Last month, the 92009 median sales price declined 14.8% YoY, and was -22% MONTH-OVER-MONTH.
Keyboard warriors everywhere will be jumping all over news like this.
What really happened?
The facts:
Last month, there were 52% fewer sales than in September, 2021.
The homes that sold last month were 13% smaller than in August.
The average and median $$-per-sf were higher month-over-month.
There were only 23 sales last month. Fewer sales means more volatility in the data, and the numbers will be bouncing all over the place. The average SP:LP was 97%, so nobody was giving it away, and when you look at sales like the last one on the list on Corte Luisa, know that it was an agent selling his own house for a $980,000 profit above what he paid in 2020.
You have to look deeper into the data to get the full picture of what’s really happening!
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Here are the August and September stats:
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Let’s revisit a previous blog post for an update, and more detail.
I featured a group of listings near La Costa Canyon HS a couple of weeks ago. The day the blog post ran, the most-expensive listing was pending, but it fell out of escrow that day. It’s back in escrow this week, and judging by how the listing agent ran my rather-sizable nose in it, they must have gotten pretty close to their list price. Tracey sold hers too, and together the two highest-priced listings are the ones that are pending, which demonstrate that buyers want quality and are willing to pay for it.
Pendings = purple:
Realtors who have no game will be reading juicy headlines on social media and be telling their sellers to dump on price, rather than dig for the truth and get to work.
GET GOOD HELP!
And just wait until I tell you the story about this one!
It was back when some homeowners had little equity that my favorite seller quote became a t-shirt legend.
But we still hear it today – when it comes to price, home sellers regularly say, “I’m Not Giving It Away!”.
Their equity positions used to be pennies, compared to today. Back in 2009, there were plenty who were just hoping to break even, and maybe come out with enough cash at closing to buy a steak dinner!
Now that every NSDCC homeseller has hundreds of thousands of dollars’ worth of equity, will they loosen up a bit? After all, the last 20% to 30% came pretty easy (in just a year or two) and if they had to give up some or all to make the deal, they certainly could
But will they?
Many potential sellers get so mad about paying the capital-gains tax that it prevents them from moving. Those who are on the open market in October of 2022 have already dealt with that fact mentally, so they must have a fairly good reason to sell.
Those who will dump on price must be really motivated. It probably also means their house isn’t that great because nobody wanted to buy it at retail, or for a little under. Can you live with one of those?
The stock market has been cooking this week, and bond yields coming down in hopes the Fed might slow down the pace of their rate increases. Or maybe even pause, and take a look around at what they created?
If that were to happen, then the 2023 Selling Season should be somewhat healthier as rates dip into the 5s just as more quality homes are coming to market. If current sellers start to get a sniff of that, then they will cancel their listing and wait until next year.
Which means those who are still actively trying to sell the rest of this year must be unusually motived – and your best candidates to test whether they will give it away! Stay in the hunt!
Bill’s take – there may be more deals available sooner than you think:
Hat tip to Mark for pointing out how much different our local inventory has performed, compared to other markets around the country. When you hear the doom and gloom from the national talking heads, this is what they are talking about:
Our inventory topped out in July, and has been declining since – where many other markets are exploding. In September, Las Vegas and Phoenix will probably set all-time highs for their number of homes for sale, where we are around half of our peak inventory numbers.
Super-custom estate with commanding ocean views from the best lot in the neighborhood! The previous owner had invested over $1,000,000 in upgrades, and these sellers added their own touches to create a magnificent property. Once through the private gates, it is immediately apparent that the attention to detail is paramount. Expert stone and woodwork set the stage for an elegant example of interior design, sure to impress the most discerning of palates. An open foyer shines in marble. Columned archways, hint at spacious parlors. Custom ironwork adorns the graceful, winding staircase – which frames a grand wine room. The entryway flows past the formal dining room and into an expansive family room – ideal for entertaining and complete with a functional bar and ocean view. A richly appointed, chef’s kitchen is at the ready, for functions large or small, and effortlessly incorporates the finest appliances, rich woods and exotic slab granite. Upstairs, a luxe master suite offers spa-like comfort- whether it’s relaxing in front of the fireplace or taking in your own private sunset, via the secluded balcony. Secondary rooms are beyond comfortable, and there is even a guest room, with en-suite bathroom, down stairs. Choose to step off the beaten path, once again, and take your place at the top of Aviara Point.
All of the home buyers who were willing to purchase a house ‘as-is’ with no repairs are sitting comfortably in their 3% golden handcuffs contemplating what else to fix.
None of today’s buyers – which is a whole new set of people – are going to tolerate that program.
It would be smart for home sellers to get in front of it. Completing a home inspection before going on the open market is an idea that’s been around for years, but the industry has been slow to adopt – we were always happy to take a chance!
But paying a few hundred dollars for an inspection report and then fixing the defects prior to going on the market provides significant benefits to the sellers:
It gives the buyers confidence that they aren’t buying a money pit when making their offer.
It demonstrates that the sellers have respect for the current marketplace.
It helps to avoid having to sell the home 2-3 times, each at a lower price.
Sellers and agents can do everything right and get into escrow with a buyer, only to have buyer’s remorse kill a deal over one stupid little thing. You know that the buyer’s family and friends have been telling them that they are making a big mistake, and that prices are going to drop – and at this point the buyers are looking for any reason to cancel.
