Loan Fraud Pushed Home Values

While the PPP fraud was rampant across the country, the ultra-low mortgage rates and lack of inventory were more to blame for inflating home values recently – at least around here:

Anecdotal evidence suggests that many recipients of fraudulent PPP loans used the funds they received to purchase expensive houses, cars, and luxury items.13 In this section, we examine whether recipients of PPP loans flagged as potentially fraudulent are more likely to purchase houses than non-flagged recipients. We first examine house purchases using property records from PropertyRadar for a random sample of 250,000 individual PPP borrowers.

The sample was collected in February 2023 and consists of individual borrowers who received PPP loans during all three rounds of the PPP with data on house purchases through the end of 2022. Round 3 of the PPP ended in June 2021, so we observe at least 18 months of post-PPP house purchase activity for all individuals in the sample. We match names purchasing houses in the PropertyRadar data to names of PPP borrowers, limiting the sample to names that are unique.

Link to 150-page report

Happy New Year!

The best thing about 2021 for Kayla? Her new boyfriend Frank, who is a great guy and quite a golfer too!

Natalie signed with a new talent agent and has high hopes for next-level work in the new year. Dancing on a concert tour would be ideal, all while being our marketing director!

Hello 2022!


I said that pricing will likely seem a lot higher this year.

With few recent sales to guide them, sellers and listing agents will wonder how much can they get away with on price. There are tales of a old blogger guy being wildly successful with his transparent open bidding, but other agents aren’t experienced in conducting a slow-motion auction and don’t have the guts.

Instead, the list prices will be getting packed.

When sellers wonder how high, it will be easier to lump 10%, or more, on top of the initial guess (which was probably +5% optimistic already).  The zestimate, or other automated valuation, that is higher and supports the dream will be collected as proof!

But it’s the METHOD of selling that makes the +10% possible.

Bidders are turned against one another and compete for the prize.  Their ego takes over and directs the bidding……and the contest is on, with no ceiling.

Will a list price that starts at 10% to 15% higher than comps produce the same results as my slow-motion auctions? Maybe, but only with the homes that are highly upgraded with all the bells & whistles and have a superior location. The real creampuffs.

The early buyers will have to tolerate such sloppy pricing, but for those who are already frustrated from not buying a house in 2020/2021, it won’t matter and they will grab whatever they can. It virtually guarantees that the first 1-3 months of the season will be scorching hot.

But there will come a day when we run out of those buyers, and the frenzy conditions will be over.

I’m sticking with my +15% appreciation, and it all happens in the first half of 2022.


Two new laws that address the housing crisis begin today (above).

Baby boomers are another year older, and more will need help with living. The multi-gen home buyers will grow in numbers, and granny flats will be an ideal solution. Many will buy a suitable property with grandma’s money, and take care of her until the end.

Some multi-gen home buyers will cope with finding an existing single-family home and adding their own granny flat. But the real opportunity will be for those sellers of properties that already have an ADU. Because the supply is low and the need is very high (and because grandma’s money came a little too easily), the prices paid for homes with existing granny flats will be excessive. There will be a separate category of comps too – those with ADUs, and those without, with a pricing differential of 10% minimum.


 This could be the year that buyers have to pay for their own agent.

I don’t think many agents can make a case of why they are worth it – or at least demonstrate why they are worth as much as 2% to 3%.  It would be cool to develop buyer-agent squads who are experts in their field and are worthy of compensation – and can prove it.  But most will just fade away, or open up a shop of discount door-openers who don’t offer much, but get paid up front.


Another political season starts in 2022, which means an increase in the vitriol and hate. The perceived volatility will cause a few people to move to areas which are better suited for their political leanings, especially if there are riots – which is what it would take to get laid-back San Diegans to reconsider a move. It may not cause a surge of additional sellers here, but it could create more demand for homes in those politically-friendly destinations.


The difficulty of buying homes out-of-state is already tough enough, and now they are more expensive  – with some now 30% to 40% higher. It could be the game-changer for potential sellers and even be the reason why the inventory has been so tight recently.

We don’t know what it will take to get more homeowners to sell.

In the past, record-high prices did the trick, but today’s prices are setting new records every month – and inventory is in decline. How many current homeowners in San Diego wouldn’t sell at any price? 80%? 90%?  That’s a problem, and I’ll say that it’s something we’ve never faced before until the last few months.

At the same time, the number of San Diego County detached-home sales in 2021 will probably rank as the #2 of all-time, behind only those in 2003.  There were 28,319 detached-home listings last year, and 25,029 sales, which is incredibly efficient. Virtually everything is selling!

But only 12,936 of those listings came in the second half of 2021, and if we continue at that pace or lower, it will be excruciating for buyers – and send prices to the moon.

The optimum number of listings will probably be in the 30,000 to 35,000 range.  Having a small surge in listings will drive the market crazy with activity…..and force sellers and buyers to Get Good Help!

Happy New Year!

Goodbye 2021!

People say to me, “I bet you’re loving this market”, expecting that realtors are raking it up these days.

Not really.

I lost 50+ bidding wars with buyers this year who lost out to others who insanely overpaid with no regard for the comps, or because listing agents were too lazy to give everyone a fair chance.  Neither of those are healthy for the market in general, yet no change is on the horizon for 2022.

I found myself in two more bidding wars this week!

The two properties weren’t the superior buys in top condition – instead, both were very average and priced with no regard for the comps. Yet they both had multiple offers over list price during the week between Christmas and New Years?

This is my 698th blog post of 2021, and the best way to review the year is to scroll through the highlights and lowlights here:

or here:

For those who like the videos, here is the full collection:

I’m off to play golf with Kayla – she extended her stay for another week! I’ll comment more later.

