Bill has been following the inventory in different markets, and San Diego is faring much better than other areas. He is showing a 23.8% drop in new listings YoY, but last year was the record low. Look at the previous years:
September New Listings, San Diego County Detached and Attached Homes:
2005: 6,325
2006: 5,735
2007: 5,448
2008: 5,101
2009: 4,328
2010: 4,696
2011: 4,013
2012: 3,578
2013: 4,265
2014: 4,367
2015: 4,185
2016: 4,267
2017: 3,953
2018: 4,506
2019: 3,959
2020: 4,389
2021: 3,570
2022: 2,853
Everyone talks about the demand-side, but our market is being impacted by the lack of supply too.
Could there be demand that isn’t being satisfied because there aren’t more quality homes for sale listed by good agents at attractive prices?
I had 100+ people come to open house this weekend, and there were legitimate buyers in the group.
I wanted to show a house this weekend, and the showing instructions said to text the listing agent. I started via text on Wednesday, but literally never got a response, so I didn’t show it. The listing is still active today.
Higher rates haven’t changed the frustration of finding the right house, at the right price.
The inventory is probably going to dry up further and more sellers get convinced that now isn’t a good time to sell. With a tight selection of quality homes for sale, those who are willing to sell now aren’t going to be deterred from trying peak pricing, or close.
Example: My $1,800,000 listing in Aviara? This just popped up around the corner, priced at $2,295,000:
Those folks might sell, and they might not, but they should help me with mine! My point is that we are not seeing an increasing flow of new listings being priced lower and lower in an attempt to get out now. It’s actually quite the opposite.
In 2013, fresh off the biggest housing downturn in their lifetimes, 73 housing industry executives compiled the Top 10 Signs of a Housing Market Bubble at our Summit Conference in Laguna Beach, CA. Assessing the criteria that we set almost a decade ago (10 quantitative and 10 qualitative), we have found that 16 of the 20 housing bubble signs are now flashing red.
In last month’s client-exclusive housing outlook webinar, we called out some signs we are seeing:
Dr. Doom said in his podcast here that the California markets have had the most significant price declines, and the Bay Area, LA, and San Diego have ‘gotten creamed’.
He didn’t provide any data to back it up, so let’s look at what we have from the MLS which includes September data so we’re including the most relevant information.
San Diego County, All Property Types:
The San Diego County median sales price was $855,000 in June and July, and last month it was $792,500 – which was a 7% decline from the peak this summer. It was also 2% higher than in August. Is that creamed?
We’re coming off the greatest real estate frenzy of all-time, and now the Fed has caused mortgage rates to double in less than six months. All considered, I think we’re doing great, and better than expected.
These guys who just fling it around on their national platforms are doing undue harm to our market. Don’t listen to them until they get out of their mom’s basement and actually investigate what’s really happening!
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:
Last month, there were 52% fewer sales than in September, 2021.
The homes that sold last month were 13% smaller than in August.
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!
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.
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:
The market will coast through the next few months, and then pick up during the selling season when both buyers and sellers decide to quit dancing around and just go for it (after they see others doing it too).
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.
This just closed on Friday for $3,400,000 – which was $10,000 over list – but it looks like a fixer inside and out compared to the only other Bressi Ranch house to sell above $3,000,000:
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.
