I could not feel more certain about this conclusion:
Here’s What’s Coming
by Jim the Realtor | May 7, 2023 | Boomer Liquidations, Boomers, Jim's Take on the Market, Why You Should List With Jim | 11 comments
Jim Klinge
Klinge Realty Group
Broker-Associate, Compass
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If you want to consider one fact to back it up, know that the El Camino Creek Elementary School in La Costa Valley had 4-6 kindergarten classes at the peak.
In Fall 2023, there will be one class of 31 kindergarten students out of 1,073 houses.
Could ther be a surge of inventory – YES, and it would be very exciting. If 2-3 more houses hit the open market in La Costa Valley it will be very entertaining. Two are known and there wil be more.
I have one coming, and a Plan 4 in the Davidson tract will be listing for $2.7-ish. Buckle up.
Here’s another angle. If you own the house + even if you don’t but have a small mortgage it makes more sense to rent it out + move somewhere else cheaper + let someone else pay it off for you and/or create an income stream.
Instead of kids on bikes, La Costa Valley streets will be overrun by seniors on scooters. Won’t be long before they turn the soon-to-be-abandoned elementary school into medical offices. That’s where you catch up with your neighbors to discuss your latest medical procedure and how your last Zoom call with the kids and grandkids went, who live 1,000 miles away because they can’t afford San Diego.
Wow I just kind of depressed myself there.
Your analysis makes sense, but what I don’t understand is what caused the acceleration in the past 2 years.
I get it, empty nesters will sit tight for the next 5-10 years, but this kind of behavior was there also in the past 5-10 years. Furthermore, if they downsize they are looking for smaller/cheaper units. The fact that they don’t move should remove pressure from the entry market, but your weekly stats show that there is basically no <1.5M inventory.
Yes, the inventory was in a downtrend trajectory in the past 10y, but it has been dramatic in the past 2y. I really don't understand other factors at play here.
Investors? For sure, but house flippers seems almost out of the game in 2023 and the latest news point to large investors being net sellers of SFH.
I really have a hard time to explain the number we see
Between the population outflows, asset-rich boomers paying nothing in property taxes, and loss of tax revenue from commercial real estate, CitiBank predicts CA state income tax will rise from 17.5% by 2026 / middle bracket (115k) to 13.75%.
You might be able to get 2k a month from an ADU now, but 10 years from now?
Yes, the inventory was in a downtrend trajectory in the past 10y, but it has been dramatic in the past 2y. I really don’t understand other factors at play here.
The allure of the big payday was real for many. Maybe their numbers have been winding down, and virtually all of them have all left by now?
The scarcity itself likely discourages potential sellers.
Once you’re gone, you can never come back. Hey hey, my my.
Spot-on Jim. Every owner has refi’d to an ultra low rate, is enjoying a low tax basis via Prop 13, gets everything delivered to home, scared of COVID and its future iterations. Extreme weather around the country sours the pallet for moving out-of-state. Coastal SD is end game and everyone knows it. If you’ve lived or have moved from the Bay Area, you know this area is still undervalued.
Jim, who has been buying houses here over the past 3 years? Bay Area transplants? VPs and Directors? Doctors & Lawyers? Rich out-of-state retirees?
The buyers of the LCV home closing tomorrow are both doctors, and Bay Area transplants and rich retirees make up the rest.
The only hope regular people have is if parents or grandparents give them a huge down payment to make the mortgage payments more reasonable. But any coastal house has a minimum $1500 per month in property tax so the money is flowing. Hope you don’t have to make many repairs!