People are leery when the squid speaks, but they could be right about additional price gains in 4Q21.
- We had a 15% increase in the NSDCC median sales price between September, 2020 and January.
- There will be fewer sales this year, which typically provides more volatility.
- Frustrated buyers will pass on the fixers, and wait ’til next year instead.
- With the sales mix having a bigger percentage of superior homes, pricing should get a boost.
My #1 reason? We’ve experienced intense frenzy conditions, and it has gotten to the point where the comps don’t seem to matter any more. Buyers just want a house, and they will pay whatever it takes!
Rob Dawg suggested that the total volume of the frenzy must be remarkable.
Both sales and pricing are higher, and the higher-end markets have never had it so good.
NSDCC Total Sales Volume, First Three Quarters of the Year
||# of Sales Under $2M
||# of Sales Over $2M
Remarkable indeed! The affluent have commandeered the market.
Here is where the cooling-frenzy shows up.
The number of buyers who are willing to pay over list price is dropping:
NSDCC Detached-Home Sales, % Closed Over List Price
To have 41% of the sales close over list price would be remarkable….if it weren’t for the last six months!
Percentage Who Paid Over List Price by Price Range
|$0 – $1.0M
|$1.0M – $1.5M
|$1.5M – $2.0M
|$2.0M – $3.0M
The average sales prices have been virtually identical for the last three months, and the median sales price is back up to where it was in May:
NSDCC Average and Median Prices
||# of Sales
Compared to last September, the average sales price was +25%, and the median sales price was +33%!
Sales should taper off the rest of the year, but not sure if pricing will follow!
Most of the country is experiencing increases in their inventory, but not San Diego. This is why I think our frenzy could – and should – be as hot today as it was last year, but there just aren’t enough homes for sale.
The count of active listings is half of what it was last year at this time!
In spite of our inventory dropping, San Diego sales are hanging tough – down only 11.1%:
From Bill at CR:
Man, what a great time to sell. Here is Bill’s full article:
The 3/4 Report!
NSDCC Detached-Home Listings and Sales between Jan 1st and September 30
||# of Listings
||# of Sales
||Median Sales Price
||# of Sales Over $2,000,000
We usually have roughly 3,900 listings in the first three quarters of each year, until covid hit. This year, there were 21% fewer listings, yet sales have soared – up 14% above 2020 sales.
The median sales price is up 32% YoY, and the sales over $2,000,000 have MORE THAN DOUBLED last year’s previous record count!
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.
It’s interesting to see that the total number of actives and pendings are so similar – as close as they were in late-June as the max frenzy was unwinding. The big split in the counts on August 11th made it look like the frenzy was coming apart, but they’ve gotten back in line nicely since:
But with fewer homes for sale combined with the time of year, we probably won’t see much change. Let’s call it low-grade frenzy conditions for now.
The average days on market is creeping upward, but still no big concerns. There will always be sellers who would rather wait for the lucky sale, than adjust their price – and longer average market times indicate more sellers doing the former. Though we should note that the hottest range ($1.5 – $2.0) must have a lot of dogs lying around:
San Diego County has experienced the worst YoY change of active listings IN THE NATION. Three thousand houses for sale in a county of 3.3 million people? Yikes!!
And that was the August report. Today in San Diego County:
While we’re talking about the median sales price of detached-homes in San Diego County, let’s review the last ten years. There usually is some dropoff towards the end of the year:
The last frenzy in 2013 saw the median sales price increase 26% between January and September.
The Greatest Frenzy of All-Time started with closings in May, 2020 that had a median sales price of $660,000. It peaked in June/July at $875,000, which is a 33% increase and lasted five more months than in 2013. I’m happy with it, the fun was great while it lasted, and now here we are.
Well, at least until 2022.
There was some hesitancy in the market at the end of 2013, but it took off again in 2014.
Look at the difference though (the graph is interactive).
The increase was only +7% between September, 2013 and June, 2014 before it decelerated again – and the median sales price in November was back to where it was in the previous September!
Sellers should appreciate the big boost we’ve had, and the uncertainty of the future. Don’t attempt to time the market for max return – it’s great where it is today.
One factor that will slow down the exodus is the increased difficulty of moving out of state – it’s not easy, or cheap, to buy a home outside of California any more. But fewer people leaving will mean less inventory – and could ramp up the frenzy in 2022.
The researchers used open-source data from Zillow or other providers to score the top 100 overvalued or undervalued metro areas in the nation, ranking the cities by a percent premium homebuyers are paying in today’s market based on a history of past pricing.
Here’s how the top 10 rankings landed, according to the research:
- Boise, Idaho, where homes are selling at an 80.6% premium.
- Austin, Texas, at a 50.7% premium.
- Ogden, at a 49.7% premium.
- Provo, at a 46.2% premium.
- Detroit, at a 45.6% premium.
- Spokane, Washington, at a 45.2% premium.
- Salt Lake City, Utah, at a 42.4% premium.
- Phoenix at a 42.3% premium.
- Las Vegas at a 41.9% premium.
- Stockton, California, at a 38.5% premium.
The typical value of homes in Boise was over $523,300 as of the end of August, up more than 46% over the past year, according to Zillow.
Link to Full Article
Why you should Get Good Help!
Kim Rohrer was looking forward to leaving the leaky windows in the two-bedroom Berkeley rental duplex that she shared with her husband and two small children.
The couple recently found a three-bedroom, two-bathroom chalet-style house in Berkeley listed for $799,000, which seemed relatively affordable for the area.
The house needed significant work, including plumbing upgrades, but the couple wasn’t deterred. “It was like a dream house,” said Ms. Rohrer, who works in human resources for a tech company. (Her husband works at the University of California, Berkeley.)
The couple offered well above the asking price: $850,000. They knew there would likely be multiple offers but they also needed to save some money for the necessary repairs. They didn’t get the house.
They didn’t even come close. The home sold for $1.4 million — nearly double its asking price. “It’s terrible,” she says of her house hunting experience so far. “Completely terrible.”
Hat tip to Rob Dawg for sending in the second forecast that is predicting our home prices will continue to rise:
While home price changes on the local level vary, July gains across all of the top 10 metros surpassed their 2020 levels. However, metro areas where affordability constraints are prevalent continue to persist as prices rise. For instance, in July, home prices in San Diego increased 23.7% year over year and are forecasted to increase an additional 9.1% over the next 12 months.
Full article here: