by Jim the Realtor | Mar 21, 2023 | Jim's Take on the Market, Thinking of Selling?, Tips, Advice & Links, Why You Should List With Jim |
A great quote about higher-end listings from this free WSJ article:
Tomer Fridman, a luxury agent with Compass said the prices on some of the homes were exorbitant in the first place, so the reductions represent a long-overdue correction. “When you do a price adjustment at this level, that seller has to make it impactful,” he said. “You have to show you mean business.”
Once a home is for sale but not selling, how do you know what to do? Just dump on price? Lower in small increments and risk irritating buyers? Isn’t there a guide somewhere?
Both buyers and sellers can apply my List-Price-Accuracy Gauge:
Once on the open market, if you are……
- Getting visitors and offers, you are within 5% of being right on price.
- Getting visitors but no offers, you are 5% to 10% wrong on price.
- Not getting visitors, then you are more than 10% wrong on price.
It’s nothing personal, it’s just a simple guide to know how close you are to selling.
The serious buyers rush out the first week to take a look, but after that it’s crickets, with only an occasional visitor. It is tough for sellers to cope, or make adjustments. But once the initial urgency has expired, you have to do something – don’t just sit there.
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How quickly should sellers make adjustments? The DOM clock is ticking!
0-14 days on market – Hot property, sellers have max negotiating power.
15-30 days on market – Buyers get suspicious, want to pay under list.
30+ days on market – The jig is up, and buyers expect deep discounts.
After being unsold for two weeks, sellers will suspect that something is wrong. But it is natural to resist changing the price and instead blame everything else.
Sellers, and agents, need to shake that off and act quickly to keep the urgency higher. The first price reduction should be for at least 5% and happen in the first 15-30 days for maximum effectiveness. If the home doesn’t sell in the next two weeks, then another 5% is in order, and by then the fluff is eliminated.
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Where do sellers go wrong? They don’t properly price in the negatives.
Typically sellers just pick apart the comps to convince themselves why their home is the best around, and then settle on a list price that will show everyone who’s the boss. If you don’t have any negatives, then you probably will get your price! But typically sellers are forced to come to grips with the negatives of their house, and adjust accordingly.
Do sellers have to lower their price? No, not neccesarily.
There are other alternatives:
1. Make your house easier to show. Listing agents who insist on buyers jumping several hurdles just to see the home aren’t realistic about today’s market conditions. Make the home easy to see!
2. Fix the problems. New carpet and paint is the best thing you can do: 1) it looks clean, 2) it smells new, 3) you have to clean out your house to install it, and 4) you are managing a business transaction now – it is the logical solution. Utilize staging too.
3. Improve the Internet presence. Have at least a 12-25 hi-res photos and a simple youtube tour.
4. Wait for the market to catch up. If unsold for 60+ days, cancel and try again later – probably next year.
5. Reset the Days-on-Market stat. As long as the MLS allows agents to refresh their listings, then it’s in the best interest of the seller to reset the DOM. It is a gimmick, and instead sellers should concentrate on creating real value for buyers – that’s what will cause them to pay more.
The longer it takes to sell, the more discount the buyers will be expecting – usually about a 1% off for each week on the market. When other homes are flying off the market, the buyers’ obvious conclusion is that your price is wrong, and they load up the lowball offers.
Even if you complete one or all of the five ideas above, don’t be surprised if you need to lower the price too. Keep it attractive!
by Jim the Realtor | Mar 20, 2023 | 2023, Frenzy, Jim's Take on the Market, Tax Reform |
It’s natural for people to wonder how this will all play out.
The Fed raising their rate until they crush inflation (and everything else), home prices are higher than just about anyone can afford, and inventory levels so low that prices will probably keep trending higher too.
How could this all stay afloat?
We are already in the midst of the greatest wealth transfer in the history of the world. Unless there are changes in the law, those who have accumulated between $5,000,000 and $11,000,000 will be expediting their distributions over the next three years to save on taxes before the limit is lowered in 2026:
https://www.irs.gov/newsroom/estate-and-gift-tax-faqs
The free-and-easy money has already been flooding into our real estate market. Back in the old days, the cash buyers always demanded a discount – but today the craziest sales are to buyers paying all-cash.
With the gift and estate taxes changing in 2026, it should continue, and possibly increase.
by Jim the Realtor | Mar 17, 2023 | Jim's Take on the Market |
Not mentioned are the conversations people have with their dogs. I just want equal time with all decision-makers!
Given the increased share of pets in households and the increased time and resources spent on pets, it is no surprise some home buyers consider their pets the most important factor when making home buying decisions. Factors such as proximity to the vet and outdoor space for pets is important for buyers with pets.
Among all unmarried couples, nearly one-third of buyers considered their pet when deciding their neighborhood to purchase in compared to 14% of married couples. One-quarter of single women considered factored their pet into their neighborhood choice in comparison to 16% of single men. This trend is similar to the BLS Time Use Survey which found women are more likely to spend time with pets on a daily basis.
Among those who considered their pet to be very important to their neighborhood choice, they were also more likely to factor in a pet for other neighborhood features than those who did not.
