3627 North Fork, Carlsbad 3 br/2.5ba, 1,989sf YB: 2014 closed for $900,000.
Single Story Home in the highly sought after “Foothills” at Robertson Ranch w/ 3bd, 2.5 ba and 1989 sqft w/low HOA. Offers Resort Style Living at its Finest An OPEN FLOOR-PLAN, Highly Upgraded Kitchen, Granite Counters, Custom Back-Splash, SS Appliances & 5 Burner Gas Stove, New Porcelain Tile through living area, Dual Pane windows, tankless water heater. Master Suite Features 10 ft Ceilings, Custom Vanities, & Very Large Walk-In Closet.
Double-digit increases can’t last forever – but could home prices plateau for years? It will probably depend on mortgage rates, and having enough reasonable sellers who are willing to take the same $ as what the last guy got.
From our friends at JBREC:
Price appreciation has slowed across every major housing market, in what we are coining the Great Price Deceleration.
The biggest deceleration occurred in San Jose: Last year, resale prices in San Jose were up 20% YOY! Today, prices are down 6% YOY—a deceleration of 26%. Last year, San Jose was frenzied with less than one month of supply and very strong job growth. Builders were selling homes faster than they could build them. In the second half of 2018, the San Jose market slowed substantially due to affordability issues, but conditions have stabilized this year.
Top California markets, Seattle, and Las Vegas have experienced the most price deceleration. Home buyer affordability remains weak, even with historically low 4% mortgage rates, and homes are sitting on the market longer (especially higher-priced homes). We are seeing more buyer demand in markets such as Seattle, where home builders have adjusted prices.
Markets in the Southeast, Midwest, and Northeast have been far less frenzied this cycle and have had much steadier prices. These markets are typically lower risk in their fundamentals (more affordable, less risk of oversupply, and steady job growth). Raleigh-Durham has experienced the least deceleration in price from last year. Resale prices gained 7% YOY last year, and today they are up 6%, a 1% price deceleration.
Nationally, we expect resale prices to gain 2% through 2022, cumulatively, but there are huge disparities by region and metro.
We explore all top housing markets each month in our Regional Analysis and Forecast report for our paying research clients. If you are interested in becoming a research client, please reach out to our team of expert analysts.
This collection of opinions has more reach – and more influence – than those of any part-time blogger. Thankfully, these experts are split on whether the alleged slowdown is temporary, so readers will just be on their merry way in hopes that it will all work out.
It’s what happens when the ivory-tower group chimes in – they attempt to apply the vague old theories to what is happening today, but we don’t know if their principles are still valid.
Gina is the only one who mentioned a specific data point, so let’s put the actual number on it:
First-half sales of detached-homes in San Diego County between $1,000,000 and $2,000,000 were nearly identical year-over-year (1,551 in 2018, and 1,546 in 2019), while sales over $2,000,000 dropped 10% YoY.
Gary probably has the best take on it above, and his day-to-day focus is advising builders.
My thought:
We have a low supply of quality homes mixed with a very affluent demand which is causing every aspect of selling homes via the MLS to be under attack. Rather than championing (and improving) the traditional system of selling homes, the industry is going to allow off-market sales, ibuyers, commission lawsuits, and Wall Street to sway the outcome.
It will take away some of the free-market influence, which could keep us at an artificially-inflated plateau.
But then again, I’ll stick with what Yogi Berra said,
“It’s tough to make predictions, especially about the future.”
Rich’s latest graphs are out, and this inventory history above shows how relatively few homes are for sale locally.
The median detached-home list price for the county today is $849,000!
He did mention a reader’s theory that in the era of online search portals, the inventory has become more efficient. Better-educated buyers are making faster decisions these days, which keeps the inventory counts down. But the hot buys have always sold quickly, and the over-abundance of data could be dumbing down the decision-making.
We saw yesterday that the number of new listings has remained steady, but it seems that buyers keep getting pickier. First-half sales are down 4% year-over-year, and pricing is a little soft too.
But last year’s sales were down too, and if we consider the 2016 count to be the median in the group above, then this year’s first-half sales are 10% under that.
Yunnie is optimistic though:
Yun said consumer confidence about home buying has risen, and he expects more activity in the coming months. “The Federal Reserve may cut interest rates one more time this year, but there is no guarantee mortgage rates will fall from these already historically low points,” he said. “Job creation and a rise in inventory will nonetheless drive more buyers to enter the market.”
