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Max Appreciation

We are hitting peak performance when the median sales price is going up around 2% per month.  With the wicked combination of low inventory and rates, it could continue – and after a year we could be up +24%!

It reminds me of my first blog post from 2005, which was the last time these types of conditions were in play.  Our 15th anniversary is next week!  Hat tip Susie!

20-25% appreciation per year – how can that happen?

Boise Report

Are you thinking of a move out of California?

Cashing in your home-equity lottery ticket and escape the tract homes of SoCal?  Move to a quieter, more laid-back area and get yourself a smaller yet comfortable home with an ADU on some land, all for $300,000 to $400,000 and bank the rest to live on?

You may want to get going.

Long-time reader Susie is a former Californian who has lived in Boise, Idaho for 10+ years and has watched it grow tremendously. She sent in this latest listing as an example of what people can expect:

I called this one earlier today! Saw it as brand-new listing 4 hours ago. Never heard of $487/sf for the upscale North End but here’s a cute remodel. Now more will follow! Notice small sq. footage and tiny lot. So many folks want to live near Hyde Park (restaurants) and the park. See agent remarks. Yep, signed $800/mo lease in back for ADU.

TEN HOURS and it goes pending!

Take a look at the ADU thing in the backyard too:

Link to listing with photos

Susie – how is the anti-Californian sentiment?

A guy who just moved to Oregon from here grew a full beard to help with the assimilation.

Who’s Fleeing?

The pandemic is being blamed for people leaving town.

I think it’s more that Covid-19 is the last straw that is causing people to take the action they would have taken at some point anyway.  The ‘rona will be gone in 1-18 months – moving is a major life-changing event.

But these two conflicting articles probably demonstrate who is being impacted.

On one hand, we have people – probably those who want/need to be economical – who are moving themselves and are being ripped off by the rental-truck agencies (hat tip SM):

https://jalopnik.com/moving-truck-prices-in-la-and-san-francisco-are-skyrock-1845068350

But a survey of full-service moving companies describe a different scenario:

Are people in the U.S. migrating during the coronavirus crisis in different ways than pre-pandemic? Are they leaving cities? Moving to the suburbs? These are popular questions without definitive answers — yet. But there is some data emerging that can paint a better picture of Americans’ geographic response to the pandemic.

One thing’s for certain: So far, there is little support for the dramatic claims that people are fleeing cities writ large. In fact, available data indicates that overall, fewer people moved at all since the beginning of stay-at-home orders and through June — even with interest in moving on the rise again.

Among those who have moved, it’s unclear how many of those moves will be only temporary. But that doesn’t mean there aren’t interesting migration takeaways worth following. A select few cities including New York City and San Francisco do seem to be seeing more out-migration than most. But guess where many of those people are going? Other very large metropolitan areas, like Seattle and Los Angeles.

If there is a perception that the pandemic has ushered in a mass migration, it is not supported by the data. According to figures from two national moving companies, Americans moved less during the pandemic than they normally would have, not more. 

Several surveys have found that the great majority of people who did move during the first months of the pandemic did so for reasons unrelated to the coronavirus. In one such survey of 1,300 individuals conducted by Hire A Helper, just 15% said they had relocated because of Covid-19. Out of these pandemic-induced migrations, 37% of respondents said they moved because they could not afford current housing due to a Covid-related income loss. Thirty-three percent of the respondents said that they moved to shelter in place with friends or family, and 24% that they didn’t feel safe where they were.

Pew Research Center survey in June looked more closely at Americans who said they did make pandemic-induced moves. It found that overall, young people between the ages of 18 and 29 were moving because of Covid-19 in higher numbers, whether permanently or temporarily (college closing for in-person education might be to blame, at least partially.) Only 3% of the respondents said they had moved because of Covid-19, and 6% said someone else had moved in with them because of it.

Link to Article

What the pandemic is exposing is the gap between the haves and have-nots.

