Taking The Plunge with JtR

An example of a recent bidding war, won by JtR’s buyer. Sales in the neighborhood have averaged $398/sf over the last six months, and his was bought at $362/sf, so it felt like a decent deal at the time.

We liked this one a lot because it was a larger one-story with 3-car garage on a good-sized lot with no HOA or Mello-Roos. It had several more-recent upgrades too, including roof, full kitchen, baths, windows, and sliders. Best of all, the location has good access, both walking and driving.

But you’ll only know if any house is a deal in hindsight – give it a go!

green flag is property location

San Diego Case-Shiller Index, Jan.

San Diego’s Case-Shiller Index for January, 2014 had the highest increase in the nation for seasonally-adjusted, month-over-month readings.

Our seasonally-adjusted index went up 1.8% between December and January!

Of course, having one of the warmest winters on record probably helped – do we need to be seasonally adjusted?

These are the non-seasonally adjusted numbers below:

Month
M-O-M
Y-O-Y
March ’13
+2.0%
+12.1%
April ’13
+2.8%
+14.7%
May ’13
+3.2%
+17.3%
June ’13
+2.8%
+19.3%
July ’13
+2.0%
+20.4%
August ’13
+1.8%
+21.5%
September ’13
+0.9%
+20.9%
October ’13
+0.3%
+19.7%
November ’13
+0.0%
+18.7%
December ’13
-0.1%
+18.0%
January ’14
+0.6%
+19.4%

“The housing recovery may have taken a breather due to the cold weather,” says David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices. “Twelve cities reported declining prices in January vs. December; eight of those were worse than the month before. From the bottom in 2012, prices are up 23% and the housing market is showing signs of moving forward with more normal price increases.

“The Sun Belt showed the five highest monthly returns. Las Vegas was the leader with an increase of 1.1% followed by Miami at +0.7%. San Diego showed its best January performance of 0.6% since 2004. San Francisco and Tampa trailed closely at +0.5% and +0.4%. Elsewhere, New York and Washington D.C. stood out as they continued to improve and posted their highest year-over-year returns since 2006.

Here is the usual interview with Shiller: http://www.cnbc.com/id/101522276

During an interview with CNBC, Robert Shiller, the index’s co-founder and an economics professor at Yale University, characterized January’s growth as “good,” but cautioned that home price gains were slowing gradually. The overall market appears to be weakening, Shiller said, suggesting that the recent surge could due to speculative activity.

“I worry that [the housing market] is going to weaken more because I think investors are in the market,” Shiller said, adding that “they know there is momentum in house prices,” calling the recent price gains “enticing.”  Shiller added: “Now, you know, it may not last and these investors may be gone.”

The highest reading on this graph is 250.34 in November, 2005:

SD Case-Shiller Index history

Dear Frustrated Buyer

Buyers are grabbing up everything in sight – what do you do?

dealing with insanityBe patient, commit to a price point, subtract up to $100,000 for repairs/improvements, know what/where you are willing to compromise, and buy the next good one!

It’s only sticks and stucco, you’re the one who makes it a home.

Let me help you!

Chinese Boost Sales

Excerpts from this article in the latimes.com:

http://www.latimes.com/business/la-fi-chinese-homebuyers-20140324,0,2832012,full.story#axzz2wnzTJbz1

The overflow from China’s economic high tide is transforming the housing  markets of suburban Los Angeles.

lennarAffluent Chinese home buyers are driving prices past boom-era peaks, spawning  a subset of property brokers and mortgage lenders that cater to their distinct  needs — and even dictate design details in new subdivisions.

Chinese buyers bought 12% of all U.S. homes purchased by foreign citizens  last year, up from 5% in 2007, according to the National Assn. of Realtors. More  than half their home purchases were in California. And more than two-thirds of  them paid cash, the trade group said.