Don’t give them one – even if you have to fix everything on the list!
Available to realtors in the on-going market shift is the chance to elevate their game from the frenzy era. My observations don’t come from being an old veteran because we are far removed from fax machines and the one-page contract (“press hard, there are four copies”). Instead, just basic common sense can reveal changes that would make it easier to sell a home in a tougher market.
Nobody had a problem getting showings and offers during the frenzy. But now it’s different, yet some of the same practices are still with us. You want more showings? Make your listing easier to show!
Two recent examples:
A. Early last Sunday morning, I received a request from a buyer to see six houses priced around $2 million later that afternoon. I guessed that only half of them would be available, and after calling/texting/emailing around to the listing agents, I was able to arrange TWO showings out of the six pursued.
B. Yesterday I had an all-time classic, though some version of this is fairly typical. In spite of the house looking vacant in the photos, the listing agent is requesting 24-hour notice to show. I call, but no answer, so I leave a voicemail. I’m having a busy day, so I had not sent a text yet when I get the call an hour later:
JtR: Hello, this is Jim, can I help you?
Agt: HELLO, you called me?
JtR: Hmmm, yeah maybe – what’s your name (I didn’t recognize the phone number)?
Agt: I’m so-and-so. Are you in real estate? (agent didn’t listen to my voicemail)
JtR: Yes, and I was calling about showing your listing tomorrow.
Agt: Text me your contact info. (I send my name, company, and license number).
The conversation is now changes over to text, instead of by phone.
JtR: I’d like to show your listing.
Agt: What time?
JtR: It’s looks vacant, does it matter?
Agt: Yes, the sellers have cameras, and they like to watch.
JtR: 3:30
Agt: Ok, I’ll send you instructions.
Next, this comes over by text:
Lights in most rooms are on timers (living room, bedrooms, and dining room), so please do not move those light switches. But Lights in the entry, kitchen, and bathrooms are NOT on timers, so you can turn those on, and then off, when done. If you want window blinds opened, turn slats 90 degrees open to let light in, but please do not raise the blinds. When done, turn all window slats fully closed to avoid sun damage. Use slider door in kitchen to access patio. Please turn slider door slats to perpendicular first before moving the slats to the right to go outside. There is a ROD in the door track, just remove it. Please return rod to door track, lock door, fully close blinds when done. And All must wear Booties and Masks and all supplies are in entry foyer. If booties have run out, take off shoes. Water is turned off until accepted offer, so let your party know to plan ahead, as toilet can not be used and no water to wash hands (sorry). Office upstairs could be turned into mirror image of adjacent bedroom. Solar panels are owned by Seller. FYI. Cameras are throughout home. Thanks so much for showing. If you have any questions, please ring my cell phone for faster reply and text too. Thank you!
I’m sure the agent is probably thinking that this is all helpful information. But all I’m thinking about is how difficult it would be to try and negotiate an offer with them – they will want everything to go their way. During the frenzy, buyer-agents accepted that the listing agents were going to beat the crap out of you, and we just had to take it. But not now.
Yet, have listing agents adjusted their approach?
When you list your home with me, I’ll tell you up front that it is in our best interest to show the home seven days a week with little or no notice. Not only do we have more showings, but it also sends the message to buyers and agent that we have respect, and want to make it easy to buy the home – with no cameras!
The local market conditions appear to be getting worse every day, mostly because the headline writers and social-media experts are piling on now. What can listing agents do?
When most agents are content to show their listings and then go wait by the phone, there are alternatives. Hat tip to our manager Steve Salinas for bringing up the Reverse Offer technique in our sales meeting!
For two years, the buyer-agents have just been telling their clients to bid hundreds of thousands of dollars OVER the list price, so now they may need some help with advising their buyer on how to proceed in this market. When a buyer shows some interest in the home, the listing agent can reach out to the buyer’s agent with more than just a casual request for feedback.
The Reverse Offer is where the listing agent suggests price and terms to the buyer-agent that might be the foundation of a potential deal. It needs to be handled tactfully, and with the seller’s knowledge so it’s not a breach of fiduciary or a waste of time.
It can be as casual as mentioning any needs the seller might have in their exit plan, or for terms that would be advantageous to the buyer like seller financing or rate buydowns. But it can also be as formal as issuing written offers signed by the seller for the waiting buyers to consider – here’s more:
It’s worth considering because what’s the alternative? To just sit by the phone and hope it rings, and when it doesn’t, go tell the seller to dump on price?
This is the Wait-and-See period when buyers are so comfortable on the fence that it’s going to take something different to get them to buy a home. Dumping on price during the Wait-and-See period only makes the home buyers think that if they just wait longer, the prices will go down more.
Agents should offer their sellers some alternatives to that!
We were discussing the “mold” found by a home inspector, who wasn’t qualified to comment on the subject – though that didn’t stop him from trying to scare the daylights out of the buyer just so he could CYA.
I suggested that it was the garden-variety mildew that could be removed with a squirt of bleach and a wipe of a cloth. After all, it tested ‘dry’ and the minor stain under the kitchen sink looked like it was years old.
Of course, they asked, “What do you know about mold?”
Agents who can't price a home properly or are afraid to have a tough conversation with their sellers are more damaging to the housing market than rising rates.
