Inventory Watch

2016-04-10 15.23.13

We are in the prime selling season!

In the weekly reports since the end of March, we have averaged 105 new listings each week.  They aren’t all high-enders either – the median list price has only been $1,399,900 since March 28th.

The average list prices are about 5% higher than they were last May.

Click on the ‘Read More’ link below for the NSDCC active-inventory data:

(more…)

Open House Report

2016-05-22 15.23.57

The weather was fantastic this weekend, and we had good traffic – 40+ people each day.  You know you have a specialty product in a mostly custom area when the zestimates are bouncing around.

Here is our zestimate history since Thursday.

BEFORE ZILLOW INPUT on Thursday night:

327

AFTER ZILLOW INPUT, THE ZESTIMATE INCREASED $249,754:

327 27

It has since come back to earth a bit:

zest may 23

I think buyers are putting more stock in the zestimates for a number of reasons – easy-to-find data point, it is somewhat reliable in tract neighborhoods, and it’s been around the longest.  Yet, I found myself having to explain to one visitor why was so far under our zestimate.

When the zestimate is within 10% of the list price, people might give it some credence. But when it is off by over 20%, buyers aren’t going to consider it as a reliable source.

In this case, the Z team used an oceanfront 2,000sf attached-home as a comp:

par

 

This is a recent sale nearby that is a better comp:

http://www.sdlookup.com/MLS-160008484-437_Hillcrest_Dr_Encinitas_CA_92024

But Zillow doesn’t show it as a closed sale, thanks to the dispute between them and our MLS (it wasn’t uploaded manually).

Hence, their zestimate is only $2,142,343:

http://www.zillow.com/homedetails/437-Hillcrest-Dr-Encinitas-CA-92024/81774561_zpid/

The Sandicor MLS people think they are doing us a favor by not negotiating with Zillow, but this is what we get – zestimates that are more unreliable than ever!

Gazumped

gaz

Colin asked me if I had ever been ‘gazumped’.

Not being familiar with the term, I hoped not!

I’ve been gazanged a couple of times though!

From wiki:

Gazumping occurs when a seller (especially of property) accepts an oral offer (a promise to purchase) on the property from one potential buyer, but then accepts a higher offer from someone else. It can also refer to the seller raising the asking price or asking for more money at the last minute, after previously orally agreeing to a lower one. In either case, the original buyer is left in a bad situation, and either has to offer a higher price or lose the purchase. The term gazumping is most commonly used in the UK, Ireland and Australia, although similar practices can be found in some other jurisdictions.

With buoyant property prices in the British residential property market of the late 1980s and early 1990s, gazumping became commonplace in England and Wales because a buyer’s offer is not legally binding even after acceptance of the offer by the vendor. This is because, by s.2 of the Law of Property (Miscellaneous Provisions) Act 1989 and in order to prevent dishonesty, a contract for the sale of land must be in writing, a requirement of English law that dates back to the Statute of Frauds of 1677. This requirement was originally intended to promote good faith and certainty in land transactions.

When the owner accepts the offer on a property, the buyer will usually not yet have commissioned a building survey nor will the buyer have yet had the opportunity to perform recommended legal checks. The offer to purchase is made “subject to contract” and thus, until written contracts are exchanged either party can pull out at any time. It can take as long as 10–12 weeks for formalities to be completed, and if the seller is tempted by a higher offer during this period it leaves the buyer disappointed and out-of-pocket. Asking price has no impact on whether a property has been “gazumped”. Any offer over a previous offer that is subsequently accepted is known as gazumping.

When property prices are in decline the practice of gazumping becomes rare. The term ‘gazundering‘ has been coined for the opposite practice whereby the buyer waits until everybody is poised to exchange contracts before lowering the offer on the property, threatening the collapse of a whole chain of house sales waiting for the deal to go through. ‘Gazanging‘ describes a similar situation, where a seller pulls out of a sale entirely, expecting to get a better asking price or offer once the market improves.

In California, realtors are quick to sign buyers and sellers to a legally-binding contract.  Once signed, our sellers can not back out – only buyers have contingencies that allow them to cancel.

Current Market Trends

sf

Here are the thoughts of a two-percenter agent from the Bay Area about her market, which are probably about right.  Instead of wild bidding wars, there might only be one or two offers per house – which will leave sellers’ egos disappointed, but the market will survive.  Plus, more houses won’t sell – let’s face it, only about 60% of NSDCC listings actually close escrow.  P.S.  Have you noticed that most agents seem to be in the Top 1% or 2%?:

http://www.marketwatch.com/story/san-francisco-bay-area-housing-bubble-not-bursting-but-moderating-2016-05-17

The whole story – I bold-italicized the phrases where I had strong agreement:

Real estate markets are moving toward a “new normal” in the San Francisco Bay area. This is according to the local “feet on the street” stories I hear from top Bay Area Realtors.

