Signs of Frenzy

We have a real frenzy when many of the signals are happening at the same time:

  1. Record-low mortgage rates.  Rates are so low, it feels like free money now!
  2. Record-high sales.  We’ll never see this many July sales again.
  3. Homes sell quickly. Last month’s average days-on-market was 38 days, and the median was 14 days!
  4. The SP:LP is close to 100%.  Last month’s ratio was 98%, and that includes 51 sales over $3,000,000.
  5. Pricing is wildly optimistic, yet sales keep happening. The best sign of a frenzy is when the comps don’t seem to matter any more.
  6. In the midst of a recession, record unemployment, and a 100-year pandemic, PRICES KEEP GOING UP!

We have all of the above!!!

Frenzy to Continue

Because baby boomers tend to own in the best locations (they got there first), we should have an extended frenzy, and maybe an occasional glut of older and dated 2-story homes in some areas:

Nearly a third (31%) of home sellers are “extremely anxious” about selling their home in 2020. The percentage of sellers in each age group who feel this way are:

  • 37% of millennials
  • 35% of Gen Xers
  • 20% of baby boomers

Another 46% of sellers are “somewhat anxious” about a home sale this year, while 6% have no anxiety at all.

While 32% of home sellers already have their home listed for sale, more than 6 in 10 sellers (62%) haven’t put their home on the market yet. Another 6% previously listed their home, but have since taken it off the market.

More baby boomers (57%) plan on waiting to put their home on the market, due to the COVID-19 pandemic, than Gen Xers (41%) and millennials (42%).

Link to Full Article

The Frenzy of 2020

Mortgage rates hit an all-time low yesterday!

Combine the improved purchasing power with the covid-delayed selling season and the lowest inventory in recent history, and we have full-blown frenzy conditions. Look at how July wound up:

NSDCC July Sales & Pricing – Preliminary

Year
# July Sales
Avg. $$/sf
Median SP
July Mortgage Rate
# Listings, 1st Half
2012
258
$365/sf
$850,000
3.55%
2,545
2013
297
$418/sf
$930,000
4.37%
2,790
2014
271
$451/sf
$1,018,000
4.13%
2,714
2015
321
$458/sf
$1,025,000
4.05%
2,871
2016
271
$504/sf
$1,110,000
3.44%
2,999
2017
261
$528/sf
$1,240,000
3.97%
2,725
2018
273
$544/sf
$1,280,000
4.53%
2,701
2019
281
$612/sf
$1,300,000
3.77%
2,725
2020
343
$620/sf
$1,420,000
2.99%
2,293

We had 342 sales, and there will be some late-reporters. Wow!

Has pricing caught up with the market conditions yet?

22 Offers

Not mentioned was the list price was $7,000,000 (on April 2nd), and the listing agent represented the buyer too:

Even in the throes of a pandemic, the offers started coming in almost immediately.

The day after an off-market opportunity in Beverly Hills was made known in late March, as Los Angeles County residents adjusted to new stay-at-home orders, the listing agent found his inbox flooded and his phone ringing off the hook. Seemingly everyone wanted a piece of the property, which was marketed by email. Within the first 24 hours, there were dozens of calls on the property and 18 offers made.

“I knew we’d see some action, I just didn’t know how much,” said Paul Salazar, the listing agent with Hilton & Hyland.

The home on North Bedford Drive, a popular street in the Flats section, received a total of 22 offers, according to Salazar. The potential buyers were a mix of end-users — buyers who wish to remodel and live in the home — and developers looking to tear down the existing structure and build. Ultimately, it was an end-user that purchased the property for $6.75 million.

The Italianate-style house, built in 1928, has four bedrooms, 3.5 bathrooms and more than 3,500 square feet. A large motor court sits off the front of the one-third-acre property.

Salazar believes marketing the home as an off-market opportunity gave it more exclusivity, but the excitement began to wear off as “everyone began watching the news” and reality of the coronavirus set in. Additionally, about one-third of the buyers, specifically those carrying mortgages, were ruled out over concerns that loans might be frozen due to the pandemic.

“It looked like it was going to be a big bidding war, but it ended up being a long negotiation with 3-4 buyers going back and forth,” Salazar said.  Had the pandemic never happened, Salazar believes the property would have sold for about $1 million more.

