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San Diego Case-Shiller Index, January

After sputtering over the last three months, the latest reading of the SD Case-Shiller Index showed some pop – like it did last January:

San Diego Non-Seasonally-Adjusted CSI changes:

January ’17
231.21
+0.8%
+5.7%
February
233.31
+0.9%
+6.5%
March
235.61
+1.0%
+6.4%
April
237.48
+0.8%
+6.6%
May
239.84
+1.0%
+6.5%
June
241.96
+0.9%
+7.0%
Jul
243.48
+0.6%
+7.1%
Aug
245.55
+0.9%
+7.8%
Sept
246.61
+0.5%
+8.2%
Oct
246.58
+0.0%
+8.1%
Nov
245.74
-0.3%
+7.4%
Dec
246.29
+0.2%
+7.4%
January ’18
248.16
+0.8%
+7.3%

The highest reading of the San Diego NSA CSI was 250.34 in November, 2005.

U.S. home prices posted another big gain in January, pushed higher by a shortage of homes for sale. Standard & Poor’s said Tuesday that its S&P CoreLogic Case-Shiller national home price index climbed 6.2 percent in January from a year earlier. That nearly matches December’s 6.3 percent gain, which had been the fastest 12-month growth in almost three years. The January increase was in line with economists’ expectations.

“The home price surge continues,” said David Blitzer, chairman of the index committee at S&P Dow Jones Indices.

Downsizing Within California

Another reason why the 2018 inventory might stay tight – seniors waiting until this thing passes to downsize. Currently, the counties of Alameda, El Dorado, Los Angeles, Orange, Riverside, Santa Clara, San Bernardino, San Diego, San Mateo, Tuolumne, and Ventura already permit such transfers, so the additional benefit would be for those who are moving to the other 47 counties.

My fellow REALTORS®,

I have great news to share! This week, C.A.R.’s Homeownership for Families and Tax Savings for Seniors Committee submitted nearly one million signatures to county elections officials throughout California. This will qualify the Property Tax Fairness Initiative (Portability) for the November 6, 2018, General Election ballot. We are one step closer to ensuring that seniors, the disabled and disaster victims can move freely throughout California without facing an unfair “moving penalty.”

This significant milestone illustrates the strength of our REALTOR® Party, demonstrating vision, leadership, and our grass roots campaign to improve housing opportunities for all Californians. Fixing California’s property tax system is critical to people across California and our state as a whole.

As champions for homeownership, REALTORS® face challenges with California’s property tax laws. You probably know a senior citizen who lives in a home that no longer fits their needs, but cannot afford to move and faces a massive property tax “moving penalty.” Our brothers, sisters, parents and grandparents shouldn’t be barred from downsizing or relocating to be closer to family because they cannot afford the property tax increase.

Similarly, severely disabled people may live in homes that are no longer safe or practical for them. Buying a more suitable home is often impossible because they face significant property tax increases when they move, even if they move to a less expensive home. Finally, disaster victims like those affected by the massive northern California wildfires and Santa Barbara mudslides have arbitrary and limited protections. Disaster victims, too, face a moving penalty if they choose to move outside of their disaster-torn county.

Passing the Property Tax Fairness Initiative reforms what is a confusing and inconsistent approach to property taxation. Senior homeowners can keep their existing tax base when they move, but only one time and only when moving to a home of equal or lower price within their current county of residence, or in 11 counties that allow an exemption. Moving to a high cost part of California is nearly impossible, regardless of circumstance. C.A.R.’s initiative fixes these issues so these homeowners can move throughout California and adjusts their property taxes up if their new home is more expensive. It allows people to move more than once, as circumstances may require. In short, it is the right thing to do for people who are already paying their fair share in property taxes.

Nobody should be penalized due to their life circumstances. That’s not right. Not in California.

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Inventory Watch

We’re tracking the total number of pendings this year, and this week was the first time the count went down (from 350 to 347).  It probably means the selling season is at peak performance, and with more escrows closing, the pendings’ count should plateau(?)

The Over-$2,000,000 inventory has blown up this month.  On March 5th, we had 398 houses for sale priced over $2,000,000, and today we have 455, which is a 14% increase in three weeks!

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Carlsbad 2009 vs. 2018

In the last post, I included a link to April, 2009.

Local Boy left this comment there with stats – let’s compare to today:

“Carlsbad Statistics (Single Family–all 4 zips)
I think the sellers in Carlsbad have been doing an excellent job pricing–in the last 3 months, 123 properties have closed escrow at 96% of asking price at a average price per sqft of $280 and 70 days on the market average (42 median)–not bad. 409 active listings with less than 3 months average market time, 155 houses currently in escrow with 52 days on the market average–Fairly healthy market–2.6 ratio of active/pending (single family).”

Category
April, 2009
March, 2018
Carlsbad Sales, last 90 days
123
183
Average SP/LP Ratio
96%
96%
Average Price Per SF
$280/sf
$425/sf
Avg. Days on Market
70
32
Active Listings
409
161
Pending Listings
155
126
Actives/Pendings
2.60
1.28
Median Sales Price
$630,000
$960,375

There have probably been 200-300 houses built in Carlsbad since 2009, yet the active inventory isn’t half of what it used to be.  But closed sales are +49%!

Timing is Everything

Here’s an example of how fast the market has been moving:

It was only nine years ago when you could buy a decent Carmel Valley starter home in the $600,000s.  This 2,056sf house built in 1985 on Santa Nella sold for $678,000 in April, 2009.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Five years later, this 2,057sf house in Carlsbad sold for $679,000 in April, 2014.

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You can still buy a 2,096sf house in the $600,000s today; you just have to go to Oceanside.  Here’s an example of a house that just closed for $620,000, and though it does back to a busy road, you do get a 3-car garage!

