Still Time to Move!

The selling season is pretty much over – did you get ‘er done?  Or did summer slip away from you?

School starts in 40 days…..there is still time!

But when you include a couple of days for negotiating, and a couple of days for moving, you need to make a deal by Monday!

Lower rates have helped to keep our pending sales afloat, so don’t give up hope:

Get Good Help!

La Jolla Relaxed Coastal Design

This just closed for $7,250,000 cash – and for that money you get the quality upgrades like Calacatta Caldia White Marble Countertops (not quartz), Fleetwood Multi-Slide Pocket Doors & Windows in Foyer, Living Room and Kitchen/Family Room (Marvin windows/door throughout the Rest of House) and DaVinci EcoSlate Cool Roof (meets Title 24 Requirements for CA ENERGY STAR qualification):

Del Mar Flood Zone

The new flood map goes into effect in December, and it shows the ‘base flood elevation’ being six feet higher than it was on the previous map.  This article is about the city council meeting on Monday, where no action was taken but notes that the Coastal Commission is preparing their recommended changes to Del Mar’s Local Coastal Plan:

https://www.delmartimes.net/news/story/2019-07-17/del-mar-awaits-state-federal-coastal-actions

An excerpt:

Ongoing dialogue between the city and commission administrators has provoked fears among beach-area homeowners that the state body could impose onerous requirements in response to sea-level rise.

Of major concern is that the city adopted a sea-level rise adaptation plan that outlines various measures to cope with the rising sea. The plan, however, rejects the concept of “managed retreat,” in which property owners would have to relocate their homes and buildings to higher ground to avoid flooding.

City officials determined managed retreat is impractical for Del Mar, the county’s smallest city. The city analysis concluded there would be nowhere for buildings to be relocated and it would destroy property values in the millions and even tens of millions of dollars. The median home value in Del Mar is about $2.5 million, according to online sources, but beach front homes run much higher.

In contrast, Del Mar’s adaptation plan calls for measures such as sand replenishment and management, flood control measures such as dredging, and ongoing monitoring and analysis of the effects of the rising sea level.

A number of residents filed letters with the city before Monday’s meeting and many in attendance wore stickers with red “say no” bars over the term “trigger points.”

The sticker and comments were intended to express opposition to any commission attempt to establish thresholds that, when reached, would trigger required “managed retreat” responses by the city.

Also, city officials oppose the commission’s definition of existing development as structures that were built in the coastal zone before the commission’s establishment in 1977.

“Please listen to Del Mar residents. Say no to trigger points, say no to new definitions of existing development and say no to the California Coastal Commission,” urged Jerry Jacobs, president of the Del Mar Beach Preservation Coalition.

Reasons NOT To Sell

Baby boomers in full control of the market, and very few have a reason to sell. In fact, the list of reasons NOT to sell is so long that you can’t help but have a personal favorite that keeps you in limbo:

1. I don’t need the money.

2. The grandkids are here.

3. My low property taxes have me locked in.

4. My low mortgage-interest rate has me locked in.

5. Everything else is too expensive.

6. I don’t want to leave the city/state.

7. My parents might move in.

8. My kids might move in.

9. My kids need to inherit because they can’t afford a home.

10. I don’t want to pay capital-gains (on more than the $500K).

11. I got a reverse mortgage.

12. I love it here!

13. Waiting for the market to peak.

Yet we don’t have an inventory problem – heck, there are 1,005 houses for sale in North SD County’s coastal region (La Jolla to Carlsbad).

To buy one, you need to have some horsepower – the median list price is $2.25 million.  But at least it looks like higher-end pricing has slowed:

First-half stats for homes priced over $2,000,000:

Year
Jan-Jun # Listings
Median LP
Jan-Jun # Sold
Median SP
2013
628
$2,998,000
203
$2,620,000
2014
646
$3,197,438
218
$2,776,000
2015
712
$3,250,000
252
$2,820,500
2016
856
$3,092,500
257
$2,754,000
2017
805
$3,100,000
293
$2,749,000
2018
862
$3,098,000
312
$2,645,000
2019
898
$2,995,000
298
$2,694,000

Has the higher-end market peaked? Compare this year to 2013.

It could be that egos are causing homes that are really worth $1.7-$1.9M to slip up into the $2M+ range, which would skew the median prices lower. But the sales have leveled off over the last three years, in spite of more choices. More listings but fewer sales keeps the pressure on pricing.

Inventory Watch

How does our NSDCC inventory compare to last year’s counts? Here they are by price range:

Price Range
1H18 Listings
1H19 Listings
ACT Listings on 7/16/18
ACT Listings on 7/15/19
0-$1.0M
529
523
98
100
$1.0M-$1.5M
870
831
200
191
$1.5M-$2.0M
487
523
160
194
$2.0M+
862
898
979
1,036

The inventory under $1,500,000 is about the same as last year, and above $1,500,000 is a little bloaty.

There were 7% more listings between $1.5M and $2.0M that came to market in the first half of 2019 as sellers keep pushing higher. But not everyone deserves to be there just yet – there are 21% more active listings today in that $1.5M-$2.0M range.

Let’s look at how sales have been impacted.

Here are the NSDCC first-half closed sales by price range:

Price Range
1H18 # Sold
Median SP
1H19 # Sold
Median SP
0-$1.0M
380
$866,250
342
$859,000
$1.0M-$1.5M
506
$1,249,950
551
$1,225,000
$1.5M-$2.0M
244
$1,712,500
249
$1,744,000
$2.0M+
312
$2,645,000
298
$2,694,000

Mortgage rates that are at least 1/2% lower this summer are only keeping sales close to what they were in 2018 – and any extra inventory just waits in line, hoping good fortune will come their way.