The Bay Area housing bubble is not bursting. It is changing to what appears to be a “new normal.” Let’s look at the big picture to understand what we believe are the trends driving the current market and how we think they will continue to impact the market in 2016.

1: This is a high-stress market and it will continue

Buying or selling a home is usually prompted by a life event: death, divorce, marriage, relocation, job change and increase or decrease in family. These life events often bring stress and buying or selling a house adds to this stress. Add in the drama of a notably contentious presidential campaign, toss in the uncertainty of the financial markets and then add the pressure of the fast-paced expensive Bay Area market where decisions and offers need to be made quickly.

Unfortunately, all this is here to stay for a while. Yes, any normal person would be hard-pressed not to feel like they were in a tornado.

2: Low inventory of good homes will continue to drive pricing. However, buyer demand is becoming tempered and more deliberate

Yet another reminder that markets invariably change. While our group of top agents acknowledged the low inventory, they also recognized that buyers were becoming much more selective and deliberate. They look, they think and if they don’t “feel it” they move on. “Who cares if there is an offer date?” “Another day and another home will appear.” “Maybe the home won’t sell and we can buy it for less.” If they don’t see the value they pass.

As a client of mine once said during a previous hot market, “This market is so crazy even a burning house will sell.” Not so any more. Many agents believe sellers are seeing the last days when homes with deficiencies will sell quickly for top dollar. Great homes in great locations, priced fairly and marketed properly are selling. However, we are now beginning to see situations where even these homes only have one offer and sometimes, unfortunately, none.

3: Now more than ever you must play to win

While we don’t believe another downturn is on the horizon, having a Realtor with strategies to address even the slightest of market corrections is critical to success whether you are a buyer or seller. A San Francisco agent in our group told a story of a home with 12 disclosure packets out to potential buyers. When the offer date came his buyer did not make an offer. What happened? The buyer thought the home would sell outside his price range. Sadly for him, the home sold below what he was prepared to spend. The moral to the story is “nothing ventured nothing gained.” We are entering into a shifting market. Don’t be afraid to make an offer.

Finally: The bottom line is we are moving to a ‘new normal’

The “feet on the street” believe that the outlook for the rest of the year remains positive, but moderating, with a continuing but more purposeful demand for Bay Area housing.

Zillow is “Killing It”

smug

Realtors are attempting to mount a challenge to the Zillow dominance.  The Broker Public Portal announced yesterday that they are partnering with HomeSnap to develop a new portal, and the National Association of Realtors has pledged $12 million to fund Upstream, a national MLS thingy.

They throw around words like “revolutionary” and “game-changing”, and in the meantime Zillow is running away from the field.  Until the realtor efforts start spending millions on crisp, concise advertising that makes a difference, there is no chance of them catching up – even if they can find a smug, cocky CEO like Spence:

http://www.cnbc.com/2016/05/18/zillow-ceo-heres-why-we-are-killing-it.html

After spending the last two years in the doghouse, online real estate player Zillow Group has bounced back, up more than 11 percent this year.

More people now type the word “Zillow” into Google than the words “real estate,” Zillow’s CEO Spencer Rascoff told Jim Cramer on Wednesday.

Zillow’s database features over 110 million profiles of U.S. homes, and generates revenues through advertising subscriptions aimed at real estate professionals, mortgage lenders and brand advertisers.

Rascoff attributed the success of his to the wide array of brands it covers, which include Zillow, Trulia, StreetEasy, Hotpads and Naked Apartments.

“The combination of that audience across all those brands are the reason that we are killing it,” Rascoff said.

Nothing Price Won’t Fix, Part 2

sv1

The Bloomberg story already got picked up by Vanity Fair and realtor.com.  Is this new news, or just what we’ve been seeing around NSDCC for months?  All that matters is what buyers’ perception will be.

http://www.vanityfair.com/news/2016/05/is-the-silicon-valley-real-estate-bubble-about-to-explode

http://www.realtor.com/news/trends/silicon-valley-slowdown/

The realtor.com version:

Silicon Valley is known as one of the world’s most expensive markets. But these days, those shopping for a luxury home in the techie paradise may be able to score a (relative) deal.

