If you think San Diego’s housing market is strained and pricey now, what will it be like in 20 years? Yes, feel free to shudder. No one, of course, can accurately predict that far in advance. There are too many variables at play. But there is one aspect of the current housing market that would seem tough to reverse.
And that’s the ability to build.
For one thing, we have finite developable land, particularly in the city of San Diego. Secondly, a portion of our population appears unwilling to embrace density — at least in their own neighborhoods — which makes it tough on planners and builders to increase supply.
“We’ll be the Bay Area in no time,” said Borre Winckel, president and CEO of the Building Industry Association of San Diego. “We can offer very few product lines for the middle-class buyer.”
San Francisco was once a quirky, counter-cultural city that was home to a bevy of activists, artists and writers. But that city is vanishing because of sky-high housing costs. Now, only the elite can afford to live in the city and, like in Manhattan, low- and middle-income workers are forced to live further afield and make long commutes to their jobs.
San Diego is not far behind. It is already the nation’s fifth most expensive housing market, according to the National Association of Realtors. Only an estimated 25 percent of households can afford the median home price.
Even more troubling, most of the apartment units under construction are higher end, catering to wealthier millennials.
“My lament is that we’re royally screwing the housing opportunity for the middle class and young people,” Winckel said.
San Diego’s population grew by 159,000 people from 2010 to 2014, but the region added only 22,000 housing units in that time, according to the U.S. Census Bureau.
If that trend continues, experts predict housing prices will continue to rise.
People get excited about home prices going up or down based on the median price statistics, which are easily skewed. The explanations are humorous too, where the declines tend to be dismissed, and increases lauded (in bold below).
According to PropertyRadar’s report, the median price of a California home in September was $405,000, which was down 2.4% from a revised $415,000 in August. It was also down 2.6% from the 2015 high of $416,000 in July.
On a year-over-year basis, the median price of a California home was up 3.3% from $392,000 in September 2014.
Prices may be up on a yearly basis, but Schnapp said that price appreciation in many parts of the state has slowed or stopped entirely.
In fact, on a monthly basis, prices were lower in 21 of California’s 26 largest counties, Schnapp said.
According to PropertyRadar’s report, the counties with the largest price declines were Contra Costa (-5%), Kern (-5.2%) and San Mateo (-3.3%).
San Francisco prices fell 11.8% for the month but the decline is likely an artifact of the mix of homes sold rather than an actual price decline, PropertyRadar’s report showed.
On an annual basis, prices are still appreciating, but in general at a much slower pace.
Home prices in a few northern California counties, mostly concentrated in the Bay Area, continue to appreciate rapidly. Counties experiencing the highest annual price appreciation were Santa Cruz (+18.1%), Merced (+15%), Santa Clara (+13.8%) and San Mateo (+11.3%).
“Homes in the Silicon Valley corridor, consisting of San Francisco, San Mateo and Santa Clara counties, continue to buck statewide trends and are experiencing double-digit price appreciation,” Schnapp said. “The increased demand from plentiful well-paying jobs, sky high rents, and fear of higher mortgage interest rates have propelled home prices into the stratosphere.”
Schnapp said that in September, more than half of all homes sold in San Francisco and San Mateo counties exceeded $1 million.
“I am frequently asked how long can this continue?” Schnapp said of the San Francisco price explosion. “My answer is, ‘Until you run out of eager buyers and bankers willing to lend,’ and we clearly are not there yet.”
Have you seen the remark, “Back on market, no fault of property”?
Well then……..whose fault was it?
Somebody allowed the buyers and sellers to believe they had a deal. Rarely is it intentional – and almost always it’s due to a condition that could have been remedied in advance, if both agents were on their game.
When a buyer does want to cancel, it is their agent’s duty to craft a real whopper of an excuse so there is no conflict in getting the deposit back. As a result, the real reason for cancelling is rarely known.
The most common excuses:
Buyer didn’t qualify.
Some other babbling, semi-conscious drivel.
There is no excuse for getting offers accepted with buyers who don’t qualify. The frenzy is over, so there is no reason to rush an offer before the lender has taken a full application and has had it underwritten.
I’m even reluctant to believe that the buyer got laid off – come on, they had no idea that their job was in peril? It’s hard to believe any employee would be out shopping for homes if they thought there was any unrest at work.
But it is a great excuse for cancelling – how can the sellers blame you?
If the excuse given is just a smoke screen to ensure the deposit is returned, then what was the real reason? Could there be a solution to the real reason?
Two places where agents screw up:
Don’t verify the prequal (for buyers who really cancel for that reason).
They don’t try to save the deal.
Upon being notified of an impending cancellation, listing agents rush to their computer and quickly mark the listing BOM (back-on-market). Many will add ‘no fault of the property’ (which is really code for ‘flaky buyers’, ‘stupid buyer’s agent’, or both), and the listing agent goes back to their prayer vigil.
If the listing agent took the best of many offers received during the first week, then you can’t blame them for being confident that other buyers might still be interested. But if they’ve been struggling for weeks or months to find a buyer, the writing is on the wall – the price isn’t working.
Price can fix anything. Either agent can take the initiative too.
It happened to me yesterday. My buyers and I went the conventional route, and conducted the home inspection after our offer was accepted (which included a seller’s counter-offer insisting upon a 7-day inspection period). We scrambled to complete the inspection promptly, but it revealed enough problems that my buyers said ‘forget it, let’s cancel’.