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Euclidean Geometry

Stunning architecture coupled with natural landscapes and vistas await a discerning buyer. Distinguished architect Leon C. Meyer creation that hearkens back to the golden age of Mid-Century Modern design is truly one of a kind. Revered for his flawless application of Euclidean Geometry, the home nestled in Southwest Escondido on a private road offers a unique canvass to create a masterpiece. Ample indoor & outdoor living space, mountain views & the feel of private retreat. Sold for $545,000 cash.

Low Rates, No Nuts

Ryan is probably the most similar blogger to me because he’s in the business and sees what is actually happening on the street.  He does a ton of charts and graphs, so if you’re analytical give his blog a look:

www.sacramentoappraisalblog.com

He sums up his current market conditions quite well with these thoughts:

Normal: The market felt really dull last year, but it’s been a somewhat normal year so far in 2019. There are certainly concerns about affordability, but from a stats perspective it’s been a pretty standard first half of the year. Pendings continue to be strong also, so buyers still clearly have a strong appetite for the market.

14 months in a row of slumping volume: Despite mortgage rates being low we’re seeing somewhat sluggish sales volume. In fact, sales volume was down 11.6% in the region last month and it’s down 8.6% so far in 2019. Moreover, we’ve had fourteen months in a row with lower sales volume compared to the previous year. In my mind it’s still best to say we’re having a slower year instead of a volume meltdown because levels aren’t alarmingly low by any stretch. Let’s watch this carefully.

Dude, rates will never get below 4% again: It’s been a little surprising to see how low rates have gone again, right? The narrative for a while was, “Dude, they’ll never go below 4% again. We’ve bottomed out.” Yet here we are. My sense is if rates keep going down it’ll only increase competition and artificially inflate prices. That would be temporarily nice for buyers, but an unfortunate byproduct is low rates in a wider picture tend to create less incentive for sellers to move. Why sell if you’re sitting on a 3.5% mortgage rate?

Purplebricks & the tech invasion: Last week it was announced that Purplebricks will be exiting the United States housing market after a 75% loss in shares. This company is going to the grave in the U.S., but the reality is we’re still in a market where tech companies are trying to disrupt the traditional real estate model. Next up? Zillow is said to be coming to Sacramento by the end of the year.

Joe Montana’s $49M overpriced listing: Former Quarterback Joe Montana listed his property for $49M and it didn’t sell because it was profoundly overpriced. In fact, the price has now been reduced to $28M. Many sellers are like Joe in trying to attract mythical unicorn buyers who will mysteriously overpay for some reason. My advice? Be aware that today’s buyers are incredibly picky about paying the right price.

The dream of selling at the top: I met a guy who wants to sell because he says the market might top out soon. His concern is a friend sold two years ago thinking the market was at its peak, but it wasn’t. The truth is it’s not so easy to time a market perfectly. We talk about how simple it is to do this, but most people pull it off from dumb luck more than anything. The reality is the bulk of buyers don’t buy based on price metrics, but rather lifestyle and affordability.

My thoughts on his thoughts:

The first time mortgage rates went under 4%, it did spark a mini-frenzy because no one had seen that before.  Those who moved up – or refinanced – were able to mitigate their payment shock with a lower rate than they had before.  But now the sub-4% rates are a yawner for those who already have them, and as a result, we’re not seeing the same enthusiasm we saw previously.

I’ll add a bit to his thoughts on Joe’s mansion.  Are buyers being extremely picky? Yes, absolutely, yet it’s more about finding the perfect house than the perfect price.  Once buyers find a great fit, they will pay whatever it takes.  I saw a starter home in Carlsbad yesterday get four offers over list price, which will make it the most expensive sale for that model ever. But it was also a great location and house was dialed in.

Selling at the top used to be a big driver for decision-making back in the old days.  But the market is so tight today that you can’t just go out and replace a quality home without a real struggle.  Now, selling at the top is only one of the criteria for home sellers, and it’s dropped down the list for most.

Ryan has more thoughts and graphs here:

www.sacramentoappraisalblog.com

Carlsbad Raceway

From the U-T archives:

On June 22, 1980, San Diegan Marty Moates became the first U.S. motorcyclist to win the U.S. Grand Prix of Motocross at Carlsbad Raceway.  Union sports writer Bill Center later called the 1980 U.S. Grand Prix of Motocross, “the most historically significant motorsports event ever held in San Diego.”

Moates continued racing until 1984, when he joined with twin brothers Mark and Brian Simo, also racers, to create No Fear, the successful extreme sports gear manufacturer based in Carlsbad.

From The San Diego Union, Monday June 23, 1980:

It took a decade, but those daring young American motorcyclists have, finally, routed the entrenched Europeans from the ruts, jumps and ditches of Carlsbad Raceway.

And the hero was homegrown, 23-year-old San Diegan Marty Moates, who rode the torturous 1.3-mile Carlsbad circuit like no man in the nine previous events, riding off with the following firsts:

  • The first American to win the U.S. Grand Prix of Motocross
  • The first rider to win both Carlsbad motos
  • The first privateer rider (that is without factory backing) to win the U.S.G.P.

Motocross enthusiasts have a term for it — holeshot. That is when one rider has a bead on the pack at the start and buries, so to speak, the competition in his dust. “One-one, bullets,” said another San Diegan and Moates’ friend Marty Smith (fourth in the second moto and eighth overall). “Marty put on a show.”

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