The trend appears unlikely to unwind soon. More than 60% of China’s wealthy  have left or plan to leave the country, at least part time, and their No. 1  destination is the United States, according to the Hurun Report, a Shanghai  publishing firm focused on recently minted millionaires and billionaires.

Despite dizzying ups and downs in U.S. home prices, the market can seem more  stable than in China, where fears of a property bubble have added to the  economic and political worries of the burgeoning middle and upper classes.

Eva Chen and her husband travel between their homes in Shanghai and Arcadia,  where they purchased a property near Santa Anita Park in October. They scooped  up the second home as an escape from pollution and a shot at better schools for  their two infants.

Compared with housing prices in China, the $1.27-million Arcadia property  didn’t seem expensive.

“The Arcadia house is cheaper,” Chen said.

Others want the prestige of a San Marino or Pasadena mansion, even if paying  for it means working in China and rarely visiting. One of Ng’s neighbors bought  a Pasadena estate, then lived there for just two days out of the two years that  followed.

“He was not renting it out,” Ng said. “People have so much money, they just  say, ‘What the heck. It’s a nice neighborhood. I might as well just buy  one.'”

It’s a story echoed by Patti Hahn of Arcadia, gesturing to the house next  door, which sold for $2.45 million last year, up from $1.55 million in 2006, the  last time it changed hands.

“No one lives there,” Hahn said.

In Las Vegas, which has a long-established community of ethnic Chinese  residents, as well as the allure of gambling and inexpensive housing, Lennar  went a step further when it developed a 40-acre housing tract, Lantern Gardens,  on the outskirts of town.

In addition to applying feng shui design principles and interior apartments  for relatives, Lennar designed a central park that is round instead of square  and aligned most of the homes on a north-south axis, reflecting the preferences  of many Chinese.

“The traffic coming through was principally Asian, and mostly Chinese,” said  Jeremy Parness, the company’s division president for the area.

The company has even taken care to avoid putting the number four in any  address, because it rhymes with the Chinese word for death, Parness said.

Read the whole story here, with great comments too:

http://www.latimes.com/business/la-fi-chinese-homebuyers-20140324,0,2832012,full.story#axzz2wnzTJbz1

Inventory Watch – Steady Heat

You know the Under-$800,000 market is red hot when you see the Avg DOM in the low-30s. But average list-pricing isn’t going up – sellers might be leaving a little money on the table. Get good help!

North SD County’s Coastal Region (La Jolla-to-Carlsbad)

The UNDER-$800,000 Market:

Date
NSDCC Active Listings
Avg. LP/sf
DOM
Avg SF
November 25
95
$376/sf
47
1,988sf
December 2
79
$371/sf
50
2,047sf
December 9
72
$383/sf
43
1,954sf
December 16
81
$378/sf
42
1,948sf
December 23
77
$374/sf
49
1,937sf
December 30
76
$373/sf
51
1,950sf
January 6
74
$370/sf
49
1,995sf
January 13
71
$381/sf
44
1,921sf
January 20
72
$384/sf
41
1,877sf
January 27
75
$399/sf
40
1,891sf
February 3
78
$409/sf
41
1,876sf
February 10
82
$395/sf
38
1,927sf
February 17
85
$387/sf
35
1,929sf
February 24
90
$383/sf
37
2,008sf
March 3
82
$397/sf
39
1,942sf
March 10
88
$377/sf
37
2,008sf
March 17
89
$366/sf
34
2,038sf
March 24
79
$369/sf
34
2,031sf

The $800,000 – $1,400,000 Market:

Date
NSDCC Active Listings
Avg. LP/sf
DOM
Avg SF
November 25
245
$448/sf
61
2,856sf
December 2
239
$448/sf
64
2,851sf
December 9
226
$461/sf
65
2,812sf
December 16
211
$464/sf
66
2,794sf
December 23
197
$453/sf
73
2,813sf
December 30
173
$450/sf
78
2,821sf
January 6
170
$470/sf
65
2,757sf
January 13
168
$463/sf
59
2,764sf
January 20
174
$444/sf
51
2,882sf
January 27
166
$435/sf
52
2,902sf
February 3
165
$441/sf
53
2,857sf
February 10
175
$443/sf
51
2,852sf
February 17
180
$447/sf
50
2,803sf
February 24
188
$438/sf
44
2,846sf
March 3
202
$421/sf
44
2,936sf
March 10
215
$431/sf
41
2,854sf
March 17
223
$421/sf
42
2,918sf
March 24
217
$419/sf
42
2,941sf

(more…)

Double-Bubble Trouble?

Yesterday reader SBT asked,

I’m not in the real estate industry so maybe I’m missing something but does the fact that the ppsf is the same as ’05-’07 mean we are in a mini bubble?? Everything seems too expensive right now?  thoughts?

If it were a bubble, it would need to be “pop-able”.

The last bubble (and to some degree the late-1980s bubble) popped due to exotic financing.  We saw homeowners fleeing in mass numbers around Oceanside and other parts where subprime loans were prevalent.

The rising appreciation that we enjoyed from 1995 to 2007 became embedded – most thought it would last forever.  When it didn’t, those in more affluent areas bailed out over the thought of being ‘underwater’.

Those folks may be having some regrets today.

Today’s mortgages are the most conservatively underwritten financing we’ve had over the last 30 years.  Buyers are using sizable down payments in most cases, and their payments must be affordable to get a loan.

These are folks who plan to stay forever, regardless what happens to prices.

If prices were to drop, they won’t be selling – they live there.

How do we know?

Because they would be more tempted to move if prices went UP – and look how few sellers we have now.  Nobody wants to move at today’s prices, if they were lower they really wouldn’t move!

How can we support these prices when the SD median household income is $70,000?  Have lots of renters – the homeownership rate is 55% in the county.

It is a market for the affluent, and the thought of everyone enjoying the benefits of the American Dream is kaput.

Could a Baby Boomer Liquidation Sale disrupt the market with a flood of inventory?  I doubt it – not in prime coastal regions where the kids would rather move in, than give it away.  The houses are paid off – what would you rather have? Free housing or free money?  The government will provide enough money for food, but you are going to be on your own for housing.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Yet, today’s valuations aren’t as crazy as they seem – here is Rich Toscano’s latest comments and graph:

(T)he peak was over 8 years ago — nearly a decade now! — and since that time, both rents and per capita income in San Diego are up 20%.  “Peak pricing” in nominal terms just isn’t a meaningful number, when the purchasing power of money has been declining while nominal incomes and rents have been rising over that period.

rich toscano san_diego_housing_valuations_12_2013-1

Read more here:

http://piggington.com/are_you_planning_to_sell_your_primary_anytime_soon

Feb. Sales – Glass Half Full

jim at last year's frenzyIt was noted in the media this week that February homes sales were the at the lowest count in 18 months – yes, a frenzy will do that to you!

http://www.cnbc.com/id/101511116

Sales are going to be ‘sputtery’, and struggle to keep up with previous frenzied months when prices rise sharply.  When prices and rates both rise substantially, you’d think it would put a real damper on sales – but around NSDCC they have held up remarkably well:

NSDCC Detached-Home Sales

Year
Jan. Sales
Feb. Sales
Jan. Avg $/sf
Feb. Avg $/sf
2005
206
184
$500/sf
$480/sf
2006
169
189
$559/sf
$519/sf
2007
157
155
$489/sf
$482/sf
2008
115
131
$474/sf
$485/sf
2009
114
105
$419/sf
$370/sf
2010
137
143
$368/sf
$376/sf
2011
149
166
$366/sf
$377/sf
2012
155
184
$374/sf
$358/sf
2013
185
187
$379/sf
$400/sf
2014
181
176
$498/sf
$483/sf

Let’s remember that these are completely different sets of buyers and houses.  The recent consistency, and resiliency, is remarkable!

P.S. The preliminary numbers for this month look much lower than last year (we had 298 sales in March, 2013, which was 25% higher than in 2012).

This will probably continue for the next few months – any comparison to the max-frenzy months of 2013 is going to look dismal.  But the sky isn’t falling, and price will fix anything.  Get good help!

Zillow and the Future

Realtor.com already slid down to the #3 real estate website, and was in danger of becoming completely irrelevant.  Then Zillow poaches realtor.com’s president and executive vice president, and less than two weeks later, Move/realtor.com sued Zillow over trade secrets.

Realtor.com sells advertising to realtors just like Zillow and Trulia does, and eventually the agents will spend their money with the most effective websites.

N.A.R. and Realtor.com will probably both go down with the ship – for them to rebound and compete with Zillow seems highly improbable.  Does Zillow plan to take out the competition, or play nice?

I think the likely outcome is that Zillow becomes the main player, and the agents who advertise at Zillow will benefit greatly.  Old-school agents who keep whining about Zillow and Trulia will be left behind.  Realtor.com turns into the broken-down jalopy that is sold to Trulia some day for pennies on the dollar.

Here is Zillow’s new ‘chief industry development officer’ talking about his move, and Zillow’s role in the industry – being the conduit between consumers and agents:

How to Sell for Top Dollar

You’ve decided to sell the house.  How do you get top dollar?

pending sign1. Don’t tell anyone yet.  To create maximum urgency – which puts the most pressure on buyers – you want to surprise them with your new listing.  Any ‘pre-marketing’ of the home diminishes your chances of getting top dollar.

Don’t install signs early, no flyers or ads – and none of the ‘coming soon’ nonsense.

Why?

Because urgency is a selling tool – it gets buyers to make a decision now, instead of hesitating. But any premature leaking of the opportunity drains the urgency.  Why? Because there is no fear of loss.

If the home isn’t on the MLS/open market, buyers won’t feel like they have to decide today.  Given the chance to hesitate, buyers almost always will.  If they don’t, it’s because the price is less than top dollar.

2.  Know where you are going.  Put your home on the market once you are certain about the next move. You will get the best offers to sell your home in the first few days it is on the open market – and you want to be ready to move!

3. Fix everything that is visible.  Most buyers don’t have the time or ability to repair or improve a home.  They’d rather keep looking, than to buy a ‘fixer’….at these prices.  Enhance the curb appeal, kitchen, and baths in that order.

4. Hire a great realtor.  Interview in person, and if you only ask one question, ask this: What is your bidding-war strategy and experience? (because their answer will tell you everything about their ability to get you top dollar).

Check their profile on Zillow, which has the best combination of the agent’s sales history, past-client testimonials, and current listings.  Look for an agent who has a consistently professional approach – and has time for you.  Any agent that has more than 75 sales in the last 12 months is using a team of agents, and you can get lost in the shuffle.

5.  Price attractively.  Buyers know the recent sales nearby – they probably have seen more than you, or your agent – and are tired of every seller inflating their list price to unrealistic levels.

Use this to your advantage – select a list price that is slightly higher than the comps.  You will look more attractive than those who are 5% to 20% higher, and buyers will come running.  Have your agent implement their sound bidding-war strategy, and you’ll sell for top dollar!

6.  Only sell once.  After winning a vigorous bidding war, the conquering buyer will feel some degree of buyers’ remorse – this is normal, and a part of every big transaction.  The effects are seen after the home inspection, when the buyer will make repair requests.

The contract states that the home is sold ‘as-is’, so you are not obligated to fix anything.  But the buyers don’t have to buy it either.

Do what you can to keep this escrow together – even if it means throwing a couple of bucks at it.  If the first deal fails, it is very difficult to re-create maximum urgency!

Remember the old adage – you only have one chance to make a first impression.  Following the steps above will ensure you make it a great one!

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