The best thing about 2021 for Kayla? Her new boyfriend Frank, who is a great guy and quite a golfer too!
Natalie signed with a new talent agent and has high hopes for next-level work in the new year. Dancing on a concert tour would be ideal, all while being our marketing director!
I said that pricing will likely seem a lot higher this year.
With few recent sales to guide them, sellers and listing agents will wonder how much can they get away with on price. There are tales of a old blogger guy being wildly successful with his transparent open bidding, but other agents aren’t experienced in conducting a slow-motion auction and don’t have the guts.
Instead, the list prices will be getting packed.
When sellers wonder how high, it will be easier to lump 10%, or more, on top of the initial guess (which was probably +5% optimistic already). The zestimate, or other automated valuation, that is higher and supports the dream will be collected as proof!
But it’s the METHOD of selling that makes the +10% possible.
Bidders are turned against one another and compete for the prize. Their ego takes over and directs the bidding……and the contest is on, with no ceiling.
Will a list price that starts at 10% to 15% higher than comps produce the same results as my slow-motion auctions? Maybe, but only with the homes that are highly upgraded with all the bells & whistles and have a superior location. The real creampuffs.
The early buyers will have to tolerate such sloppy pricing, but for those who are already frustrated from not buying a house in 2020/2021, it won’t matter and they will grab whatever they can. It virtually guarantees that the first 1-3 months of the season will be scorching hot.
But there will come a day when we run out of those buyers, and the frenzy conditions will be over.
I’m sticking with my +15% appreciation, and it all happens in the first half of 2022.
Two new laws that address the housing crisis begin today (above).
Baby boomers are another year older, and more will need help with living. The multi-gen home buyers will grow in numbers, and granny flats will be an ideal solution. Many will buy a suitable property with grandma’s money, and take care of her until the end.
Some multi-gen home buyers will cope with finding an existing single-family home and adding their own granny flat. But the real opportunity will be for those sellers of properties that already have an ADU. Because the supply is low and the need is very high (and because grandma’s money came a little too easily), the prices paid for homes with existing granny flats will be excessive. There will be a separate category of comps too – those with ADUs, and those without, with a pricing differential of 10% minimum.
This could be the year that buyers have to pay for their own agent.
I don’t think many agents can make a case of why they are worth it – or at least demonstrate why they are worth as much as 2% to 3%. It would be cool to develop buyer-agent squads who are experts in their field and are worthy of compensation – and can prove it. But most will just fade away, or open up a shop of discount door-openers who don’t offer much, but get paid up front.
Another political season starts in 2022, which means an increase in the vitriol and hate. The perceived volatility will cause a few people to move to areas which are better suited for their political leanings, especially if there are riots – which is what it would take to get laid-back San Diegans to reconsider a move. It may not cause a surge of additional sellers here, but it could create more demand for homes in those politically-friendly destinations.
The difficulty of buying homes out-of-state is already tough enough, and now they are more expensive – with some now 30% to 40% higher. It could be the game-changer for potential sellers and even be the reason why the inventory has been so tight recently.
We don’t know what it will take to get more homeowners to sell.
In the past, record-high prices did the trick, but today’s prices are setting new records every month – and inventory is in decline. How many current homeowners in San Diego wouldn’t sell at any price? 80%? 90%? That’s a problem, and I’ll say that it’s something we’ve never faced before until the last few months.
At the same time, the number of San Diego County detached-home sales in 2021 will probably rank as the #2 of all-time, behind only those in 2003. There were 28,319 detached-home listings last year, and 25,029 sales, which is incredibly efficient. Virtually everything is selling!
But only 12,936 of those listings came in the second half of 2021, and if we continue at that pace or lower, it will be excruciating for buyers – and send prices to the moon.
The optimum number of listings will probably be in the 30,000 to 35,000 range. Having a small surge in listings will drive the market crazy with activity…..and force sellers and buyers to Get Good Help!
Boomers aren’t going to sell. Most bought at small fractions of current value. The income taxes are too high of a price to pay. Even with the rising crime, taxes, and other problems, it does not make sense. If the old folks go to assisted living or nursing homes, the houses will not be sold. The cost of ownership isn’t high enough to force a sale. A lot of the kids will keep the properties when the parents pass, even with the reduction in the parent to child exclusion. Don’t see any major increase in inventory in the immediate or mid-term future.
Next ten years:
* The US economy is expected to grow to around $33 TRILLION in the coming decade, up around $10 TRILLION from where we are today – or up OVER 40%….. expect wealth and the demand for owned homes to accelerate.
* By 2030, the 65 and older population is projected to be over 71 million…..up over 30%. Many will look and feel younger and age in place. Many will sell their very large homes and downsize. Many will own two homes in two different locations. The 75 and older population is projected to be over 33 million. And this group will probably live longer, healthier lives as medical advances accelerate.
* At least $16 TRILLION of wealth will have transferred from older generations to younger generations. This will create and fuel new markets and consumers with capital causing demand – and pricing – to rise.
* There will probably be around 1,000 more new billionaires. The wealthy will become wealthier. Unless there is a major shift in taxation policies, and even then this won’t impact the very wealthiest notably.
* At least 15 million new homes will have been built by 2032. This will still be insufficient to meet growing demand as the US population grows.
* The US will house around 363 million people, up 8%…..or 27-28 million more people!
* There will be 8.7 BILLION people on earth, up over a half a BILLION people.
* Numerous new technologies will create new efficiencies, new industries and new careers, rising profits, greater wealth.