San Diego County Actives & Pendings

Tom asked on our Facebook page about getting the actives and pendings data for San Diego County.  Here is the InfoSparks data from the SDAR Resources page on the MLS – they are interactive so scroll over the graph lines for the exact counts:

The first graph charts the number of active listings on the last day of the month, the second graph shows the number of new listings in each month, the third graph shows the number of properties that were marked ‘pending’ in each month, and the fourth is the actual sales counts each month.

My initial reactions to each graph:

Active Listings: The frenzy let up in June/July, but it’s back now – and the last few months have been brutal for buyers. On the last day of November, 2019 we had 4,068 actives, and last month we had 1,420.

New Listings: Hard to grasp the cumulative effect so I calculated annual number of listings. In 2021 we have had 16% fewer listings than in 2018.

Pending Sales: This November’s count was almost identical to last year – which was the all-time high!

Sold Listings: The total number of sales for the year is 9% ahead of last year, and we’re not done yet!


We know that media types are looking to sell newspapers, and if it bleeds, it leads.  The article in the UT this morning about the San Diego Case-Shiller Index starts with this:

San Diego continued to slide down in rankings of the nation’s hottest real estate markets in October.

The article doesn’t mention the lower inventory in 2021, or offer any other explanation.  But it does use the D-word, deceleration, in their headline that everyone is using to describe the last few months.

But are home prices really decelerating?

All of the comparisons are judging the year-over-year changes, without any mention of how the 2020 numbers were rising quickly too. If we add the 2020 monthly YoY increases to those from this year, here’s what the combined 2-year increases would look like:

The indices in the last half of 2019 had flatlined, so the graph above is a pretty good visual on how our local index has been marching skyward since the pandemic started.

We can also note that the month-over-month increases are probably a better gauge of current activity – and they have picked up since we had actual deceleration:

Here’s a graph from a different article that also mentioned how price gains are slowing:

If that’s what slowing looks like, I’ll take it!

But let’s not misinterpret the recent index readings and then give potential home buyers the impression that our local market conditions are changing, because they’re not (or at least not yet).

All that matters in 2022 is inventory.  Here’s how prices will be affected:


  • Ultra-low inventory, or
  • Moderate surge of inventory (less than normal though)


  • Big surge of inventory (more inventory than in 2019)
  • Ridiculous over-pricing of inventory (it’s a fine line too!)


  • Massive surge in inventory
  • Mortgage rates rise above 4%

We should know by March/April which way it’s going to break!

Inventory Watch

It is appropriate that the last reading of 2021 shows more pendings than actives (170 vs 164)!

How does the last week of the year compare to previous years? I didn’t split off the $3,000,000+ category until 2019, but you get the idea here:

NSDCC (La Jolla to Carlsbad) Number of Active Listings:

Price Range
$0 – $1.0M
$1.0M – $1.5M
$1.5M – $2.0M
$2.0M – $3.0M

A monumental shift in just three years!



Over List, November

Momentum going into 2022 is strong, given that the Over List percentage has gone up the last two months:

NSDCC Detached-Home Sales, % Closed Over List Price

January: 38%

February: 43%

March: 53%

April: 55%

May: 54%

June: 59%

July: 64%

August: 55%

September: 41%

October: 45%

November: 48%

The higher-end market had some bounce-back too:

Percentage Of Sales Over List Price by Price Range

Price Range
$0 – $1.0M
$1.0M – $1.5M
$1.5M – $2.0M
$2.0M – $3.0M

The November sales were down 35% from last year, but the red-hot market of late-2020 is to blame.  This year, the sales were more in line with previous Novembers:

NSDCC November Sales

2017: 217

2018: 199

2019: 212

2020: 306

2021: 199

NSDCC Average and Median Prices

# of Sales
Avg. LP
Avg. SP
Median LP
Median SP

The median sales price went up 11% in one month, and is $101,000 higher than the median list price!

The median sales price is 19% higher than it was in February, which was ten months ago.


Extended Frenzy

Geez, Jim, you sure are optimistic about 2022 sales and pricing. How come?

I mentioned a couple of sales in last week’s video, and here is other evidence:

When this house in Carmel Valley hit the open market, there was a model-match with pool located a block away that had just listed for $1,899,000.  This house listed for $1,995,000 and was at the end of the culdesac so it had the big pie-shaped lot:

We offered $2,150,000 with 30% down payment, 21-day escrow and waived the appraisal – and lost. They received 14 offers, and they only countered the ‘serious’ ones.


The last two sales of this model were $2,700,000 and $2,760,000 in July, and all three were listed by the same agent (one was her own house).  So her list price of $3,198,000 on Thanksgiving weekend seems a bit aggressive, but it looked nice:

Showing appointments were scheduled for Saturday and Sunday…..but they took an offer on Saturday, and cancelled the Sunday showings!


We offered $1,050,000 and 21-day escrow for this fixer on a canyon in Clairemont that listed for $995,000.  We got boxed out on this one too – no counter-offer or bidding war.  They accepted $1,100,000:


Here are a few others that have closed in December:

This is a half-acre lot, but $1,710,000 is a boatload of money for Calavera Hills in NE Carlsbad:


This was a fixer built in 1986 on an acre in Olivenhain sold for 43.5% OVER THE LIST PRICE:


I could list these separately, but they look better together – all selling for big pops over their list prices:


This sold for $590,000 OVER THE LIST PRICE:


The biggest reason why the frenzy should continue in 2022 is because those who have lost out on properties in 2021 will be even more determined next year – and be your competition.

Get Good Help!

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