The inventory ‘shortage’ is limited to the lower-end. If you can spend more than a million, there are 785 choices today, which accounts for 92% of the houses for sale between La Jolla and Carlsbad.
How the mix has changed:
NSDCC Total Number of Listings Between Jan 1 – Sept 30:
# of Listings Under $1M
# of Listings Over $1M
% over $1M
As rates head back towards 4% and more and more homes list for more than a million, expect increased sluggishness next year as affordability continues to diminish. Unless, or course, you are Lawrence Yun:
Buyers looking at homes priced in the upper half (today’s NSDCC median list price is $2,395,000, the highest that I can remember) are probably thinking they can go to sleep for the rest of the year. There are about the same number of active listings priced over $2,000,000 now as there were last year.
What about the Under-$1,000,000 market?
Last year at this time, we had 110 active listings priced under $1,000,000. Today we have 60!
Those buyers should keep looking. At this rate, there won’t be much left under a million next year!
Nick was nice enough to include my quote in the Journal this morning:
The Fed’s U-turn on rates this year has delivered “the ultimate soft landing for the housing market,” said Jim Klinge, a real-estate agent in Carlsbad, Calif. Housing markets in the second half of last year felt “like a ghost town.”
At the same time, however, heady home-price gains in recent years have dulled the potential boost from a decline in borrowing costs.
Falling interest rates extend buyers’ purchasing power. A general rule of thumb holds that a one-percentage-point drop in interest rates is equivalent to a 10% reduction in the costs of purchasing a home.
“If you are thinking about buying a home, that drop in rates is very important,” said Brian Wickert, president of Accunet Mortgage in Waukesha, Wis. “But the drop in rates has been gobbled up by the increases in price caused by higher demand and lower inventories.”
Our inventories have been lower around the NSDCC (see below), but even when combined with lower rates, our NSDCC sales have been flat, with average and median pricing up 4% to 5% recently. Tomorrow’s Case-Shiller Index for San Diego County will show about a 2% to 3% increase year-over-year.
NSDCC End of October:
Active Listings, 2018
Active Listings, 2019
$1.0M – $1.5M
$1.5M – $2.0M
If rates had not come down this year, our landing would have been much more turbulent!
We had quite a rebound this week in new pendings! The previous count was 46, and we had 59 NSDCC houses go pending in the past week!
Buyers may have figured that the inventory isn’t going to get better, and, indeed, the weekly count of new listings dropped a ton. There were 102 new listings the previous week, but only 67 in the last week (-34%).
Tomorrow: The latest reading of the Case-Shiller Index!
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