San Diego #1 in 2023
Hartford was a little higher but I never liked them much. Let’s not count them.
Over List, December
The total number of December sales is up to 86, and there’s a chance it might get to 100 but it will probably take another month before all the late-reporters check in. But we saw that 12 buyers were willing to pay $100,000+ over list , and the 34% is a nice pop for what should have been a very quiet December!
NSDCC Average and Median Prices by Month
The lousy way we measure pricing makes it look softer than it has been over the last few months, but compared to last December, it’s virtually identical. Chalk it up to cheaper houses selling in December!
Best Videos of 2023
I produced 166 YouTube videos on my main channel this year, and these were the best, as decided by me. All had to have 200+ views to qualify:
This is just another grandma house blowing out at $125,000 over list, which isn’t remarkable. But this is the only video ever in which I slipped and fell down:
Some of my best thoughts about the market, long-term:
The Frenzy Cruise was hot all year and a good indicator that buyers will keep paying over list price for a home they really want. It’s just a matter of how much over:
Daughter Natalie had the time of her life touring football stadiums in America with Karol G this summer:
Natalie is in the Rose Parade tomorrow!
She will be dancing in the Grand Finale with Jordin Sparks but will also be featutred with other performers during the parade, starting at 8am Monday!
Photos 2023
Cardiff 1913
Garnet and Cass 1925
South Carlsbad/North Encinitas Leucadia 1995
From Palomar Mountain
Over List, October
The number of sales and percentage of homes that closed over their list price were better last month than they were last October, but that’s not saying much.
The late-summer surge has subsided, and the last two months of 2023 should bring in a couple of hundred more sales without much change to the pricing stats.
A look at the individual sales is more volatile though. This price point used to be 100% over list:
Buyer Listing
The first week after the realtor-lawsuit verdict went as expected – chaos, doom, and no sexy alternatives. It will take years to appeal, but it won’t matter how it turns out. Buyers are going to be paying their agents.
If sellers aren’t obligated to pay any commission to the buyer-agents, will they appreciate the benefit of incentivizing buyer-agents with a bounty, or reward? Probably not, unless their listing agent makes it very clear, and insists on it.
It is more likely that listing agents won’t push it, and because sellers naturally will want to pay less commission and not more, they will list for 2.5% or 3% and hope for the best. Both will shrug it off, and joke about how it’s about time commissions came down!
It will be a grave mistake.
Why? Because the buyer-broker agreement is a disaster:
- Buyers won’t like it.
- Agents won’t like it.
- The market won’t like it.
Today’s buyers are picky, and you can’t blame them. They’ve had to endure +40% on prices, +200% on interest rates, and -50% on inventory…..talk about challenging!
The buyer-broker agreement will be a disaster because both agents and buyers will sign a short-term arrangement and hope the seller might kick in some of the commission. But then everyone will go back to doing it the same way we always have – refreshing your feed every hour and praying!
The real opportunity will be for buyers to hire an aggressive buyer-agent who does more than just watch the MLS. When a seller hires a listing agent, they get a thorough marketing campaign to source every potential buyer in the market. Buyer-agents can do the same, in reverse!
The buyer-agents who offer a rifle-shot soliciting of specific homes that fit the needs perfectly of their buyers will eventually find one. If an aggressive buyer-agent brings the complete package to the seller’s table without having to mess with a full listing, they will likely get an audience. It could even take the place of listing agents!
Because auctions aren’t close yet, this could be what changes the world of residential resales!
It will mean more off-market sales, which means more fuzzy comps because not much if anything is known about the home’s condition. But if it catches fire and the MLS or a rogue search portal insists on buyer-agents reporting everything about their sales including photos, we could still have a database full of accurate market data. But if we don’t, we don’t – good luck everybody!
Covid Buyers Now Selling
Could there be trouble brewing under the surface?
Are there home sellers scrambling to get out with whatever money they can? Maybe get just enough net proceeds for the family to have a steak dinner at closing? It was like that last time…..but it’s different now.
It’s a lot different now!
Let’s check the home sellers who purchased during the pandemic days. Those who bought their home before 2020 are having no problem selling for substantially more than they paid, so we only need to check the recent purchasers. Is anyone losing their shirt?
This month’s NSDCC sales are up to 117 – here are the ones that were purchased since 2020, and comparing what they paid then to their sales price this month:
Observations:
- Twenty-six of the 117 sales had purchased since 2020 (22%), but 12 of the 26 were corporations in the business of making money. They succeeded!
- The median gross profit was $750,000.
