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Mostly Happy Buyers

The only buyers with regrets will be those who purchase in the last 2-3 months of increasing prices in their area:

he news seems to be filled these days with tearful tales of folks who bought homes for well over the asking price—some sight unseen—during the coronavirus pandemic. They lament that they bought these properties at the height of the real estate market, often spending more than they planned, and didn’t have the time to conduct more thorough inspections or determine whether the location was right for them.

Now a reality check: Most folks who closed on new properties aren’t suffering from buyer’s remorse, according to a recent Realtor.com® survey.  Not even close. Almost three-quarters of folks who bought homes in the time of COVID-19 are happy with their purchases, the findings showed. About 1,000 people who purchased homes within the past 12 months participated in the survey, which was conducted between March 26 and April 7.

In fact, about 71% of those surveyed say buying was a good decision, while 75% say their new home is a good fit for their families. In fact, many wish they had taken the plunge and moved sooner, before the number of homes for sale shriveled up just as waves of buyers flooded the market.

About three-quarters of these homeowners had planned to buy before the pandemic. Just a quarter bought in response to COVID-19. And almost half, 48%, say they didn’t feel rushed or pressured into a sale.

Meanwhile, only 19% wish they had waited to buy and less than a third would have spent more time looking if they could do it all over again.

https://www.realtor.com/news/trends/most-pandemic-buyers-happy-with-their-homes/

Frenzy Monitor

Here’s our two-week check on how the actives and pendings are faring.

The Big Three areas (Carmel Valley, Encinitas, and SE Carlsbad) remain blistering hot, and overall we are similar to how Ryan described the Sacramento market yesterday:

“We were driving 135 MPH, and now we’re down to 127 MPH”.

NSDCC Actives and Pendings

Town or Area
Zip Code
Actives/Pendings, Feb 2nd
May 12th
May 26th
June 9th
Cardiff
92007
11/16
9/12
10/11
8/14
Carlsbad NW
92008
17/19
19/30
19/23
20/24
Carlsbad SE
92009
9/38
19/60
13/57
19/49
Carlsbad NE
92010
1/12
5/13
6/13
8/14
Carlsbad SW
92011
2/17
8/16
4/17
4/19
Carmel Valley
92130
26/43
20/65
23/63
23/65
Del Mar
92014
43/13
34/26
34/26
32/20
Encinitas
92024
39/45
33/54
32/56
33/61
La Jolla
92037
101/46
82/40
87/47
88/48
RSF
92067
96/35
83/54
72/53
80/38
RSF
92091
3/7
1/6
3/6
Solana Beach
92075
11/10
6/9
7/8
12/6
NSDCC
All Above
356/294
321/386
308/380
330/364

We can also track the average market times too. Any upward trends here would indicate market slowing:

These remain steady too, and an indicator that buyers are still jumping at the hot buys…and more!

More Frenzy Measuring

Based on these closed sales, the local frenzy has been steady this year – though these are results of buying decisions made as far back as January and February.

For the most part, we have as many or more sales, and the same or higher LP:SP ratios over the last 60 days compared to the sales in the 60 days prior to April 23rd:

Detached-Home Sales By Zip Code

Town/Area
Zip Code
Sales 60 days Prior to April 23
LP:SP Ratio
Last 60 Days
LP:SP Ratio
Carlsbad NW
92008
40
103%
32
104%
Carlsbad SE
92009
95
105%
118
106%
Carlsbad NE
92010
15
105%
22
106%
Carlsbad SW
92011
29
103%
29
106%
Encinitas
92024
87
103%
92
104%
Carmel Valley
92130
72
101%
88
101%

This shows that the frenzy trends have been fairly consistent so far this year. Tomorrow we’ll take another look at the active and pending counts to see if there is any drop-off in the works.

Open House Report 2

We had another 50-60 people stop by the open house yesterday!  Over the weekend, we had seven agents showing their buyers, which was a healthy sign because we are priced at the upper-end of homes for sale in Fire Mountain -but it’s worth it, according to our guest commentator Jeff:

You’ll also hear from two new members of the KRG team – I forgot to get comments from a third new member Greg on Saturday – we’ll get his thoughts next time!

Second-Half Predictions

As we enter the middle of 2021, many are wondering if we’ll see big changes in the housing market during the second half of this year. Here’s a look at what some experts have to say about key factors that will drive the industry and the economy forward in the months to come.

Realtor.com

“. . . homes continue to sell quickly in what’s normally the fastest-moving time of the year. This is in contrast with 2020 when homes sold slower in the spring and fastest in September and October. While we expect fall to be competitive, this year’s seasonal pattern is likely to be more normal, with homes selling fastest from roughly now until mid-summer.”