While the coronavirus has stifled sales throughout the Southland, L.A. County’s high-end market has continued to produce a steady stream of multimillion-dollar deals.

In April, there were eight sales of $10 million or more including two deals north of $36 million in nearby Bel-Air. Last month, there were five sales of $10 million or more including two transactions of $21.5 million or more.

Link to Article

HGTV Brady!

The bidding for the “Brady Bunch” house got down to a horse race, listing agent Ernie Carswell said, but it was HGTV that ultimately pulled away from the pack. So, just how much did the cable network spend to secure the television-famous property? About twice the asking price.

HGTV paid $3.5 million to buy the Studio City residence, or $1.615 million more than the list price of $1.885 million. The sale closed Friday.

The home received eight offers, Carswell said.

The players included stage and television producers, corporate parties and entertainers such as singer-dancer Lance Bass, who was “heartbroken” to learn he had not submitted the winning bid.

All of them planned to keep the home basically intact.

“Every [bidder] intended to retain the front facade as a historic preservation, but most of them intended to renovate the interiors,” Carswell said. “No developer submitted a bid for the property.”

Link to Article

San Diego Peak-to-Trough-to-Now

The trough for San Diego was April, 2009.

Interestingly, only four of the 10 largest metros in the study – Washington D.C., Seattle, Austin and Denver – are considered overvalued. This indicates that despite the growth in home prices in metros like San Diego and Boston, other economic factors such as low unemployment, people choosing to rent, and access to high-paying jobs, have kept these regions within the normal range.

Read full article here

The Buyers’ Struggle

When you find the right home, don’t lose it. Get Good Help!

NAHB regularly conducts national polls of American adults and home buyers in order to understand new trends and preferences in the housing market. This is the third in a series of posts highlighting poll results, as presented during the 2018 International Builders’ Show in Orlando, FL.  See previous posts on tiny homes and driverless cars.

A recent poll revealed that most prospective home buyers actively involved in the search for a home have been looking for a significant amount of time. In fact, 61% have been trying to find a home to buy for three months or more, while the other 39% have been looking for less than three months.

The natural follow-up question to those who have been unable to find a home after searching for three months or longer is why?

Forty-two percent say they ‘can’t find a home at a price I can afford,’ 36% ‘can’t find a home with the features I want,’ 34% ‘can’t find a home in the neighborhood I want,’ and 27% were able to overcome all these obstacles but ‘continue to get outbid whenever I make an offer.’

This result shows there are several important reasons why prospective buyers haven’t been able to pull the trigger, but the most important one is lack of affordability – not being able to find a home at a price point they can afford.

Link to Article

Way Over List Price

Here we only have to pay 5% to 10% over list….if at all!

It is no secret the housing market is on fire. Last year, almost a quarter of all U.S. home sales were above asking price, according to real-estate listings website Zillow. But the average premium over asking for those homes was $7,000—not $700,000. Even in the hottest real-estate markets, where there is a severe shortage of inventory, the highest bid typically isn’t more than a couple hundred thousand dollars over asking.

What often distinguishes the houses that go way above asking—half a million or more—is a feature that the other homes in the neighborhood just don’t have, says Toby Lumpkin, a real-estate broker with Realogics Sotheby’s International Realty in Seattle. That can be a better view, more southern exposure, an especially tasteful renovation, a three-car garage in a parking-challenged city, or a side yard, which is what set apart Mr. Malcolm’s house. It’s also often a price low enough to attract attention.

When Kerry Bucklin saw a house for sale on Mercer Island, Wash., on the waterfront, he thought its price of $1.995 million was too low. The Midcentury Modern home, built in 1959, needed updating and shared 210 feet of waterfront with five other houses. But it was the closest of the houses to the shore, offered unobstructed views in a parklike setting and allowed him to go paddling on Lake Washington without having to load a canoe on his car. At the same time, the property was close to the freeway, shaving 6 miles off his commute to work.

Mr. Bucklin, 55, a real-estate lawyer, had been looking for a couple of years to replace the large family home mid-island, where he lived alone since becoming an empty-nester. He bought the home in June by paying just over $500,000 above asking, beating seven other offers.

Read full article here:

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