The continued strength in sales and pricing is remarkable. We sold 360 houses between Carlsbad and La Jolla for more than $1,000,000 in the first quarter!
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Since 2012, the median sales price has risen 47%, and the average $/sf has gone up 41%. Thank goodness for low mortgage rates!
Will better access to Del Mar Mesa make a difference? I don’t know if it will raise prices, but it should cause buyers to re-consider the benefit of exiting the I-5 freeway at the Carmel Mountain Rd. bypass and be home in 10 minutes, rather than fight traffic to Rancho Santa Fe for an extra 30-45 minutes:
Remember when principal reductions were resisted by banks and DeMarco? Now they are throwing money at people:
SACRAMENTO – Keep Your Home California announced today changes to help more low and moderate income homeowners, who are struggling with their monthly mortgage payments, remain in their homes as part of the free mortgage-assistance program.
The changes will assist homeowners who have suffered a financial hardship attain an affordable monthly mortgage payment and provide them with an opportunity to solve their mortgage troubles, before they fall behind on their payments.
For homeowners who have already fallen behind on their monthly payments, Keep Your Home California more than doubled the amount of funding that is available to help homeowners catch-up on past due mortgages. The state program, which is overseen by the California Housing Finance Agency (CalHFA), can provide up to $100,000 in assistance to eligible homeowners.
“Despite an improving economy and job market, there are still many homeowners who are struggling every month or just need a little help to get back on track with their payments,” said Tia Boatman Patterson, Executive Director of CalHFA. “Our goal is to help California homeowners prevent avoidable foreclosures, and the changes to the program are the latest in that effort.”
The program criteria changes affect the Principal Reduction Program, which allows homeowners with unaffordable monthly mortgage payments to apply for as much as $100,000 in assistance to reduce the principal balance. Principal reductions often lead to savings of hundreds of dollars each month on homeowners’ mortgage payments.
This is another installment in my quest to change how homes are sold.
In Australia, 98% of the homes are sold by auction. The guy who was the main auctioneer for Harcourts sold over 6,000 homes there by auction, and has since come to America. They are offering an auction option as one of the ways they will sell your home.
They don’t insist on an auction, they will sell your home the traditional way too – it’s just one of the choices for sellers.
They do include an undisclosed reserve price to make sellers feel comfortable that they won’t have to ‘give it away’ at the auction. They then input the listing onto the MLS at the below-reserve opening bid, and do several open houses leading up to the auction about a month later.
I had a long talk with one of their agents yesterday about their results.
Since they started about a year ago, the local office has sold 49 properties with the auction format. Here are the results:
62% of the homes sold before the auction.
12% sold at the auction.
23% sold after the auction.
While I’m a big believer in the auction format, it appears that our local society has yet to embrace it as the most effective way to sell for top dollar. While we were talking, I told Kayla she should get her auctioneer’s license and just hope it happens in her lifetime.
The big takeaway is how well the “attractive-pricing” format works.
Because the properties are listed on the MLS at the opening-bid amount, they look like deals. But sellers have no intention of selling for that price – they have already designated a higher reserve price.
Yet nearly two-thirds of the time they are able to make an acceptable deal with a buyer at some price point above the opening bid.
Buyers don’t mind paying a little more if they see the value. They know that if they really want the house, they might as well step up now and make the deal while certainty is available.
Our MLS already allows the goofy ‘value-range pricing’, where two prices are listed and buyers are supposed to guess what to do. We probably don’t need to replace that format, but the MLS should offer a new option:
List your home at the opening-bid price.
Every seller should consider adopting this format as the best way to instill excitement and urgency in buyers, and give them reason to bid early and often to win the property. Making it a contest where buyers compete for the home is the best way to drive the price up – and in most cases, more effective than pricing above comps and hope you get lucky.
You don’t even need the actual auction – it isn’t working that well anyway. All you need is an agent who can conduct a proper bidding war once the interested buyers emerge.
The traditional method of pricing above the comps works great when prices are rising rapidly, because eventually the market will catch up with you. But the frenzy is over now, and buyers are being much more cautious. If you don’t sell early, the buyers are watching the days-on-market closely, and will hold them against you, price-wise.
If we never get to the actual auctions, or we just work our way towards them over time, then fine. But what sellers need is attractive pricing to stand out from the crowd, and get the buyers’ attention. Conduct some open houses so they can see other potential bidders eye-to-eye, and then offer the chance of buying now when they have an open shot.
I will take your listing using either format, and give you everything I got. I’m suggesting that as the market ‘matures’, and prices flatten out, buyers are going to be increasingly reluctant to consider homes listed at 5% to 10% above the comps.
Using the ‘attractive-pricing’ format will set you apart from the crowd, give you maximum exposure and an obvious format to cause a buyer to pay a price that is acceptable to you.
That’s what you want, isn’t it?
Architects are taking rammed-earth home design far beyond the dirt-plain adobe look—creating walls that are almost sculptural in their complexity and scale.
It took 300 tons of decomposed granite to build the 72-foot-long rammed-earth wall that forms the spine of Linda Low’s 7,800-square-foot home in Scottsdale, Ariz. Light from a narrow, 110-foot-long skylight—diffused by reflective silver-leaf panels—plays on the wall, which sparkles with bits of mica. “At any time of the day, I can look at it and see something different—and it’s never the same any day,” said Ms. Low, 72, who built the house on 10 acres with her husband, Mickey. “It gives me a sense of tranquility.”
