Standard Realtor Lunch
There’s nothing wrong with a regular VG donut!
Inventory Watch
How does our NSDCC inventory compare to last year’s counts? Here they are by price range:
| Price Range | ||||
| 0-$1.0M | ||||
| $1.0M-$1.5M | ||||
| $1.5M-$2.0M | ||||
| $2.0M+ |
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 | ||||
| 0-$1.0M | ||||
| $1.0M-$1.5M | ||||
| $1.5M-$2.0M | ||||
| $2.0M+ |
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.
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:
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.”
Seaport Yesterday and Today
The house featured below is where the red dot is in the photo above, and the area circled in red at the bottom notes where the La Costa Resort expanded.
These sold for less in 1977 – this one was a Portsmouth-A plan:
San Diego Earthquakes
After two major earthquakes rocked Southern California over the holiday weekend, many looked to one of San Diego’s own fault lines as a potential threat — but one seismologist says that’s hundreds of years away.
Drake Singleton is a Ph.D. candidate at San Diego State University whose thesis focuses on the Rose Canyon Fault, which runs through some of San Diego’s most populated areas.
Singleton’s work is helping to determine how fast the Rose Canyon is moving at depth — an important parameter to accurately characterize the seismic hazard for San Diego.
Several years ago, Singleton was part of a team that created a so-called “paleoseismic trench” in Old Town’s Presidio Park. He estimated earthquakes occur on the fault line every 700 years, on average — and that the last earthquake struck in the mid-1700s.
“The Rose Canyon fault line, based on the data that we have, looks like it’s right in the middle of its cycle and not toward the later. I would say the seismic hazard is lower than other faults in California, but still there,” Singleton told NBC 7.
He said there is a lower seismic hazard compared to the San Andreas and San Jacinto fault lines. But he also added the Rose Canyon Fault could potentially have a maximum magnitude in the high 6s — or possibly a 7.
“A lot of major freeways cross the fault zone, so there would be disruption to travel as well as damaged water pipes, that sort of thing,” said Singleton.
The San Diego County Office of Emergency Services, using a FEMA disaster evaluation model, put together estimated damage figures based on a 6.9 magnitude earthquake along the Rose Canyon fault line. Costs would include $1,094,267,000 in structural damage, $5,317,666,000 in non-structural damage, and $1,972,043,000 in contents damage.
Additionally, the county estimated that 122 to 292 people would be hospitalized, 1,307 to 1,720 would need basic first aid care, and somewhere between 12 and 57 people would die.
NSDCC July Sales
We saw that the first-half sales were 4% under last year’s count – has it been getting worse lately? Yes, and the high-end is where the trouble is:
NSDCC Detached-Home Sales, July:
| Year | ||||
| 2016 | ||||
| 2017 | ||||
| 2018 | ||||
| 2019 | ||||
| Latest YoY |
We have 546 active listings of NSDCC homes priced over $2,000,000/46 = 12-month supply.
Low rates, more inventory, strong employment, and record Dow hasn’t helped much yet. But we know there’s nothing that price won’t fix!
Get Good Help!
Foghat @ The Belly-Up
Foghat is playing at the Belly-Up tomorrow night, July 11th!
Getting the Price Right
I don’t know if they surveyed actual home sellers, but if these stats demonstrate the current sentiment, it shows how critical it is to list a home at ‘market price’ vs. ‘dream price’.
An excerpt from this HW article:
You’ve listed your home for sale, and no one is taking the bait. One month passes, then two. How long do you wait before you increase the odds of an offer by dropping the price?
According to a recent survey, most American home sellers opt to reduce their asking price after three months of zero offers.
Specifically, a survey of 1,000 consumers revealed that 33% would opt for a price reduction after three months, making it the most common choice.
Just under 20% said they would wait one month, while 17% would wait five months. For about 9%, it would take an entire year before they’d reconsider their price.
But for others, they’d rather not sell at all as opposed to selling for less than they originally wanted, with about 12% said they would never lower the price of their home.
The 33% would wait three months, but 38% would wait at least five months or longer to lower their price, if at all (17%+9%+12%).
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Zillow says that the average price reduction is 2.9%, which isn’t going to impress buyers much. When prices were rising 5% to 10% annually, the market would catch up with a wrong price before too long. But now that pricing is flat, we don’t have that luxury – and we need to be smarter about price strategy.
https://www.zillow.com/sellers-guide/when-to-reduce-house-price/
Jim Klinge
Klinge Realty Group
Broker-Associate, Compass
Are you looking for an experienced agent to help you buy or sell a home?
Contact Jim the Realtor!
- 682 S. Coast Hwy 101, Suite #110
Encinitas, CA 92024 - (858) 997-3801 call or text
- klingerealty@gmail.com
CA DRE #01527365, CA DRE #00873197
