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My video on Monday touched on the different groups of buyers and sellers that should be very active in the 2021 selling season.  Let’s break it down further, shall we?

SELLERS

Boomer liquidations – When we first started talking about boomer liquidations, people in their 60s scoffed and shrugged it off.  Now they are in their seventies, and the burdens of homeownership have never been so apparent. Stuff needs to be fixed regularly, and that dang property tax bill keeps coming twice a year. If you didn’t mind leaving town, a homeowner’s equity position has never been so solid, and you could go to most towns in America and buy a house for cash and live happily ever after.  It’s a temptation that aging boomers will find harder to resist in 2021.

Health considerations – Covid isn’t going away, and for those who are physically challenged, selling their house here and moving to a healthier location will feel like a life-or-death decision – they need to do it. Cashing out their equity is a nice bonus too, and provides enough grease to make it easier to leave San Diego. Let’s note that there are good doctors everywhere, and while the transition may be uncomfortable for the first couple of months, you’ll adjust.

Grandkids – Obviously, it is harder for the kids to get a foothold here than the parents who came 10-30 years ago – home prices have doubled.  If the kids pack it up and take the grandkids somewhere that is affordable, it is inevitable that the grandparents will follow.  They don’t have much time left, and they want to spend it with family.  The grandkids may be the #1 factor in real estate decisions for the next few years.

Move-Uppers – For those who want to stay local, the best time to move up is when you can sell your existing home for more money than ever, AND get a lower interest rate.  My rule-of-thumb for move-uppers is that you have to spend 50% more on the next house to make it worth the move – if you only spend 10% more, you only get an extra bedroom, and it’s not worth moving. There aren’t many in this group who finance – you still need a big cash infusion to make it work. Here’s an example:

If you bought your home for $500,000, with a loan of $400,000 at 4%, the payment is $1,910 per month. If you sell now for $1,000,000, and use $600,000 for your down payment to purchase a $1,500,000 house, the payment is $3,794 per month at 3%.

Most who are used to paying $1,910 per month will want to inject more capital into the equation.

Last Movers – You are of the age where you have one more move left in you, and it’s probably due to hanging on to the 2-story family homestead for a little too long.  The kids have been gone for a while, and you’ve been rattling around in a house that should be passed on to the next generation before you fall down those stairs.

BUYERS

First-timers or Out-of-Towners – If you don’t own a house here yet, your motivation  is substantially higher than those who do own and are just trying to re-position.  It’s why current homeowners struggle to understand why homes keep selling for record amounts – because heck, they’d never pay that much.  But first-timers and out-of-towners are more desperate to get in, and will pay an extra few bucks to finally get something.

Downsizers – Rarely do locals downsize in the same town – keeping the old house makes to much sense, and why we have such low inventory. But San Diego County is well-positioned to be a landing ground for those selling for big bucks in L.A./O.C./Bay Area and coming here where our prices look like a bargain.  This may be the largest group of buyers, judging by how fast prices go up.

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Next year’s selling season won’t be as predictable as they’ve been recently.

We are overdue for a surge of sellers.

It may be disguised in the overall stats as a blip, but if you have three houses on your street go up for sale, and two others on the next street over, don’t be surprised if buyers freeze up and wait it out. If you live in a neighborhood where most of the residents have been there for 10, 20, or 30 years, there only needs to be one from each of my five seller categories above to cause a glut of homes for sale within a week or two.  If any of them are desperate for money and undercut the pricing to get out, it will affect all.

Next year will be exciting because each seller and buyer group could grow 10%+ without notice.  Remember the graph that said 57% of boomers are delaying the sale of their home?  Add a possible covid bump in the usual number of deaths, divorces, & job transfers and we could experience a surge of inventory that nobody sees coming.

If you are thinking of selling……are you willing to get out in February or March will all-time record money, or are you going to wait until June or July and try to milk it for another 5% because you can?  And risk not getting out at all because those ‘lowball’ offers based on 2020 comps are insulting and unacceptable?

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