Last week, we saw that the average cost-per square foot was slightly lower this year than in 2015 – how drastic is it? There are other variables, and if they were all on the move it would be more exciting.
The average list prices have dropped 4% to 6% from last year – but the average square footage is less too, so it’s not the end of the world.
Price Range
2014 Avg. SF
2015 Avg. SF
2016 Avg. SF
0-$800,000
1,929sf
2,152sf
1,987sf
$800K-$1.4M
2,803sf
2,952sf
2,884sf
$1.4M-$2.4M
3,729sf
3,666sf
3,554sf
$2.4M+
6,572sf
6,370sf
6,232sf
Our market is extremely resilient!
Get Good Help!
Click on the link below for the complete NSDCC active-inventory data:
The building of the next bubble won’t look the same as the last one, but a common thread will be lenders who are hands-off. Hat tip to daytrip for sending in this story about crowdfunding for flippers:
Although data providers don’t track the number or dollar-volume of loans going to house flippers as opposed to developers of larger projects, more than a dozen real-estate-focused platforms offer loans to them. And a handful of Southern California start-ups specialize in the market.
Patch of Land in West Los Angeles made about $61 million in loans last year, mostly to house flippers, and PeerStreet in Manhattan Beach made $40 million, almost entirely to them.
“There’s a crowdfunder popping up once a month now, and the low-hanging fruit is the fix and flips,” said Jonathan Lee, a principal at George Smith Partners, a Century City real-estate-financing firm.
Like hard-money lenders, crowdfunding platforms guard against risk by securing the loans to the property and lending for less than its full value.
If a borrower goes bust, the lender takes title to the property, which, in theory, can be sold for more than the loan principal. PeerStreet, for instance, typically will lend only about 75% of a home’s value.
“They don’t look at income or tax returns. They’re looking at the property and the project. Is there profit to be made?” said Christian Fuentes, a Pomona real estate agent and house flipper.
Patch of Land can issue a check in just a couple of weeks, assuming that a loan meets its underwriting standards. The loan is then offered up to the 17,000 investors signed up on its site.
Golden Bee in November bought a two-bedroom house on Greenfield Avenue in West L.A., not far from the Westside Pavilion. The company paid about $1.2 million, with $1 million coming from Patch of Land at an annual interest rate of 12%.
Berneman is planning a $750,000 renovation that will add more than 1,500 square feet of space, along with new plumbing and wiring. He estimates that the house, built in the 1930s, hasn’t been renovated in 50 years.
“We’ll be knocking some of it down to the studs,” he said.
Berneman hopes to sell the house for as much as $2.5 million once it’s back on the market this fall. Golden Bee would stand to make $575,000, not including the cost of financing.
The Zillow tagline this year is that they have the best agents – Spence says it twice in a row here. Nobody else in the business gets as much exposure as him, so we should keep hearing it, which should cause more consumer trust and engagement – with Zillow agents.
A reader emailed that his zestimate had increased 32% within a year – and he lives in Escondido! He wondered why!
I did ask, but the Z team hasn’t been great about answering prickly questions like this. They promised to ‘look into it, and call back’. But no response.
We wondered if Z has been adding the nearby active listings to the algorithms?
Or if wild statistical swings are just a result of fewer sales/comps to use?
We already know that the zestimates can be pretty accurate in newer tract-house neighborhoods. The houses are similar, there hasn’t been much time for do-it-yourselfers to screw them up, and heck – newer tract houses are easier for buyers to evaluate. The conformity leads to steady pricing.
But in the older areas where every house is different, look out!
What can you do?
It was reported last February that you can manually improve your zestimate, and it does update immediately. But the needle doesn’t move much, and you need to add square footage to get a bigger pop.
Here are instructions on how to tinker with your own zestimate:
Zillow has also expanded the options once you have updated the zestimate on your own home, and compare to ten comps around you. The free tool is designed for people who are preparing to sell their homes — giving them a custom, private estimate of their home’s value:
It’s important to remember that Zestimates track the market, not drive it. People ultimately have more fundamental reasons that drive what they choose to buy or not buy. Our data shows that half of all sales are generally above the Zestimate. To provide more data on your Zestimate, you can post your estimated value and comments in the Owners Estimate section. The purpose of the Zestimate is provide data in a user-friendly format to promote transparent real estate markets and allow people to make informed decisions.
The median error is still 5.9% in San Diego, and none of their newer gadgets aren’t going to change that much. Are buyers influenced by high or low zestimates? I think the low zestimates make buyers pause, and the house has to really wow them to compensate.