Wealthy homeowners are starting to slash prices on the most expensive mansions, which have been sitting on the market a little longer, according to Bloomberg.com. The reductions aren’t quite an everything-must-go fire sale, but they hint that the days of skyrocketing prices may be coming to an end.

That’s due to a topsy-turvy stock market, fewer foreign buyers, and worries that the tech industry could be headed for a slowdown, Bloomberg reports.

For example, the average price of Silicon Valley properties costing more than $3 million was $3.76 million in April—down from $4.12 million a year earlier, according to data provided by the Silicon Valley Association of Realtors®. It rebounded a bit to $3.94 million in the first half of May—but that’s still quite a chunk of change.

Meanwhile, Silicon Valley homes costing more than $3 million stayed on the market a bit longer as well. They were at 30 days in April, a small rise from 26 days a year earlier, according to the association’s data.

“The market is cooling down,” says Realtor® Avi Urban of Keller Williams Palo Alto. He’s seeing interest wane for properties costing more than $4 million.

“It doesn’t mean the market is going to crash tomorrow,” he says. “This is a time where basically we have reached a point where it’s too expensive” for many would-be buyers, and it’s starting to pull down prices.

The median price for all housing types in Silicon Valley’s ritzy Palo Alto is a staggering $2.2 million, according to realtor.com®.

For example, Urban had a two-unit condo property in a prime Palo Alto location in the $2 million range that received only one offer in the first two weeks it was listed. A year ago, he would have expected it to receive more than a dozen bids for 10% to 15% over the asking price.

To compensate, homeowners are lowering the prices of the highest-end residences that aren’t attracting enough potential buyers, says Karen Trolan, president of the Silicon Valley Association of Realtors.

“Everybody gets so excited when the market’s crazy that they push the prices up. They’re testing the market,” Trolan says. And when the homes don’t move, “what they usually do is bring [the costs] down.”

Prices are not dropping much yet, though, on the midddle to low end of the market, say local real estate agents. Stories still abound of a Google employee living in his truck and a San Francisco man residing in a plywood box for $400 a month because they can’t afford the astronomical housing prices. And bidding wars continue to drive up sale prices even higher.

But demand remains high for turnkey, single-family homes and condos at (relatively) affordable price points in good school districts, Trolan says.

“We have a housing shortage here,” Trolan says. “Our homes are still [selling] really well.”

Nothing Price Won’t Fix

sv

A pullback in Silicon Valley? It could happen anywhere!

http://www.bloomberg.com/news/articles/2016-05-17/silicon-valley-mansions-linger-on-market-in-real-estate-slowdown

Excerpts:

A custom-built home in the heart of California’s Silicon Valley had its price cut by $500,000 last week after sitting on the market since the end of March — a move that would’ve been almost unfathomable a year ago and a signal that frenzied demand has peaked.

The six-bedroom, five-bath house in Palo Alto — located blocks from Stanford University and the homes of Google co-founder Larry Page and Steve Jobs’s widow, Laurene Powell Jobs — is now listed for $7.5 million. It joins a growing inventory of high-end homes in the area that are taking longer to sell.

“We’ve recently noticed a slowdown,” Jack Woodson, who works at Alain Pinel Realtors in nearby Menlo Park, said on a tour of the house in the Old Palo Alto neighborhood. “Buyers are taking more time to decide about making offers.”

Silicon Valley, the most-expensive U.S. housing market, is seeing a pullback by the wealthiest homebuyers after a four-year real estate boom marked by bidding wars and multimillion-dollar prices. Stock-market turmoil, a drop in foreign investors and concerns of a technology-industry slowdown are cooling demand at the high end, even as interest remains robust for more moderately priced properties.

In Palo Alto, an ultra-wealthy city that’s home to many Google and Facebook Inc. executives, homes costing more than $5 million were on the market for a median of 16 days in April, compared with 11 in the same month in 2015 and 10 in 2014, according to data from Irvine, California-based John Burns Real Estate Consulting. The 11 active listings in that price range as of May 14 have been on the market a median of 30 days.

“The seemingly inexhaustible well of very high-end buyers has proven exhaustible after all,” said Dean Wehrli, a senior vice president at John Burns. “The peak is behind us, and that’s becoming clearer and clearer to builders and buyers.”

“We’re probably moving toward normalization,” said Katharine Carroll, vice president at Pacific Union Real Estate in Palo Alto. “Buyers see that they have a few more options. They don’t feel the urgency that they have to decide on something right away and put an offer in. They can kick the tires a little bit more.”

http://www.bloomberg.com/news/articles/2016-05-17/silicon-valley-mansions-linger-on-market-in-real-estate-slowdown

Pin It on Pinterest