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Home Seller Survey

An excerpt from Zillow’s seller survey:

With the rollout of vaccines against COVID-19, 70% of homeowners in a recent Zillow survey say they would feel mostly or completely comfortable moving to a new home when vaccines are widely distributed — and 78% of homeowners who say widespread vaccine distribution would impact their decision to move say such distribution would makes them more likely to move.

“We expect that the vaccine rollout will likely boost inventory, as sellers become increasingly willing to move despite COVID-19 — resulting in greater numbers of new listings beginning this spring,” says Chris Glynn, principal economist at Zillow. “That injection of inventory could give buyers more options and breathing room in a competitive market. The vaccine, however, will also likely add to already-strong demand, given that most sellers will become buyers as they trade in for a home that better suits their new needs.”

Zillow research shows that 63% of sellers are also buyers. And, as buyers, they have specific reasons for selling. A recent Zillow survey shows that homeowners who are thinking of selling in the next three years have a variety of reasons for doing so.

Additionally, 26% want to live closer to family, 24% wanted out from being responsible for yard work, 14% say their family or household is getting larger and 13% say they can no longer afford their home.

Nearly 40% of homeowners who are considering selling within three years (39%) say they think they’ll get a better price if they wait. They’re not necessarily wrong — although waiting comes with tradeoffs, according to Zillow economist Jeff Tucker.

“Potential sellers are likely correct that home prices have yet to reach their peak,’’ Tucker said, “but in the long run prices tend to rise, so there’s no clear ‘right time’ to sell.”

The catch, he said, is that waiting to sell may raise the cost of trading up to their next home if mortgage interest rates rise.

https://www.zillow.com/agent-resources/blog/potential-sellers-gaining-confidence/

When The Frenzy Busted Loose

The real estate market was boisterous in last half of 2020, which made it easy to predict that once we got past the election and into the new year we’d probably see the Greatest Real Estate Frenzy Ever.

Let’s use February 22nd as the day the frenzy really kicked in.

It was the day that this home was listed for sale, after a troubled past:

2005: $679,000 Sold (vacant lot)

2007: $550,000 Sold (vacant lot)

2008: $2,000,000 borrowed from WaMu

2009: House built

2015: $2,137,500 WaMu/Chase FORECLOSED

2016: $1,930,000 Sold

2018: $2,875,000 listed for sale for the next 18 months

2019: $2,044,000 Borrowed in January

2019: $2,225,000 last list price before FORECLOSED

2019: $1,540,000 sold at trustee sale 12/27/2019

2021: $2,595,000 listed for sale

2021: $2,840,000 sold 4/6/2021

Timing is everything!

Mortgage Rates And Home Prices

Matthew makes the case here that the current uptick in mortgage rates may not affect home prices:

There was a big rate spike at the end of 2016 that had no discernible effect on prices.  This is notable because that rate spike was fueled by economic optimism as opposed to 2013’s rate spike which happened after the Fed said they would begin decreasing their rate-friendly bond buying program.  2018 was somewhat similar as the Fed was continuing to tighten monetary policy and raise short term interest rates.

A case could be made that the current rate spike shares some similarities with 2016.  The path of 10yr Treasury yields (a benchmark for longer term rates like mortgages) has largely traced pandemic progress and economic recovery hopes.  Yields (aka rates) began rising late last summer as vaccine trials showed promising results and economic data began to improve.

Rates spiked more quickly in the new year as vaccine logistics ramped up and covid-relief legislation was passed.  Fiscal spending hurts rates both due to both its positive implications for the economy (a stronger economy supports higher rates) and the implication of more US Treasury issuance (more Treasury supply = lower bond prices = higher bond yields = higher rates).

But it is predicated on mortgage rates staying about where they are today, which is around 3.0% – 3.25%.  The demand has been strong enough that rates in the low-3s should be acceptable and that the bidding wars will sort out the rest of what happens to pricing.

He also makes the case that the 10-year bond yield and mortgage rates have re-connected.  The 10-year closed at 1.71% yesterday, and if things go right, it will stay in that ballpark.

But there has been times when the 10-year has kept rising. If that happens again, we might see 4% rates:

 

If mortgage rates get back to 4%, we should see pricing flatten out. Let’s keep an eye on the 10-year yield!

Read full article here:

http://www.mortgagenewsdaily.com/consumer_rates/971650.aspx

NSDCC Over List, March

The trend of paying over the list price is increasing.

