The guy who bought the Carlsbad firehouse for $803,333 in July, 2019 (there were 28 offers) has resold it for $1,275,000. Here is the HGTV tour that starts as they roll up to the original listing (we know how HH works – he has already bought the house before filming and they are faking this tour):
Ultra-low rates, record home equity, and societal needs/concerns make the perfect frenzy cocktail:
The pandemic is driving a major boom in the housing market that’s breaking all kinds of records and exposing a very uneven economic recovery between the haves and the have-nots.
The most dramatic increases are happening at the top end of the market — sales of homes costing $1 million and up have more than doubled since last year.
Millions of people are working from home while juggling their kids’ remote schooling. And many who can afford to are buying bigger houses.
Home sales in September were up more than 20% from a year ago, according to the National Association of Realtors. And median home prices hit a record $311,800. That’s about $40,000 more than just a year ago.
“It is great news for homeowners as they are seeing equity rise and rise,” says Lawrence Yun, the chief economist for the Realtors group. But he says prices are rising too fast. Generally, he says, economists like to see home prices climb in line with people’s wages. But in recent years, home prices have been rising much more quickly.
“It will eventually lead to a choking point where first-time buyers simply can not show up to the market,” Yun says. Already the percentage of first-time buyers is decreasing — they represent about 31% of the market. In a healthy market, they represent 35% to 40% of buyers, Yun says.
He worries that if the trend continues, the country will see a further “divergence in society where you have the haves, with homeownership gaining their equity, and those people who would like to become homeowners continually being frustrated, unable to reach that goal of owning a home.”
The signs are everywhere – the super-frenzy is building. I spoke with a friend in Phoenix yesterday who said the cheaper homes for sale there are flying off the market in 1-2 days:
While restrictions are driving people out California, newfound freedom is allowing others to come to San Diego and set roots.
San Marcos resident Logan Lidster is 99% sure his family will be moving to Texas despite living for years in San Diego.
With two kids planning to make the jump to the Lone Star State, Lidster said he had been considering an exit out of California for a while. But then COVID-19 advanced the possibility, and the Lidsters realized his family needed to become more self-sufficient.
“We’ve got a little bit of property here, but everything from regulations of what we can do with our homeowners’ association to what things we’re allowed to grow, there’s so much red tape,” Lidster explained. The pandemic brought things full circle for the Lidsters. In a time when things are difficult to access as is, he’s seen a need to grow his own crops and raise his own chickens in preparation for what might lie ahead.
And Lidster isn’t the only one turning his eye beyond the Golden State. Marie Bailey, a real estate agent in Texas, said her business has tripled since the pandemic hit, citing sales specifically tied to Californians on their way out.
The unstable job market in California brought on by the pandemic has played a part in the exodus, Bailey said. “It has exacerbated the politics so lots of companies have been shut down,” Bailey said. “People are unhappy with how California is handling it.”
And in San Diego, a similar migration pattern is forming. Chris Hasvold, a broker at Coldwell Banker Village Properties, said he’s seeing people make the dash out of California for more affordable locations.
“We’re seeing people leaving in droves,” Hasvold said. “They’re going to the most common places…that I’m working with are Florida, Arizona, Idaho, Texas, and Tennessee.”
But Hasvold said he’s not just witnessing movement out of California. He’s also seeing people pour into Northern San Diego. The shift to remote working has given them the flexibility to live where they want, Hasvold said.
“They just are not restricted to a certain area now because they can work remotely and so that’s opened up a whole new world for people,” Hasvold explained.
Hasvold said some of his clients desire more of a return to nature where they can have more land and space.
Bad neighbors aren’t just annoying. They can cost you real money when it’s time to sell your home.
A nearby property’s overgrown yard, peeling paint and clutter can easily knock 5% to 10% off the sale price of your home, said Joe Magdziarz, the president of the Appraisal Institute and a real-estate appraiser with 40 years of experience. A true disaster — a junky home in deplorable condition and a yard packed with debris — could cost you even more.