Pet lovers also purchased a home in an area with availability of larger lots or acreage and were more interested in convenience to parks and recreation areas and in walkability. This is not a surprise as it is likely not just the human who desires these neighborhood features but the pet themselves who need room to run and play.
https://www.nar.realtor/blogs/economists-outlook/a-stunning-stat-there-are-more-american-households-with-pets-than-children
by Jim the Realtor | Mar 16, 2023 | 2023, Frenzy, Frenzy Monitor, Jim's Take on the Market, North County Coastal |
The reason for breaking down the active and pending listings by zip code is to give the readers a closer look at their neighborhood stats.
Four areas have MORE pendings than active listings, which is a sign of a red-hot market, and all areas except Rancho Santa Fe are around the healthy 2:1 ratio. But the most interesting datapoint is how the number of active listings has been skidding downward ever since rates went up:
The demand may have dropped off, but the supply is shrinking just as fast, or faster. Virtually everyone who is thinking about selling their house this year is going to be on the market in the next 2-3 months, and so far, it doesn’t look like the number of springtime sellers will be anywhere close to what we’ve had in the past.
The number of 2023 NSDCC listings is already 20% behind last year’s count – which was the lowest ever.
by Jim the Realtor | Mar 14, 2023 | Jim's Take on the Market, North County Coastal, Sales and Price Check |
When it comes to anticipating the direction of the real estate market, the median pricing isn’t nearly as informative as these indicators – Number of Sales and SP:LP.
We are used to seeing the sales increase early in the year, but it could have been different if higher rates had broken the market. But it looks like we’re going to survive, especially when you see the SP:LP rising:
NSDCC Monthly Sales
Last February, March, and April were scorching hot, and the market’s about-face in the second half of 2022 looks very orderly, in hindsight. Both the number of sales and SP:LP ratios were declining until recently, and now they make the rest of spring look promising.
by Jim the Realtor | Mar 10, 2023 | Jim's Take on the Market |
Mortgage rates improving 0.24% in one day is extremely unusual!
In a matter of 48 hours, Silicon Valley Bank has gone from being a company that we’ve never heard about or discussed to the highest profile bank failure since the Great Financial Crisis.
Such developments sound like they should be good for bonds and today was no exception. The news certainly overshadowed today’s jobs report although traders also looked willing to take that in stride (higher headline job creation offset by lower wage growth and higher unemployment).
The net effect was the largest rally in 4 months and one of the 5 biggest rallies of the past decade–at least for Treasuries.
https://www.mortgagenewsdaily.com/markets/mbs-recap-03102023
by Jim the Realtor | Mar 7, 2023 | 2023, Frenzy, Jim's Take on the Market |
It was a year ago that my uncle’s girlfriend’s house went on the market for full retail at $3,195,000.
Nobody is going to feel sorry for the buyers who pay a half-million or more over list, and the buyers probably knew that it was lost money for now. But hey, they got their house!
Our local market is dependent upon the higher-priced markets like Los Angeles and the Bay Area holding up, and continuing to make our market look like a bargain. So far, it looks like the the value of this home is about the same as the value it was a year ago when the listing agent comped it out.
by Jim the Realtor | Mar 3, 2023 | Jim's Take on the Market, North County Coastal, Sales and Price Check |
Combining the January and February stats gives us the larger sample sizes to better identify the trends.
The sellers are doing a phenomenal job at restricting the supply, and there have been enough buyers to keep the momentum going. The current listings/sales ratio is better than it was in the years before the frenzy, in spite of much higher pricing. Compare today’s pricing to 2021:
There were 78 of the 201 sales that were all-cash (39%).
It would help if there was more innovation in the mortgage world. You can get a 5-year fixed jumbo at 5.625% today, but with everyone buying their forever home, how many will want short-term money?
Without creative financing or lower rates, we will likely be on a long bumpy road for years to come.
by Jim the Realtor | Feb 28, 2023 | 2023, Jim's Take on the Market, Same-House Sales |
The local index is 11% lower than its peak in May.
The beauty about this market is that buyers don’t have to fight with the decision to buy now or wait. Because the inventory of quality homes is so thin, having to wait is baked in.
How often do buyers see a home for sale that interests them? Once a month, maybe?
The higher rates go, the more sellers will think it’s a bad time to sell – causing FEWER homes for sale.
It’s a big game of chicken, and you have to wonder if every buyer will get the memo to hold out. If renegade buyers keep paying retail for the premium properties, it spoils the whole idea of prices dropping.
Will higher rates cause better pricing on the homes you are willing to buy?
Don’t ask Jay Powell, because he doesn’t know. He said:
We are well aware that mortgage rates have moved up a lot. And you are seeing a changing housing market. We are watching it to see what will happen.
How much will it really affect residential investment? Not really sure.
How much will it affect housing prices? Not really sure.
Thanks Jay!
by Jim the Realtor | Feb 27, 2023 | Inventory, Jim's Take on the Market |
We are two months into 2023!
Here’s how the weekly new listings compare with previous years – inventory is worse than ever:
As a result, the list-pricing looks like it is holding up:
Here’s how it wrapped up last year:
The high-quality homes that hit the market in March should reveal the underlying frenzy conditions.
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