The Future of Real Estate Sales

One more thought about the extinction of buyer-agents.

There are many variables that point to the demise of the two-agent system that has prevailed for 100+ years. The coming changes should roll out over the next 12 months too – how exciting!

What’s already happened:

  • Buyer-agents can no longer tell buyers that they work for free, when paid by the seller.
  • Buyer-agent commissions are advertised on the search portals.

What’s coming:

  • The DOJ/FTC directs realtors to ‘de-couple’ commissions, and buyers pay their agents, instead of sellers.
  • Buyers will think they won’t have to pay a commission by going direct to the listing agents.
  • CoStar develops and advertises the Broker Public Portal, whose stated goal is to advertise listings and send all buyer inquiries back to the listing agent, instead of a third-party.
  • Realtors will sell their listings directly to those inquiring buyers.

The traditional buyer-agents get cut out of the loop, which then also means the MLS isn’t needed either.  Then today’s search portals break down because they aren’t getting the listing feeds from the 600+ MLS companies around the country.

Because it is dual agency when buyers go direct to the listing agent, there will be a semblance of buyer representation, so commission rates won’t change much – even though buyers will mostly be on their own.  Whether the consumers recognize the benefits of having their own representation won’t matter.  They just want to buy a house, so the companies that spend the most money on advertising with win their business.

Any disrupter could win the game if they spend enough money. Zillow was spending more than $100 million per year in advertising to become #1, and it worked.

In the link below, Joe says that CoStar is going to spend a couple of hundred million dollars on consumer advertising to compete with Zillow. You can imagine their advertising:

Want to know about a property? Click here to contact the listing agent directly!

Joe lays it all out here, starting at the 17-minute mark:


Throw in an auction platform somewhere along the way, and homes sales will be transformed forever.

Padres Contest on Inventory Surge

Are we going to get a surge of new listings in the coming months?

Our recent history doesn’t suggest it – the San Diego inventory has been the worst around (thanks Bill):

But let’s consider what used to be normal, and see if we can connect the dots.

NSDCC Number of Listings Between January 1st and June 30th:

Total Number of NSDCC Listings, 1st Half

The first-half inventory really hit a groove at 2,700 listings for three years straight. But then the impact from covid struck in 2020, and the listings count was 15% lower than the previous years.

But then 2021 was even worse!

If you remember last year, we did a contest for readers to guess the number of listings in January, and everyone came in much higher than the actual listing count. The final total was 288 (Derek did get tickets).

As it turned out, it was an omen for the inventory all year.

Let’s do it again!  To keep an eye on what will be the #1 predictor on how the spring season will roll out, let’s guess the number of NSDCC listings this month!

The recent history is below – leave your guess in the comment section.

NSDCC Total Number of Listings, Jan 1-31
Total # of Listings

If there is a baseball season, the winner will get four tickets to a Padres game!  They aren’t front row, but they are pretty good seats:

There may only be a dozen or so guesses, so take part – your chances of winning are good!

My general sense of what will happen, based on the number of January listings:

450 or more listings: Frenzy will be over within 30 days.

400-450 listings: Causes a wait-and-see with some buyers.

300-400 listings: Super-charges the environment to ultra-frenzy conditions!

Under 300 listings: Painfully slow opening to the selling season.

Give it a guess!

Over List, December

Impressive momentum to wrap up the year, with almost half of the buyers feeling the need to pay over list:

NSDCC Detached-Home Sales, % Closed Over List Price

January: 38%

February: 43%

March: 53%

April: 55%

May: 54%

June: 59%

July: 64%

August: 55%

September: 41%

October: 45%

November: 48%

December: 48%


Have the higher-end buyers figured it out that paying over list could be a ruse though?

Percentage Of Sales Over List Price by Price Range

Price Range
$0 – $1.0M
$1.0M – $1.5M
$1.5M – $2.0M
$2.0M – $3.0M


The December sales were a little soft, historically, but the inventory has been decimated:

NSDCC December Sales

2017: 224

2018: 196

2019: 227

2020: 290

2021: 182


NSDCC Average and Median Prices

# of Sales
Avg. LP
Avg. SP
Median LP
Median SP

The median list price dropped and the median sales price went up!

The median sales price is 9% higher than the median list price!

The average LP and SP were almost identical for the second month in a row.


Frustration Fee

Why do buyers offer $100,000-$200,000 over the list price?

  • The sellers and listing agents aren’t demanding it.
  • The home isn’t priced $100,000-$200,000 under value.
  • Half the homes are selling for list price or under.
  • There will be others for sale.

There isn’t a threat of transparency either – every listing agent (besides me) does blind bidding, and then just takes the highest offer.  It would be understandable if there were rounds and rounds of open bidding and the buyers’ ego kicked in because they KNEW they had to out-bid everyone else to win.

