More on Inventory

We had 1,782 new listings of houses and condos last month, in a county of 3.3 million people?  And only 1,332 active listings (I believe that is the count at the end of the month).  Look at Phoenix and Las Vegas for comparison, where they have 2x and 3x as many listings.

If we get a surge of inventory, it would just make the frenzy conditions even hotter!

Thanks Bill!


Open Houses Are Complete

We have three more showings today and then almost 200 people will have seen the house since Friday! Next we will engage in open bidding by phone with all interested parties and let the MARKET decide the winner, not the listing agent (which is how everyone else does it).

Here’s a buyer-agent strategy that can be really effective, especially with weaker listing agents:

Heavy Demand, 2022

To demonstrate the imbalance between the supply and demand, look at the view counts of our new listing on the two search portals in the first 33 hours on the open market:

Views: 3,051

Saves/Favorites: 171

I received three phone calls from agents letting me know that they have interested buyers and will be attending the open house today – part of the rapport-building process that some have included in their repertoire of buyer-positioning tactics. One agent implored me to do a James Bond video, and even though Mitch has his Aston-Martin available, I had trouble getting into my black suit!

There were THREE other agents who requested an earlier showing time, so I’m getting started at 11:30am today to accommodate. On a Friday morning!

How pent-up is the demand coming into 2022?

Sacramento isn’t the same as us, but consider:

If there are multiple offers, what else can buyers do to compete, besides price?

  1. Butter up the listing agent. It doesn’t work with me, but most listing agents want to select somebody who they like to be the winner. They justify it with it being a ‘good match for the neighborhood’ or some other garbage, but it is pure discrimination – though completely unconscious.
  2. Bring the kids, for the same reason above. If you don’t have kids, grab an infant on your way over.
  3. Figure out if there is any predetermined process for selecting the winner. When I ask a listing agent this question, at least 90% of the time the answer is “I don’t know, I let the seller decide”.
  4. Big down payments, and big deposits. Though the chance of the buyers cancelling is the same, the naïve listing agents think those mean something.
  5. Ask for seller disclosures, and if there is anything unusual, then waive that contingency.
  6. Spend a lot of time at the house. It makes you look like you’re serious.
  7. Be one of the first visitors, and the first offer. It impresses most listing agents, and mentally they have designated you as the probable winner.
  8. At an open house last year, an agent brought me a sandwich. He still lost, but I’ll never forget it!

I heard an agent say, “If my buyers like the house, I tell them to offer $100,000 over list. If they love it, I tell them to offer $200,000 over list”.  A great example of how dumbed down the business is!

Besides, buyers are doing better than that:


Frustration Fee

Why do buyers offer $100,000-$200,000 over the list price?

  • The sellers and listing agents aren’t demanding it.
  • The home isn’t priced $100,000-$200,000 under value.
  • Half the homes are selling for list price or under.
  • There will be others for sale.

There isn’t a threat of transparency either – every listing agent (besides me) does blind bidding, and then just takes the highest offer.  It would be understandable if there were rounds and rounds of open bidding and the buyers’ ego kicked in because they KNEW they had to out-bid everyone else to win.

But with blind bidding, you don’t know anything about the other offers (if any).

The extended frenzy is causing buyers to voluntarily sacrifice hundreds of thousands of extra dollars in trade for the hope of ending their frustration – and if they still lose, then they offer even more next time!

The frustration builds over time, and buyers go through a fairly predictable sequence:

Early-on: I’m not going to play that game – I’m not desperate.

After losing 2-3 houses: These people are nuts.

After losing 4-5 houses: Ok, this is ridiculous. I gotta get this over with.

The biggest problem is that it seems there are always people with more horsepower who started the process earlier and, as a result, are MORE frustrated than you.

Once buyers reach the peak frustration level and end up winning a house, they are left in disbelief with the one universal thought: “Oh, what have I done?”

It becomes obvious that buyers are paying tomorrow’s prices today, but they come to terms with it later because there are enough other reasons to buy this house that paying the frustration fee gets forgotten.

If overpaying is part of the environment, what can a buyer do?

  1. Get to the peak frustration level quickly, and/or just buy the first house you see.
  2. If you are going to overpay, then insist on buying a superior home.
  3. Only buy an inferior home if the defects can be fixed with money.

You will have a 15-minute tour to size up the home and make decisions that will affect the rest of your life.

You’d be crazy to attempt that without a solid, experienced agent to assist you!

Yet, even with all this pent-up frustration among buyers, it doesn’t occur to listing agents to go back to all the other bidders and give everyone a chance to overpay.

Get Good Help!

Non-Stop Frenzy

Buyers who stalled their home search when school began are going to be shocked at recent prices.

In September, there were two sales of the larger 3,362sf floor plan; one was $1,869,000 and the other was $1,875,000 (both under list). So when this house came on at $1,895,000, it seemed about right.

It closed for $2,125,000:

Happy New Year!

The best thing about 2021 for Kayla? Her new boyfriend Frank, who is a great guy and quite a golfer too!

Natalie signed with a new talent agent and has high hopes for next-level work in the new year. Dancing on a concert tour would be ideal, all while being our marketing director!

Hello 2022!


I said that pricing will likely seem a lot higher this year.

With few recent sales to guide them, sellers and listing agents will wonder how much can they get away with on price. There are tales of a old blogger guy being wildly successful with his transparent open bidding, but other agents aren’t experienced in conducting a slow-motion auction and don’t have the guts.

