Hat tip to Eddie89 for alerting us to how the sale turned out:
A bidding war recently broke out over a prime piece of California real estate — and it wasn’t for a tiny San Francisco condo.
In this case, a dozen offers were made for an entire town, the 19th-century mining hub of Cerro Gordo, on 300 acres in the Inyo Mountains outside Lone Pine, Calif. It was listed for for $925,000 in June and closed on Friday the 13th for $1.4 million.
“I would say the date was very coincidental,” says listing agent Jake Rasmuson of Bishop Real Estate. “Strictly by chance but very fitting for the property.”
The seller accepted an offer from a group of Los Angeles investors who plan to preserve the relic of the American West and keep it open to the public.
“We did have higher offers, however the sellers really liked the buyers’ proposal and liked the buyers’ plan,” says Rasmuson.
Cerro Gordo has been in the hands of the same family for decades, and though privately owned, it was open to the public for tours. The owners were hoping to sell to someone who appreciates the property’s history.
The buyers are Brent Underwood, who founded the youth hostel HK Austin and Jon Bier, who runs a public relations firm catering to athletes. The two teamed up with other investors to make the purchase; they include Ryan Holiday, former director of marketing at American Apparel; Tero Isokauppila, CEO/founder of superfood company Four Sigmatic; Brendan Gahan, CEO/founder of Epic Signal; George Rutolo, owner of The Whisky Bars; and Kelley Mooney, an en executive at Hulu.
“We want to maintain the historic nature of the property while introducing amenities that will allow more people to enjoy this piece of American history,” Underwood says. “We have spent a lot of time with the current owners and caretaker to learn the history of the place. I’ve read all the books I can find on the town. I can’t express our excitement to be able to continue the care of this beautiful location.”
He adds that they also hope to eventually add overnight accommodations and events such as writing retreats, concerts, photo shoots, theater and more.
Silver was first discovered in the hills of Cerro Gordo in 1865, and in the following years prospectors flocked to its rich veins of silver. It became known as the “silver thread” to Los Angeles and silver was loaded onto mule trains and taken to the city. The town population swelled to some 5,000 at its height and quickly dwindled when silver prices dropped in 1877.
“We want to create a place that pays tribute to this historic part of American history,” Underwood says.
People question how big of a problem it is that listing agents withhold their listings and sell them before inputting them onto the MLS – which denies their own sellers the benefit of open-market exposure, and potentially a better offer.
Above is a sample from today’s MLS hotsheet.
There were a total of 51 properties that were marked either pending or sold, and of those, eight were sold prior to MLS input.
Sellers don’t get open-market exposure.
Buyers get robbed of a chance to purchase the home that might be the perfect fit, AND then wonder why their current buyer’s agent isn’t getting those deals for them.
Other agents are denied the opportunity to earn a living.
But the listing agents get to double-end the commission, so it’s allowed – at least by broker management, NAR, CAR, and the MLS itself; the entities who could do something about it – but who look the other way instead.
Historically, we have considered our market to be relatively ‘healthy’ when the actives-to-pendings ratio is around 2.0 – but that thought originated when prices were about half of what they are today!
But all in all, we’re in pretty good shape today.
The active inventory hasn’t exploded, and as long as the supply stays in check, the sellers aren’t going to panic. Do the buyers have the willingness and ability to wait it out, with no assurance it will ever get better? Or will the lack of solid evidence keep the ball rolling, albeit at a slower pace?
Here are the stats for the NSDCC detached-home market (La Jolla to Carlsbad):
Reading Date
Actives
Pendings
A+P
A/P
Oct 28, 2015
970
358
1,328
2.71
Feb 1, 2016
788
254
1,042
3.10
Mar 23, 2016
900
399
1,299
2.26
June 21, 2016
1,052
428
1,480
2.46
Aug 17, 2016
1,060
395
1,455
2.68
Dec 4, 2016
886
327
1,213
2.71
Apr 21, 2017
842
427
1,269
1.97
July 16, 2018
973
357
1,330
2.73
NSDCC Actives Median Price = $2,288,045
NSDCC Pendings Median Price = $1,395,000
Only 10% of the actives are under $1,000,000, and 35% are over $3,000,000 (which are the same ratios as the last reading in April, 2017).
Here are the Actives/Pendings ratios for each area:
Area
Zip Code
June
Aug
Dec
Apr
Act/Pend Today
Cardiff
92007
2.3
3.5
1.1
1.0
2.5
Carlsbad NW
92008
2.0
2.3
1.3
1.2
2.9
Carlsbad SE
92009
1.6
2.0
1.9
1.0
1.3
Carlsbad NE
92010
0.7
0.9
1.3
0.9
1.1
Carlsbad SW
92011
1.6
1.5
1.3
1.1
2.4
Del Mar
92014
3.2
2.5
4.9
3.3
9.4
Encinitas
92024
1.3
1.8
1.8
1.6
2.0
La Jolla
92037
4.8
4.4
4.4
3.7
4.4
RSF
92067
8.2
6.3
6.3
5.2
4.6
Solana Bch
92075
2.9
3.9
2.7
1.5
2.0
Carmel Vly
92130
1.5
1.8
1.8
1.1
1.9
All Above
All
2.5
2.7
2.7
2.0
2.7
These stats are going to bounce around, so there isn’t anything here that gets me overly concerned.
Del Mar has always been a smaller, expensive subset (just eight pendings today), La Jolla is in line with their recent past, and RSF is as good as it’s been in years. Everything else is around the regular 2.0 ratio for a normal market.
The pending count finally reversed course and gained 6% this week, after dropping for the last five weeks. Just in time to be greeted by this ZH post on the three stages of a housing bubble – hat tip to Doug for sending in:
Stage One usually ends with price spikes in the hottest markets so extreme that they generate headlines. Like these:
Phase Two of a typical US housing bubble begins when sellers read these headlines and note that prices are now above what they could have gotten in the last bubble. With the memory of how badly they’d wished they’d sold at the peak, they realize that they’ve been given a second chance to cash out, move to a cheaper, less-frenetic place, and coast on their real estate riches. So they call a realtor and list their house. As do a bunch of their neighbors. Supply, out of the blue, jumps.
That may be what’s happening now:
The most competitive, tightest housing market in decades may finally be loosening its grip, and that could put pressure on overheated home prices. The supply of homes for sale in the second quarter of 2018, the all-important spring market, rose at three times the rate of the same period in 2017, according to Trulia, a real estate listing and research company.
The inventory jump was the largest quarterly improvement in three years and could be signaling a slight thaw in today’s housing market. But it is just a start.
“This seasonal inventory jump wasn’t enough to offset the historical year-over-year downward trend that has continued over 14 consecutive quarters,” according to Alexandra Lee, a housing data analyst for Trulia’s economics research team.
The supply of homes for sale is still down 5.3 percent compared with a year ago. Still, all real estate is local, and some markets are seeing greater relief. Thirty of the nation’s 100 largest cities, including New York City, Miami and Los Angeles, now have more supply than a year ago.
Of course, the increase is a double-edged sword. Supplies are increasing because sales are slowing, and sales are slowing because prices are so high. In New York City, the median household must spend 65 percent of its income to buy a home, according to Trulia. In Los Angeles, it takes 59 percent.
“Among these unaffordable metros, San Diego posted the largest inventory growth—22 percent year-over-year,” wrote Lee. “Compare that with the same quarter last year, when that Southern California metro registered a 28 percent inventory decrease.”
Mortgage applications to purchase a newly built home plummeted nearly 9 percent in June compared with June 2017, according to the Mortgage Bankers Association. This suggests lower new home sales going forward, despite higher price.
Stage Two’s deluge of supply sets the table for US housing bubble Stage Three by soaking up the remaining demand and changing the tenor of the market. Deals get done at the asking price instead of way above, then at a little below, then a lot below. Instead of being snapped up the day they’re listed, houses begin to languish on the market for weeks, then months. Would-be sellers, who have already mentally cashed their monster peak-bubble-price checks, start to panic. They cut their asking prices preemptively, trying to get ahead of the decline, which causes “comps” to plunge, forcing subsequent sellers to cut even further.
Sales volumes contract, mortgage bankers and realtors get laid off. Then the last year’s (in retrospect) really crappy mortgages start defaulting, the mortgage-backed bonds that contain their paper plunge in price, et voila, we’re back in 2008.
How far away is the climax of Stage Three? It’s too soon to tell, with just one quarter of trend-reversal data on-hand. But if you’re thinking of selling (or if you own a lot of bank stocks or are thinking of shorting such stocks), now might be a good time to start paying attention and taking the appropriate steps.
Are you turned off by the e-buyer who wants to lowball your home’s value, and then knock off another 7% to 9%? But you like the idea of having your equity available for the next purchase?
How about an old-fashioned bridge loan?
Joel arranged financing for a recent buyer of ours who changed jobs during the week of escrow closing – Joel re-verified employment and still closed on time. This was on 97% financing of a converted-apartment condo built in 1979.
Daytrip sent in this link to ZH, and it typifies what we’ll probably see up and down the coast and rich people battle it out with everyone else who is left. The wackos will be the most obvious on the front lines in the beginning, but eventually there could be a real revolution by regular people who are sick of the divide. The comment section is as important as the actual advertisement:
P.S. Government and law enforcement won’t be getting in front of this – there will need to be some violent clashes before any attention is put on this topic.
Reader AI mentioned Patagonia and Sonoita in southern Arizona as two good places to consider, but both are really small – about 1,000 people each. Because most of this audience is made up of city-slickers, I picked a bigger town to feature as an introduction to southern Arizona.
Described by “Where To Retire” magazine as a “four-season Arizona gem”, Sierra Vista is the ideal retirement location. With a year-round temperate climate, low cost of living, affordable housing, and spectacular natural beauty, Sierra Vista has it all. To find out how you can come and sample our beautiful community for $199 for 2 people over 3 days, visit www.RetireSierraVista.com
Here’s what $325,000 will buy you – 2,670sf built in 2002 on 1/4-acre:
My new listing in Carmel Valley, listed for $1,078,000, and hopefully priced attractively for today’s market by realistic sellers. Open 12-3pm Sat&Sun!
Nice buy in the Del Mar school district and ideal for those who prefer a low-maintenance lifestyle – the yard is right-sized with no houses behind! Hardwood floors, granite-slab kitchen and baths, newer appliances, new roof, new paint, new water heater, crown molding, upstairs laundry room, plus master has big walk-in closet and balcony! Easy 5-min ride to freeway access at I-5 and 56. Priced under the last three sales in area – including next door!
Click on image to see last three sales nearby (Jim sold 2 of 3)
