Today, there are 160 pending listings between La Jolla and Carlsbad, and 36 sales have closed this month so far – and currently, there are 470 active listings with a median list price of $2,997,000.
It means that the July sales will be under 200 for the second month in a row (June’s total is currently at 189 sales). Because the 2021 frenzy was so insane, the comparisons to last year will be shocking.
We had 357 sales last June, and 312 sales in July, 2021, which means the monthly sales totals this summer are going to look like year-over-year declines of 35% to 50% – yikes!
To the casual observers, it will look like the market is in shambles.
But is it?
The quick and easy assumption is that the active listings are overpriced, and yes, price will fix them. But it is also due to them being inferior – and at this stage, buyers don’t want to compromise, or at least not much.
During the frenzy, buyers were so desperate to just win a house that they paid about the same for the fixers as they did for the creampuffs. Not any more, and the price gap between them is back. But sellers of the inferior homes haven’t gotten the memo yet – and those homes are languishing on the market.
I’ll make my case with one that just happened yesterday. The model-match directly across the street from this new listing had just closed for $2,900,000 a month ago. But this house had a decked-out backyard that cost hundreds of thousands of dollars. They priced it 9% higher at $3,175,000:
They received six offers and according to the listing agent, it sold for “way over list”.
I know that I’m cherry-picking and there will always be a market for the creampuffs with a fancy backyard that have a good comp across the street. The market might wind down to just these types of sales, but there are buyers willing to pay retail, or retail-plus for them!
What can sellers do who don’t have a fancy backyard?
- When pricing your home, omit the sales with fancy backyards.
- When pricing your home, don’t use the sales price of comps that were radically bid up (use the list prices).
- When pricing your home, compare to the active (unsold) listings and start lower than them.
And Get Good Help!