Instead, the list prices will be getting packed.

When sellers wonder how high, it will be easier to lump 10%, or more, on top of the initial guess (which was probably +5% optimistic already).  The zestimate, or other automated valuation, that is higher and supports the dream will be collected as proof!

But it’s the METHOD of selling that makes the +10% possible.

Bidders are turned against one another and compete for the prize.  Their ego takes over and directs the bidding……and the contest is on, with no ceiling.

Will a list price that starts at 10% to 15% higher than comps produce the same results as my slow-motion auctions? Maybe, but only with the homes that are highly upgraded with all the bells & whistles and have a superior location. The real creampuffs.

The early buyers will have to tolerate such sloppy pricing, but for those who are already frustrated from not buying a house in 2020/2021, it won’t matter and they will grab whatever they can. It virtually guarantees that the first 1-3 months of the season will be scorching hot.

But there will come a day when we run out of those buyers, and the frenzy conditions will be over.

I’m sticking with my +15% appreciation, and it all happens in the first half of 2022.


Two new laws that address the housing crisis begin today (above).

Baby boomers are another year older, and more will need help with living. The multi-gen home buyers will grow in numbers, and granny flats will be an ideal solution. Many will buy a suitable property with grandma’s money, and take care of her until the end.

Some multi-gen home buyers will cope with finding an existing single-family home and adding their own granny flat. But the real opportunity will be for those sellers of properties that already have an ADU. Because the supply is low and the need is very high (and because grandma’s money came a little too easily), the prices paid for homes with existing granny flats will be excessive. There will be a separate category of comps too – those with ADUs, and those without, with a pricing differential of 10% minimum.


 This could be the year that buyers have to pay for their own agent.

I don’t think many agents can make a case of why they are worth it – or at least demonstrate why they are worth as much as 2% to 3%.  It would be cool to develop buyer-agent squads who are experts in their field and are worthy of compensation – and can prove it.  But most will just fade away, or open up a shop of discount door-openers who don’t offer much, but get paid up front.


Another political season starts in 2022, which means an increase in the vitriol and hate. The perceived volatility will cause a few people to move to areas which are better suited for their political leanings, especially if there are riots – which is what it would take to get laid-back San Diegans to reconsider a move. It may not cause a surge of additional sellers here, but it could create more demand for homes in those politically-friendly destinations.


The difficulty of buying homes out-of-state is already tough enough, and now they are more expensive  – with some now 30% to 40% higher. It could be the game-changer for potential sellers and even be the reason why the inventory has been so tight recently.

We don’t know what it will take to get more homeowners to sell.

In the past, record-high prices did the trick, but today’s prices are setting new records every month – and inventory is in decline. How many current homeowners in San Diego wouldn’t sell at any price? 80%? 90%?  That’s a problem, and I’ll say that it’s something we’ve never faced before until the last few months.

At the same time, the number of San Diego County detached-home sales in 2021 will probably rank as the #2 of all-time, behind only those in 2003.  There were 28,319 detached-home listings last year, and 25,029 sales, which is incredibly efficient. Virtually everything is selling!

But only 12,936 of those listings came in the second half of 2021, and if we continue at that pace or lower, it will be excruciating for buyers – and send prices to the moon.

The optimum number of listings will probably be in the 30,000 to 35,000 range.  Having a small surge in listings will drive the market crazy with activity…..and force sellers and buyers to Get Good Help!

Happy New Year!


We know that media types are looking to sell newspapers, and if it bleeds, it leads.  The article in the UT this morning about the San Diego Case-Shiller Index starts with this:

San Diego continued to slide down in rankings of the nation’s hottest real estate markets in October.

The article doesn’t mention the lower inventory in 2021, or offer any other explanation.  But it does use the D-word, deceleration, in their headline that everyone is using to describe the last few months.

But are home prices really decelerating?

All of the comparisons are judging the year-over-year changes, without any mention of how the 2020 numbers were rising quickly too. If we add the 2020 monthly YoY increases to those from this year, here’s what the combined 2-year increases would look like:

The indices in the last half of 2019 had flatlined, so the graph above is a pretty good visual on how our local index has been marching skyward since the pandemic started.

We can also note that the month-over-month increases are probably a better gauge of current activity – and they have picked up since we had actual deceleration:

Here’s a graph from a different article that also mentioned how price gains are slowing:

If that’s what slowing looks like, I’ll take it!

But let’s not misinterpret the recent index readings and then give potential home buyers the impression that our local market conditions are changing, because they’re not (or at least not yet).

All that matters in 2022 is inventory.  Here’s how prices will be affected:


  • Ultra-low inventory, or
  • Moderate surge of inventory (less than normal though)


  • Big surge of inventory (more inventory than in 2019)
  • Ridiculous over-pricing of inventory (it’s a fine line too!)


  • Massive surge in inventory
  • Mortgage rates rise above 4%

We should know by March/April which way it’s going to break!

Inventory Watch

It is appropriate that the last reading of 2021 shows more pendings than actives (170 vs 164)!

How does the last week of the year compare to previous years? I didn’t split off the $3,000,000+ category until 2019, but you get the idea here:

NSDCC (La Jolla to Carlsbad) Number of Active Listings:

Price Range
$0 – $1.0M
$1.0M – $1.5M
$1.5M – $2.0M
$2.0M – $3.0M

A monumental shift in just three years!



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