Last week, a reader suggested that we highlight the Under-$3,000,000 market.
It is astonishing that in an area of 300,000 people, there are fewer than 100 houses for sale priced under $3,000,000 (and none under $1,195,000).
Our standard for a healthy market is a 2:1 ratio of actives to pendings, and today it’s under 1:1….there are more pendings than actives!
The Under-$3,000,000 market is doing great, and if it weren’t for the buzz around higher rates and the uber-frenzy at the start of 2022, we’d be on our merry way through the spring selling season.
But last year’s first quarter was NOT normal:
If someone you know is thinking of selling their home, tell them to go ahead – the market is fine.
It’s natural for people to wonder how this will all play out.
The Fed raising their rate until they crush inflation (and everything else), home prices are higher than just about anyone can afford, and inventory levels so low that prices will probably keep trending higher too.
How could this all stay afloat?
We are already in the midst of the greatest wealth transfer in the history of the world. Unless there are changes in the law, those who have accumulated between $5,000,000 and $11,000,000 will be expediting their distributions over the next three years to save on taxes before the limit is lowered in 2026:
The free-and-easy money has already been flooding into our real estate market. Back in the old days, the cash buyers always demanded a discount – but today the craziest sales are to buyers paying all-cash.
With the gift and estate taxes changing in 2026, it should continue, and possibly increase.
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.
Four areas have MORE pendings than active listings, which is a sign of a red-hot market, and all areas except Rancho Santa Fe are around the healthy 2:1 ratio. But the most interesting datapoint is how the number of active listings has been skidding downward ever since rates went up:
The demand may have dropped off, but the supply is shrinking just as fast, or faster. Virtually everyone who is thinking about selling their house this year is going to be on the market in the next 2-3 months, and so far, it doesn’t look like the number of springtime sellers will be anywhere close to what we’ve had in the past.
The number of 2023 NSDCC listings is already 20% behind last year’s count – which was the lowest ever.
This house first listed for sale on November 1st for $1,650,000, and got all the extras; one Coming Soon, two Holds, four price changes, two Pendings, and finally closed today for $1,397,500.
The listing agent gave it a good go, but it just looked like too much work at the higher prices. A similar-sized home nearby sold for $1,675,000 last month which demonstrates the disdain for the fixers:
I’m not going to get crazy-optimistic just because the over-list percentage more than doubled MoM, or because last month’s median sales price was 11% higher than it was a couple of months ago.
I’m just happy that the number of sales appears to have bottomed out.
Let’s say that it looks like our local market has stabilized.
So far, there have been 37 sales closed in March, which means we should hit 100+ easily.
It was a year ago that my uncle’s girlfriend’s house went on the market for full retail at $3,195,000.
Nobody is going to feel sorry for the buyers who pay a half-million or more over list, and the buyers probably knew that it was lost money for now. But hey, they got their house!
Our local market is dependent upon the higher-priced markets like Los Angeles and the Bay Area holding up, and continuing to make our market look like a bargain. So far, it looks like the the value of this home is about the same as the value it was a year ago when the listing agent comped it out.
It was the most insane frenzy ever, and it was the most intense at the beginning of last year as inventory started to thin out. Compared to that environment, I think these stats look pretty good:
NSDCC Monthly Sales and Pricing
Down 5% to 10% YoY, and on the rise? I’ll take it!
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!
You might think that the frenzy conditions are starting to percolate again after watching this video! There were 13 offers submitted, and the winner had agreed to pay $1,410,000. But once they found that it needed a roof and other stuff, they agreed to a $40,000 reduction in price.
Plus it features the first time I have fallen down while filming!
