The biggest barrier to a more robust spring housing market is simply a lack of listings, and there may be even fewer than we think, at least fewer homes people want to buy.
Nearly three-quarters of the homes on the market are “stale,” which is to say that they have sat on the market for more than a month with little to no interest from buyers, according to a new report from Redfin.
The number of homes for sale rose 2 percent in March from a year ago, according to a report from the National Association of Realtors released Wednesday. That, however, includes both new listings and homes that have languished on the market for months. With demand and sales increasing, there is just a 4.6-month supply of listings; a six-month supply is considered to be a healthy market balance between buyers and sellers.
There is something else at play as well: information. With so many websites and apps pushing moment-to-moment market movement, today’s buyers are increasingly data driven. Especially after the epic housing crash that gave birth to all this data, buyer psychology and suspicion are in full swing.
“The trust is broken among buyers. In Denver and Silicon Valley, if the house has been on the market for two weeks, there is something wrong with it,” noted Nela Richardson, Redfin’s chief economist. “Everyone is afraid to overpay, and the herd behavior in the stock market is something we’re now seeing in the housing market.”
We talk about how hot the market is, but not every seller is enjoying the benefit. Of the 850 NSDCC houses for sale, 41% of them have been on the market for 60 days or longer – and that’s not counting those that have been ‘refreshed’. These are ripe for a lowball offer.
But we live in a very polite marketplace, where buyers and agents alike are so concerned about offending people. You rarely see an offer that is more than 5% under list price, and it’s because buyers just figure that the seller wouldn’t take it, so instead they keep looking.
The agents working with buyers tend to be newer agents, and they don’t want to offend any of the seasoned listing agents either.
But lowball deals happen.
Have you seen a sale close for a price well under the list, and say to yourself, “Dang, I would have paid that amount”.
It’s usually a home that has been on the market for a long time and been forgotten, usually because the seller was reluctant to lower the price. Finally a lowball offer comes in and, well, heck – they just sign it out of frustration.
Many times the lowballer approaches the listing agent directly. The agent, motivated by the double-commission, then has to coax the seller down in price.
The sellers, who haven’t seen any other offers and are left to their own devices, make the deal – convinced it’s all they can get.
Note to Sellers: If you have a lowball offer on the table that you are thinking of taking, pause and take a breath. Then lower your price to the midpoint between your current list price, and their offer price for 24 hours, to see if any other bidders emerge.
There might be some polite buyers who would be happy to pay more than the lowballer, if they only knew you might take less!
California REALTORS® responding to C.A.R.’s March Market Pulse Survey saw slightly more multiple offers than the previous month and an increase in floor calls, listing appointments, and open house traffic. The Market Pulse Survey is a new monthly online survey of more than 300 California REALTORS® to measure data about their last closed transaction and sentiment about business activity in their market area for the previous month and the last year.
In a sign of sellers pricing their homes more in line with market conditions, the percentage of properties selling above asking price dropped from its peak in March 2014 at 40 percent to 25 percent a year later. However, the share was up from the lowest point of 16 percent in February. Nearly half of homes (48 percent) closed below asking price.
The premium paid over asking price declined in March, indicating sellers’ and buyers’ expectations are more in line. In March, homes that sold above asking price sold for 7.5 percent above asking price, down from 10 percent in February, and essentially flat from 7.6 percent in March 2014.
Homes that sold below asking price sold for 11 percent below asking price in March, unchanged from February. The number of homes that had listing price reductions dropped from 31 percent in February to 22 percent in March.
Sixty-three percent of properties received multiple offers in March, up from 61 percent in February but down from 74 percent a year ago.
The average number of offers per property in March was 2.6, unchanged from February but down from 3.2 a year ago.
Floor calls, listing appointments, and open house traffic were all up in March, compared to both the previous month and year, suggesting the market will continue its upswing in closed escrow sales.
It is a classic story of David versus Goliath—the real estate edition. Only this time, David, a 600-square-foot Seattle home, may not emerge the victor, as the hours tick down to the end of an auction that will leave the structure’s future uncertain.
From a week ago:
SeattlePI.com reported that although five interested bidders were at the King County Administration Building on Friday morning, ultimately no one placed a bid, prompting the house to return to its beneficiary who owes just less than $186,000 on the property.
Bidders explained any purchaser of the property would have had to assume the first deed of trust, which would have amounted to an additional $300,000 on top of the opening minimum bid of $216,270.70, SeattlePI.com added.
The City of San Diego started a ‘grass replacement’ program last week:
City of San Diego customers can receive a rebate of up to $1.50 per square foot for residential sites that replace existing grass with water wise landscaping and converting their overhead sprinkler system with micro-irrigation. Preliminary site inspection and pre-approval is required to confirm your qualification. Do not start a landscape renovation project without the pre-approval if you wish to receive a rebate.
Others can get $2.00/sf or more in rebates from the MWD:
Turf grass is one of the most water-intensive plants in your landscape. Its high water use and frequent maintenance make it a time-consuming and expensive yard option. In fact, the average residential customer spends about 60% of their water on outdoor irrigation. By changing turf to a California Friendly™ yard of drought tolerant plants you can save water and money.
To help with turf removal projects, rebates are available for $2.00 or more per square foot of turf removed. This increased turf removal rebate is being provided in response to Governor Edmund G Brown Jr.’s emergency drought declaration.
Before you begin removing any turf, you must apply for and receive project start approval.
With all the recent action mentioned in the previous post, it makes you wonder how much the market is fueled by frustration over the selection of homes for sale. Yes, it is the “season”, but is the lack of inventory causing buyers to grab anything, at any price?
More inventory would help satisfy the demand, and help us discover if there is a ceiling to these prices. But adding just a few more houses for sale would only fire up the frenzy.
Here are the number of NSDCC houses listed between Jan. 1 and April 15th:
Number of New NSDCC Listings, Jan 1 to Apr 15
Note how the hot frenzy in 2013 was fueled by having more homes for sale. If we just had an extra 100-200 decent houses for sale now (especially under $2,000,000), they would likely get gobbled up.
Usually around tax day, the real estate market goes into a bit of a funk, and this year it was compounded by the disconnect between our MLS and Zillow – any new listings have to be manually inputted to Zillow, which isn’t obvious to most agents.
In spite of all that, there have been some remarkable new pendings in the last week. A few examples:
1. The neighbor down the street had a smaller lot and no guest apartment but had a more wide open view looking south – yet they struggled for 124 days before finding a buyer who paid $1,349,000 (closed on April 2nd). Then this house lists for $1,599,000 and goes pending the first week:
4. This is a teardown on a 9,771 sf lot with some ocean view in Leucadia listed for $1,299,000. You could buy a brand new house down the street for the same money (or less), yet it only took 26 days for this to go pending:
5. The seller of this house paid $1,575,000 two years ago, which was $80,000 over the list price then. Two weeks ago, they listed it on the range $1,629,000 – $1,699,000, and received eight offers at or above the high end of the range. My clients offered $1,760,000 cash and lost – rumor has it that the sales price is around $1,800,000:
8. In Del Mar, Solana Beach, RSF, and La Jolla there were 17 new pendings, and almost all were lower-enders. The auction happened on Friday night and I didn’t see any last-minute advertising like there was on the other auctions. But it’s pending too:
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