We are right back into frenzy mode with more than a quarter of last month’s sales closing over their list price. Was it required to win the home? Or has paying over the list price become more of a badge of honor for today’s buyers?
To complicate it further, look at the transitory nature of the market:
House sales closed for $100,000 or more OVER the list price: 20
House sales closed for $100,000 or more UNDER the list price: 51
The healthiest sign of all is that the number of sales jumped up nicely! The regular pricing metric has been on the rise too but that doesn’t mean much:
NSDCC Average and Median Prices by Month
Of the 385 NSDCC houses sold this year, NONE of them closed under $1,000,000.
We have received ten offers on our new listing, and have entered the highest-and-best round with responses due by 3pm today. A buyer asked me yesterday at what price could he end the bidding-war nonsense and just buy the house today. I told him that I couldn’t speak for the sellers, but with this much action, I think I have $1,900,000 in the bag (list price is $1,795,000), and $2,000,000 is within sight. So it would probably take $2,100,000 to squash all the other buyers.
A constant flow of 3-6 groups at a time all to see our hot new PQ listing off the 56 and only one exit down from CCHS. Talk about a convenient location – within five minutes you can get to top-rated K-12 schools, shopping, grocery, and freeway on-ramps without hearing any road noise. Perfect!
For homes in this location, the demand is overwhelming the supply. We’ve already received two offers over list, and we’re just getting started. The way it sounds, I think there will be 8-10 offers.
How do I handle it?
I am as upfront and forthright as possible, and I discuss how the process works with everyone:
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.
