Where Could Defaults Happen?

Let’s get started!

If defaulters were pressured to pay or sell…..what metro areas would suffer most? Even in the worst cases, any additional inventory from defaulters will be drawn out over time because they don’t want to move.

It looks like the San Diego-Carlsbad region is under San Francisco’s 6.22%!



La Jolla Shores

There are 22 homes on my favorite stretch of oceanfront – it enjoys ample sand and is relatively private for a public beach.  The last sale on this street was the 9,320sf home that sold for $16,000,000 cash in August, and it’s the only other sale ever that closed above $11,000,000 here.

This just closed for $24,700,000 cash! Take a look around:


Red Hot, How Long?

I didn’t see this until today – but the hotness sounds similar throughout SoCal:

Katerina Krumwiede wasn’t looking to move.

She and her husband, Rob, recently spent “well over” $100,000 on a complete remodel of their Encino house that added a backyard gazebo, custom kitchen countertops, new roof and imported bathroom tiles from Spain.

But Krumwiede, 40, said the single-story house still lacked quiet space — a drawback when the COVID-19 pandemic hit and she had to work from the master bedroom if she wanted to escape the sound of her husband’s frequent video calls.

Eventually, it became too much, setting off a chain reaction that led the family to sell their Encino home for $1.5 million and purchase a larger one in Calabasas for $1.7 million.

“It was very uncomfortable sitting on the bed all day long,” said Krumwiede, an entertainment industry lawyer. “My back was really hurting.”

In recent months, the national and Southern California housing markets have been red hot. Bidding wars are common. Homes fly off the market in days.

In November, the regional median home price jumped 11%, while sales climbed 19%, according to DQNews.

Many experts say the frenzy is due in large part to the pandemic. Although many low-wage workers worry they’ll face eviction, the economic downturn has left relatively unscathed the higher wage workers more likely to buy homes in the first place.

Federal Reserve policy has helped drive mortgage interest rates into the recently unheard of 2% range at the same time people are spending more time at home and realize they could use more space.

But the torrid pace of the for-sale market raises the question: Just how long can this continue?

For some, the pandemic simply accelerated decisions planned for the near future. And unemployment is still high, which will hinder home-buying dreams for others.


My Top Ten Reasons For Frenzy 2021

After an insanely unpredictable real estate market in 2020, will our strong sellers’ market continue in North San Diego County’s Coastal region? Probably, but it should be more balanced.

Mortgage rates around 3% (and under) will continue through at least the first half of next year, but how about the low inventory?  The number of homes for sale today is 38% fewer than it was last year at this time, so it appears 2021 will start out with the lowest inventory ever for any new year.

But I don’t think it will last.

Do we have pent-up supply waiting to burst onto the market?  Here are my categories where I think we will shave additional homes come up for sale, roughly in the order of the most-likely contributors:

1. Move-Uppers – Covid-19 changed what we want from homes. Low rates/high equity make it possible!

2. Baby Boomers – A survey said that half of seniors delayed listing their home in 2020 due to Covid-19.

3. Politics/Taxes – Many Californians have had enough. The migration trend to other states should ramp up.

4. Work From Home – This trend frees up many to move…..up and out!

5. Forbearances – Lenders will be lenient, but some in default will tap their equity, rather than risk losing it.

6. Prop 19 – Enables 55+ homeowners to take their low property-tax basis with them. Though this won’t be the sole reason to move, it makes for a nice sweetener – and may be the last straw to make it worth it.

7. Divorce Rate is Up 34% – Technically, this could add more sellers AND buyers, but realistically those coming out of a divorce will be more likely to split their equity and take a break.

8. Unemployment – Older homeowners will grapple with taking a pay cut or quitting the job-search altogether – and retiring earlier than expected won’t seem so bad when their home’s equity has never been so high.  More boomer moves that would have happened in 2022-2025 will be pulled forward.

9. Eviction Ban – In the second and third quarter of 2020, there were 11% of renters who missed a payment. Mom and pop landlords will begrudgingly sell and pay the capital-gains tax, rather than risk another episode like this one.

10. Capital-gains tax. – From the WSJ: Biden will raise the tax on the capital gains of high earners to the same rate as wage income, increasing the rate to 43.4% (39.6% plus Medicare 3.8% investment tax) from 23.8%. Mr. Biden on Thursday estimated that these increases on high earners would raise $92 billion, but that’s before they put their tax lawyers to work. Biden has also said he will eliminate the 1031 exchanges, but all of the above will need Congressional approval. Just the thought could cause landlords to hurry up their plans of selling.

