Is having more homes for sale a big deal? The local market has survived everything else, though they were all at lower price points.
If price adjustments are needed, what can we expect?
I’ve mentioned how my recent listing in La Costa Oaks got caught up in price war. A month before the election, there were 10-12 active listings nearby in the low-to-mid $2,000,000s.
I wasn’t willing to lower my price. Why? Because the price wasn’t the problem – it was that the house and yard had defects, and when that happens I’d rather fix those first, and then talk about price.
I got lucky and we received a low offer of $2,350,000. When it came time to entertain our counter of $2,450,000, the buyers stuck to their original $2,350,000 and said no more. We countered again at $2,400,000, and they came around and accepted.
The closest other active listing had hit the market at $2,525,000 a couple of weeks before us – but they lowered their price to $2,455,000 a few days before we came on. And they kept lowering!
This is how it turned out for them:
This is what we can expect going forward.
There is a natural range of around 10% to 15% between the creampuffs and fixers. When there are several choices, buyers may try to pick up a creampuff for a fixer price. Some might get lucky.
We have NEVER seen a market like this, where the sellers have gained so much equity so quickly – about +60% in the last five years. The sellers of Sitio Lima paid $1,059,500 when new in 2005, and they had not hit the housing ATM to refinance a big cash-out (loan was under $300k). I don’t know what made them so motivated, and it doesn’t matter. They had a load of equity, and if it was time to sell, then it’s time to sell – bring any and all offers!
Expect the sales prices of similar tract house to be in a ~10% range in 2025.
Get Good Help!
> …hit the market at $2,525,000 a couple of weeks before us – but they lowered their price to $2,455,000
-2.7%? I am not so sanguine as to grant them the favor of calling that lowered. That is not lowering the price. That is changing the price as a marketing strategy. @20% down that’s a $2.02m mortgage v a $1.964m mortgage. Rates are $7.1%. $13,400 v $13,160 per month. That’s not even a rounding error.
Good point.
Sellers have equity to burn and as long as buyers are payment shoppers, we should be fine!
A full-blown frenzy could break out. It’s pretty much all agents know at this point.
And truly, people buying $2.5m houses are 60% down not 20%. That makes these tiny reductions even more trivial.
All it will take is sellers eventually realizing “their equity” isn’t theirs. Sell that 2-1/2 story La Jolla peek-view on a postage stamp lot and grab a California Rambling Ranch single story with ample parking for half the price while transferring your Prop 13 basis. You only need to track ever lower school enrollment to see this isn’t happening yet.
Prop 13 was in part supposed to level growing school funding disparities. It worked for a while but eventually resulted in even wilder inequities. People with $14k mortgages don’t fret paying for private school but are unlikely to support public schooling.
My ghetto in a comfortable part of Camarillo is finally getting a few children almost a generation after my kids were part of the upswing 20+ years ago.
That makes these tiny reductions even more trivial.
We should make it a rule that the minimum price reduction in SoCal coastal is $100,000. Or 5%, whichever is more.
If the price was within 5% of being right, somebody would have made an offer by now.
Idea! Highest listing price is the new tax basis if the property doesn’t sell.
Best idea of 2025 and there won’t be another one close!
> Best idea of 2025 and there won’t be another one close!
Dodgers at Padres late August enters the discussion. 😉
If we don’t get Roki, we’re not going to be contenders unless half the Dodgers pitching staff gets hurt. We couldn’t even talk Snell into coming back.
Latest on the hunt for Roki:
https://www.si.com/mlb/padres/san-diego-padres-news/roki-sasaki-s-agent-reveals-huge-factor-for-padres-target-when-picking-next-team-01jgfw0vjnrd
Another idea: Agents don’t need to include one more useless thing in their confidential remarks.
We know the seller will consider paying concessions. Technically, the seller might consider flying me to the moon too!
Instead, just include “Seller won’t pay any concessions” if you have the guts and aren’t too embarrassed. Otherwise, the buyer-agents know to include it in their offer.
I can only remember one listing since August 17th where the agent said they aren’t paying commissions. And it didn’t sell.