National Association of Realtors (NAR)

Sellers who have been hesitant to list homes as part of their personal health safety precautions may be more encouraged to list and show their homes with a population mostly vaccinated by the mid-year.”

Danielle Hale, Chief Economist at realtor.com

“Surveys showed that seller confidence continued to rise in April. Extra confidence plus our recent survey finding that more homeowners than normal are planning to list their homes for sale in the next 12 months suggest that while we may not see an end to the sellers’ market, we might see the intensity of the competition diminish as buyers have more options to choose from.”

Freddie Mac

We forecast that mortgage rates will continue to rise through the end of next year. We estimate the 30-year fixed mortgage rate will average 3.4% in the fourth quarter of 2021, rising to 3.8% in the fourth quarter of 2022.”

Lawrence Yun, NAR

“Higher home prices and higher mortgage rates are simply squeezing away those homebuyers that are right at the margin.”

San Diego Case Shiller Index, March

San Diego has had positive gains straight through the Covid-19 era, and we are really ramping up in 2021 with a 3.3% monthly gain in March!  We kept our #2 spot in the nation, and are right behind Phoenix:

San Diego Non-Seasonally-Adjusted CSI changes

Observation Month
SD CSI
M-o-M chg
Y-o-Y chg
Jan ’20
264.04
+0.2%
+5.1%
Feb
265.34
+0.5%
+4.6%
Mar
269.63
+1.6%
+5.2%
Apr
272.48
+1.1%
+5.8%
May
273.51
+0.4%
+5.2%
June
274.91
+0.5%
+5.0%
July
278.00
+1.1%
+5.4%
Aug
283.06
+1.8%
+7.6%
Sep
288.11
+1.8%
+9.4%
Oct
292.85
+1.6%
+11.5%
Nov
295.64
+1.0%
+12.3%
Dec
297.52
+0.6%
+13.0%
Jan ’21
301.72
+1.4%
+14.3%
Feb
310.62
+2.9%
+17.1%
Mar
320.81
+3.3%
+19.1%

From cnbc:

Home prices in March were 13.2% higher in March, compared with March 2020, according to the S&P CoreLogic Case-Shiller National Home Price Index. That’s up from the 12% annual gain in February, and it marks the 10th straight month of accelerating home prices.

The March gain is the largest since December 2005 and is one of the largest in the index’s 30-year history. Prices are being pushed higher by incredibly strong competition in the market. High demand is butting up against near record-low supply, resulting in bidding wars for the vast majority of listings.

The 10-city composite rose 12.8% year over year, up from 11.7% in the previous month. The 20-city composite increased 13.3%, up from 12% in February.

Cities with the strongest price gains continue to be Phoenix, San Diego and Seattle. Phoenix sits at the top with 20% year-over-year price increase, followed by San Diego with a 19.1% increase and Seattle prices rising 18.3%. All 20 cities reported higher price increases in the year ending March 2021 versus the year ending February 2021.

“These data are consistent with the hypothesis that Covid has encouraged potential buyers to move from urban apartments to suburban homes,” said Craig Lazzara, managing director and global head of index investment strategy at S&P DJI.

“This demand may represent buyers who accelerated purchases that would have happened anyway over the next several years. Alternatively, there may have been a secular change in preferences, leading to a permanent shift in the demand curve for housing,” he added.

Mortgage rates began rising during this period, with the average rate on the 30-year fixed just below 3% in February and then ending March at around 3.4%, according to Mortgage News Daily. Higher mortgage rates cut into purchasing power and usually put a chill on home prices, but clearly unusual competition in the market is overwhelming the usual mechanics of the market.

Only 1.16 million homes were on the market in April, a 20% drop year over year, according to the National Association of Realtors. The continued shortage of homes, especially at the lower end of the market, forecasts that home prices will not cool off any time soon.

Sales are beginning to weaken, and prices usually follow, but again, the usual trends are not dependable in this very unusual housing market.

Prime Mid-Range

For us data geeks, here are some raw numbers to ponder.

Between La Jolla and Carlsbad, there are three prime zip codes – 92009 (SE Carlsbad), 92024 (Encinitas), and 92130 (Carmel Valley) – that are the dominant target zones for buyers of the mid-range home (which today is $1.2M to $2.0M).

