$402/sf
47
2,428sf
Oct 28
267
$408/sf
49
2,432sf
Nov 4
264
$408/sf
52
2,436sf
Nov 11
252
$408/sf
52
2,421sf

The OVER-$1,200,000 Market:

Date
NSDCC Active Listings
Avg. LP/sf
DOM
Avg SF
April 29
620
$806/sf
94
5,183sf
May 5
606
$806/sf
93
5,223sf
May 9
628
$808/sf
93
5,150sf
May 18
653
$807/sf
92
5,161sf
May 23
661
$814/sf
92
5,141sf
May 30
659
$805/sf
95
5,222sf
June 5
663
$794/sf
96
5,185sf
June 11
672
$779/sf
96
5,163sf
June 17
661
$787/sf
99
5,164sf
June 24
679
$791/sf
98
5,097sf
July 1
705
$785/sf
94
5,084sf
July 8
702
$779/sf
95
5,100sf
July 15
736
$776/sf
94
5,038sf
July 22
748
$782/sf
96
5,043sf
July 29
736
$782/sf
100
5,057sf
Aug 5
754
$765/sf
100
5,024sf
Aug 12
750
$767/sf
102
5,032sf
Aug 19
742
$769/sf
104
5,009sf
Aug 26
740
$781/sf
106
4,962sf
Sep 2
736
$773/sf
107
4,928sf
Sep 9
724
$781/sf
108
5,006sf
Sep 16
738
$773/sf
107
4,993sf
Sep 23
736
$776/sf
109
4,953sf
Sep 30
717
$765/sf
111
4,954sf
Oct 7
709
$769/sf
111
4,960sf
Oct 14
719
$780/sf
111
4,965sf
Oct 21
704
$781/sf
111
4,976sf
Oct 28
702
$766/sf
114
4,993sf
Nov 4
684
$762/sf
112
4,975sf
Nov 11
674
$776/sf
116
5,019sf

Of the 76 new listings this month, only 8 have found a buyer. But new pendings keep pouring in, thanks to the older listings tuning up their price. This week, we had more new pendings than new listings!

Weekly NSDCC New Listings and New Pendings

Week
New Listings
New Pendings
May 30
70
84
June 5
87
64
June 11
77
69
June 17
73
66
June 24
100
69
July 1
86
64
July 8
81
53
July 15
106
54
July 22
105
89
July 29
71
74
Aug 5
105
64
Aug 12
77
61
Aug 19
88
73
Aug 26
87
77
Sep 2
76
55
Sep 9
85
58
Sep 16
102
61
Sep 23
84
54
Sep 30
73
80
Oct 7
80
61
Oct 14
78
53
Oct 21
70
63
Oct 28
54
40
Nov 4
63
53
Nov 11
49
64

Disintermediation & Realtors

by | Nov 10, 2013 | Jim's Take on the Market, Listing Agent Practices, Market Buzz | 9 comments

The desire to bust up the realtor cartel has a long and lengthy history, and each year it seems to take on a new twist.

Now it is the realtors themselves who talking about the Big Dismantle:

http://www.inman.com/2013/11/09/mlss-at-cliffs-edge-over-pocket-listings/

We saw the distressed inventory dry up as banks turned off the foreclosure machinery.  It has left buyers scurrying for deals, and eventually they were scrambling to just buy anything.

San Diego County Attached and Detached Sales, Jan 1 – Oct 31

Year
REO
Short-Sales
Non-Distressed
2012
4,022
7,105
19,078
2013
1,403
3,935
25,930
%diff
-65%
-45%
+36%

It had a similar effect on realtors, especially those who were short-sale or REO ‘specialists’.  When their inventory dried up this year, they were left with big teams and half the business – or less.

These agents have a choice.

Try to compete with the rest of us legitimately, or develop a new gimmick.

Most of these REO/Short-sale specialists enjoyed having full control of the transaction. With short-sales especially, they were able to steer the deal to their flipper buddies who brought them back for re-listing.

Just earning one honest commission isn’t good enough after you’ve become accustomed to making 2-3 commissions in a package deal.

Benefits include more than money – these agents also want to control who buys your house.  Hence, you can look forward to more gimmicks built around pocket listings and off-MLS sales as agents try to convince you that their new trick is going to change the real estate world.

Don’t fall for it.

What Sellers Want, Need, and Deserve:

1.  Open Market Exposure – In the hotter markets, some buyers have been paying prices that are completely unhinged from the comps.  Any agent that discourages you from listing on the MLS in order to quietly steer the deal to their buyer is doing you a disservice.

2.  Shock and Awe – Redfin and others want potential sellers to identify themselves so they can shop your property around their stable of buyers.  The sellers will bask in the attention, but would only sell at full retail price. But WITHOUT OPEN MARKET EXPOSURE these potential buyers will feel no pressure to step up that high.

Worse yet is the over-saturation.  When you do finally list your property on the open market, the urgency has already been diminished because you’ve been passed around already.  The highest urgency is reserved for those who surprise the market with a hot new listing – and that urgency is what drives the crazy-high sales prices.

3.  Listing Agent With Good Reputation – These gimmicks are intended to build databases, with hopes of a lucky sale here and there.  The primary goal is to get you into the database so they can constantly ping you about how cool they are, and how many millions of homes they sell.  When you are finally ready to list, they hope you give them the listing. But think of how other agents feel about these tactics – the agents who represent the potential buyers of your house.

It has always been a dog-eat-dog business, and it will get worse before it gets better. It’s likely to splinter into “expert teams whose unique marketing skills” are promising to provide that dreamy lucky sale – at your price – by pulling a buyer out of their pocket, rather than from the open market.