Ms. Low estimates that they spent close to $2 million on the 1997 compound—designed by architect Eddie Jones and rammed-earth builder Quentin Branch.
She recently put the house on the market, but then took it off—after turning down an offer that was more than double the cost to build, she said. “I just decided I’m not selling—I love this house too much,” she said.
http://www.wsj.com/articles/rammed-earth-luxury-homes-1427989394?mod=WSJ_hpp_sections_realestate
While the glossy high-end production of these real estate ‘films’ is undoubtedly good for attracting new business, this isn’t really a tour of the house – it’s just a teaser just to whet your whistle:
http://www.zillow.com/homedetails/168-Emerald-Bay-Laguna-Beach-CA-92651/25140049_zpid/
We need tent cities too! Hat tip to ‘just some guy; for sending this in:
SUNNYVALE — Two years of mounting rent increases pushed them out of their 800-square-foot apartment, but Emily Gwynn and Roderick Fox have now purchased their dream house.
“It’s 1,370 square feet, three bedrooms, two full baths, washer and dryer,” Gwynn said, excited to show off the spacious kitchen, as well as the master bedroom with its 14-foot cathedral ceiling.
The price: $219,000, in a county where median home prices hit $782,000 last month. The catch: It’s a manufactured home — a classy new spin on the old prefab “mobile” home.
“We were surprised,” Fox said.
Read full article here:
Fannie interviews 1,000 people every month, and then leaves it up to their ivory-tower guy to explain it to the masses. Here’s my conclusion from my own personal survey: buyers are being cautious due to prices going up so fast.
http://www.fanniemae.com/portal/research-and-analysis/housing-survey.html
Consumer attitudes toward housing appear to have stalled somewhat amid a recent dip in confidence regarding personal finances and income growth, according to results from Fannie Mae’s March 2015 National Housing Survey™.
Among those surveyed, the share who expect their personal financial situation to improve over the next year fell to 41 percent last month, while those who said their household income is significantly higher than it was 12 months ago fell to 22 percent.
Additionally, the share of respondents who said they would buy a home if they were to move decreased 5 percentage points to 60 percent – a new all-time survey low.
On the bright side, the share of consumers who believe now is a good time to sell a home reached a new survey high of 46 percent, narrowing the gap with those reporting it is a good time to buy, perhaps signaling a more balanced housing market.
“Consumers are being patient prior to entering the housing market. Our March survey results emphasize how critical attitudes about income growth are to consumers’ outlook on housing,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “We’ve seen modest improvement in total compensation resulting from a strengthened labor market. However, income growth perceptions and personal financial expectations both eased off of recent highs, consistent with Friday’s weak jobs report. Simultaneously, the share of consumers expecting to buy on their next move has declined. We believe the recent setback in consumer sentiment should be short lived if early signs of income growth bear out and occur in proportion to expected interest rate increases. Meanwhile, the wait for housing expansion continues.”
http://www.fanniemae.com/portal/research-and-analysis/housing-survey.html
Terry from Canada sent in this question:
I’m just wondering with the ongoing drought in California, do you see the possibility that if the drought continues and California really does run out of water will there have to be a mass migration out of the state in the future?
We have seen and heard about the desalination plant being built in Carlsbad that will add 50 million gallons of drinkable water per day, which is 7% of what the San Diego region uses now.
The cost is projected to be 20% to 25% higher than the current rate of water purchased from the MWD, so even if the drought reverses itself in the near future, the cost of water is going up.
Will that alone cause an exodus? Probably not, but every little bit counts, and it could be the final straw for people on the edge.
The trend of our area being for affluent people will continue though. How will they cope?
It’s not like there isn’t any water – there just isn’t any water here.
Folks who are on propane know how it works – private companies will provide the water, and make it convenient. They will bring you the tank, hook it up for you, and then come back regularly to fill it for you.
The 12,500-gallon tanks like the one above cost about $10,000, and if a household can get by with 200 gallons per day they would only need to fill their tank every other month. If you live in on a smaller lot, you can opt for a pint-size tank and get more deliveries.
http://www.utsandiego.com/news/2014/nov/04/environment-water-conservation-residential/
If you had one of these big tanks, it would only cost you about $100 today to fill it – that’s why you don’t see them…yet. But if the drought continues, having water delivered is a possibility.
How much would you pay for water? $500 per month? $1,000 per month? The county has already cut back usage by 30% in recent years, and more conservation is on the way.
But people will stay as long as they can bear it, so I doubt any mass exodus from the coastal regions will happen in the short term.
Drone view of the plant:
Mortgage rates on Friday dropped back to 3.62% (avg. jumbo was 3.57%!), which should help fuel the final Spring Kick of the selling season. The end of the school year is within sight, and there are lots of lookers. My listing on Monroe in Old Carlsbad was shown steadily for the first three weeks on the market, but no offers. Then we got three over Easter weekend!
Click on the link below for the complete NSDCC active-inventory data:
Are you looking for an experienced agent to help you buy or sell a home?
Contact Jim the Realtor!
CA DRE #01527365, CA DRE #00873197
