The total number of pendings dropped 6% this week – escrows are closing! It also means that the market took the normal break for graduations, though we haven’t had fewer than 54 new pendings since Super Bowl week.
The number of pendings over the last four weeks is inline with previous years:
2014: 248
2015: 296
2016: 271
2017: 295
2018: 271
We should have another surge before the selling season is over. Mortgage rates are lower today than the day before the Fed increase last week!
A somewhat-remodeled single-level home in La Jolla’s gated Windemere community with virtually no yard, an interesting pool, and virtually right on the tennis courts. This closed for $1,110,000 in April:
Here we saw how the NSDCC sales have been down 9% this year – how have sales been county-wide? The closed sales between January and May this year are also down 8% compared to last year, in spite of there being 20% MORE houses listed for sale than in 2017!
The cheerleaders can’t claim that lower sales are due to lack of inventory!
San Diego County Detached-Homes Sales, Jan – May:
Year
New Listings
Closed Sales
Median SP
Median DOM
2013
14,259
10,410
$433,000
29
2014
13,779
8,875
$485,000
35
2015
14,476
9,351
$515,000
29
2016
14,352
9,284
$550,000
26
2017
13,816
9,366
$585,000
20
2018
16,581
8,602
$629,000
26
People want to believe that it takes longer to sell more expensive homes. But the NSDCC median days-on-market is 18 days this year, where the median SP is $1,325,000. Eight days faster in a sub-region where the median sales price is twice as much!
I was listening the night that John Lennon was assassinated, and Jim Ladd got me through the next few hours by playing an incredible blend of JL tunes to ease the pain. He is one of a kind:
This might be the greatest sucker play in the history of housing. The I-news featured a story about the first five Zillow buys in Phoenix, and as you can see above, they are planning to lose money on all of them.
The reporter also interviewed one of the homeowners who sold. She said that her offer from Zillow was higher than the other ibuyers (Opendoor and Offerpad). What a great way to enter an already-competitive market. Make headlines about offering the most money, and don’t look like you’re gouging the homeowners – heck, they look like Robin Hood!
The publicity should fuel a surge of interest in homeowners wanting to sell to Zillow, and the story mentions that they are expanding their staff to 50 people in Phoenix to handle the ‘stronger-than-expected’ demand.
It could just be a ploy to load up their Premier Agents with listings, and/or to gain advantage over the other ibuyers.
Will they eventually resort to flat-out lying to people like all the rest of the real estate advertisers these days? Here’s an example, where they say they will pay ‘fair market value’ (how do you know if it never hits the open market), and no mention that their fees are 6% to 13% – but at least they tell you that they will hammer you for repairs once the deal is in play:
The diverting of money being wired into escrow accounts to close real estate transactions is a real problem, but the authorities are on it – they have recovered $350 million! Unfortunately, they also mention here that $3.7 billion in losses have been reported:
Federal authorities announced today a significant coordinated effort to disrupt Business Email Compromise (BEC) schemes that are designed to intercept and hijack wire transfers from businesses and individuals, including many senior citizens. Operation Wire Wire, a coordinated law enforcement effort by the U.S. Department of Justice, U.S. Department of Homeland Security, U.S. Department of the Treasury and the U.S. Postal Inspection Service, was conducted over a six month period, culminating in over two weeks of intensified law enforcement activity resulting in 74 arrests in the United States and overseas, including 29 in Nigeria, and three in Canada, Mauritius and Poland. The operation also resulted in the seizure of nearly $2.4 million, and the disruption and recovery of approximately $14 million in fraudulent wire transfers.
BEC, also known as “cyber-enabled financial fraud,” is a sophisticated scam often targeting employees with access to company finances and businesses working with foreign suppliers and/or businesses that regularly perform wire transfer payments.
The same criminal organizations that perpetrate BEC also exploit individual victims, often real estate purchasers, the elderly, and others, by convincing them to make wire transfers to bank accounts controlled by the criminals.
The Fed raised their federal-funds rate by 1/4% as expected today, and mortgage rates showed their usual indifference:
Fannie/Freddie 30-year mortgage rate with no points, yesterday: 4.70%
Fannie/Freddie 30-year mortgage rate with no points, today: 4.73%
From MND:
In one sentence, today’s Fed rate forecasts pushed bonds into weaker territory at 2pm and Jerome Powell’s press conference helped to recover most of the losses.
The forecasts showed a slightly higher probability of 4 rate hikes in 2018. The average “dot” (so named for the dot plot on which the forecasts appear) also moved a hair higher in 2019 and 2020. This was the key market mover at 2pm, even though the Fed announcement was heavily edited from its previous version. It probably didn’t help that most of the edits were easier to argue as “unfriendly” for bonds. That said, it would be harder to argue they were unexpected or unjustified.
Powell’s press conference saw bonds bounce back and recover most of the losses, starting at 2:30pm. He said he wasn’t at all concerned about inflation getting out of control, and he was so pleased with the strength of the economy that it doesn’t really leave room for anything other than disappointment or the mere meeting of expectations. The tacit implication is that Fed policy is as tight as it’s going to get. Or rather, the trajectory of Fed policy isn’t going to get any more onerous for bonds–a fact that was driven home by Powell saying we’re getting closer to a “neutral Fed funds rate.”
The ECB is up tomorrow morning, with just as much market movement potential as the Fed. Their announcement is out at 7:45am, but the bigger to-do is typically the Draghi press conference which begins at 8:30am.
The cheerleaders have been saying that the fewer sales this year are being caused by less inventory. Is that the case?
Looking at the detached-homes between La Jolla and Carlsbad, the number of houses being listed in 2018 looks about the same as in previous years. But those priced under a million are dropping like a rock.
NSDCC Detached-Homes Listed Between Jan 1 and May 31
Year
Total New Listings
Those Listed Under $1M
2013
2,312
1,044
2014
2,244
865
2015
2,332
822
2016
2,480
697
2017
2,283
590
2018
2,211
433
Questions:
How many realtors can improve their game and adjust to working the higher-end market, when that’s all that’s left?
How will discount brokerages (low cost, low service) succeed in an high-end environment with dozens or hundreds of competing homes for sale?
Will the ibuyers venture into the higher-end market? (companies who do a quick-purchase of your home for cash and resell for a profit)
Home sellers and buyers should take into account how adept their realtors and service providers are at handling different price points.
When buying a home, the opinion of children matter. If you also add what the parents think the kids want and need, and include those variables into the home-buying decision, it would be even higher – probably close to 100%. Centrally-located homes with big yards and pools tend to benefit:
When it comes to purchasing a new home, 55 percent of U.S. homeowners with a child under the age of 18 at the time of home purchase say the opinion of their child was a factor in their home buying decision. This is according to a new Harris Poll survey commissioned by SunTrust Mortgage, a division of SunTrust Banks, Inc. (NYSE: STI). For millennial parents between the ages of 18 and 36, the influence of children is even higher at 74 percent.
What are children lobbying for in a home? Top requests include their own bedrooms (57 percent); large backyards (34 percent); proximity to parks/activities (25 percent), schools (24 percent), friends (24 percent); and swimming pools (21 percent).
“As a parent of two kids, I know from experience that including children in the home buying process is not only fun for the whole family, but also educational for our homebuyers of tomorrow,” said Todd Chamberlain, head of Mortgage Banking at SunTrust.