For any fan of R&B music — any fan of music, period, really — it is impossible to think of the 1970s and early ’80s without recalling the shiny, groovy, exuberant sounds of Earth, Wind & Fire. And no man had a greater impact on them than founding member Maurice White, who died Thursday at 74.
Shining Star, That’s The Way of the World, September, Sing A Song,Fantasy, Reasons: White helped write all of these hits. The onetime sessions drummer, who played with Ramsey Lewis’s jazz trio in the ’60s, also served as EWF’s principal producer as its music — steeped in jazz and funk as well as Latin influences, but as luxuriantly pop-savvy as any AM radio classics of the time — segued seamlessly into the disco era and eventually embraced electronic textures.
“The California Coastal Commission staff is one of the most difficult bureaucracies to work with, I believe, in the entire United States,” said Fred Gaines, a lawyer and lobbyist who has represented owners of oceanfront homes such as the actor Dustin Hoffman and the director Steven Spielberg. “They put severe limitation on property owners’ right to use their property.”
Jana Zimmer, who served on the commission from 2011 to 2015, said environmentalists were unfairly characterizing the intentions of the board, which she said regularly ratified staff recommendations.
“I am extremely troubled that some of the environmental leadership in this state has resorted to black-hat-versus-white-hat, Trump-like tactics in their zeal to retain Lester at all costs,” she wrote in an essay in The Santa Barbara Independent. “The issue is not whether retaining or terminating Lester will protect or destroy the coast. This is a false choice, and the polarization it has created is unnecessary.”
China’s leading international real estate show is coming up next month. The 11th Annual Overseas Property & Immigration & Investment Exhibition will be March 5-7 at the Shanghai International Conference Center Natatorium.
It is the #1 real estate exhibition in Mainland China!
Buyers were purchasing properties right off the photos at the display booths last year, and they expect another good year in 2016.
Klinge Realty’s listings will be prominently displayed – join in!
If you want your property to receive direct exposure to Chinese investors, contact Jim the Realtor at (858) 997-3801 or jim@jimklinge.com.
A few real-life occurrences this month – and it’s only February!
It happens regularly that out-of-staters will call me after arriving for a preliminary visit. They are respectful about being very early in the process, and really just want to drive around by themselves to get a feel. I love the opportunity, because I am happy to give them some quick advice, and a handful of homes to drive by. Call anytime!
Jerry called on Monday – we spoke for less than five minutes, and then he emailed me this response:
Great speaking with you yesterday!
Took your advice, was in and out of the car a great deal, did visit the house in Solana Beach, and then drove around South Carlsbad.
Your analysis is spot on. Really appreciate your honesty. As for me, I will have to rethink what I’m looking for. You were right, $1 million or so doesn’t really get you anything.
Continued success and best wishes!
A million dollars ain’t what it used to be!
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When a listing agent was informed that her list price was 9% higher than the model-match comp that closed in November, she filed this response:
Hi, the seller has showed plenty of flexibility. But the buyer can not get it at last year prices. I hope we can work together.
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Agents hate when sellers and buyers get together prior to closing. Myself, I never minded much, because we’re all big boys and girls here, and if something went wacky, I’d find a way to resolve.
But I had a case where we were wrapping up our inspection that began at 8:30am in the morning. The seller had agreed to it, but didn’t leave the house and is now rambling around in her bathrobe.
The buyer and us (Donna and I) are outside on the patio, waiting patiently for a sewer-pipe camera scan to complete. The seller opens the glass slider and says, “I need to get ready for work, so go wait in your car”. The tone, and the attitude, were worse than the words.
It was more than insulting – it was downright rude, and worthy of cancelling the sale on the spot. But because I think of every issue in monetary terms, I thought to myself, “that’s going to cost you $5,000.”
I reel in my buyer, and to compensate, we agree to request a $5,000 credit.
The listing agent witnessed the carnage, and knew there was a problem. The sale negotiations had already been tough because the sellers wanted more from this sale to be able to purchase their next home out-of-state. But home valuations don’t work that way.
Thankfully, the agent agreed, and when I told her that the $5,000 credit was life or death, she heard me. Additionally, I told her that if this sale cancels, I felt sorry for her because trying to re-sell this house would be a nightmare. The sellers would want more, and do less.
The sellers objected to the credit, so the agent threw in the $5,000 herself.
It was a very smart move – make a little something, and move on.
The agent understood that spending additional weeks or months on this case could be more time wasted, and it might never sell. But rarely do agents consider all of the possibilities. Instead, agents should make the deal.
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This is the year that negotiations are going to matter again.