NSDCC Detached-Home Sales, % Closed Over List Price

January: 38%

February: 43%

March: 53%

Most sellers and agents are happy just to get 1% to 5% over list which will cover some or all of the commission. There were 22 of 244 (9%) that went double-digit over list. The big winners:

Most % Over List Price

List Price
Sales Price
Percentage Over List Price
$1,299,000
$1,655,000
27%
$989,000
$1,200,000
21%
$749,000
$900,000
20%
$1,325,000
$1,580,000
19%
$1,900,000
$2,255,551
19%
$1,535,000
$1,800,000
17%
$2,800,000
$3,200,000
16%
$2,198,000
$2,510,000
14%
$2,695,000
$3,075,000
14%

NSDCC Sales, March: 244 

Average List Price: $2,285,792

Average Sales Price: $2,252,883 (99%)

Median List Price: $1,788,500

Median Sales Price: $1,810,000 (101%)

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Over List By Price Point:

Under $1.0M: 6

$1.0M – $1.5M: 44

$1.5M – $2.0M: 39

$2.0M – $3.0M: 32

Over $3.0M: 8

A real bell curve there!

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The most sales over list are happening right where you’d expect:

Most Sales Over List By Area:

SE Carlsbad, 92009: 32 of 41 sales were over list (78%).

Carmel Valley, 92130: 22 of 32 sales were over list (69%).

Encinitas, 92024: 24 of 41 sales were over list (59%).

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88 Offers, 76 Cash Offers

This is the other article that several people sent in – thank you!

Rob Dawg wondered if these cases of dozens of offers could be tempered by putting the right price on these from the beginning. The agent’s Zillow profile shows 30 sales in the last year – and 26 of those were seller sides which is great and it means she knows something about pricing.  But I think when you are pricing a home on the lower-end of the market these days, you can add easily 10% on top of the comps and buyers won’t notice – because other sellers are already doing it too. Note: the agent didn’t take the highest offer here either.

Ellen Coleman had never received so many offers on a house in her 15 years of selling real estate.

She listed a fixer-upper in suburban Washington, DC for $275,000 on a Thursday. By Sunday evening, she had 88 offers. “The offers just kept coming,” she said. “I felt like Lucy with the chocolates. I’m thinking, ‘This is just out of control.'”

Of those 88 offers, 76 were all-cash, said Coleman, who works for RE/MAX Realty Centre. There wasn’t even enough time for all of the bidders to visit the property. She said 15 offers were sight unseen.

The four-bedroom, 1,800 square-foot home sold for $460,000, nearly a 70% increase from the asking price. She said the winning bid was not the highest offer, but it was all-cash with no contingencies and it had paperwork in place.

The buyer, she said, is an investor who is likely to renovate and resell at an even higher price.

“It was a lower priced property for the area and may have been an outlier,” she said. But even her other listings have typically been getting closer to 15 offers. “Several people came in wanting to be homeowners and do the repairs themselves. There is such low inventory out there and people feel like that is a way they can get into a home.”

Read full article here:

https://www.cnn.com/2021/03/29/success/when-will-housing-market-cool-off-feseries/index.html

122 Offers

Thanks to the readers who sent in this article – and it makes you wonder how many offers any house for sale would get if listing agents didn’t shut down the showings so quickly:

CITRUS HEIGHTS, Calif. (KTXL) — A Citrus Heights home in a quiet cul-de-sac received 122 offers in one weekend on the market.

The 1,400 square feet home has three bedrooms, two baths and a spacious backyard with a swimming pool and an asking price of $399,900.00.

“People would think that it was underpriced. It was not underpriced. It was straight on with the comps,” said Deb Brittan, the listing agent for the property. “I had hoped, I thought, maybe if we get 20 offers that would be amazing.”

Barry and Anita Jackier are the sellers of the Citrus Heights home.

“We had this little friendly wager going. I’m like, ‘I think we’re going to get eight offers,” Anita Jackier said.

“I said 10,” Barry Jackier said.

They all underestimated the number of offers, by a lot.

They received 122 offers in one weekend.

“That’s 121 people who didn’t get a house. And that’s kind of heartbreaking in this market to think that there are so many buyers out there. And if you don’t have an agent that understands how to put a strategic offer in on a house and get it accepted, you’re just out burning your gas and a lot of emotional turmoil because of the nature of our market currently,” Brittan said.

Brittan says the highest offer was above $500,000, but that was not the winning offer. There were other factors to consider.

The couple is buying a home in Idaho.

They need time for the escrow to close on that home, so one big factor was they needed a buyer to wait until that happens before moving in.

“I’d like to think that the buyer that was supposed to have gotten the house, has gotten the house,” Brittan said.

The selling price of the home was in the mid-$400,000 range.

“We have so many great memories. And that’s going to be hard to let go of,” Barry Jackier said.

“But you know what I’m excited about is now another family gets to have a blank palate to make all those memories on. We are keeping those memories and they have an opportunity to start their own,” Anita Jackier said.

The couple said they felt called by God to move to Idaho and from that perspective, it’s a miracle they were able to find a home there.

“That house was on the market for three hours,” Anita Jackier told FOX40.

“So I don’t know that it’s going to slow down any time soon. And I don’t know what it’s going to take to slow it down,” Brittan said.

https://fox40.com/news/home-for-sale-in-citrus-heights-receives-122-offers-in-one-weekend/

Pricing Spurt

Yesterday’s Case-Shiller Index was a reflection of November, December, and January market data.  Here’s a local supplement to help map out what’s coming – and this is only through February:

This was in a fairly tight range of $400/sf to $450/sf for a couple of years. But six months ago, this metric went ballistic, and in that short of time it’s catapulted well into the $500s!

San Diego Case-Shiller Index, Jan

It’s more than just the trendy areas – it’s red-hot everywhere.

Every metro area on the list is having substantial gains in their index, which means there has been a psychological shift happening coast-to-coast on how human beings feel about their homes.  With the real-estate-selling business being one of the last totally-free markets left, it’s going to run wild for a while.

The #1 market, Phoenix, hit +1.9% month-over-month, which is incredible for a January reading.

It should put them on track for a +20% to +25% annual gain in 2021, and we won’t be far behind.

I think we might catch them!

San Diego had positive gains straight through the Covid-19 era last year, and now we have 2% monthly gains in our sights for the next few months. Look how that compares to the 2019 readings:

San Diego Non-Seasonally-Adjusted CSI changes

Observation Month
SD CSI
M-o-M chg
Y-o-Y chg
January ’19
251.30
-0.2%
+1.3%
Feb
253.69
+0.9%
+1.1%
Mar
256.40
+1.1%
+1.2%
Apr
257.63
+0.5%
+0.8%
May
260.08
+1.0%
+1.1%
June
261.90
+0.7%
+1.3%
July
263.66
+0.7%
+2.0%
Aug
263.23
-0.2%
+2.3%
Sep
263.26
0%
+2.8%
Oct
262.56
-0.2%
+2.7%
Nov
263.18
+0.2%
+3.9%
Dec
263.51
+0.1%
+4.7%
Jan ’20
264.04
+0.2%
+5.1%
Feb
265.34
+0.5%
+4.6%
Mar
269.63
+1.6%
+5.2%
Apr
272.48
+1.1%
+5.8%
May
273.51
+0.4%
+5.2%
June
274.91
+0.5%
+5.0%
July
278.00
+1.1%
+5.4%
Aug
283.06
+1.8%
+7.6%
Sep
288.11
+1.8%
+9.4%
Oct
292.85
+1.6%
+11.5%
Nov
295.64
+1.0%
+12.3%
Dec
297.52
+0.6%
+13.0%
Jan ’21
301.72
+1.4%
+14.3%

From S&P

“The strong price gains that we observed in the last half of 2020 continued into the f irst month of the new year. In January 2021, the National Composite Index rose by 11.2% compared to its year-ago levels,” says Craig J. Lazzara,Managing Director and Global Head of Index Investment Strategy at S&P DJI. “The trend of accelerating prices that began in June 2020 has now reached its eighth month and is also reflected in the 10- and 20-City Composites (up 10.9% and 11.1%, respectively). The market’s strength is broadly-based: all 20 cities rose, and all 20 cities gained more in the 12 months ended in January 2021 than they had gained in the 12 months ended in December 2020.

“January’s performance is particularly impressive in historical context. The National Composite’s 11.2% gain is the highest recorded since February 2006, just one month shy of 15 years ago. In more than 30 years of S&P CoreLogic Case-Shiller data, January’s year-over-year change is comfortably in the top decile. That strength is reflected across all 20 cities. January’s price gains in every city are above that city’s median level, and rank in the top quartile of all reports in 18 cities.

“January’s data remain consistent with the view that COVID has encouraged potential buyers to move from urban apartments to suburban homes. This demand may represent buyers who accelerated purchases that would have happened anyway over the next several years. Alternatively, there may have been a secular change in preferences, leading to a shift in the demand curve for housing. Future data will be required to analyze this question

“Phoenix’s 15.8% increase led all cities for the 20th consecutive month, with Seattle (+14.3%) and San Diego (+14.2%) close behind. Although prices were strongest in the West (+11.7%), gains were impressive in every region.”

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Max Showings?

This year’s orange line has plateaued. It’s been in the 70% range all month, meaning there has been 70% more showings each week than there were during the first week of the year.

Even though it’s twice as much, it mirrors the 2019 trend that the spring selling season is underway, and I think we can assume that every buyer who is thinking about moving in 2021 is out looking at homes.

The buyer pool is full, and engaged.  Sellers, no need to wait!

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