- Fourteen of the 117 sellers (12%) were regular buyers since 2020 who found a reason to sell this month.
- Even if they were in some sort of trouble, they still made out nicely – and for all we know, there were many who sold JUST BECAUSE they could hit the jackpot!
- The only seller who lost money had purchased 1,700sf for $5,500,000. Think twice about doing that!
- There are at least 100 sellers EVERY MONTH who are walking away with $1,000,000+ in their pocket!
Could there be trouble ahead for those who bought this year if prices declined substantially? Maybe, but rates have been rising for 18 months so they shouldn’t be surprised about future market shifts – if any.
For them to purchase a home in spite of market conditions must mean they are in it for the long haul.
P.S. The flip that made $8,000,000: Click here
Price Discovery
A good example of the places that could be undervalued is Terramar in Carlsbad. It’s a neighborhood of 240 homes near the beach, and the living is so good that there is rarely any turnover. Without a flow of recent sales, who knows what the market will bear – especially when every house has been uniquely customized.
Two months ago we set out on our journey of price discovery.
The sellers have a genuine reason to move, but wanted to really test the market on price. When you have active oceanfront listings of $12,750,000 and $25,000,000 in the neighborhood, the curiosity is real!
Everyone gets attached to their zestimate. In this case, my seller had her eye on the zestimate range, and suggested that we start at the high end, which we did:
But you have to read the room, and adjust accordingly.
All we had to do was follow my List Price Accuracy Gauge:
- If you are getting showings and offers, then the list price is within 5% of being right.
- If you are getting showings but no offers, then the list price is 5% to 10% off.
- If you’re not getting any showings, then the price is more than 10% wrong.
Lowering the price early and often is prudent too. The initial urgency wears off quickly, and once a home has been on the market for months, it invites lowball offers because buyers know it’s just a sitting duck.
We lowered early and often, and in meaningful amounts:
Boom, now we’re in escrow!
Trophy Properties
Remember when Doug said that buyers these days want something special? With all the domestic and international conflicts, mortgage rates at 16-year highs, and ultra-low inventory making the house-hunting almost unbearable for most buyers, there are still homes selling – the ones with something special.
We received four offers and closed escrow in two weeks with a cash buyer who paid $75,000 over list!
San Diego Is Most Expensive
San Diego is #1! Hat tip to Mitch for sending this in:
According to the magazine, the Value Index measures how comfortably the average resident of a metro area can afford to live within their means. Specifically, it looks at housing affordability, as well as federal data on the parity between regional prices and national averages.
Home prices were one of the factors that pushed San Diego up on the ranking, given that average prices are considerably higher than the national rate.
In August, the median price for a single-family home came in right at $1 million for the first time in the region’s history — nearly $650,000 more than the national average by some estimates.
U.S. News and World Report also pointed to additional fees that San Diego residents have to pay, such as homeowners association dues or apartment complex maintenance costs, as another factor driving its unaffordability.
However, the magazine said that many residents are willing to pay elevated prices relating to cost-of-living, given other aspects of the region that make it an ideal place to live.
They added that some San Diegans often refer “to the cost-of-living differences as the ‘sunshine tax,’ or price of enjoying a year-round temperate climate.”
Many of the other metro areas that were placed along the top 10 have similar “sunny” reputations with their climate, including cities Los Angeles, Honolulu, Miami and Santa Barbara.
Los Angeles, which came in second place on the ranking, was also given a score of 3.3 for residents’ ability to afford living there. Although, San Diego’s northern neighbor comparatively had lower scores for other metrics used by the magazine to look at “best places to live,” including the overall and quality of life indexes.
A full list of the top 25 “most expensive places to live” in the U.S. can be found here. San Diego is #1.
This ranking comes as inflation rate nationwide remains to a persistent problem for federal officials, but San Diegans seem to have been feeling it even more.
In San Diego, the U.S. Bureau of Labor Statistics estimated that the city exceeded the year-to-year national rate of inflation, which was around 3.7% in September. Over the last 12 months, prices in the San Diego area advanced about 4.7% overall, according to the bureau.
Housing costs have been one of the most pressing issues facing elected officials, with prices skyrocketing for both buyers and renters due to a continued lack of available units to meet the demand in the region.
Jim Klinge
Klinge Realty Group
Broker-Associate, Compass
Are you looking for an experienced agent to help you buy or sell a home?
Contact Jim the Realtor!
- 682 S. Coast Hwy 101, Suite #110
Encinitas, CA 92024 - (858) 997-3801 call or text
- klingerealty@gmail.com
CA DRE #01527365, CA DRE #00873197
