This is the fourth reading – this time I checked the last 112 detached-home sales between La Jolla and Carlsbad.
Here are the categories of when the sellers purchased the home they sold:
Year Purchased
12/12/15
3/19/16
6/18/16
12/13/16
0 – 2003
41%
42%
39%
57%
2004 – 2008
23%
29%
24%
19%
2009 – 2011
15%
11%
13%
6%
2012 – 2016
18%
18%
19%
13%
New Homes
2%
1%
5%
4%
It has been consistent all year – the majority of sellers are long-time owners, which almost always means buyers are getting a project to some degree. No matter how much work the sellers have done to their house, buyers can plan on spending plenty to bring it into this era, and modify to their tastes.
Buyers should get comfortable with the idea of remodeling just to expand the inventory. It is helpful if you or your realtor can properly assess the repair costs before offering, and know that it’s rare to get a dollar-for-dollar discount.
More stats:
Other Categories
12/12/15
3/19/16
6/18/16
12/13/16
Number of Sales
125
114
144
112
Avg. $$/sf
$505/sf
$552/sf
$550/sf
$529/sf
Median SP
$1,080,000
$1,129,000
$1,291,500
$1,274,500
Avg DOM
60
38
42
54
Sold in First 10 Days
24%
32%
35%
28%
Lost $$
11
3
7
7
0 DOM
5
8
7
2
Today’s stats are fairly similar to the first reading last December, with the exception being the median sales price up 18% – which isn’t the appreciation rate for every house. It means more of the higher-priced homes are selling.
“In 1965, a real estate developer stumbled upon a lush valley that combined natural beauty with perfect weather: and the vision for La Costa was born”. Everything except the top of the hill is covered with houses now:
We should have a dwindling inventory over the next 7-10 days as sellers cancel for the holidays – and get ready for the spring selling season, where they will expect better results than they’ve had during the last 3-6 months of the off-season.
Will it be better next year?
Probably not, and it could be worse if Trump messes it up.
Active-inventory stats for the 2nd week in December for the last three years:
Price Range
2014 # of Actives
LP/sf
2015 #
LP/sf
2016 #
LP/sf
0-$800,000
113
$375/sf
62
$388/sf
35
$417/sf
$800K-$1.4M
247
$435/sf
193
$439/sf
200
$443/sf
$1.4M-$2.4M
221
$592/sf
211
$582/sf
221
$588/sf
Over $2.4M
325
$1,013/sf
375
$1,026/sf
398
$979/sf
NSDCC pricing hasn’t changed much over the last three years. It gets skewed in the early spring because only the creampuffs are selling.
Click on the ‘Read More’ link below for the NSDCC active-inventory data:
Just before the election, real estate site Trulia asked voters how they felt about the possibility of buying a home in 2017. Then, after it all went down, they asked again a few weeks later.
If you’re looking to sell a house in places like West Virginia, Texas, or certain parts of Pennsylvania, the results were encouraging. Less so in the Bay Area.
Survey respondents split on entirely predictable party lines: Republican enthusiasm for investing in a new home shot up 26 points after November 8. Democrats’ confidence in the same plunged 23 points.
The report doesn’t mention how those with no affiliation to either party feel. Trulia economist Ralph McLaughlin tells Curbed SF that, in general, independent and third party voters seem to have grown discouraged, although it’s hard to tell whether the dip is statistically significant.
On one hand, this would appear to be terrible news in San Francisco, where Democrats run the show and where Bay Area voters were part of the most vigorously anti-Trump turnout in the entire country.
On the other hand—actually, there is no other hand. Almost no one seems to be able to foresee a potential future in which the Trump administration is not at least a little bad for San Francisco’s market.
Redfin economist Nela Richardson pointed out in November that mortgage rates climbed immediately after election day.
Paragon Real Estate’s Patrick Carlisle noted that even a small increase in interest rates could shove potential buyers into the abyss in a competitive market like SF.
Mansion Global (a luxury real estate site owned by Forbes) speculated that the critical Chinese buyer market may become skittish of American investments in California.
And Pacific Union’s Selma Hepp noted that while markets seemed to warm up to Trump, things like increased inflation and scuttled trade deals from his policy promises would probably put a scare right back into them.
Those in an optimistic mood could point out—correctly—that this is mostly speculation.
While local voters (and home buyers) feel down in the dumps about the future, when push comes to shove they might still do what they would have anyway in a highly volatile market.
But that’s the thing: It’s not exactly encouraging when the likely best case scenario is just breaking even.
Interestingly, most of the analysts cited above noted that despite his extensive background in real estate, the president-elect didn’t articulate any housing plans during the campaign.
It’s easy for me to say our local real estate market should get off to a fast start.
It’s what we do every year!
