The San Diego Case-Shiller Index is 6.2% higher than it was 12 months ago (October to October readings), which beats just about everyone’s expectations.
But the tony north-coastal region (La Jolla to Carlsbad) had already experienced healthy price gains since 2012. At the beginning of 2015, lower mortgage rates (3.5% to 3.75%) fueled a surge of sales at higher pricing, but then things mellowed out the rest of the year – just like Rob Dawg predicted!
If it weren’t for the blip in November, it would be clear that the first quarter of 2015 was the best time to sell, price-wise. If we do get more inventory this year, the same will probably be true – more houses for sale combined with higher mortgage rates = more of a buyer’s market.
We saw last week that the annual count of NSDCC detached-home sales already exceeds the 2014 total. By the time the sales from this week are recorded (and the late-reporters chime in) the 2015 sales will be about 5% higher than last year’s count – in spite of higher pricing!
Higher prices = more sales??
More sales = higher prices??
The additional action was made possible by more homes coming to market.
New-Listings Count – Annual, 2nd Half, and 4th Qtr:
Annual # of Listings
# of Listings, 2H
# of Listings, 4Q
Incr over 2014
All signs are pointing to the inventory increasing next year – will a larger selection of homes for sale inspire more buyers to buy?
If so, it means more sales – and a faster rate of appreciation if each sale is slightly higher than the last.
Or will a surge of over-priced listings cause the market to stagnate? If there are more OPTs stacking up, it makes it more obvious to buyers that the prices are wrong.
I think 2016 will be the most interesting yet – especially if we get mortgage rates bumping up faster than expected!
Some months we are going to have a set of homes sell that, as a group, were inferior to previous sets and won’t pull the same prices.
Or the market is falling apart, take your choice!
The non-seasonally adjusted CSI for San Diego showed -0.32% decline in October, the first decline all year (the seasonally-adjusted number was +0.2%). But it isn’t the end of the world – last year there were four times that the NSA number declined, month-over-month.
Here are the San Diego NSA changes for 2015:
The national headlines conveniently focused on happy talk, and reported the Y-o-Y stats, and the seasonally-adjusted month-over-month calcs. No mention in this article that SEVEN of the 20 cities showed a M-o-M decline of the non-seasonally adjusted numbers:
Not just anyone can get in to see Michael Jackson’s former Neverland ranch, which is for sale at $100 million.
Vetted billionaires and high-end real estate agents have been among the few to tour Sycamore Valley Ranch, as the 2,700-acre spread in Los Olivos is known.
But on Monday morning NBC New’s “Today” show is offering the next best thing, a virtual tour in which correspondent Joe Fryer looks at features from the late King of Pop’s day. Among them are the international superstar’s floral clock, train station and movie theater.
The host made a mistake and said 2,700sf in this video – it is 2,700 acres:
Most national forecasts are predicting a 3% to 4% appreciation rate for 2016, which has to be a safe bet. If it comes in anywhere from -2% to +8%, you can say that you were close.
Zillow has enough algorithms that they are willing to make predictions for each local area. They have conflicting numbers, depending on where you look on their website – these are from the Home Values section:
You can see that Zillow was less optimistic last year too. Most were predicting that mortgage rates would be in the mid-4s by now, so the lower rates in 2015 helped fuel higher-than-expected prices. Could rates stay right where they are? Maybe, but both Zillow and I think the euphoria will die down next year:
Zillow Price-Appreciation Predictions
For some reason, Zillow is also labeling each market from Warm to Very Cold. The labels don’t seem to correspond to the predictions, so I don’t know their intent – are they just trying to tell you to put on a sweater?
How will buyers feel about getting worked over for that last 2% to 3% when they see they are in a ‘Very Cold’ market?
A very typical Christmas week around the NSDCC region, where the median list price today is a whopping $2,195,000!
We have the glutty higher-end where the average market time is 144 days (and still unsold), and a lower-end that is cleaned out! The 59 active listings under $800,000 is the lowest count since we started keeping score.
The Christmas Week symmetry:
Click on the link below for the complete NSDCC active-inventory data:
Want to guess when the best time will be to sell your house in 2016?
Let’s reflect on recent history.
The Big Frenzy of 2013 was super-charged by mortgage rates dropping into the low-3s during 4Q12. The low point for the 30Y conforming rate was 3.31% during the week of Thanksgiving.
It skewed the sales history of early 2013 higher, but then rates started rising which tempered the market. By the time we got into 2014, rates had to decline most of the year just to keep the market afloat. Those two histories are unlikely to be duplicated in 2016.
Rates were back into the 3s by the end of 2014, which helped 2015 get off to a good start – and now rates have muddled through the rest of this year.
Because of the highly-publicized Fed hike this month, home buyers have to be thinking that it’s time to buy – before rates go higher. The Fed has threatened to raise rates throughout 2016, which should cause buyers to be very active early on.
As a result, let’s compare our 2016 market expectations to 2015 – the recent sales history that will be most-likely to repeat.
These are the weekly counts of NSDCC detached-homes that have closed escrow, based on when they were marked pending. Starting in mid-October, I included the listings that are currently marked pending too, figuring that they have released their contingencies and should be closing soon.
Once the Super Bowl is over, the motivated buyers really get busy. You can see that February, 2015 was one of the best months of the year to find a buyer.
This year is wrapping up nicely, with the 4Q15 action being better than 3Q15. It should provide a solid foundation for early 2016.
Let’s consider the difference between wanting to sell, and having to sell.
If you really needed to sell, you probably got it done in 2014 or 2015. Prices were hitting all-time highs, and the motivated sellers weren’t going to wait around any longer.
The 2016 sellers are more likely to be the lesser-motivated, “if-I-get-my-price” sellers. It will be irresistible for them to tack on that extra 5% to 10%, just in case, and by the end of spring we could see the OPTs stacking up. I thought it might happen like that in 2015, but it didn’t so who knows. But one of these years the buyers will have had enough.
We have a lot of clients whose balance sheets are so strong that they don’t intend to adjust much to the short-term pain because the long-term gain will be worth it.
Nice summary @klinger_jbrec https://twitter.com/klinger_jbrec/status/1556751006947590144
The new owner of the Old California Restaurant Row property in San Marcos has applied to develop over 200 housing units and 10,000 square feet of new commercial space on a portion of the site still home to several businesses. @itslaurasplace