Those who are moving are seeking financial relief – either homeowners cashing in their home-equity lottery ticket and moving down, or those who flee so they can afford to start their American dream in a cheaper area.

The affluent don’t have to worry about that stuff. But they’ll move closer to the grandkids!

NSDCC September Preview

The impending ‘upgrade’ of the MLS starts today at noon, and last until Monday. It will screw up my stats for usual Inventory Watch on Monday morning, so here’s a mid-week preview.

Today there are 491 NSDCC detached-homes in escrow, which the highest number I’ve seen.  The huge number of pendings isn’t due to escrows not closing either:

NSDCC Detached-Home Sales, September 1-15

2012: 127

2013: 114

2014: 112

2015: 117

2016: 130

2017: 139

2018: 107

2019: 102

2020: 149

We still have late-reporters too, so this year’s count should get up close to 160!

But you can feel the slowdown coming, and I think it’s purely because there aren’t more houses coming onto the market.  We already had the lowest number of August listings in recent history, and the rest of 2020 probably won’t get any better:

Are sellers waiting for the 2021 selling season? Probably! Buyers will be waiting!

Toots, RIP

Let’s break from our early-1980s cruise around the L.A. music scene to acknowledge one of the greatest Jamaican artists of all-time, Toots Hibbert, who died on 9/11.

As most of you know, my wife Donna was born and raised in Jamaica, and her father was a musician in his own right. Her parents sent along this video as their favorite tribute to Toots:

Dear Homebuyer

Have you been searching for homes all summer, and still haven’t bought one?

Do you feel like the inventory has been mostly garbage that you wouldn’t buy at any price? Then once or twice a month you see a nice buy that turns into a bidding war and you don’t win it?  It happens, and unfortunately it might keep happening so be resilient.

This is the time of year when buyers want to give up.

It’s easy to get discouraged because you aren’t seeing as many new listings come to market these days – it’s hard to pay attention when days or weeks can pass without seeing a decent house.

Here are reasons why you should hang in there:

  1. Competition is waning. Some of the people we’ve been competing against have bought houses, but most importantly, more buyers have given up on 2020, and will wait for 2021.
  2. Inventory is dry, but you only need one.
  3. You can still get a mortgage rate that starts with a 2.
  4. It will be worse next year.

Looking at houses has never been more annoying. Agents have gone nuts with their demands for masks, gloves, booties, bank statements, preapproval letters and your first-born just to see a house. Many aren’t even nice about it – they have plenty of showing requests, so their attitude is if you don’t like it, kiss off.

If it bothers you that much, just wait a couple of weeks – they get more accommodating the longer the house is on the market.  But know that these demands have become a tactic to screen out buyers so they don’t have to work as much. I heard a listing agent complain recently about having to process paperwork for 52 showings – you know many just stop answering their phone.

While it is a hassle, you must see the best homes in person in case it’s a winner and you want to grab it.

What can you do to make the search more bearable?

Here are a few tips:

  • Revise your auto-searches. They are ‘upgrading’ the MLS this weekend, and our realtor auto-searches will need to be re-inputted. It will be a good time to re-visit yours to make sure they weren’t affected, and while you are there, bump your price up. It’s the best way to see better quality!
  • Use the 3D tours to save time. You’ve heard me say that Matterport 3D tours are terrible for sellers because agents rely on them to do the selling.  But the 3D tours are fantastic for buyers – be patient with them and remember that you will find something wrong with every house.
  • Use Google Street Views to cruise the neighborhoods.  How many times to you roll up to a new listing and the immediate neighbors make you want to keep driving? Avoid those time-wasters by viewing the neighborhood online.
  • Accept the fact that every house will need $25,000 to $50,000 in improvements/upgrades.  You will have to compromise somewhere – don’t give up on a house just because you find a defect. Money will fix everything except location – rejoice when you find something to fix!
  • Be prepared to make strong offers. Know the comps, have a solid preapproval letter, and shorten contingency timelines – which I hate to do but it’s one of the addictions now.
  • The market isn’t going to go down. Today’s inventory is almost entirely full of the homes that have been passed over for weeks or months.  Longer market times and price reductions only mean that those are dogs, not that the market is suffering. You want to buy a premium property anyway, and those will always be in fashion.