But with blind bidding, you don’t know anything about the other offers (if any).

The extended frenzy is causing buyers to voluntarily sacrifice hundreds of thousands of extra dollars in trade for the hope of ending their frustration – and if they still lose, then they offer even more next time!

The frustration builds over time, and buyers go through a fairly predictable sequence:

Early-on: I’m not going to play that game – I’m not desperate.

After losing 2-3 houses: These people are nuts.

After losing 4-5 houses: Ok, this is ridiculous. I gotta get this over with.

The biggest problem is that it seems there are always people with more horsepower who started the process earlier and, as a result, are MORE frustrated than you.

Once buyers reach the peak frustration level and end up winning a house, they are left in disbelief with the one universal thought: “Oh, what have I done?”

It becomes obvious that buyers are paying tomorrow’s prices today, but they come to terms with it later because there are enough other reasons to buy this house that paying the frustration fee gets forgotten.

If overpaying is part of the environment, what can a buyer do?

  1. Get to the peak frustration level quickly, and/or just buy the first house you see.
  2. If you are going to overpay, then insist on buying a superior home.
  3. Only buy an inferior home if the defects can be fixed with money.

You will have a 15-minute tour to size up the home and make decisions that will affect the rest of your life.

You’d be crazy to attempt that without a solid, experienced agent to assist you!

Yet, even with all this pent-up frustration among buyers, it doesn’t occur to listing agents to go back to all the other bidders and give everyone a chance to overpay.

Get Good Help!

Tuesday Tidbits

Housing bulls on Wall Street argue that this is an upturn that could last for a decade. Millions of millennials are now at a point in their lives when they are seeking single-family homes in the suburbs and exurbs. They are in good shape too. Almost 70 percent of homebuyers who took out new mortgages in the third quarter had credit scores above 760, according to the Federal Reserve Bank of New York.


Mortgage rates started off the year at the “highest rates in 9 months”, but aren’t insanely higher than anything we saw last week.  From the lowest rates over the past 2 months, today’s are roughly a quarter of a point higher.


From Bill:

As of December 31st, inventory was at 294 thousand (7-day average), compared to 420 thousand for the same week a year ago.  That is a decline of 30.0%. Inventory is down 5.4% from last week.

Compared to the same week in 2019, inventory is down 61.5% from 764 thousand.  A week ago, inventory was at 310 thousand, and was down 29.0% YoY.

Seasonally, inventory bottomed in April (usually inventory bottoms in January or February). Inventory last week was about 4.2% below the previous record low set-in early April 2021.

Inventory peaked for the year in early September, when inventory was at 437 thousand (the peak for the year), so inventory is currently off about 32.8% from the peak for 2021.


Architectural Digest says the biggest design trends for 2022 will include the desire for more earthy-related color tones, contemporary conservatories, a greater attention to sensory qualities, not purely esthetics, and more curves…..


The world’s population is currently estimated to be at 7.8 billion people. According to some estimates, the global population should peak at around 9.7 billion in 2064. Imagine how many homes need to be built to house almost 2 BILLION extra people over 40 years! If 4 people share a home, that equates to about 12 million new homes per year! Then, population could fall to 8.79 billion in 2100…..maybe a good year to wait to buy a new home?

Happy New Year!

The best thing about 2021 for Kayla? Her new boyfriend Frank, who is a great guy and quite a golfer too!

Natalie signed with a new talent agent and has high hopes for next-level work in the new year. Dancing on a concert tour would be ideal, all while being our marketing director!

Hello 2022!


I said that pricing will likely seem a lot higher this year.

With few recent sales to guide them, sellers and listing agents will wonder how much can they get away with on price. There are tales of a old blogger guy being wildly successful with his transparent open bidding, but other agents aren’t experienced in conducting a slow-motion auction and don’t have the guts.

Instead, the list prices will be getting packed.

When sellers wonder how high, it will be easier to lump 10%, or more, on top of the initial guess (which was probably +5% optimistic already).  The zestimate, or other automated valuation, that is higher and supports the dream will be collected as proof!

But it’s the METHOD of selling that makes the +10% possible.

Bidders are turned against one another and compete for the prize.  Their ego takes over and directs the bidding……and the contest is on, with no ceiling.

Will a list price that starts at 10% to 15% higher than comps produce the same results as my slow-motion auctions? Maybe, but only with the homes that are highly upgraded with all the bells & whistles and have a superior location. The real creampuffs.

The early buyers will have to tolerate such sloppy pricing, but for those who are already frustrated from not buying a house in 2020/2021, it won’t matter and they will grab whatever they can. It virtually guarantees that the first 1-3 months of the season will be scorching hot.

But there will come a day when we run out of those buyers, and the frenzy conditions will be over.

I’m sticking with my +15% appreciation, and it all happens in the first half of 2022.


Two new laws that address the housing crisis begin today (above).

Baby boomers are another year older, and more will need help with living. The multi-gen home buyers will grow in numbers, and granny flats will be an ideal solution. Many will buy a suitable property with grandma’s money, and take care of her until the end.

Some multi-gen home buyers will cope with finding an existing single-family home and adding their own granny flat. But the real opportunity will be for those sellers of properties that already have an ADU. Because the supply is low and the need is very high (and because grandma’s money came a little too easily), the prices paid for homes with existing granny flats will be excessive. There will be a separate category of comps too – those with ADUs, and those without, with a pricing differential of 10% minimum.


 This could be the year that buyers have to pay for their own agent.

I don’t think many agents can make a case of why they are worth it – or at least demonstrate why they are worth as much as 2% to 3%.  It would be cool to develop buyer-agent squads who are experts in their field and are worthy of compensation – and can prove it.  But most will just fade away, or open up a shop of discount door-openers who don’t offer much, but get paid up front.


Another political season starts in 2022, which means an increase in the vitriol and hate. The perceived volatility will cause a few people to move to areas which are better suited for their political leanings, especially if there are riots – which is what it would take to get laid-back San Diegans to reconsider a move. It may not cause a surge of additional sellers here, but it could create more demand for homes in those politically-friendly destinations.


The difficulty of buying homes out-of-state is already tough enough, and now they are more expensive  – with some now 30% to 40% higher. It could be the game-changer for potential sellers and even be the reason why the inventory has been so tight recently.

We don’t know what it will take to get more homeowners to sell.

In the past, record-high prices did the trick, but today’s prices are setting new records every month – and inventory is in decline. How many current homeowners in San Diego wouldn’t sell at any price? 80%? 90%?  That’s a problem, and I’ll say that it’s something we’ve never faced before until the last few months.

At the same time, the number of San Diego County detached-home sales in 2021 will probably rank as the #2 of all-time, behind only those in 2003.  There were 28,319 detached-home listings last year, and 25,029 sales, which is incredibly efficient. Virtually everything is selling!

But only 12,936 of those listings came in the second half of 2021, and if we continue at that pace or lower, it will be excruciating for buyers – and send prices to the moon.

The optimum number of listings will probably be in the 30,000 to 35,000 range.  Having a small surge in listings will drive the market crazy with activity…..and force sellers and buyers to Get Good Help!

Happy New Year!

Goodbye 2021!

People say to me, “I bet you’re loving this market”, expecting that realtors are raking it up these days.

Not really.

I lost 50+ bidding wars with buyers this year who lost out to others who insanely overpaid with no regard for the comps, or because listing agents were too lazy to give everyone a fair chance.  Neither of those are healthy for the market in general, yet no change is on the horizon for 2022.

I found myself in two more bidding wars this week!

The two properties weren’t the superior buys in top condition – instead, both were very average and priced with no regard for the comps. Yet they both had multiple offers over list price during the week between Christmas and New Years?

This is my 698th blog post of 2021, and the best way to review the year is to scroll through the highlights and lowlights here:


or here:


For those who like the videos, here is the full collection:


I’m off to play golf with Kayla – she extended her stay for another week! I’ll comment more later.


We know that media types are looking to sell newspapers, and if it bleeds, it leads.  The article in the UT this morning about the San Diego Case-Shiller Index starts with this:

San Diego continued to slide down in rankings of the nation’s hottest real estate markets in October.

The article doesn’t mention the lower inventory in 2021, or offer any other explanation.  But it does use the D-word, deceleration, in their headline that everyone is using to describe the last few months.

But are home prices really decelerating?

All of the comparisons are judging the year-over-year changes, without any mention of how the 2020 numbers were rising quickly too. If we add the 2020 monthly YoY increases to those from this year, here’s what the combined 2-year increases would look like:

The indices in the last half of 2019 had flatlined, so the graph above is a pretty good visual on how our local index has been marching skyward since the pandemic started.

We can also note that the month-over-month increases are probably a better gauge of current activity – and they have picked up since we had actual deceleration:

Here’s a graph from a different article that also mentioned how price gains are slowing:

If that’s what slowing looks like, I’ll take it!

But let’s not misinterpret the recent index readings and then give potential home buyers the impression that our local market conditions are changing, because they’re not (or at least not yet).

All that matters in 2022 is inventory.  Here’s how prices will be affected:


  • Ultra-low inventory, or
  • Moderate surge of inventory (less than normal though)


  • Big surge of inventory (more inventory than in 2019)
  • Ridiculous over-pricing of inventory (it’s a fine line too!)


  • Massive surge in inventory
  • Mortgage rates rise above 4%

We should know by March/April which way it’s going to break!

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