NSDCC October Listings

Next year, everyone will be talking about how mortgage rates in the 7s or 8s will be causing a lack of affordability, but I have bad news for those who still want to buy.

There probably won’t be many homes for sale.

It will only take one or two headlines about the real estate market being crushed by high rates to cause potential sellers to pack it in until “the market gets better”.

Look how few sellers came to market last month:

NSDCC Detached-Home Listings, October

Number of Listings
Median List Price

Before last year, the lowest October-listings count over the last twenty years was 312 in 2012, and back in the golden years of real estate, there were 452 October listings in 2001, and 510 in 2002!

510 vs. 174?


Hopefully, those who do list their homes for sale next year will be highly motivated, and, lucky for them, having so few competitors will cause their list prices to stay elevated.

Don’t be surprised if the 2023 spring selling season ends up being the Greatest Standoff Ever!

Over List, September


NSDCC Average and Median Prices by Month

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


We saw that the difference needed to fully compensate for the higher rates is -30%.  We’re almost there, and the full effect should be built in by springtime!

Please note that I didn’t say home prices are down 23%.

The median sales price is 23% lower than it was six months ago.

FATCO Repeat Sales Index

The local Case-Shiller index is due tomorrow, and expectations are for a 2% drop from June.  First American has their own repeat-sales index which is already showing a 12% decline in San Diego pricing (above).


While the -12% over six months is probably a surprise to people who think pricing is downward sticky, it’s different this time. In the past, the home-equity positions were much smaller, and many sellers had hold out just to have enough for a steak dinner at closing.

None of today’s sellers need to hold out. All of them could sell today for what the market will bear, if they could just get out of their own way. Yes, it’s true that they may have plans for all the money and need to sell for their price, and those sellers should just wait it out.

This could be over before you know it.

Is there a specific marker for home buyers to know when it’s time to buy? Or is it just when prices go down?

Is the -12% enough to get the attention of the highly-motivated buyers – those who don’t own a house yet?

Or will they just look up in March/April and say, “Close enough!”

Wait Until When?

I tell potential home buyers to keep looking because you never know when you will find the right house – which is the most important part of the equation. Most will convince themselves that it will be easier to find the right house if prices came down, and besides, the current crop isn’t that interesting.

To keep it simple, let’s just calculate how mortgage rates have changed the equation:

Purchase Price: $2,000,000

Loan Amount: $1,600,000

30-yr jumbo rate: 3%

Monthly pmt: $6,746

Buyers who expect the sellers to make up the entire difference with a lower sales price will have to wait until they can find a home that meets this description:

Purchase Price: $1,400,000

Loan Amount: $1,120,000

30-yr jumbo rate: 6%

Monthly pmt: $6,715

If home prices come down 30%, it will enable buyers to buy the same house for the same monthly payment – and with a $120,000 smaller down payment too. If it happened over the next five years, it means we only need to drop about 6% per year, and we’ve already dropped more than that in 2022.

Or let’s say you want to roll back to pre-pandemic pricing.

NSDCC homes that sold in February, 2020 closed at a median of $509/sf, and last month the median was $793/sf which means we’d need a 36% decline to get back to pre-pandemic pricing.

How are you going to play it?

Are you going to wait until you actually see homes selling for 30% to 36% off to get back into the game?

Are are you going to wait until rates come back to 3%?

Or do we acknowledge that the buyers who have more horsepower are going to jump back in sooner, and there’s not much chance of prices dropping the full 30% to 36%?  The highly-motivated affluent folks will probably be satisfied with 20% off, and they will derail a full decline.  It’s what happened in 2012.

Can you live with 20% off?

Because if you can, then you need to stay in the game.

If the #1 variable is buying the right house, then #2 is timing.

I think the affluent will be looking next spring, and if they find a suitable house, they are going to buy it. By then, some of the statistical pricing gauges will be showing 10% to 20% declines, either nationally or in isolated markets. Because the local pricing isn’t that nuanced and buyers just want a house, they will decide that’s close enough and go ahead with the purchase.

To support my suspicion, I’ll note that during the frenzy, it was the same mentality, just in reverse.

When people found the right house, they just paid whatever it took – even if it meant paying $500,000 to $1,000,000 over the list price!  Nothing else mattered besides getting the right house.

Most buyers won’t believe their eyes, and the volume will be thin. But sellers will appreciate any momentum and be encouraged to price their home for about what they thought they could get, with not much discount. Buyers who want discounts will be relegated to scouring through the dent-and-scratch bin, or hope that moving during the off-season might be more fruitful. Great for them.

What are you going to do?

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:

San Diego Appreciation, Next 12 Months

The final accuracy of any guess on appreciation doesn’t matter. We all know that they are just guesses.

What matters is whether home buyers and sellers will make decisions today, based on what they read.

If I keep showing data and forecasts that show pricing isn’t tanking between La Jolla and Carlsbad, would it cause you to ignore the national doom and do something different, like buy or sell now?

Or will people just take it all in, and then do what they planned to do all along – move next spring? Or deliberately wait until 2024 to ‘wait-and-see’ what happens then, hoping for something different?

Because for the market to be ‘different’ , there would need to be a change here:

Very few quality homes for sale at less-than-retail pricing.

Most everyone who bought a home in the last 13 years has tremendous incentives to NOT sell it.  Will the IRS waive the capital-gains tax to help the real estate market? Will there be a load of new homes built between La Jolla and Carlsbad?  Will higher rates make potential sellers panic?

The answer to those questions is ‘very unlikely’, and things are most likely going to stay the same.

Will ANY data or forecasts have an effect on your moving plans?


The next round of Zillow local guesses started today – here’s the first installment:

Carmel Valley

Summer Listings & Sales History

Chris asked how the current environment compares to the 2008 downturn.

In the summer of 2008, there were only 601 NSDCC sales between June 1st and August 31st, in spite of there being 1,348 listings that summer. For the next two years, the number of listings far exceeded the number of sales, and in the 2008-2010 period there were twice as many listings as sales. The 2010 ratio was the worst at 2.3 to 1.

This summer we only had 825 listings, and 504 sales, which is a 1.6 to 1 ratio!

The 2022 sales were 16% lower than the previous record in 2008, but there were 39% fewer listings!

We’ve never had so few listings to consider. Now that the Fed is making it so obvious that they intend to cause a recession, more potential sellers – who tend to casually read the headlines only – will delay their decision to move.  Does anybody HAVE to move in 2023?  Every potential seller will give it a second or third thought if they believe it will cost them several hundreds of thousands of dollars.

The NSDCC inventory next year will be the lowest ever – even Ray Charles can see that coming.

Inventory Watch

There were 31 and 38 new listings between La Jolla and Carlsbad in each of the last two weeks, which is incredible – the last time we had those numbers was in the beginning of January! As recently as 2019, the number of new listings in the middle of September were 100+ per week.

The NSDCC monthly sales counts will be crushed for the rest of 2022 – there will probably be at least two months when there will be fewer than 100 sales. There have been 40 NSDCC sales so far in September, and only five of them closed over the list price (with two of those at +$1,000 over or less).

Will they be the superior homes where the sellers held out, and buyers paid retail?  Or will they be the homes where sellers didn’t Get Good Help, and they give away their home in a panic?

The biggest problem is that the comps used to price homes in 2023 will be fewer and farther between, which will mean that we’ll get off to a slow start in the first quarter as everyone does the wait-and-see.



San Diego County Inventory Very Low

Above, Bill shows how the number of new listings is dropping off in San Diego.

Yes, in the top chart, there were 20.7% more active listings YoY because you can wrongly price a listing today. Last year, just about everything was selling, which is very unusual!

In August, 2019, there were 3,007 detached homes listed for sale in San Diego County, and 67% of them sold.  Last August, there were 2,608 detached homes listed for sale, and 83% of them sold!

We don’t want to get alarmed by any comparisons to the Uber-Frenzy of 2021.

The counts are a little different in this graph, but you can see the huge differences between the pandemic inventory, and normal times.

Today, there are 2,859 active listings of detached-homes in San Diego County.  I won’t be looking for the panic button until that number gets over 6,000 – which may never happen again:

As recently as 2018, there were 10,000+ houses for sale, and today there are fewer than 3,000?

If there was any panic, it would be because the market isn’t correcting – it’s shutting down:


Plateau City in 2023

I said: 0% appreciation for NSDCC (La Jolla to Carlsbad) in 2023.

Zillow says: +1.5% to +1.9% for NSDCC.

Goldman Sachs says: -1% for San Diego.

Moody’s has San Diego County home prices changing –3.65% between now and the end of 2023, and then -2.9% by the end of 2024.

What do you say?

Hat tip to shadash for sending this in:


Pin It on Pinterest