Meanwhile, the value of the Carmel Valley house is around $1,000,000 today.

Higher Density in Coastal California

There’s an outdated view circulating around that California urban areas are lower density than those of the Northeast Corridor, according to New Geography, but a comparison of Census data shows coastal California suburbs more than double Northeast suburbs in density.

New Geography compared “Coastal California” hubs Los Angeles, San Francisco, San Diego, and San Jose to the Northeast Corridor which runs from Washington, D.C., through Baltimore, Philadelphia, New York, Hartford, Providence, and Boston. The analysis shows urban core population density in coastal California is at least 60% higher than urban Northeast populations while suburban density more than doubles that of Northeast areas.

New Geography’s Wendell Cox writes:

Given the already elevated level of density, proposals to cram more people into already settled areas of California could worsen the quality of life. California’s high urban densities are accompanied by the worst traffic congestion in the nation and some of the worst in the world. With plans in place and more proposals to increase densities, this can only get worse.

Link to Article

Bathroom Tips

From realtor.com:

It may not be the grandest room in the house, but the bathroom is one of the most important when it comes to selling your home. Buyers want as many bathrooms as they can afford, and they want them pristine. So, if you’re getting set to host an open house, it’s time to spiff yours up! Here’s exactly what you need to do to get it ready:

Clean everything. You know this already: There’s nothing worse than walking into an open house and finding mildew, scum, hair (or worse) in and around the tub, toilet, and sink. Give your bathroom the kind of deep cleaning you’d usually reserve for when the in-laws visit. Ask yourself, “What would Martha Stewart think?” No rings around the tub, no soap scum on the shower door, no beard clippings in the sink. Use a mix of vinegar and water in a spray bottle to make mirrors sparkle—it’s an old-school recipe that gets fabulous results (just remember to wipe away streaks with either newspaper or a microfiber towel).

Hide your toiletries. That means toothbrushes, contact lens kits, loose makeup containers, hairspray bottles—anything that could clutter up your countertop goes into the medicine cabinet, under the sink, or wherever it won’t be seen.

Then put out nicer ones. Now is the time to break out those triple-milled imported soaps, or a nice handsoap and lotion duo. Think hotel bathroom.

Remove prescription drugs. We can’t stress this one enough. If you have a medicine cabinet full of allergy meds, sleeping pills, or anything else your doctor may have prescribed, either lock it in a safe or take it with you when you leave during the open house.

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Home Buyer Competition

What today’s home buyers are up against……from realtor.com:

Driven by frustrated buyers who rolled over from last year and record-breaking lows in housing inventory, the 2018 spring buying season is expected to be one of the most competitive in years—but buyers are still optimistic about getting into their dream home, according to a survey conducted for realtor.com®.

“We’re only a few weeks into March and already seeing the market heat up,” said Danielle Hale, chief economist for realtor.com®, in a statement. “Holdover buyers hoping for greener pastures this spring are likely to find sparse options that require them to pay top dollar or make other concessions.”

And those holdover buyers are driving a large portion of the demand, according to an online survey of more than 1,000 active buyers conducted in early March by Toluna Research.

The home search has dragged on for more than seven months for 40% of respondents, the survey showed, while 34% have been searching for 4-6 months. About a quarter have been in the market for three months or less.

More than one-third, or 35%, of those surveyed indicated they anticipate “a lot of competition” this spring.

Perhaps because of that, buyers are thinking strategically about turbocharging their home search and getting an edge on the competition.

When asked how they are trying to get ahead, 42% of respondents revealed they are checking listing websites every day, while 40% plan to put more than 20% cash down. The survey also revealed that 33% are setting price alerts, 31% plan to put down a larger earnest money deposit, and 26% are willing to offer above asking price. Only 6% indicated they are not planning to use any special tactics to cope with competition.

“The majority of buyers are aware of the tough competition they’re up against this spring. Having been in the market awhile, they’ve likely lost a few homes to better offers, which has given them more time to save and up their bidding strategies,” said Hale.

Link to Article

Higher Rates and Impact on Home Prices

Could the supply of homes-for-sale get any tighter?  Freddie Mac thinks so:

Recently, Freddie Mac published a report titled Nowhere to go but up? How increasing mortgage rates could affect housing. The report focused on the impact the projected rise in mortgage rates might have on the housing market this year.

Many believe that an increase in mortgage rates will cause a slowdown in purchases which would, in turn, lead to a fall in house values. Ultimately, however, prices are determined by supply and demand and while rising mortgage rates may slow demand, they also affect supply. From the report:

 “For current homeowners, the decision to buy a new home is typically linked to their decision to sell their current home… Because of this link, the financing costs of the existing mortgage are part of the homeowner’s decision of whether and when to move.

Once financing costs for a new mortgage rise above the rate borrowers are paying for their current mortgage, borrowers would have to give up below-market financing to sell their home.  Instead, they may choose to delay both the sale of their existing home and the purchase of a new home to maintain the advantageous financing.

The Freddie Mac report, in acknowledging this situation, concluded that prices are not adversely impacted by higher mortgage rates. They explained:

“While there is a drop in the demand for homes, there is an associated drop in the supply of homes from the link between the selling and buying decisions. As both supply and demand move together in this way they have offsetting effects on price—lower demand decreases price and lower supply increases price.

They went on to reveal that the Freddie Mac National House Price Index is…

“…unresponsive to movements in interest rates. In the current housing market, the driving force behind the increase in prices is a low supply of both new and existing homes combined with historically low rates. As mortgage rates increase, the demand for home purchases will likely remain strong relative to the constrained supply and continue to put upward pressure on home prices.”

Link to Article

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