Let’s theorize why the pricing pops in Spring:
Demand has been pent-up for 3-6 months; and buyers come out hungry.
Virtually all sellers come out greedy, and tack on the extra 5% or so.
But only the spectacular homes sell – those that deserve a price hike.
The inferior homes don’t sell, and clog the inventory.
You can see in the graph above that in the last two years, the cost-per-sf has jumped early. But buyers only buy early if they see a spectacular house – it is too tempting to wait-and-see, rather than buy a fixer that’s priced retail-ish.
As the selling season matures, the inventory swells with inferior homes that don’t deserve the new pricing premium. As buyers keep passing on anything that has been on the market for more than 30 days – figuring there must be something wrong if nobody else bought them – the demand intensifies around each of the occasional creampuffs that come to market
Home Sellers
Creampuffs – You can sell your well-appointed, attractively-priced home for a premium all year round. But this year, waiting until summer didn’t get you any more money than you could have gotten in April, according to the graph above. The San Diego Case-Shiller Index has risen only a cumulative 1.3% over the last five months, reflecting sales data back to March.
Inferiors – Those selling homes with partial or no remodeling/upgrading, bad locations, hard-to-show, or listed with bad agents will face increasing competition as time goes on – and they’ll be piling up by May-June. Most importantly, the pricing will be more suspect the longer that yours and others are lingering unsold. List early, and get it done.
Home Buyers
Creampuffs – Buy early. The competition for the well-appointed, attractively-priced homes will increase as the season rolls on.
Inferiors – Buy late. Hope that fixer pricing is crushed by supply overload.
It will probably get harder to tell the difference between the creampuffs and inferiors as the selling commotion starts rumbling down the road.
We’ve touched on the new disrupter OpenDoor, which is currently operating in Phoenix and Dallas (places where home values might be easier to determine):
They are willing to pay cash for your house and close in three days, which sounds enticing for those sellers looking for instant cash. But they offer to buy your home at a below-market price based on algorithms, and fees range from 6% to 12%. They are glorified flippers.
The length of time it takes to close escrow should have improved by now. It still takes 30-45 days to process a sale, which might be advantageous for sellers who occupy the home – they usually need time to pack it up.
But for those sellers of vacant homes, or those who want to use their proceeds to purchase another home, a quick escrow might be preferred.
Thankfully, there are new alternatives.
Quicken is offering the Rocket Mortgage, and yesterday Caliber Home Loans rolled out their new product that can close a regular sale in 10 days or less:
These options should stop sellers from getting their head tore off just because they want a fast closing. These mortgage products could also really help the move-up market by alleviating the struggle of making offers contingent upon the sale of your current residence.
The regional VP of Caliber told me that their process is very innovative. They do not require the buyer to bring in the usual documents. Instead, they are getting them directly from the institutions themselves, which will help ensure accuracy. The IRS will furnish Caliber with income documentation, and the funds for closing will be verified directly with the banks themselves. The appraisals will be computer-generated in areas where you have easier valuations, like in Carmel Valley and Carlsbad where there are newer tract houses that are very similar.
We are close to being able to get a mortgage with the swipe of your ID card! It could invigorate the move-up market in 2017 – and Trump will get the credit!
Our real estate needs are just as they were prior to the election—the demand’s there, even with the uncertainty of what’s to come. That’s according to a just-released report by realtor.com®, which surveyed its homebuyer users’ perceptions toward housing in the wake of the election.
Seventy-nine percent of those surveyed said the election had “no impact” on their plans to buy a home, and, in fact, 10 percent said they were more likely to buy a home now that the new administration has been determined—distributed primarily among those aged 45-64, men and those in red states.
The opposite (those under 45, women and those in blue states) said they were less likely to buy, with millennials posting the highest percentage.
The non-effect of the election is also reflected in the traffic patterns on realtor.com—according to the report, listing views on the site have tracked back up to 15 percent since the election, in line with the growth experienced over the summer. Listing views tend to lead demand.
Gregg Allman wrote ‘Melissa’ sometime in 1967 on a songwriting marathon that yielded 1 good song out of over 200 written, and despite never cracking the U.S. Top 40 charts, it’s remained a classic rock favorite for decades. The late, great Duane Allman loved this song, often asking Gregg to “play me that song – the song about that girl,” and it’s in this 1992 performance that you get the feeling it was really being played for Duane as much as it was for the audience that night.
Allman, supported by Dickey Betts (on lead) and Warren Haynes, performs a rather sober and soulful rendition of ‘Melissa’ that Duane would have loved. In fact, with Gregg sitting so far apart from his bandmates, it’s almost like he’s recalling those nights after dinner when he’d dig out his guitar and play for Duane.
This performance closed out the final episode of the Dennis Miller Show, a popular late night talk show.
