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. We’ve considered a 2:1 ratio of actives-to-pendings to be a healthy market.
While other areas in America are reporting a surge of inventory, it’s not happening here, at least not yet. Comparing the current stats to the last few months, there really isn’t any reason to be overly concerned:
Taking out La Jolla and Rancho Santa Fe, the actives-to-pendings is 2.4-to-1 (249:103), which isn’t bad, all considered, and it’s the same ratio as it was last month.
The holiday season is less than a month away…..and the NFL season is already two weeks old. The Super Bowl is right around the corner, and so is the 2023 Selling Season!
This Encinitas Ranch home was listed for $3,499,000 on March 29th – which was the week rates started going up – and had no price reductions. After 112 days on the open market, they found a buyer who closed in less than 30 days (Sept.12th) for $3,390,000 cash, which was 3% under the list price.
The buyer’s dilemma: If you are like most buyers, you are turned off by at least 90% of the inventory.
There are probably only one or two listings per month that are nice enough to capture your interest – can you stay passionate in your pursuit? Will you review every auto-notification of a new listing with the likelihood of 85% to 95% of them have no chance of being a possibility for you?
For some, and perhaps for many, it will be easier to just pay within 3% of the list price for a stale old listing. Buy the house and get settled. Pour another 5% to 10% into it during the first year to make it your own.
I had mentioned in the comments section that I showed a house on Labor Day that was priced at $2,195,000. The temperature was so hot that I literally said to my buyers that no agents would be working on the holiday, let alone writing offers, so we should have an easy path to escrow. We wrote a full-price offer and expected the seller to sign it on Tuesday.
Donna suggested that I call the listing agent to see if there were any other offers. I shrugged it off, thinking there weren’t going to be any other offers – heck, the market is dying a slow death, right?
So Donna called, and found out that there was an offer, and it was over list price.
By late Tuesday, there were SEVEN offers.
It felt like 2021 all over again as the listing agent gathered the highest-and-best offers from the contestants. Yesterday, she revealed that the decision was going to be between my buyers and one other, and that we were in second place.
We had bumped our offer to $2,450,000, and that wasn’t enough to win? Wow!
I asked her to tell me the number to beat…..and she did, and sent me the document to prove it (snip above).
Ultimately my buyers decided not to go higher. But I complimented the agent for her transparency, and told her that I wish every listing agent would do that. I guess it’s possible with blind bidding that a buyer might go wild, but we were already 12% over the list price in a non-frenzy environment. It’s much more likely that my buyers would go higher if they had a number to hit, and be able to say yes or no, rather than having to grope around in the dark trying to guess what it would take to win.
Congratulations to the seller and listing agent, and bravo – job well done.
Yesterday’s Case-Shiller Index for San Diego was 425.26, which is 11% higher than it was in January.
But check how the trend increased between January and now.
Prices rose as fast as ever in early 2021 (yellow above). If they would have mellowed out along my red line, then we would have experienced slightly-increasing prices for the last year. But noooo! Instead, the early-2022 buyers – egged on by their realtors – insisted upon paying ridiculous amounts over the list price to win a house. Hopefully that practice is done.
The only reason the June reading was 11% higher than January was because it came down a bit. The San Diego Case-Shiller Index rose 11.2% between January and April, 2022, which was an annual clip of 33.6% – which nobody would have believed was sustainable after rising 43% since the pandemic started.
If the SD Case-Shiller just goes back to where it started in January, it will be a 10% drop from today, which will sound like a disaster. But the annual appreciation will be zero, which is not only reasonable, but sustainable for a while.
Is anyone going to mind if we start 2023 where we started 2022, price-wise? If mortgage rates can stay in the 5s, and hopefully the low-5s, we should be fine!
This just closed on Friday for $3,400,000 – which was $10,000 over list – but it looks like a fixer inside and out compared to the only other Bressi Ranch house to sell above $3,000,000:
Last week, we saw here how the number of July sales has been plummeting, and with three days to go in the month, we are now at 119 NSDCC sales – which means we will end up with around 40% to 50% of last year’s July sales.
We also hear about how inventory is rapidly rising in other areas of the country. How are we doing here?
Here are the recent monthly counts of NSDCC July listings:
2017: 412
2018: 433
2019: 445
2020: 468
2021: 349
2022: 215 so far.
The NSDCC sales really aren’t bad, considering how few new listings are coming to market.
There is a bit of a backlog of sellers hoping to get lucky, but they will likely cancel their listing in the next month or two and try again next year, rather than give it away.
Between now and February, there will probably be months when we don’t reach 100 NSDCC sales, and it will be because there won’t be enough homes available to sell!
The biggest barrier to prices going down is that sales are needed to prove it.
Back in the old days when we had foreclosures, the banking rules forced lenders to keep selling their REOs, regardless of price.
But who or what is going to force regular homeowners to sell for whatever the market will bear? Anyone who needs money can borrow against their sizable equity, and virtually everyone who can’t get their price today will blame it on everything but their price (“I have comps!”) and wait for a sunnier day.
How bad will sales get?
Here are the NSDCC sales counts from recent months of July:
2017: 260
2018: 271
2019: 281
2020: 351
2021: 312
We’ve only had 103 NSDCC sales this month, with a week to go plus late-reporters.
Sellers get a vote in this process, and they can choose to not sell – and create the Big Standoff.
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.
In the recent years prior to the pandemic, the actives/pendings in Rancho Santa Fe ran at a 10:1 pace. Nobody is in a hurry there, they don’t have to sell, and they’re not going to give it away. Those days appear to be coming back.
The median list price of those RSF actives is $5,995,000 – is anyone going to feel sorry for them? Probably not. Does it reflect what is going on in the rest of the area? Not really – the other areas are mostly around a 2:1 ratio (except La Jolla) which has been our standard for a healthy market and pretty good, all considered.
In 2020, we had 400+ pendings from June 22nd to November 30th – with a peak of 491 pendings on September 7, 2020.
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