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More Than 10% Off

I said on the Frenzy Cruise that I’d also recognize the NSDCC sales that closed well under their list price.  It’s good for potential sellers to see how buyers will lowball homes that have been on the market for a while – and encouraging for buyers to know that they might be able to get a deal if they play the game wisely.

These are sales from November, with percentages off their original list price:

-17%

-14%

-23%

-19%

-15%

-10%

-23%

-10%

-16%

-32%

-16%

-20%

-11%

-15%

-15%

-13%

-26%

-17%

-23%

-12%

-20%

-14%

-13%

-29%

-19%

-16%

-22%

-12%

-14%

-14%

-18%

-28%

There have been 94 NSDCC closings in November (so far), and 34% have been discounted by a double-digit percentage off the original list price – which isn’t too bad, given the negativity everywhere.  It happens at all price points too.

Two conclusions from the clusters in graph below:

  1. Once a home has been on the market for 30-40 days, sellers are ready to deal.
  2. Sellers who go beyond 100 days on the market are really taking a chance.

 

There were 13 of the 32 sales who ‘refreshed’ their listing, or had it on the market this year with a different agent – those DOM are not reflected here. There were quite a few at the -8% and -9% too.

Five of the 32 were round-tripped.

Because it is unethical to deliberately list a home for sale at an unrealistic price, it means that in a third of the cases, the listing agents just flat-out got the price wrong by a double-digit percentage.  Can you imagine if doctors, lawyers, stockbrokers, plumbers, or burger-flippers were wrong a third of the time?

Get Good Help!

Frenzy Monitor – November

The reason for breaking down the active and pending listings by zip code is to give the readers a closer look at their neighborhood stats. A healthy market is when there are two actives to every pending.

There are a couple areas (in red) where the number of pendings have dropped significantly. But in six of the more-expensive areas, there are the same number of pendings now as there were last month:

All we have to do is muddle through the next three months!

In 2020, we had 400+ pendings from June 22nd to November 30th – with a peak of 491 pendings on September 7th.

Bidding War!

Between trying to watch the Padres game on my phone and the crowds of people looking at the house yesterday, I couldn’t get any more footage than this:

After having roughly 300 people attend the two open houses, we have received 14 offers!

We have countered all of the offers because agents don’t know who will go higher – why limit the seller response to just the top 3 or 5 offers?  We countered $1,150,000 to every buyer to narrow down the group of contenders willing to go to at least that amount, and then I’ll do the jimjamalama.

Stay Tuned!

We did adjust the price upward this morning to alert the newcomers to our new starting point:

There were a few comments, mostly from neighbors, that accused me of deliberately starting with an ultra-low price to attract more people. Given the recent sales nearby, the current market conditions, and especially the active listings sitting around unsold, I thought it was an attractive price. I never fear pricing too low because I know how to handle a fair bidding process so everyone has a chance to pay top dollar.

https://www.compass.com/app/listing/6217-oakridge-road-san-diego-ca-92120/1162342864989189569

NSDCC Pendings Since 6% Rates

The national bashing of the real estate market continues unabated, and I’m sure there are individual markets that are really feeling it.  But real estate is local, so let’s examine the facts.

To get a sense of what has been happening since rates got into the 6s, let’s review NSDCC homes that have gone pending recently. You don’t have to know the streets or the particular homes – just scroll through the bunch and you’ll get the feeling that frenzy pricing is still lingering. Click on any for the full listing:

Inventory Watch

Bill has been following the inventory in different markets, and San Diego is faring much better than other areas.  He is showing a 23.8% drop in new listings YoY, but last year was the record low.  Look at the previous years:

September New Listings, San Diego County Detached and Attached Homes:

2005: 6,325

2006: 5,735

2007: 5,448

2008: 5,101

2009: 4,328

2010: 4,696

2011: 4,013

2012: 3,578

2013: 4,265

2014: 4,367

2015: 4,185

2016: 4,267

2017: 3,953

2018: 4,506

2019: 3,959

2020: 4,389

2021: 3,570

2022: 2,853

Everyone talks about the demand-side, but our market is being impacted by the lack of supply too.

Could there be demand that isn’t being satisfied because there aren’t more quality homes for sale listed by good agents at attractive prices?

  1. I had 100+ people come to open house this weekend, and there were legitimate buyers in the group.
  2. I wanted to show a house this weekend, and the showing instructions said to text the listing agent. I started via text on Wednesday, but literally never got a response, so I didn’t show it. The listing is still active today.
  3. Higher rates haven’t changed the frustration of finding the right house, at the right price.

The inventory is probably going to dry up further and more sellers get convinced that now isn’t a good time to sell.  With a tight selection of quality homes for sale, those who are willing to sell now aren’t going to be deterred from trying peak pricing, or close.

Example: My $1,800,000 listing in Aviara?  This just popped up around the corner, priced at $2,295,000:

https://www.compass.com/app/listing/1306-savannah-lane-carlsbad-ca-92011/1158240234153778457

Those folks might sell, and they might not, but they should help me with mine!  My point is that we are not seeing an increasing flow of new listings being priced lower and lower in an attempt to get out now. It’s actually quite the opposite.

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JB On The Bubble

Housing Bubble Set to Pop

By John Burns

In 2013, fresh off the biggest housing downturn in their lifetimes, 73 housing industry executives compiled the Top 10 Signs of a Housing Market Bubble at our Summit Conference in Laguna Beach, CA. Assessing the criteria that we set almost a decade ago (10 quantitative and 10 qualitative), we have found that 16 of the 20 housing bubble signs are now flashing red.

In last month’s client-exclusive housing outlook webinar, we called out some signs we are seeing:

Pricing Momentum

There will always be an occasional low sale here and there.

What would cause home prices to really slide?

There would need to be a series of low sales in the same area to create downward momentum.  The next seller would have to be convinced that lower prices are a fact, and without an obvious trend, they will be reluctant to believe it.

Here’s an example.  Even though this lowball listing (in red) undermined the two comps over $2 million, the next seller wasn’t convinced, and they listed their home for $1,975,000.  They have lowered it since, but you can bet they are digging in now – and the market is in their hands:

If they hold out and get close to their price, then the lowball sale will be dismissed as one-off, and other sellers in the future will ignore it….and hope the buyers do too.

These are the standoffs happening everywhere now. ALL sellers have plenty of equity and could go down in price if they really wanted – or needed – to make the sale.

But will they?

Generally speaking, the agents might go along for 30 days or so, but they aren’t used to sitting on unsold listings for months. They are going to nudge the sellers to lower their price, but those drops need to be in 5% increments to cause a meaningful reaction from the buyers.

Will some sellers surrender? Yes, but only when confronted with a lower offer. Currently we are in the Buyer-Vacation stage where few are in the game and making offers, and without solid proof, the sellers are more likely to wait, than dump.

The 2023 Selling Season will be the most anticipated market in the history of the world!

New update – another price reduction. Buyers are on vacation now, we’ll see about 2023:

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