Our reader Another Investor has been supportive of the blog throughout the years. Her comment from the second link above still makes me wonder about the future:
We’ve already seen how the natural real estate cycles have been crushed, and now here we are in the middle of a world-wide pandemic, rampant unemployment, and racial/political unrest AND PRICES STILL KEEP GOING UP. There is nothing natural, normal, or historical about it – we are living in a different world. Today’s real estate market is tailored for the elite, and their insiders.
The days of individual realtors helping families with achieving the American Dream are just about over, and as AI said, ‘the Klinge era of service to clients is coming to an end’. All I can do is to try and help as many people as I can before I get pushed out.
Let’s look at the bigger picture and compare the first half of 2020 to previous years:
NSDCC 1H Listings & Sales
Year
# Listings
Median List Price
# Sales
Median Sales Price
2016
2,999
$1,425,000
1,526
$1,150,000
2017
2,712
$1,425,000
1,595
$1,225,000
2018
2,701
$1,499,000
1,420
$1,325,000
2019
2,725
$1,555,000
1,383
$1,300,000
2020
2,290
$1,675,000
1,150
$1,400,000
19vs20
-24%
+8%
-17%
+8%
There have been a fairly-consistent 2,700 NSDCC houses listed for sale in the first half of each of the last three years. In 2020, the count dropped to 2,290, which is 435 fewer listings than last year, or about a month’s worth. We didn’t miss them much either, with sales only being down 17%. Pricing of homes on the lower end has known no throttle.
If we have a typical second half, the 2020 annual sales could end up only being down 5% to 8% for the year – and median pricing up 5% to 10% YoY. I’m not sure anyone predicted that when the ‘rona broke out!
Thinking of leaving America? Here’s an sample – and Italians hold out on price too!
On June 4, just a day after Italy opened its borders to European Union citizens, real-estate agent and reality TV star Fredrik Eklund boarded a plane from Los Angeles to Milan, with a pit stop in Paris. With Covid-19 fears still high, the airports were nearly deserted, with restaurants and lounges shuttered and passengers scuttling around in face masks. The experience was like being in a sci-fi movie, said Mr. Eklund, 43.
An L.A. resident with both American and Swedish citizenship, Mr. Eklund was visiting Italy on a personal mission—to scour Tuscany for the summer estate he had dreamed of for decades. With Northern Italy hit early and hard by the coronavirus pandemic, the real-estate market in the region had been stalled for months, and he thought there might be bargains.
“I’m not there to take advantage of a situation, but the reality is that there has been no local activity because the market has been shut down,” said Mr. Eklund, an agent at Douglas Elliman.
Mr. Eklund is one of many potential home buyers looking for deals in Tuscany amid the pandemic. Real-estate agents in the region said they’ve seen an enormous surge in inquiries for rural Tuscan retreats as the nation has begun to recover from the Covid-19 crisis, predominantly from British and American nationals looking for vacation homes as well as Italian urbanites dreaming of more space after having been stuck in apartments for months. Agents now forecast that, if it keeps up, the third quarter of 2020 could eclipse last year in terms of transaction volume for luxury homes, spurred in part by new laws that limit taxes on foreign income for Italian residents.
It’s a much needed injection of activity for the Tuscany market, which has struggled in recent years as the eurozone economy has slowed and more recently as Brexit fears and exchange rates stymied investment from the U.K. Then market activity dropped by about 90% in the spring as a result of the virus, said Mark Harvey, the London-based head of the international department at brokerage Knight Frank.
“It’s a bit of a feeding frenzy, which is not at all what we were expecting,” Mr. Harvey said of the recent influx of interest, noting that the pandemic forced many people to re-evaluate their living arrangements.
Mr. Eklund had very specific criteria for his new home, which he plans to visit in the offseason and rent out in the summers. He was looking for a historic estate in the countryside within driving distance of an international airport, with at least five bedrooms for his family and their nanny plus guests. He wanted a home that was private but still within a few minutes of a town with restaurants and shopping. In terms of budget, he was trying to keep it under roughly $3.5 million but also looked at more expensive properties. And, most importantly for Mr. Eklund, who has an enormous following on social media thanks to “Million Dollar Listing,” it had to have that Instagram magic.
“This might sound a little materialistic, but it needs to have a certain look, like Instagram-friendly,” he said. “It needs to have this ‘I need it, I want it, can’t live without it’ look.”
In part, that’s because Instagram could be a crucial tool for renting out the property when he’s not using it, he said, noting that social media is now more powerful for him than any listings service.
Ultimately, Mr. Eklund’s favorite property was a more modest, 17th-century farmhouse in San Casciano dei Bagni, a rural region known for its hot springs about 40 miles southeast of Siena. He loved the panoramic views of the region from the hilltop, the large outdoor swimming pool, the kitchen with its huge central island, and the “warm and cozy” palette of the décor, he said. With just four bedrooms, the nearly 5,000-square-foot house had slightly less space for guests than Mr. Eklund originally wanted, but it had been recently restored and was the only house he saw with central air conditioning and heated floors. To make it perfect, he said, he would add outdoor furniture and do some landscaping. The asking price was $1.5 million.
After seeing the property, Mr. Eklund felt sure it was the one.
“I found it,” he told The Wall Street Journal by phone after the showing. “I’m actually crying in the car—super emotional. I’m completely obsessed.”
Mr. Eklund, who calls himself spiritual, said that the purchase seemed meant to be, and that he could envision himself retiring at the property. It was the same overwhelming reaction he recalled having when he first saw his family’s estate in Connecticut.
Mr. Eklund submitted an offer on the house, but the deal was complicated in part by travel restrictions, since he wants his husband to see the property before they buy. They may hold off until next year to move ahead with a purchase to see how the market is then, he said.
It’s not clear if the deals Mr. Eklund envisioned will materialize. Bill Thomson, chairman of the Italian Network at Knight Frank, said his sellers are standing firm on their asking prices despite the pandemic fallout, while Ms. Romolini said she’s seeing them loosen up a little in light of the circumstances.
Mr. Harvey said he’s not sure if this surge of activity will last, or if it’s simply a blip.
“What happens after this wave,” he said, “is anyone’s guess.”
Another incredible week as buyers scramble to grab something and get a mortgage rate in the 2s!
We had 106 new listings, and 98 new pendings in the past seven days, leaving us with roughly 30% fewer homes for sale than at the same time last year.
As long as inventory counts are heading downward, there won’t be any relief for buyers – especially those under $1,000,000, where we have 34 active NSDCC listings, and 73 pendings!
We ended up with four offers on our latest listing, and all came in over list price.
I’m always going to do a highest-and-best round – not to work over the already-beleaguered buyers who have probably lost others and just want to get it over with – but to make sure everyone felt they had a fair shot to buy it.
The winners also took the opportunity to submit a SECOND love letter that out-shined their first when they mentioned that they just found out this week that they were pregnant again (they had pointed out in their first love letter than their first kid was about the same age as the seller’s little boy) and they wanted their family to grow up with others they knew who had just moved into the same neighborhood! My sellers were pregnant when they bought this house so the connection was very real.
The agent who represents the winners was the first to call me about the listing, the first to show the house, and the first to write an offer – be ready!
The motivated buyers are on alert and will drop everything to come over for a look. Yet how often do we still see few or lousy photos (and rarely a real video-tour), no showings for days or weeks after MLS input, or listing agents who are nowhere to be found?
