Mike thinks this year’s price explosion was unusual, and is working its way back to a more-normal pace. I agree with Mike, and think the market will split, with those products that have been the hottest (one-story homes, family homes with yards and pools, etc.) will stay red hot, while those on the fringes (inferior locations, condition, age, etc.) will struggle to keep up and their appreciation rate will flatten faster.
Here is his Twitter thread, and webinar – thanks Mike!
This graph is charting the local Case-Shiller Index. The latest reading is from March, so these trends are reflecting the first quarter of 2021 – which means these lines will be going straight up for at least another 2-3 readings before there is any chance of a change.
The editors expect a collapse in prices next year, though they are coming to the wrong conclusions:
The number of May sales dropped month-over-month, even when we tack on another 10-25 late-reporters to the current tally:
NSDCC April sales: 357
NSDCC May Sales: 294
The April, 2021 sales were 35% higher than in April, 2019, but this year’s May sales were about the same as in 2019 (297). Was it due to less inventory? Not really:
NSDCC April Listings: 378
NSDCC May Listings: 371
But about the same percentage of buyers paid over list price:
NSDCC Detached-Home Sales, % Closed Over List Price
Most sellers and agents are happy just to get 1% to 5% over list.
The big winners who got 20% or more over list:
Most % Over List Price
Percentage Over List Price
Is anyone surprised that sales are slowing down?
Not when you consider how fast the pricing went up just between April and May. The average list price jumped $200,000, and median list price increased $100,000 in just one month:
NSDCC Pricing of Monthly Listings
Average List Price, April: $2,396,667
Average List Price, May: $2,596,992 (+8%)
Median List Price, April: $1,799,900
Median List Price, May: $1,900,000 (+6%)
But how we measure the sales prices went up more. The average sales price went up $177,753, and the median sales price went up $166,500 – which is a 9% INCREASE IN ONE MONTH!
NSDCC Pricing of Monthly Sales
Average Sales Price, April: $2,403,962
Average Sales Price, May: $2,581,715 (+7%)
Median Sales Price, April: $1,828,000
Median Sales Price, May: $1,994,500 (+9%)
Percentage Who Paid Over List By Price Range:
Under $1.0M: 89% of all sales
$1.0M – $1.5M: 84%
$1.5M – $2.0M: 72%
$2.0M – $3.0M: 34%
Over $3.0M: 22%
It is natural to have sales decline with rapid price increases. The buyers at the margins can get priced out in a week or two, and then we have others who give up and aren’t going to play this game any more – or not until it becomes more rational.
We could be in for a Frenzy Soft Landing, where fewer sellers get lucky as we coast into the pricing plateau that should be coming later this year.
There is plenty of interest in home-buying but the number of showings has been dropping in the state. It may be due just to pricing – today there are only TWO homes for sale between Carlsbad and La Jolla that are priced under $1,000,000. One is a short-sale, and the other should be marked pending any day.
FreedomCM asked if people who attend the open house have to self-certify that they have been vaccinated. This is the new form (above), which – like the previous form – just wants you to state that you don’t think you have the bug.
It is a thinly-disguised way for the agent to get your phone/email, and then contact you until you buy or die. It doesn’t state that you have to divulge your phone/email, and if the agent insists and you don’t want them to bug you, then give them this number: 704-482-0022.
One of the crazy things that have happened since running this blog occured last year when I posted a copy of the original covid form for all to see. A lady in Northern California (who wasn’t an agent) came across it and began using it to schedule appointments to see houses for sale! My name was at the bottom, and a listing agent called to see if this person worked for me. I’ll delete this in a couple of days!
To help get a sense of the frenzy conditions, let’s monitor the number of active & pending listings per area.
If the active (unsold) listings start to rise, we will know that pricing is becoming an issue.
But so far, the demand for detached homes between Carlsbad and La Jolla is solid, and buyers are enduring prices that are 20% to 30% higher than last year:
NSDCC Actives and Pendings
Town or Area
Actives/Pendings, Feb 2nd
The 92009, 92011 and 92130 (SE Carlsbad, SW Carlsbad, and Carmel Valley) are scorching hot, with 4x, 4x and 3x as many pendings as actives! But Rancho Santa Fe is the most impressive of all. There have been times when there were 10x as many actives as pendings in 92067 – today it’s 1.4x!
With the 30-day closings, there shouldn’t be any drastic changes here – let’s examine the trends over time.
We can also track the average market times too. Any upward trends here would indicate market slowing:
For us data geeks, here are some raw numbers to ponder.
Between La Jolla and Carlsbad, there are three prime zip codes – 92009 (SE Carlsbad), 92024 (Encinitas), and 92130 (Carmel Valley) – that are the dominant target zones for buyers of the mid-range home (which today is $1.2M to $2.0M).
According to the Census, there are a total of 35,146 one-unit single-family residences in these three zips, so let’s use this mid-range group to consider the trends:
Number of Listings & Sales, May 1 to Apr 30
The most-recent inventory count is in line with previous years – it is the number of sales that are so astonishing. The big winners are those inferior homes that are getting scooped up in the frenzy, for which buyers are overpaying just to win something.
In an area of 35,146 houses, there are 86 for sale today (0.2%), with a median list price of $2,124,500. No wonder the inferior homes are getting scooped up.
Buyers on the lower-end have to feel like they are getting closer to being priced out every day.
Of the 13,715 recent sales, 10,000 of them were probably forever homes – or forever rentals – and unlikely to come back onto the market for 10-20 years (at best). The lean inventory will continue just because we won’t have the turnover we’ve had in past decades when it was easier to move around.
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"Where do we begin..2020 has been a year for everyone. When COVID hit and shut down both my husband and my businesses, we were left with a mortgage and very little income coming in. We were stressed, scared and felt stuck. We made the hard decision to sell our home and move out of state. We contacted the Klinges' and spent a good hour going over what we hoped we could accomplish. Jim and Donna came over with comps in hand and suggestions on improvements to get our house ready for the market. It was overwhelming to think about, but Donna was there and one step ahead in every scenario. more "
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I consider myself a rather savvy buyer/seller. I've bought/sold 7 times in more "
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