Keep the goal simple: Buy the right house, at the right price.

Be picky, rely on your tools, keep a laser focus and remember that it only takes one.

Being A Realtor in 2020

Here’s what it will take to be a successful realtor from now on – hat tip WSJ!

“It’s an attention game. It’s not who has the better postcards, it’s about who can attract the most eyeballs,” Mr. Serhant said. “I can walk into an appointment with a seller and say ‘there are 30,000 active real-estate agents in the city, there’s hundreds and thousands of us all over the world, but I have a level of exposure you can’t buy.’ ”

Mr. Serhant has decided that it’s time to cash in on his name recognition. After more than a decade at the brokerage Nest Seekers International, he is starting his own company, which will be known as “Serhant.” The new firm will have its own film studio, digital-marketing lab and a tech team dedicated to tracking the reach of the brand and its content across the web. Mr. Serhant said he decided to launch his company now because he believes “the traditional real-estate brokerage model is broken.”

“The brokerage company, open houses, and pretty photos don’t sell homes today the way they did 10 and 20 years ago,” he said. “Buyers of high-end real estate, and their children, go to YouTube and social media on their phones to research homes and agents now. I was already doing things differently from everyone else and it has been working incredibly well so I thought why not do it differently and build a firm from the ground up?”

Eddie Shapiro, Nest Seekers International founder and chief executive, noted that Mr. Serhant is not cutting ties with the company entirely. He will close out the business he signed at Nest Seekers, including his listings and new developments. Mr. Shapiro said that the company’s agents are now involved with a new reality real-estate show on Netflix called “Million Dollar Beach House.”

Mr. Serhant’s new business will crank out social-media content and multiple, dedicated short-form series for its YouTube channel, “Listed by Serhant,” based around his agents and listings. One series, provisionally called “3 in a Million,” will invite regular people into three listings and ask them to guess the price. Another, called “Meals in Mansions,” will be hosted by an agent at the firm who enjoys cooking and who will make meals in the kitchens of the firm’s high-end home listings.

Mr. Serhant, whose YouTube channel has one million subscribers, already produces his own YouTube videos weekly, putting together a mix of listing reveals, personal day-in-the-life style vlogs that showcase his family and personal life and business advice tutorials with titles like “How to OVERCOME self-doubt” and “How to SUCCEED in a VOLATILE market.” While these videos don’t directly sell his listings, Mr. Serhant said, they help him build a global following, which, in turn, gives his listings better exposure.

These tactics aren’t for everyone and some competitors snipe that Mr. Serhant is more interested in being famous himself than dedicating his time to his clients. Others said these stunts are more likely to attract voyeurs than actually result in deals, since ultrahigh-net-worth buyers aren’t likely to be shopping for multimillion-dollar properties on Instagram.

But Mr. Serhant argues that the numbers prove out his concept: His team at Nest Seekers did $1.4 billion in closed and in-contract sales last year, mostly in New York and in the Hamptons, making him one of the most successful agents in the country. He estimates that since he started in the business, he and his team have sold over $4 billion in property. Last year, they sold a $40 million house in Bridgehampton to a prominent executive who reached out to Mr. Serhant after finding him on YouTube, he said.

“If a listing video gets 10,000 views or a million views, that’s a big difference,” he said. “I tell clients, ‘I work incredibly hard to grow my brand for your benefit so I can put your listing in front of more eyeballs than anyone else in the business.’ ”

Mr. Serhant said many of his wealthy clients have secret accounts on Instagram that aren’t registered in their real names. One former client, so privacy-obsessed that his chauffeur-driven car had blacked-out windows, had an Instagram account and mentioned several of the properties he’d seen on Mr. Serhant’s account.

