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Prices Dropped 22% In One Month?

Last month, the 92009 median sales price declined 14.8% YoY, and was -22% MONTH-OVER-MONTH.

Keyboard warriors everywhere will be jumping all over news like this.

What really happened?

The facts:

  1. Last month, there were 52% fewer sales than in September, 2021.
  2. The homes that sold last month were 13% smaller than in August.
  3. The average and median $$-per-sf were higher month-over-month.

There were only 23 sales last month.  Fewer sales means more volatility in the data, and the numbers will be bouncing all over the place.  The average SP:LP was 97%, so nobody was giving it away, and when you look at sales like the last one on the list on Corte Luisa, know that it was an agent selling his own house for a $980,000 profit above what he paid in 2020.

You have to look deeper into the data to get the full picture of what’s really happening!

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Here are the August and September stats:

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Let’s revisit a previous blog post for an update, and more detail.

I featured a group of listings near La Costa Canyon HS a couple of weeks ago.  The day the blog post ran, the most-expensive listing was pending, but it fell out of escrow that day.  It’s back in escrow this week, and judging by how the listing agent ran my rather-sizable nose in it, they must have gotten pretty close to their list price. Tracey sold hers too, and together the two highest-priced listings are the ones that are pending, which demonstrate that buyers want quality and are willing to pay for it.

Pendings = purple:

Realtors who have no game will be reading juicy headlines on social media and be telling their sellers to dump on price, rather than dig for the truth and get to work.

GET GOOD HELP!

And just wait until I tell you the story about this one!

Transparency is Appreciated

I had mentioned in the comments section that I showed a house on Labor Day that was priced at $2,195,000. The temperature was so hot that I literally said to my buyers that no agents would be working on the holiday, let alone writing offers, so we should have an easy path to escrow. We wrote a full-price offer and expected the seller to sign it on Tuesday.

Donna suggested that I call the listing agent to see if there were any other offers. I shrugged it off, thinking there weren’t going to be any other offers – heck, the market is dying a slow death, right?

So Donna called, and found out that there was an offer, and it was over list price.

By late Tuesday, there were SEVEN offers.

It felt like 2021 all over again as the listing agent gathered the highest-and-best offers from the contestants. Yesterday, she revealed that the decision was going to be between my buyers and one other, and that we were in second place.

We had bumped our offer to $2,450,000, and that wasn’t enough to win? Wow!

I asked her to tell me the number to beat…..and she did, and sent me the document to prove it (snip above).

Ultimately my buyers decided not to go higher.  But I complimented the agent for her transparency, and told her that I wish every listing agent would do that. I guess it’s possible with blind bidding that a buyer might go wild, but we were already 12% over the list price in a non-frenzy environment.  It’s much more likely that my buyers would go higher if they had a number to hit, and be able to say yes or no, rather than having to grope around in the dark trying to guess what it would take to win.

Congratulations to the seller and listing agent, and bravo – job well done.

San Diego County Inventory Very Low

Above, Bill shows how the number of new listings is dropping off in San Diego.

Yes, in the top chart, there were 20.7% more active listings YoY because you can wrongly price a listing today. Last year, just about everything was selling, which is very unusual!

In August, 2019, there were 3,007 detached homes listed for sale in San Diego County, and 67% of them sold.  Last August, there were 2,608 detached homes listed for sale, and 83% of them sold!

We don’t want to get alarmed by any comparisons to the Uber-Frenzy of 2021.

The counts are a little different in this graph, but you can see the huge differences between the pandemic inventory, and normal times.

Today, there are 2,859 active listings of detached-homes in San Diego County.  I won’t be looking for the panic button until that number gets over 6,000 – which may never happen again:

As recently as 2018, there were 10,000+ houses for sale, and today there are fewer than 3,000?

If there was any panic, it would be because the market isn’t correcting – it’s shutting down:

https://calculatedrisk.substack.com/p/1st-look-at-local-housing-markets-86d

Prediction on SD Pricing

These guys are among the most negative in the business, so if they have San Diego County home prices changing –3.65% between now and the end of 2023, and then -2.9% by the end of 2024, then prices in the better areas will be positive.

The most likely to happen is that we’ll see a few wild sales at the extreme ends, and those will get the headlines.  The rest will be +/-5% of the comps.  Most will just fumble along – just like during the frenzy – with little or no quality data or advice.

https://fortune.com/2022/08/15/falling-home-prices-to-hit-these-housing-markets-in-2023-and-2024/

 

Frenzy Monitor By Area

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.

In the recent years prior to the pandemic, the actives/pendings in Rancho Santa Fe ran at a 10:1 pace.  Nobody is in a hurry there, they don’t have to sell, and they’re not going to give it away.  Those days appear to be coming back.

The median list price of those RSF actives is $5,995,000 – is anyone going to feel sorry for them? Probably not. Does it reflect what is going on in the rest of the area? Not really – the other areas are mostly around a 2:1 ratio (except La Jolla) which has been our standard for a healthy market and pretty good, all considered.

