In the previous post I mentioned that Carmel Valley has been red hot this year. It might get hotter!
One of my favorite clients sent me a blurb from UBS where their advisors think California could benefit greatly from Vancouver’s recent 15% transfer tax imposed on foreigners buying real estate there. The additional tax could cause buyers to look elsewhere – like around here!
Stewart told CKNW that his overseas clients are already backing away.
“A lot of them have decided to buy elsewhere because of the tax. A lot of people have put purchase plans on hold, pretty much indefinitely, because of the tax,” he said.
He is under scrutiny so he may have popped off in order to save himself. But 15% on a multi-million dollar purchase is a boatload of money!
Should foreign buyers purchase a home in San Diego County for more than $2,000,000, they will be reported to the Financial Crimes Enforcement Network – thanks Wendy for sending this in:
But the United States hasn’t imposed a transfer tax or even mentioned what they will do to foreigners who pay cash for homes costing more than $2,000,000. As long as it is a legit purchase, what can they do?
But I wouldn’t be surprised to see a bunch of homes around here worth $1,500,000 – $2,000,000 all of a sudden coming to market for $1,999,999!
The graph above shows the inventory of Orange County homes listed for $1,300,000 or higher (San Diego wasn’t included but is similar to the OC).
Mark likes to believe that prices have to fall – his quote:
In other words, higher-end real estate prices have much more air underneath them than lower-end prices have air above them. The resulting house price compression will accelerate taking all price bands lower until the higher-end housing market can catch a macro bid.
Here is how inventory in our higher-end areas have changed since May 26, 2015:
Area
5/26/15 Actives
Today’s Actives
Diff
Del Mar & Solana Beach
73
99
+36%
Encinitas
91
110
+21%
La Jolla
185
218
+18%
RSF
237
275
+16%
Carmel Vly
116
126
+9%
Yep, our inventory in the tonier parts of town is higher but it has been so low lately that an extra 20-40 or so houses on the market in each area isn’t going to hurt much. These are the only numbers I have for comparison, and May vs. August isn’t that great either – there is more build up of the unsuccessful sellers in every August.
Most importantly, the high-end sellers have more horsepower – they can hold out longer, and in most cases, will only sell if they get their price.
Rancho Santa Fe has been the harbinger of what we can expect elsewhere – lots of listings sitting around not selling, but few lowering their price – they are happy to wait.
Unless we get a surge of boomer liquidations, the worst thing that will happen is the whole high-end market will go stagnant.
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If you have concerns, just buy in Carmel Valley. In the first 7 months of 2015, there were 276 houses sold in the 92130, and this year there were 321 – a 16% increase! And that doesn’t include the 100+ new CV homes sold this year.
Carmel Valley pricing statistics have been flat though. The average cost-per-sf only went up from $413/sf to $419/sf, and the median sales price actually went down from $1,178,000 to $1,124,000. It’s probably a reason why they’ve had so many sales!
Are you thinking of moving? I want to be your realtor! The primary focus of this blog is to provide educational materials about our local market, and to demonstrate how I can help you.
Here is how it turned out for one recent seller (thanks skerzz!):
I followed Jim’s blog for several years and decided to contact him (along with several other realtors) when an out-of-state work relocation required me to sell my home in San Marcos, Ca. At our initial meeting, Jim spent a significant amount of time discussing pricing options, strategy, as well as providing recommendations for improvements /upgrades (including recommended contractors) that would help sell our property quickly and return maximum value.
I ultimately selected Jim because of his knowledge of the market, his honest assessment of my property and condition, experience handling multiple offers, contractor resources, professionalism, and pricing.
I am extremely happy I selected Jim (and Donna & Kayla) to sell my home. Jim went the extra mile with regards to all aspects of the sales process; everything from recommendations of top-notch (and affordable) contractors, to the amazing professional photography (including very cool drone photos), exposure of my listing on his blog, driving TONS of traffic to the open house, nailing the listing price, patching pot-holes in our private drive to overcome buyer objections, to his professional assistance in analyzing multiple purchase offers and negotiating sales price, terms, repairs, etc. — Jim more than exceeded expectations.
Once under contract, Jim’s wife (Donna) did an amazing job at pushing forward with the paperwork and all the behind the scenes details to ensure a fast and timely close of escrow.
Ultimately, Jim and his team delivered on everything I was looking for — a quick sale, strong sales price that returned the value he estimated on his recommended improvements/upgrades before listing all while limiting my stress during the process. It was refreshing to work with such a great agent and team. I highly recommend Jim and his team and would not think twice about using him again for any of my future real estate transactions in San Diego County.
For more reviews, see the right-hand column or click here:
One of the primary reasons homes will keep coming on the market is divorce. Here’s a good summary of stuff to cover if you are in that predicament.
If you own a mortgaged home together, make sure to have the spouse who is keeping the house to refinance in their name only. If all you do is quitclaim, then the bank still has both husband and wife on the loan – the credit record for both will be affected by any late payments:
In the United States, more than 800,000 couples per year divorce. Unfortunately, divorce not only brings a great deal of emotional baggage and heartache – it also can be very expensive financially. Court and attorneys’ fees can add up to tens of thousands of dollars. Some studies estimate that divorcing couples can lose an average of 77 percent of their net worth (the value of assets after debts are repaid). And after the divorce, there is the cost of running two separate households.
If you are dealing with a divorce, there are things you can do to protect your financial resources. Below are seven considerations to be aware of when a marriage or other relationship ends.
1. Know who is responsible for debt. Your divorce agreement will specify which partner is responsible for paying which debt. This clarification will include joint debts as well as individual accounts. Be aware that if your name is on a debt with your ex-spouse’s name on it, and he or she does not pay the debt, the creditor may come after you.
2. Pay off or refinance debts before the divorce. It is a good idea for both parties to refinance their debts in their own names. This may mean transferring credit card debt from joint cards to cards held by one individual, and then closing the joint accounts. If one partner keeps the family home, that partner should refinance the mortgage in his or her own name. Some divorce agreements include a provision with a time limit for this refinancing, to ensure that the other ex-spouse is not held liable for mortgage debt at a later time.
3. Watch out for undisclosed debts, especially in community property states. Nine states have “community property” laws: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. These states divide assets and debts 50-50 between partners. This means that a divorcing spouse could be equally liable for debt – even debts one partner does not know about. Discuss this possibility with your attorney. A good rule of thumb is to clearly disclose all debts before the divorce. It is also a good idea to request and review your credit profile before signing a final divorce agreement.
4. Protect yourself and your family with insurance and planning. Sometimes, after a divorce, buying new insurance is far from top of mind. A single parent, however, may have an even greater need for insurance due to unforeseen life circumstances. Protect your family and your assets with life insurance, a will, and provision to care for any young children.
5. Prepare for retirement. Post-divorce, your retirement plans will likely change. Check with a tax advisor to understand your state’s laws when it comes to dividing retirement accounts. Be sure your advisor has worked extensively with couples who are splitting up assets, and can make sure all details are handled appropriately. For instance, agreements should specify that accounts will be divided on a percentage basis, not by a dollar amount. Specifying a dollar amount could result in significant loss for one partner if the market changes.
6. Change your beneficiary designations. It is important to update your will after a divorce. It also is important to file new beneficiary designation paperwork for retirement plans and insurance policies. In most cases, funds will go to the person listed as your beneficiary, even if that person is your former spouse. Updating these forms ensures that your wishes will be honored.
7. Know your options if you and your spouse have more debt than you can pay. Consult a good attorney to be sure you completely understand your debt obligations after your divorce. If you and/or your spouse have large amounts of debt that you are struggling to pay down, talk with a reputable debt relief provider to discuss options before the divorce is finalized. Especially if you suspect that your spouse might file bankruptcy after the divorce, work closely with your attorney to protect your interests. Child support payments cannot be eliminated through bankruptcy or other means.