“Instagram isn’t a joke now,” Mr. Serhant said. “People will go to your Instagram to see who you are as a person before they pick up the phone. You don’t need a business card, you need a powerful social-media profile.”

(more…)

Inventory Watch

I think the Labor Day heat stroke showed up in the stats this week.

We only had 75 new listings between La Jolla and Carlsbad, and 70 new pendings, which is about a 20% drop from the last couple of weeks.  Or was it just the usual cooling off? We’ll see next week!

The showings perked up the last few days, and are nearly 30% higher than last year:

The number of active listings should keep dropping as the year winds down – we have probably seen the 2020 market peak for number of active listings.  But we could see the pendings count stay in this range for a few more weeks.

(more…)

Carlsbad ADU Policy

Hat tip to Peter for sending in this article:

CARLSBAD — The city finalized its policy regarding accessory dwelling units to reflect changes in state law.

During its Sept. 1 meeting, the City Council approved amendments to the zoning and municipal codes, in addition to the Village and Barrio Master Plan and Local Coastal Program.

The changes to the city’s municipal code align with six new state laws aiming to spur construction of ADUs, or “granny flats,” and create more affordable housing options for residents.

Don Neu, Carlsbad city planner, said ADUs are secondary residential units on an existing property and the city’s recent approval is keeping in line with the new state laws.

The latest California laws (AB 68, AB 881, SB 13, AB 587, AB 670 and AB 671) allow for ADUs on any lot with single-family or multi-family dwellings to include junior ADUs — units within the walls of a single-family home with a maximum size of 500-square feet — along with ADUs, which are detached units up to 1,200-square feet.

Other changes include setbacks, heights, lot coverage allowing for 800-square-foot units and prohibiting ADUs being used as short-term rentals, Neu said. Also, homeowner’s associations must allow both types of ADUs and state-mandated Housing Elements must include incentives for ADUs, Neu said.

“The processing time to act on a permit request for an accessory unit has been reduced from 120 days to 60 days,” Neu said.

The council also approved the attached ADUs to be 50% of the main dwelling or a maximum of 1,200-square feet, whichever is less. For detached units, 1,200-square feet is the maximum, which is in line with state law, Neu said.

These new guidelines also regulate height limits, which are 16 feet for both detached and attached units, and the city will default to the height allowed by the current zoning. As for landscaping, city ADUs must apply the same requirements as applied to the development of the property, while the architecture must be consistent with the main dwelling.

As of Nov. 2019, Neu said there were 425 ADUs in the city with rent running between $1,416 for a studio and $1,618 per month for a one-bedroom unit. Of the 425, there are 184 that are deed-restricted for lower-income residents and the rest are counted as affordable to moderate-income households.

“These were accessory units that were constructed to satisfy the inclusionary ordinance,” he said.

According to the staff report, the new state law also includes a requirement for the California Department of Housing and Community Development to review the city’s accessory dwelling unit ordinance for compliance.

The city will be given 30 days to respond and indicate if it will either change the ordinance to comply with the state housing department’s findings or adopt it as-is. If no response is made within 30 days, the state may notify the attorney general the city is in violation of state law.

https://thecoastnews.com/carlsbad-updates-municipal-code-to-align-with-states-new-granny-flat-laws/

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Peter also noted this detail which should help to appease the NIMBYs:

Title 21 Zoning Chapter 21.10.030 ADUs has a unique permit requirement:

2g. An owner signed and notarized a notice of restriction, to be recorded against the property, declaring that:

  • The property owner(s) shall reside in either the primary dwelling unit or the accessory dwelling unit, unless a lessee leases both the primary dwelling and the accessory dwelling unit; and
  • The obligations and restrictions imposed on the accessory dwelling unit per the chapter are BINDING ON ALL PRESENT AND FUTURE PROPERTY OWNERS.

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