According to the Census, there are a total of 35,146 one-unit single-family residences in these three zips, so let’s use this mid-range group to consider the trends:

Number of Listings & Sales, May 1 to Apr 30

Year
# Listings
# Sales
L/S
Median SP
2009-10
710
366
1.9
$770,000
2010-11
748
448
1.7
$739,500
2011-12
771
427
1.7
$775,000
2012-13
1,272
769
1.7
$820,000
2013-14
2,216
1,488
1.5
$895,250
2014-15
2,157
1,467
1.5
$949,000
2015-16
2,366
1,506
1.6
$989,550
2016-17
2,252
1,564
1.4
$1,072,500
2017-18
1,833
1,400
1.3
$1,160,000
2018-19
2,092
1,340
1.6
$1,241,250
2019-20
1,835
1,334
1.4
$1,260,000
2020-21
1,906
1,606
1.2
$1,440,000
All
20,163
13,715
1.5
$1,075,000

My thoughts:

The most-recent inventory count is in line with previous years – it is the number of sales that are so astonishing. The big winners are those inferior homes that are getting scooped up in the frenzy, for which buyers are overpaying just to win something.

In an area of 35,146 houses, there are 86 for sale today (0.2%), with a median list price of $2,124,500. No wonder the inferior homes are getting scooped up.

Buyers on the lower-end have to feel like they are getting closer to being priced out every day.

Of the 13,715 recent sales, 10,000 of them were probably forever homes – or forever rentals – and unlikely to come back onto the market for 10-20 years (at best). The lean inventory will continue just because we won’t have the turnover we’ve had in past decades when it was easier to move around.

Culver House

This historic home built on 1.27 acres in 1887 will be on the market for $2,995,000. From the U-T:

The owners of a Queen Anne architectural gem in Carlsbad have appealed to the city in hopes of saving the historic house from the wrecking ball.

“The home was built by Alonzo Jackson Culver, who also built the Twin Inns,” states a letter from Rebecca Holbert and Paul Abodeely, two of the eight family members who inherited the property.

The Twin Inns were mirror-image Queen Anne-style mansions built in the 1880s on what is today Carlsbad Boulevard. In the early 1900s, they were restaurants famous for their chicken dinners among coastal travelers.

One of the twins, known as the Wadsworth mansion, was torn down in 1950. The other most recently was occupied by the Land & Water Co. restaurant, which closed in October 2019, but the building remains part of Village Faire shopping center at the corner of Carlsbad Boulevard and Carlsbad Village Drive.

“Leftover lumber from the Twin Inns was used to build this sister home,” said Hollbert and Abodeely, whose great uncle Gerald Capp purchased the Culver House on one acre at the corner of Highland Drive and Oak Avenue in 1969.

Originally, the house was on 30 acres and had numerous outbuildings, including a blacksmith shop and a well house. It was built entirely with manual labor using pine from Julian, wooden nails, limestone, rock and sand, according to old news stories.

Capp lived in the Culver House until his recent death. He installed an electrical system, repaired the stained glass windows, plumbed the house for an indoor bathroom to replace the outhouse, and planted many of the Torrey pines, fruit trees and cacti that still grow on the property.

Also known as the Culver-Myers-Capp House, it is one of 19 properties that the City Council designated as local sites of historic interest in 1986. The artist Gertrude Myers, considered the “Grandma Moses” of Carlsbad, lived there from 1936 until her death in 1965.

In recent years without an occupant the two-story building has fallen into disrepair, which the family hopes could be resolved by new owners.

“The reality is that the house will likely need to be sold and the proceeds divided,” the letter states. “We do not want this house to be torn down and the land divided. We are writing in the hopes that the city … might be able to purchase the house and land in order to preserve it as a historic landmark and park for the enjoyment of the people of Carlsbad.”

The Carlsbad Historic Preservation Commission reviewed the family’s request at its March 8 meeting and agreed to ask the City Council to consider ways the property might be preserved.

“I’m not saying the city should buy it, necessarily,” said Commissioner Lauri Boone. “But there has to be some way to preserve this unique property and its history. There is an estate house, a carriage house and a second lot with old cars on it. There are so many creative ways this can be worked out.”

The Mills Act Program is one tool available, said Carlsbad Planning Commissioner Alicia Lafferty, an alternate member of the Historic Preservation Commission.

The program is an economic incentive provided by the state with oversight by the city for the restoration of qualified historic buildings by private property owners.

“This is a local historic resource … a really important piece of architecture … fast being lost,” Lafferty said.

Link to U-T Article

 

Home Price Growth

Even though San Diego is the highest-priced metro on the list, I think we are prime for upward movement.

Those metros who have -40% or worse on their YoY inventory won’t have enough sales to keep the price momentum going much longer.

We have the right mix of -22% inventory and +18.8% in pricing to be #1 in the country by September!

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