We had 18 written offers, and only one of them was cash. There were 17 parties were willing to pay the list price or higher, even with mortgage rates around 7%!
I did what was in effect a reverse offer and raised the list price from $995,000 to $1,150,000 once offers started coming in. Then we asked those who were willing to pay at least that much to submit their highest and best offer.
Five parties were willing to pay over $1,200,000, and the winner paid $1,265,000!
The pic above was the street view when we rolled up in February. It took until the middle of October to list it because we waited until everything was perfect and ready to sell – in this market, you have to!
The new listing went active on the MLS at 4:30pm yesterday, and by this morning there have already been 1,700+ views – less than a week before Thanksgiving! You can’t tell me that the market is dead!
Just as I’m ready to hit the go button on a new listing, I check the realtor hotsheet and THREE other listings provide new market data. Look at how these two dumped on price:
Do sellers wonder if there were any other buyers before dumping 10% and 11% off their price? Beats me, but if they did, lowering the list price in 5% increments promptly would have caused others to surface earlier. Once a listing has been not selling for a couple of months, they are going to get lowballed.
There is an active listing that has been listed at $1,750,000 for the last six weeks on the same street as my new listing. Even though they listed for $2,150,000 on June 24th, they dropped another $100,000 today and are now $1,650,000. It is located close to Carmel Valley Road:
If we would have listed for the $1,675,000 like we planned to do , it would have only caused a standoff. In a market where prices have dropped so precipitously, we want to be the clear front-runner.
We changed our list price to $1,599,000, and will go head-to-head this weekend!
The jumbo rate above is 6.1% at no points, which means you can get into the mid-to-high 5s with the buyers – or sellers – paying a point or two.
I’m going to mention it in the description of the new listing.
With the discounts already in place in some areas, and last week’s drop in the mortgage rates, this might be the best combination of discounts/declines that we will see in the next 1-2 years.
The Fed is going to keep raising their fed funds rate. Powell, Bullard and others have said that the FFR needs to be at least 1% higher, and they intend to get there next year. They don’t determine the mortgage rates, but you can imagine the impact on the bond/MBS markets.
What they won’t consider is where potential home sellers are going to draw the line.
Today, we might find sellers who are willing to consider a price that is 10% below peak, with an occasional 15% or 20% off. But you can bet that when it comes to selling for 20% to 30% below peak prices, most sellers will become highly resistant.
How many will quit instead? Or not even bother with trying to sell? Plenty.
I think the higher rates go, the lower the inventory will be.
The difficulty of finding the right house, at the right price, will keep getting harder and harder.
If you can find something close to the perfect home today, consider it strongly!
Our new listing in Carmel Valley! Open 12-3 this weekend.
Check out this attractively-priced Portico home with fully remodeled kitchen, hardwood floors, 3 bedrooms + loft and downstairs den, sumptuous primary suite with two walk-in closets, and upstairs laundry room. New paint and carpet, private yard, and cool front porch to watch the balloons go by! Live here and send your kids to Solana Ranch Elementary School – verified with the school district on Nov. 16th. The community pool/clubhouse is like a 5-star resort! It’s a good distance away from Carmel Valley Road too. This model sold for $2,086,000 on May 9th. Look at the savings – our list price is 20% off, and the 30-yr jumbo rate is back down in the 5s! Fed governor Bullard said today that the Fed Funds rate might have to go 1% to 3% higher. This home is the best discounted price/low rate combo you’ll see in the next 1-2 years! Only $1,675,000.
Unless the home is a real trophy property, this isn’t the market that tolerates aspirational sellers. For those who will only sell if they get their price – you should wait this out….and it could take a while.
The high-priced listings might get showings, but mostly to buyers who are considering the better-priced home down the street. It will take another six months and some boost from a strong spring selling season before the listings priced at retail-plus will start selling again. And that’s probably optimistic.
I still think the 2023 Spring Selling Season will be boisterous, and the sales volume will pick up – but generally-speaking, I agree with Zillow that pricing won’t be rising. Here are Z’s latest predictions:
SE Carlsbad 92009
Del Mar – 92014
La Jolla – 92037
Rancho Santa Fe – 92067
Carmel Valley 92130
Less than 1% annual increases in prime neighborhoods? Yikes!
There is nothing wrong with being in Plateau City. Sellers just need to recalibrate and be smart about what it takes to sell a home in this environment:
Hire a great agent.
Spruce up the home.
Utilize effective staging.
Price attractively (be the best-priced active listing).
Make it easy to show.
That’s all – and if you don’t do all five, it’s ok because there’s nothing that price won’t fix!
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An example of #1 is the now-famous property for sale in Del Mar on Border. A buyer thought they could get approvals to build a high-end resort there, but it was put to a vote, and the citizens turned it down. A new buyer is now hoping to turn it into apartments.
P.S. If there is anyone who wonders why their Over-$4,000,000 stats don’t match up with mine, it’s because I take this listing out every week so it doesn’t skew the averages.
It means the set of homes that closed escrow in October happen to produce higher numbers because they were larger (October median sf was +12%) and more attractive than the group in September.
In the graph above, the active inventory hasn’t been decreasing like I thought it would be, given that Thanksgiving is a week and a half away. You can’t say that nothing is selling, because there have been 50 closings between La Jolla and Carlsbad in November so far, which should keep the final monthly-sales count around the 100 as expected.
So I checked the Actives counts during pre-holiday season from the last few years, and in particular, the drop in active listings between the first week of October and mid-November:
The percentage of decline between the first week of October and mid-November:
2018: -3%
2019: -11%
2020: -12%
2021: -18%
2022: -0-
Comparing to last year, the hottest market in history with the lowest rates ever, will look wildly negative. In 2021, the market was still cooking in the fourth quarter, so the drop in actives had as much to do with everything selling, as it did with sellers packing it in for the holidays.
But compare today’s inventory to previous years. The pandemic count in 2020 was 547 actives in mid-November, and we’re 28% lower than that today!
The number of actives may not be dropping this year, and it means only one thing.
The sellers who are on the open market today have to be motivated to sell now, otherwise they would have given up and waited for the 2023 Spring Selling Season. Future sellers will probably be similarly motivated, because it should be obvious to everyone that selling for your aspirational price is much more difficult than it used to be – and the casual sellers will decide to wait for a ‘better market’.