Until the industry has a leader who insists on reputable, ethical dealings with the public, this business will be full of hucksters.

Sellers beware – get good help!

CA Affordability Index

by | Nov 9, 2013 | Market Conditions | 1 comment

This impact has to kick in at some point, doesn’t it?

Housing affordability is on a prolonged downhill slide in California, falling for the sixth time in the third quarter of 2013.  As measured by The California Association of Realtors® (C.A.R.) Traditional Housing Affordability Index (HAI), the percentage of home buyers who could afford to purchase a median-priced, existing single-family home in the state fell by four percentage points to 32 percent compared to the first quarter of the year and was down from 49 percent in the third quarter of 2012.

The affordability index had reached an all-time high of 56 percent in the first quarter of 2012 but has trended lower every quarter since.  The third quarter of 2013 marked the first time the HAI has fallen below 35 since the third quarter of 2008.

Home buyers needed to earn a minimum annual income of $89,170 to qualify for the purchase of a $433,940 statewide median-priced, existing single-family home in the third quarter of 2013.  The monthly payment, including taxes and insurance on a 30-year fixed-rate loan, would be $2,230, assuming a 20 percent down payment and an effective composite interest rate of 4.36 percent.

A year earlier it required an annual income of $65,828 to purchase a median priced home of $339,930 in California with an interest rate of 3.64 percent.

Nearly every county experienced a double-digit decline in affordability when compared to last year, reflecting the substantial increase in California home prices on a year-to-year basis.  Sacramento, Monterey, and Sonoma counties experienced the largest year-to-year declines, while San Mateo, Marin, and San Francisco counties experienced the smallest.

San Bernardino was the most affordable county in the state with an index of 64 percent.  San Mateo was the least affordable at 15 percent.

http://www.mortgagenewsdaily.com/11072013_california_real_estate.asp

Appreciation to Drop 36% in 2014

by | Nov 8, 2013 | Forecasts | 3 comments

From Zillow:

breakneck speedHome values nationwide have been growing at a breakneck pace for much of 2013 and are predicted to finish the year up an average of 6.7 percent compared with the end of 2012, according to the latest Zillow Home Price Expectations Survey. But that rapid pace of appreciation won’t last forever, and it is expected to slow considerably next year and over the next five years.

The survey of 108 economists, real estate experts and investment and market strategists was sponsored by leading real estate information marketplace Zillow, Inc. and is conducted quarterly by Pulsenomics LLC.

Panelists said they expect appreciation rates to slow to roughly 4.3 percent next year, on average, eventually falling to 3.4 percent by 2018.

“The housing market has seen a period of unsustainable, breakneck appreciation, and some cooling off is both welcome and expected,” said Zillow Chief Economist Dr. Stan Humphries. “Rising mortgage rates, diminished investor demand and slowly rising inventory will all contribute to the slowdown of appreciation.”

Read the entire article here:

http://www.zillow.com/blog/2013-11-07/experts-predict-us-home-value-appreciation-to-slow-in-2014-beyond/

Housing Confidence

by | Nov 8, 2013 | Forecasts, Market Conditions

Housing Consumer Confidence Is UpConsumer confidence in housing significantly widened last month, as most taxpayers were turned off by the federal government shutdown and the ongoing debt ceiling debate, taking a toll on American’s outlook toward the housing market.

The share of consumers who believe it’s a good time buy a house declined to 65% — an all-time low — while the number of those who believe mortgage rates will go up in the next year fell to 57%, according to Fannie Mae’s latest monthly survey.

It’s important to note that the survey was conducted primarily in the first two weeks of October – before the government shutdown ended and the debt ceiling agreement was reached.

Generally speaking, buying a home is a bet on the future and the federal freeze created a lot of uncertainty about the near-term economic state, explained Trulia chief economist Jed Kolko.

“Also, affordability has worsened: both rising mortgage rates and rising home prices have pushed more homes out of reach of the middle class, which would also lead to a decline in people thinking it’s a good time to buy,” he added.

The gap between the share of consumers who say the economy is on the wrong track and those who believe all engines are a-go widened from 16 percentage points in September to 40 percentages points in October — a record month-over-month change.

Nonetheless, the steep decline in Americans’ housing sentiment, which is expected to continue to tumble down as housing debates continue to heat up, Fannie Mae senior vice president and chief economist Doug Duncan doesn’t believe it will derail the gradual healing in housing.

“While this decline in consumer optimism may portend a slowing of the housing recovery, supply constraint data suggest that we are likely to see continued positive growth in home prices,” Duncan said.

He added, “That being said, October’s survey results suggest that consumer attitudes are highly responsive to ongoing debate and decision-making in Washington. Three key budget and debt ceiling dates loom in December, January, and February. The handling of each will likely play a key role in determining the pace and timing of any recovery in consumer sentiment.”

The average 12-month price change expectation continued to fall, dropping 0.2% to 2.9%.

Additionally the share of people who believe home prices will go up in the next 12 months fell to 36%, while those who say prices will go down, increase to 10%.

The share of respondents who say they would buy if they were going to move increased to 70%, a new high.

Interestingly, the share of consumers who said their personal financial situation would get worse in the next 12 months hit a new high of 22%.

Consequently, the amount of respondents who say the economy is on the right track fell 12 percentage points, which is the biggest monthly record change in the survey’s history.

http://www.housingwire.com/articles/27847-consumer-confidence-in-homebuying-hits-an-all-time-low

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