One final note for those who are planning a marriage, or thinking about a second marriage: Keep an eye on how much you spend on your wedding. A 2014 study by Emory University professors found that the less costly a couple’s wedding, the longer their marriage lasted. That is a good start to keeping a marriage debt-free!
After discussing the need for home maintenance with several clients recently, I thought it would be a great time to review.
Every condo association in California is required to complete a Reserve Study so they are socking away enough money every month to repair and replace every item needed over time. Homeowners should do the same!
Examples of things that need regular repair/replacement: Air conditioning, appliances, BBQ, ducting, faucets, flooring, furnace, lighting, painting, roof, siding, sinks, toilets, windows, etc.
These are pure home repairs and replacements – they don’t include exterior maintenance or home improvements/upgrades/updating, which all matter too.
I came up with my own formula to estimate how much money homeowners should spend each year just on maintenance – try it out:
Age of home X square footage/15 = Annual spend
The 15 was derived from a reasonable number of years it will take to catch up on everything if you start today. You may want to re-start again in year 16!
My formula is unscientific, but it is close enough. Spend something!
Doing regular repairs will help you avoid multiple major expenses, and save you from needing a complete redo when it comes time to sell.
High land prices in good locations generally force builders to build expensive homes. However, a number of builders have figured out how to build and sell entry-level homes to a growing demographic group. Builders are capitalizing on the rising number of affluent first-time buyers. These buyers tend to be dual-income, college-educated buyers with 10+ years of work experience who have delayed having children in comparison to their parents. For example, 23% of married couples had college degrees in 2014, compared to just 12% in 1990. Below is our forecast by age group for 5.2 million more homeowners over the next decade.
Many of our clients have identified fantastic solutions to address the demand of this growing demographic. Knowing exactly what this buyer wants and building the right product in the right location is crucial for success. Here are a few solutions:
High-density detached can work well. There are many detached products (with private outdoor spaces) achieving 16+ du/acre. Detached homes are generally more desirable for young families and allow for lower HOA dues.
Smaller homes. With good design, homes do not need to be large. Entry buyers will trade off size (to some extent) for location and lifestyle.
Three-story homes can live well for families—if done correctly. The layout must be open and allow for lots of light. Consider rooftop decks in lieu of private backyards.
Energy efficiency can save buyers hundreds or thousands of dollars per year, helping them choose a new home over a resale. Being green can save the homeowner a lot of money. Be sure to include this as a standard feature and market it.
More sales success has been achieved at prices below the FHA loan limit. FHA’s low-down-payment options appeal to many buyers.
Private outdoor space is crucial. These spaces do not have to be large, just functional. Consider pocket yards, side yards, and rooftop decks.
Minimize homeowners association dues and infrastructure bond payments. Entry buyers are payment sensitive and will usually trade a lower monthly payment for fewer community amenities, especially if the community is walkable to shops, restaurants, and entertainment.
Just ten years after Zillow came out with their website that is now attracting 72% of the eyeballs looking for homes for sale, our MLS is launching their second attempt at a public-facing portal – and you get the data directly from the MLS!
For those who saw the July stats and wanted a deeper look, here is a three-month comparison that wraps up the spring selling season:
NSDCC Sales, May-July
Year
# of May-July Sales
Median Sales Price
2011
725
$840,000
2012
886
$850,000
2013
992
$960,187
2014
862
$1,011,500
2015
936
$1,086,250
2016
872
$1,199,990
In spite of the median sales price increasing 10% year-over-year, sales have been hanging tough in 2016. Will it keep going with distractions like the Olympics, our political circus, and school starting?
Click on the ‘Read More’ link below for the NSDCC active-inventory data:
Every house needs house numbers. But not every house has to have boring house numbers. They’re easy to change and can make a place feel fresh and new when you find just the right ones.
