There are 631 houses for sale between La Jolla and Carlsbad today, which has to be an all-time low (in an area of 300,000+ people). The median list price is $2,550,000, which is probably an all-time high!
The new offerings are barely trickling in too.
Of the 76 new listings this week, 54% were on the market last year.
But we’re due for liftoff! It was about this time last year that the number of pendings start to increase, and rates are much more favorable in 2020!
The market seems to be poised for a hot start in 2020 – heck, 30-year jumbo rates are in the low-to-mid 3s!
Let’s review the first readings in January to see how today compares to the last two years:
| Price Range | ||||||
| Under $1M | ||||||
| $1.0M – $1.5M | ||||||
| $1.5M – $2.0M |
Coming into 2019, the mortgage rates were still in the mid-4s, so no surprise to see fairly-high numbers of homes available then. Low rates and low inventory today make for an ideal sellers’ market, but buyers are going to wait and see if any better options become available over the next 30-60 days before overpaying for last year’s leftovers.
I did finally split my last category into two in the data below. The $2M-$3M category looks good (147 actives to 31 pendings), and the Over-$3,000,000 is about what you’d expect, with almost 9x as many actives as pendings.
Has anyone found a way to shake these flu-like symptoms? I gotta get to work!
As our real estate market wraps up its strongest decade in history, let’s looks back at the trends.
The government intervened early in the decade by stopping foreclosures and manipulating rates to all-time lows. It resulted in the longest, strongest sellers’ market we’ve ever seen, with no real end in sight. How ridiculous has it become? This week I wrote an offer with the price and terms that the seller demanded, and she countered over the smoke detectors.
Big-time outsiders entered the industry too, hoping to get in on the commission pie. Because none of the industry leaders have been willing to put up an fight, individual agents are left to fend for themselves, and they have resorted to survival gimmicks like short-sale fraud and off-market sales.
Every March we would get a surge of new listings, and the number of choices would grow until August. Lately the inventory has peaked sooner as both buyers and sellers are more antsy about procuring a sale. The most fascinating trend has been how inventory has dwindled with rising prices – in the past when pricing would go up, it would cause more homeowners to sell, but not now:
Each year the best deals sell first, causing a gradual lift in pricing as the summer rolls on and buyers end up paying more later for the leftovers. These are interactive graphs, so you can see the stats for each month by running your cursor over the lines:
What can we expect over the next decade?
Mostly we will be selling old-people homes as the baby boomers phase out. In California there will be less impact as the kids find a way to keep the family estate and preserve the ultra-low property taxes, rather than buy a different home. But it seems inevitable that fewer move-up buyers will bother with the difficulties of moving, and just end up staying put – leaving only the old empty houses to sell.
The first few months of 2020 will be rip-roaring hot, and where that takes us will be very intriguing. If more oldtimers decide that leaving the state is the best/last/only solution, then the market could really take off as the inventory surges with more sort-of-reasonably-priced homes.
We still have eight days remaining in 2019, but it doesn’t look like we will match last year’s total number of listings. The relatively-light competition causes optimistic sellers, and it won’t be different in 2020:
| Year | ||||
| 2014 | ||||
| 2015 | ||||
| 2016 | ||||
| 2017 | ||||
| 2018 | ||||
| 2019 |
It is somewhat surprising that there were’t more listings over $2,000,000!
We’re entering the new decade in better shape than last year when higher rates were putting buyers to sleep. It shouldn’t take as long to get rolling next year, and 1Q20 could be red hot if buyers and sellers want to get ‘er done before the election!
But today we have 12% fewer active listings than at this time in 2018, so it will be up to the sellers. List early if you want less competition – which is when you want to sell!
It’s December 9th, which means it would be natural for most people to pack it in for the year (especially with a shorter holiday season). But in the last three weeks of 2018, we had 83 new listings!
There will be more houses to consider this month, and those sellers would have to be motivated to list in the middle of December. Keep an eye out!
Yunnie and others mention the lack of inventory as a big problem, but it is relative to price point – the higher end has plenty of choices available!
But the number of houses for sale between La Jolla and Carlsbad priced under $1,500,000 is down 33% year-over-year, in spite of higher pricing. Back in the old days, when prices went up it caused more people to sell, which helped to slow down the price increases – but not now!
NSDCC Inventory – First Week of December
| Price Range | ||||
| 0-$1M | ||||
| $1.0M-$1.5M | ||||
| $1.5M-$2.0M | ||||
| $2M+ |
The MLS still isn’t showing the LP/sf stat for the Above-$2M inventory, but in the past it has become visible once the inventory drops further. We will split the category next year – here’s a preview:
$2M – $3M
172 active listings that are averaging $742/sf
Above $3M
294 active listings that are averaging $1,181/sf
There are four listings with variable list prices around $3M that end up in both categories.
Just when you think the market might be going to sleep, we have a big week for new pendings!
Will it carry over to 2020? Only if sellers can resist tacking on that extra 5% to 10%!
At first glance you would think that the lower mortgage rates of 2019 have made NO difference in the market this year, compared to 2018.
But if we didn’t have rates in the 3s for most of this year, where would we be? We would have had a lot tougher time getting sellers and buyers together on price. It’s already been a challenge:
NSDCC Detached-Home Sales & Median Sales Price, Jan-Oct
2018: 2,418 $1,325,000
2019: 2,393 $1,325,000
Will sellers capitulate in 2020? No, because there isn’t enough evidence that they need to.
Will buyers pay more in 2020? Probably not, especially if there’s anything that makes them think that waiting longer is a good idea.
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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:
| Year | |||
| 2015 | |||
| 2016 | |||
| 2017 | |||
| 2018 | |||
| 2019 |
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:
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