In 2020, we had 400+ pendings from June 22nd to November 30th – with a peak of 491 pendings on September 7, 2020.

JtR in Scripps Ranch!

Check out our new listing of a turnkey newer one-story home in Scripps Ranch!

11684 Petenwell Rd., San Diego 92131

3 br/2 ba, 2,207sf

YB: 1996

HOA = only $42/month, and no Mello-Roos

LP = $1,695,000

We will be open 12-3pm this weekend!

https://www.compass.com/app/listing/11684-petenwell-road-san-diego-ca-92131/1095793959486824785

Are you looking for a newer one-story home that is turnkey ready? This stunning single-level awaits you! Hardwood floors, newer white kitchen with stainless, high ceilings everywhere, shutters throughout too, plus a sun-filled family room that opens out to the low-maintenance yard! Enjoy the quintessential indoor/outdoor lifestyle all on the same level and close to all! Other features include the primary suite with a lux white bathroom with makeup vanity and huge walk-in closet, a new hall bathroom, and super-large garage with extra area that has about the same space as a 3-car!



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Post-Frenzy Definitions

The doomers are hoping to drive the real estate market into hysterics, just for fun.  It’s easy for buyers and sellers to get caught up in it too, and think the sky is falling.

Let’s identify the terms, what doomers want you to believe, and the truth:

Inventory Surge

Doomers: Sellers are hitting the panic button.

Truth: If we are taking about a surge in active listings, it is because the list of aspirational sellers (those who will only move if they get their price) is growing longer. They aren’t the market makers; they are only helping those that are.

Price Reductions

Doomers – Home prices are falling.

Truth: Sellers mis-priced their home from the beginning, and now they are hoping that if they knock off a couple of bucks, it will make a difference.

Affordability/Revert to Mean

Doomers – Home prices must come down so regular people can afford to buy.

Truth – Around here, homes haven’t been affordable for the common man in years, yet home prices have accelerated.  The NSDCC market is only for the affluent now.

Higher Rates Will Crush the Market

Doomers – Home prices and rates go hand in hand. When rates go up, prices must come down.

Truth – The bumps in rates are only giving the affluent a reason to pause, in hopes of a price correction.

More Open Houses

Doomers – Realtors are panicking.

Truth – More realtor trainees are trying their luck.

Home Sales Dropping

Doomers – Market is being crushed.

Truth – More sellers are holding out for their price.

Sales Crushed

Doomers – Zero

Truth – If the NSDCC monthly sales stay in the 100-200 range, we will be fine. Those are January counts, and the usual market seasons have been topsy-turvy since March 2020 so it will give the demand more time to get pent-up.

Prices Crushed

Doomers – 50% off

Truth – Sellers determine what they can live with, and their ego plays a bigger role than you might imagine.  Nobody has to sell any more, so expect resistance to selling for lower than the last sale.  Only the extremely-motivated sellers will sell for a big discount today – it will take years for that to become commonplace.

I’ll add a few more later!

Fewer Listings = Fewer Sales

The latimes continued their assault on the truth today.  The number of homes for sale has a major impact on the number of sales.  What we’ve had is an inventory problem, yet they make no mention of it here:

Southern California home prices and sales edged lower in June from the month before, adding to the pile of evidence that the housing slowdown is starting to pull home values lower.

The data, released Tuesday by DQNews, marks the first month since January that Southern California’s ultra-competitive housing market saw a decline in the median home price. The median is the price at which half the homes sold for more and half for less.

The region’s six-county median sale price was $750,000, down from $760,000 in May. However, a broader view shows that prices are still soaring compared with last June, when the median price was $679,000.

Still, the drop comes as a slight surprise. Although median prices tend to peak in the summer, the average increase from May to June was 1.78% over the last decade, DQNews data show. The last time prices fell from May to June was in 2010.

Home sales, meanwhile, slipped on a month-over-month basis but plunged compared with a year earlier, DQNews said. A total of 20,289 homes were sold in June compared with 27,143 the previous June — a decline of 25.3%.

https://www.latimes.com/business/story/2022-07-19/southern-california-home-prices-and-sales-dropped-in-june-signaling-a-slowdown

Compare the La Jolla-to-Carlsbad numbers from previous months of June:

NSDCC June Active Listings and Sales

Year
# of Active Listings, First Week in June
# of June Sales
L/S
2013
892
339
2.6
2014
1,028
328
3.1
2015
983
340
2.9
2016
1,043
312
3.3
2017
939
360
2.6
2018
914
299
3.1
2019
1,005
282
3.6
2020
514
274
1.9
2021
607
357
1.7
2022
338
189
1.8

The 1.8 rate of sales-to-active-listings was about the same as it was in the last two years, which were considered the hottest on record!  The precipitous drop in the number of listings has to be considered when examining the current market conditions.

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