Let’s revisit yesterday’s graph and add the sales to compare the relative health of the market.
If higher mortgage rates were stopping home buyers, then sales would plummet, especially in relation to the number of listings. But if the number of listings plummets too, and we’re down to just the most serious buyers and sellers, we can still have an orderly market:
NSDCC Listings and Sales Between Jan 1 and Feb 15
Year
Number of Listings
Number of Sales
Listings/Sales
2019
625
239
2.6
2020
563
253
2.2
2021
449
290
1.5
2022
341
226
1.5
2023
280
148
1.9
The local market isn’t in shambles or falling apart.
The number of buyers AND sellers are much lower than they were previously, but they are acting in concert and fairly similar to the frenzy years. By the time the late-reporters log in, this year’s L/S will get down to 1.8 or 1.7 which is remarkably similar to the hottest frenzy years of all-time!
Jessie says we are in the top 3% of local realtors, which means she is counting 16,000+ agents in the county. She doesn’t include out-of-area or off-market sales, and because we made it into the Compass Top 50, we’re hoping it might mean we’re a little higher. Stay tuned.
In the discussion today, it quickly became obvious how important it is for agents to be able to discuss scenarios and solutions. These days, a buyer-agent will just email an offer to the listing agent, and hope it gets accepted or an easy counter-offer comes back. Any tougher than that and the buyer-agents just turn to their clients and say, ‘what do you think?’ and because no other solution is presented, everyone gives up.
The wicked seller’s market during the last 10-12 years has caused everybody to expect that buyers will just pay the sellers’ price – and if they don’t, then they are called names and declared not serious. Being able to craft these scenarios into sales is where this market will benefit greatly.
It may sound simple to expect agents to discuss offer terms, but don’t underestimate how limited that opportunity is. Not only do people who are used to texting and emailing all day find it a struggle to stitch together a sentence or two in person, they usually have little or no experience with actually discussing offers and how to find a win-win solution. It’s too easy to give up instead.
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.
Most areas look healthy (ratio of 2:1 or better), and those in red have very similar to numbers to last spring which was probably the hottest frenzy on record:
The number of pendings has risen 33% in the last month, and the active listings are restrained. There aren’t any signs of panic and there have been some eye-popping sales already this year that makes you think the frenzy conditions are still around.
We are set up for a boisterous selling season, in spite of high prices, high rates, and high skepticism!
Paying over the list price wasn’t a new thing created by the frenzy – there have always been over-list sales in the past. But getting down to 8% last month begged for a comparison to a previous January!
In January, 2019 there were 151 NSDCC sales, and 18 of them (12%) closed over the list price. Of the eighteen, seven were among the 37 sales that closed under $1,000,000 (which were a quarter of all sales).
Thirty of the 37 sales under $1,000,000 closed for less than full price?
Last month, we didn’t even have ANY sales that closed under a million!
With 92% of closings last month selling for list price or less, it must mean that today’s sellers are more willing to ‘give away’ their home. They have gained huge gobs of equity in the last couple of years, and only the seriously-motivated sellers would dare try to sell their house in a ‘bad’ market. If they need to give back a bigger portion to make the deal, they might do it.
Let’s predict the next few months.
Sellers will still try to get full retail, and based on the over-list stats from last month, 10% or less will get it. The rest will be priced to sit, and after 30+ days on the market, be prone to receiving lowball offers.
This is where the 2023 Spring Selling Season will be made. Will 80% to 90% of sellers take a low offer?
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
NSDCC Average and Median Prices by Month
Month
# of Sales
Avg. LP
Avg. SP
Median LP
Median SP
Feb
224
$2,298,797
$2,257,334
$1,719,500
$1,758,000
March
252
$2,295,629
$2,260,524
$1,800,000
$1,825,000
April
357
$2,396,667
$2,403,962
$1,799,900
$1,828,000
May
300
$2,596,992
$2,581,715
$1,900,000
$1,994,500
June
348
$2,509,175
$2,537,953
$1,900,000
$1,967,500
July
311
$2,421,326
$2,442,738
$1,795,000
$1,855,000
Aug
268
$2,415,075
$2,438,934
$1,897,000
$1,950,000
Sept
278
$2,479,440
$2,445,817
$1,899,000
$1,987,500
Oct
248
$2,754,470
$2,705,071
$1,899,000
$1,899,500
Nov
199
$2,713,693
$2,707,359
$1,999,000
$2,100,000
Dec
189
$2,686,126
$2,664,391
$1,985,000
$2,157,500
Jan
140
$2,828,988
$2,855,213
$2,234,944
$2,240,000
Feb
158
$3,063,331
$3,108,907
$2,149,500
$2,386,500
Mar
207
$3,247,251
$3,337,348
$2,400,000
$2,625,000
Apr
227
$3,190,161
$3,251,604
$2,350,000
$2,550,000
May
215
$2,943,657
$3,032,977
$2,350,000
$2,500,000
Jun
190
$2,864,089
$2,872,690
$2,297,500
$2,350,000
Jul
155
$2,889,612
$2,832,080
$2,299,900
$2,300,000
Aug
164
$2,933,243
$2,830,855
$2,200,000
$2,150,000
Sep
135
$2,650,642
$2,560,314
$2,149,000
$2,040,000
Oct
124
$3,090,320
$2,971,211
$2,272,500
$2,212,500
Nov
115
$2,581,790
$2,459,974
$1,950,000
$1,875,000
Dec
100
$2,859,960
$2,675,549
$2,097,500
$1,892,500
Jan
96
$3,032,101
$2,897,135
$2,197,500
$2,075,000
In the months when the average and median sales prices increased, it didn’t mean your home’s value went up – it just means that the set of homes were a little bigger and nicer than other months.
The number of sales is the real indicator. Fewer and fewer homes are deserving of today’s pricing.
This is the house that received THIRTY offers last month.
My thoughts:
The supply of houses priced under $700,000 is scarce, with overwhelming demand.
This is all you’re going to get from now on, and it won’t get better. I feel sorry for the kids.
My buyers offered $700,000 with 20% down and didn’t get a counter.
The listing agent didn’t round-trip it and the winner paid $730,000 and financed the purchase. How do you know if others would have made a better offer if you don’t include them?
When mortgage rates started going up last year, I said all we have to do is survive until springtime – and it looks like we’ve made it!
Not only did our local market not crash and burn, it held up pretty well – and that’s in spite of the higher rates and blistering doomer attack over the last eight months.
The San Diego Case-Shiller NSA stats:
Mar 2020: 268.19
May 2022: 421.29 (+57%)
Nov 2022: 390.22 (-7%)
I don’t know where the -7% is happening, but around the NSDCC, the pricing hasn’t changed much.
The spring season should run hot through May, and by then the mortgage rates AND prices will probably be higher. The second half of 2023 will likely be sluggish, at best.
There isn’t one standard way to sell a house – every agent does it differently, mostly based on their skill set and ambition in life. My new listing in Spinnaker Hill is a good example!
It’s a tract neighborhood of one-story houses from the 1970s, and most of them haven’t added square footage so comparing the recent sales is fairly simple.
In the post-frenzy environment, appraisers are reluctant to go back more than the standard six months for comparisons, and they will place the most weight on those in the same tract (see above).
The different ways that listing agents sell houses can be broken into three categories:
1. Listing agents who make a deal with the first buyer who calls, and shuts out everyone else.
This is what happened when an out-of-town agent listed the home on Daisy that’s pending, which is the identical house to what I’m selling, with less ocean view. It is 100 yards away from my listing, and many people at my open houses asked how I could expect to get $1,600,000 when an identical match was $400,000 less (that buyer lives in the neighborhood and has told everyone about his good fortune).
2. Listing agents who practice the 3P marketing plan (Put a sign in the yard, Put it in the MLS, and Pray).
You can see the varying results in the four recent sales in the post-frenzy era. Nobody knows how long it will take to find a buyer, and what they might be willing to pay – and three out of four took quite a bit less.
3. How Jim the Realtor sells his listings.
I thought the house needed to much work to bother with staging. But it didn’t stop me from recommending a list price that was full retail, or retail-plus – ESPECIALLY with the model match at $400,000 less.
After a vigorous open house extravaganza that 230+ people attended, I received five offers, and four were over the list price. You can tell from the comps that we had a real concern about the appraisal, and it would play a vital role in the decision made by the sellers.
After giving all five of the buyers three chances yesterday to improve their offer, the sellers decided that it boiled down to two contenders:
$1,755,000 cash and no appraisal contingency.
$1,776,000 with a $1,000,000 down payment and no appraisal contingency.
We took the cash deal initially, but the buyer got the yips the next day so we sold to #2.
How much would any other realtor have gotten?
Are you thinking of selling your house? Let’s talk!
Realtors are known to comfort buyers who have lost a bidding war by saying, “There will be others”.
But will there be?
Especially for those at the entry level of every market….where the action is the hottest.
Above are the NINE houses that sold under a million dollars between La Jolla and Carlsbad in 2022. Those on the list with a street name that starts with Don are mobile homes in Rancho Carlsbad – which by itself might make you scratch your head when you see mobiles selling for as much as $830,000!
It’s early in the new year, and of course everyone thinks that home prices are coming down fast so this problem will be cured shortly (NOT!).
So far in 2023, this is the ONLY listing of a NSDCC detached-home priced under $1,000,000:
Oh, you want a decent home too? It’s even worse for the picky buyers.
Buyers can expect that pricing of decent entry-level homes this spring will start around these numbers:
New post (Will Lower Rates Fix Real Estate?) has been published on http://bubbleinfo.com - https://www.bubbleinfo.com/2023/03/24/will-lower-rates-fix-real-estate/