Even when real-estate markets were in better shape, messy neighbors caused problems. Kamie Dowen put her Harrisburg, Pa., home on the market five years ago but had problems selling because of a nearby property.
Toys littered the lawn, even in winter. The porch sported “a pumpkin that was two years past due,” Dowen said. A garage door, damaged after the owner ran into it with his car, was never fixed.
Frustration can lead to guerrilla tactics. Jeanine Brydges Watt of Windsor, Ontario, got so fed up with her neighbors’ yard that she waited until they went on vacation, then mowed the lawn and threw out the trash, which included old diapers and split-open bags of garbage.
Watt said she wasn’t worried about being arrested for trespassing. The messy neighbors were renters and probably thought their landlord had done it, she said. And Watt’s other neighbors were thrilled.
“If they had been asked, none of the other neighbors would have ratted me out,” she said. “They were happy we cleaned up the eyesore.”
You may not be willing to risk arrest, but there are other tactics you can try if a neighbor’s property is hurting your home’s value.
If your neighbor is elderly or disabled and simply not able to maintain her property, for example, you may be able to help her find free or low-cost services that can help. Habitat for Humanity’s A Brush with Kindness program offers exterior painting, landscaping, weatherstripping and minor repairs to low-income homeowners who can’t care for their homes because of age, disability or family circumstances.
You can check with the Eldercare Locator to find other resources for home maintenance in your area.
If your neighbor is simply messy or indifferent, you might want to try these strategies:
Start with a conversation. If your neighbor is a drug dealer, owns dangerous dogs or is otherwise belligerent, you won’t want to risk knocking on the door. Otherwise, approaching your neighbor in a friendly, low-key manner can be a good start.
The script could go something like this: “We’re going to be putting our house on the market soon, and we really want it to show well. But we’re afraid that people who don’t know what nice neighbors you are might be a little put off by the condition of your yard right now. It’s so hard to keep up with everything, isn’t it? We’d be more than happy to help you tidy up a bit if you’d like.”
Find the owner. If your sloppy neighbors are tenants and the direct approach doesn’t work, or if the home is vacant, you’ll want to track down the owner. A real-estate agent can help you, or you can visit your county property-tax assessor’s office.
Then send a letter to the landlord or lender, complete with photos of the problem, and request action in getting the property cleaned up, says Ilyce Glink, the author of several books on real estate. If you get no response, consider giving the contact information to other fed-up neighbors and ask that they send letters as well.
“If a property has been foreclosed on, you can complain — loudly — to the lender to take care of the property. Go all the way to the top of the food chain, to the chief executive officer, and ask for assistance,” Glink said. “You should also complain to your state mortgage regulator as well to the Office of the Comptroller of the Currency, if it is a big national bank.”
Enlist help. If you have a homeowners association, make a formal request that it take action. If it’s reluctant and you run out of other options, you can sue the homeowners association in small-claims court, Glink said.
Before you do that, however, try to enlist local government officials. Your city or county public-health department may be able to step in, particularly if trash or other unsanitary conditions are attracting vermin. The city or county building department should be notified of other obvious hazards, such as holes in a roof or a collapsing porch.
If you can’t get local agencies to help, appeal to your elected representatives at the city or county level. Sometimes these folks can kick the bureaucracy into gear. A real-estate attorney can tell you if you can pursue a lawsuit against the neighbor, but typically these are expensive and can drag on for months if not years, making them impractical for most people trying to sell a home.
Practice mitigation. If your best efforts don’t work, a privacy fence or tall hedge, if allowed, could help screen the problem. Otherwise, do what you can to make your own property shine and divert attention from the neighbor’s mess.
Peter Anderson of Shakopee, Minn., who runs the Bible Money Matters blog, said he had a “fun time” selling a town house a few years ago because of neighbors across the street who had garbage in their driveway, a truck up on blocks “and a hundred wind chimes hanging from their garage.”
