The national Pending-Sales Index was down last month (-5.4% in the West), and Yunnie was happy to point to the inventory shortage as one of the reasons. Our month isn’t over, but so far the shortage is real around here – we’re going to have trouble catching up with previous Januarys:
NSDCC New Listings in January:
# of January Listings
Median List Price
You have probably noticed – sellers in 2020 aren’t being shy about price either!
With the low inventory and no foreclosures, buyers have given up on getting a great deal and are just hoping to get a quality house/location. No flood of listings is expected either, based on recent counts:
NSDCC Annual Inventory & Sales
4Q # of Listings
Annual # of Listings
Annual # of Sales
The 2019 inventory was right in between 2017 and 2018, and the fourth quarter was fairly quiet.
Will it get any better in 2020?
Total Listings, Jan 1-15:
There will be some listings coming onto the MLS that will be dated Jan 1-15, but not enough to catch last year’s number. But buyers should hang in there – we should see 800+ new NSDCC listings coming in February-March (we had 869 last year). If the February-March listings pop to 900+, the additional choices should ignite sales.
When the tax reform lowered the tax-deductible mortgage amounts from $1,000,000 to $750,000, many thought the purchase market in the low-millions would feel it. But it has turned into our hottest market, mostly due to the push upward – there are only 37 houses for sale under $1,000,000:
The UNDER-$1,000,000 Market:
3rd Week of Jan.
NSDCC Active Listings
# of Pendings
The cost-per-sf pricing there has stayed about the same, but you have never gotten less for your money. When you step up to the next category, the choices have dropped significantly and pricing is red hot:
The $1,000,000 – $1,500,000 Market:
3rd Week of Jan.
NSDCC Active Listings
# of Pendings
There are more pendings than actives in the Under-$1,000,000 category – will that happen next to the $1.0M – $1.5M range?
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:
# of Actives, 2018
# in 2019
# in 2020
$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:
Total Number of Listings
Median List Price
MLP % Chg YoY
% Listings Over $2M
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!
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