But because I had also gotten repair quotes on items we thought could be an issue, I was at least able to put a price on it. I urged my buyers to consider buying the property, if the price was right.
They said they would buy it, if I could get the seller to knock off $20,000.
We had made our offer the first day the house was on the market, and according the the listing agent, there were multiple offers. The $20,000 reduction seemed like a tall order, but anything is possible!
I went to work on crafting a powerful and compelling case on why the sellers should do it (without including any repair quotes or complaints because those just start a fight over what is worthy).
I included a concession (a must) that if agreed, we would release all contingencies the same day, and that we would close in two weeks.
The sellers agreed to the $20,000 reduction.
For those who wonder why you should have me assist you with your real estate needs – this is it. In every sale, there are opportunities where agents can make or break a deal. I know they are coming – I’m looking for them – and I find ways to save deals and create a win-win for all.
The “11 semi-custom and personalized estate homes designed with Agrarian inspired architecture” on the corner of Santa Fe and Lake in Encinitas are different than most new houses we see these days. The lots are 30,000sf to 53,000sf, and detached guest houses and shops can be added too.
Millennials have tough new competition for the condominiums and apartments heating up the nation’s housing market: Mom and Dad.
Roughly 10,000 baby boomers are retiring each day, and recent data shows that half of those who plan to move will downsize when they do. Many are seeking the type of urban living that typically has been associated with young college graduates — so much so that boomers are renting apartments and buying condos at more than twice the rate of their millennial children.
“There’s not one thing I miss about my house,” said Abby Imus, 57, who recently moved with her husband into a condo in downtown Bethesda, Md., three miles and a lifetime away from the house they lived in for more than two decades. “I was so ready to leave.”
This new generation of empty nester is reshaping the recovery in real estate after the industry suffered its worst setback in half a century during the Great Recession. Boomer demand has helped fuel a surge in high-end housing that features two-bedroom units and large kitchens reminiscent of boomers’ suburban homes. That could have big implications for cash-strapped millennials, who had hoped to snag affordable studios in buildings developed to house 20-somethings.
The data suggests that boomers who are downsizing are relatively well-off. Harvard University’s Joint Center for Housing Studies found that those ages 55 and older accounted for 42 percent of the growth in renters over the past decade. In addition, the wealthiest tier of American households made up about one-third of new renters between 2011 and 2014.
“Boomers will pay a premium if you can give them exactly what they want,” said Matt Robinson, principal at MRP Realty in the District. “Something closer to what was in their house, and that pushes up the price; they’re happy to pay for it.”
We will probably see more initiatives on the ballot about legalizing marijuana in California – maybe as soon as 2016? Look at the boost it has given Denver’s real estate market – and paying wild premiums too:
One in 11 industrial buildings in central Denver is full of marijuana.
The state’s cannabis industry occupies at least 3.7 million square feet of industrial space in Denver, clustered in areas of older warehouse stock, including the Interstate 25-Interstate 70 junction, Montbello, central Denver and along the Santa Fe Drive corridor in southwest Denver, according to commercial real estate firm CBRE.
Between 2009 and 2014, the industry’s appetite for real estate was voracious, with marijuana cultivation gobbling up more than a third — 35.8 percent — of all industrial space leased in Denver during that five-year period.
Braoden mortgage access to those who don’t have a credit score? Counting income from those not on the loan? Traditionally, the term ‘family member’ has been a loosely-defined concept in mortgage qualifying. From the wsj.com:
Collecting pay stubs for a home-mortgage application has been a time-honored tradition, barring a few ill-fated years running up to the financial crisis. But if changes announced by mortgage-finance company Fannie Mae catch on, that process could go the way of the dodo.
Fannie Mae on Monday said it would allow lenders to use employment and income information from a database maintained by credit bureau Equifax to verify borrowers’ ability to handle a loan, rather than relying on the traditional documentation process of collecting physical copies of pay stubs and tax data. The move is expected to make the mortgage process easier for borrowers and lenders alike.
Fannie announced other changes it said could broaden mortgage access for some borrowers.
The mortgage giant will ease the lender process for granting loans to borrowers who don’t have a credit score, a key issue for advocates for certain minority groups that are less likely to have traditional credit histories.
Likewise, Fannie in mid-2016 also will require lenders to begin collecting “trended” credit data from Equifax and TransUnion, which includes longer-term borrower credit histories.
In August, Fannie rolled out a new program that let lenders count income from nonborrowers within a household, such as extended family members, toward qualifying for a loan.
But for more than a year, some advocates and industry groups also have pushed the Federal Housing Finance Agency, which regulates Fannie and Freddie, to allow the companies to use alternative credit-score models that take into account utility or rent payments.
"Jim and Donna Klinge are by far the most professional, personable and responsive realtors I have ever worked with. They provide VIP concierge level service in every area of the process of selling your home. My home was marketed so successfully that we received an offer the day after our first and only open house. Thanks to Jim's pricing and negotiating, our house is now the highest sold in our community... more "
by Ann Romanello
"Jim educated us, helped us find the perfect house, and then negotiated us a great deal. I would hate to be sitting across the negotiating table from ... more "
"Jim is thorough and will be brutally honest about the homes he shows you. He provides great service and follows through until the very end and even ... more "
"I highly recommend Jim as a buyer’s agent. Working with Jim, we closed this week on a San Diego condo. Jim prepared a list of comparable sales to ... more "