“Despite that, it was a nice enough neighborhood,” Anderson said, “and we finally were able to sell because we priced our home realistically, we staged our house to make it look like a model, painted, fixed up any problems and just made the home a very nice place to be.”
If you think you have it bad, well, it could be worse:
Can previous experience indicate what might be brewing for 2021?
The last time we had full-blown frenzy conditions was in 2013 – let’s use the October 1 to September 30 timeframe so we can get a good experience of this year. Because we’ve had such a rebound, let’s also ignore the covid-19 effects – we’ve made up for it since:
NSDCC October 1 – September 30
# of Listings Taken
# of Closed Sales
Mortgage Rate in March
Here are the indicators from the last frenzy that suggest the frenzy is already underway:
2011-12: The number of listings declined 16% from the previous 12-month period, but sales increased 8%. This year the number of listings dropped 8%, and sales increased 3%.
2011-12: Mortgage rates dropped under the magical 4% number, and you could get a 30-year fixed rate mortgage for the same as the start rate on a neg-am loan from just 5-6 years before! Likewise, this year we dropped under 3% for the first time ever, and it has added a magic-elixir quality to the market.
2012-13: Presidential election. There might be an indirect connection, at best, but a presidential election might bring more certainty into the home buying-and-selling equation for some people.
2012-13: Inventory exploded – and so did sales. The number of NSDCC listings increased 54%….AND SALES WENT UP 52%! The median sales price went up 17% too. You could say that there was pent-up activity from the last recession that busted loose. But if we get half the action we got in 2012-13 in next year’s selling season, and inventory AND sales go up about 25% each, it will feel like a full-tilt-boogie!
2012-13: The ratio of listings-to-sales was 1.58, and this year it is an eerily-similar 1.54!
We will need a surge in inventory to re-start the frenzy in 2021, because it should simmer down over the holidays. But with so many other unique reasons why sellers should be more motivated to sell next year, it sure seems like a frenzy is likely!
We can expect that the government entities will be trying to jam affordable housing into every possible nook and cranny from now on. The idea of redeveloping larger areas, like Kearny Mesa, and include a nice compliment of affordable housing into an overall plan to uplift an entire area makes more sense to me:
The local recruiting effort by Compass has been very effective, and it’s really starting to show up in the numbers. With 1,200+ productive agents in San Diego County now (I was #160 in July 2018), we are taking away market share and becoming the dominant brokerage – especially in the coastal markets.
How will it all play out?
There could be a tectonic shift in the business if this lawsuit prevails. The result will be that the commission rate paid by the seller to the buyer-agents will be revealed publicly (can’t find them now), and it could end up that buyers will have to pay their buyer-agent’s fee, instead of the seller:
We reached 1,692 people, of which 89 participated in the survey, which is about right.
Let’s go through each question.
Q1. Most of the participants (2/3) already live in San Diego County. The question was passive in nature, but it was interesting that 10 out of 86 people have thought about moving here!
Q2. No surprise that 2/3s aren’t moving, but stunning that the next highest category was those who are selling and leaving California! Of those who are moving, 37% are leaving the state!
Q3. (No chart) Their results chart was poorly formatted, but 10 out of 70 rated their likelihood of moving as an 8,9 or 10.
Q4. Of those who plan to move, 27% are jumping right on it in the first quarter of 2021!
Q5. Covid-19 only caused 5 people to change their plans about moving?
It’s still 7% of those surveyed, which is enough to change the outcome, especially if we had that much more inventory to sell. The tipping point is probably more like 15% to 20% additional inventory to sell – then buyers might take a step back to see where this is going.
Q6. A bit of a shocker here: Getting My Price was the least concern! It may look easy, but getting your price in 2021 will require skill and some luck. Finding the Next Home is by far the biggest concern, and if we have more inventory it could grease the wheels a bit.
Q7. Those who aren’t moving would have selected the #4 answer, but glad to see the majority believe in good help!
Others left warm thoughts appreciating the blog and the effort. It’s my pleasure – thanks for participating!