The potential home sellers that are in more than one category (and have more motivation) will be the first out – which means we should get off to a fast start in 2021. We probably won’t see a flood, but it will only take 10% to 20% more sellers to change the game dramatically.

Inventory Watch

The pendings count has been mirroring the actives pretty closely since mid-October, with the best example during election week when they moved about the same amount in opposite directions.

With fewer listings and more sales, the failure rate this year has been lower than ever. Historically we’ve had around 40% of listings NOT sell, but this year it’s closer to 30%:


2018: 2,814/4,864 = 0.58

2019: 2,838/4,773 = 0.59

2020: 3,106/4,480 = 0.69 (+17% yoy)

Though all prices ranges have benefited, the action has been heaviest on the lower-end.

We have 87 NSDCC homes for sale UNDER $2,000,000 today, and 338 OVER!  The Median is $3,692,500!

Get Good Help!



Donations Needed

Posted on Facebook by Miranda Klassen – I imagine all hospitals could use a hand:

Asking for help to support my husband Bryce and the ICU staff at Scripps Memorial Hospital Encinitas.

They have been exceedingly over capacity for weeks with no sign of slowing. They are exhausted and many are working double time. They are dealing with not only very intense patient care and loss, they are fielding calls from people out of state seeking a bed, calls from private citizens questioning whether they are at capacity, and now managing the logistics of vaccinating their staff knowing to expect an immunologic response.

Bryce is often asked, what is “really” going on?

At the peak in Spring/Summer the highest Covid positive patient load was in the 20’s. They have been consistently above 50 AND an entirely full ICU of non Covid positive patients. On average there are 20 staff members per shift.

Here is how you can help:

  • Prayers
  • Letters of encouragement and gratitude. (Their favorite)
  • Pictures /Posters from kids (another favorite)
  • Holiday cards from previous patients

Donations of items to give them a much needed boost.

  • Keurig pods
  • Breakfast bars
  • Oatmeal packets
  • Individual cereals
  • Bars (granola, energy, nuts, etc)
  • Packaged snacks, crackers, chips, nuts, jerky, etc.
  • Candy bars
  • Baked goods
  • Healthy bottled juices/smoothies
  • Bottled/Canned coffee and tea
  • Bubble waters like La Croix, Bubbly, etc.
  • Protein drinks
  • Gift cards or Discount cards
  • Catered meals preferably individually packaged.

Larger items such as baskets, individual gifts, and gift cards will be used for raffles or recognition.

I will pick up or you can mail directly to the hospital. (she also said dropoff is ok too)

Scripps Memorial Hospital Encinitas

Intensive Care Unit

Attn: Bryce Klassen, Supervisor

320 Santa Fe Drive

Encinitas, CA 92024

Hot Pockets

An update from the agent on the new listing (now pending) in La Costa Oaks:

27 showings, 8 offers significantly over asking. It was crazy! So many buyers from the Bay Area!

I had seven agents contact me for details about my sale that’s pending across the street.  Because of the old wives’ tale about not divulging the sales price before closing, most agents don’t expect much from these calls, and just hope for a crumb to take back to their buyers about pricing.

I told the listing agent, and all seven buyer-agents, that my sales price was $1,470,000.

Transparency is good for everyone. The closest we can get to open auctions, the better – where all the evidence is available to everyone to make decisions with. My primary responsibility is to my sellers, who benefit from a higher price nearby that keeps our buyers happy and closing as scheduled.

The agent didn’t offer her sales price, but we’ll come back later and revisit.  Key fact is the number of offers.  I had three, and she had eight offers. Could demand be increasing as we get past the holidays? Zillow expects pricing to go higher than in 2020, which means a crazier market in 2021 than we’ve had recently!


  • There are 20-30 buyer groups looking to pay $1,300,000 – $1,500,000 for a tract home around La Costa Oaks and maybe/probably La Costa Valley. There have been 92 sales this year in that range, and last year we had 50.
  • There are 30+ groups who looked at a 1980s one-story 3,000sf home in Encinitas for $1.6M.
  • There are hundreds of buyers for homes under $1,000,000 in Carlsbad & Encinitas.
  • There are unlimited buyers for one-story homes with nice ocean views – at any price.
  • Attractive pricing works!

Results will vary for sellers of homes that are older, unique, and not staged properly. Buyers are going to be picky, which means the creampuffs will be hot, and everything else will be……well, we’ll see!

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