San Diego Case Shiller Index, Dec

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!

Inventory Watch

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.


Our National Referral Network

Do you need help with finding your next home!

For those who can stay around here, it’s easier – and I can help you.

How about those of you who want to leave San Diego County – how can you find good help?

We are part of a national referral network known as Married at Compass – a vetted group of married agents around the country. Here’s our website:


We’d love to introduce you to our friendly partner agents in other areas!

Steady Decline of Listings

Remember when the inventory tanked in 2020 when everyone was afraid of catching the bug?

Once the pandemic was over, we’d get back to the regular flow of homes for sale, wouldn’t we?

But the intensity seemed to increase as time went on, finally spinning out of control when mortgage rates went up. The resulting debris field is causing fewer people to want, or need, to sell.

For most, staying put seems like the best option, at least for now.

Buyers can probably endure another year on the lease.  But potential sellers are getting closer and closer to being too old to move. If there isn’t a clear path to living for another 5-10 years (and hopefully longer) in your new town, you’re probably going to decide to live it out where you are.

The NSDCC YoY change in January was only -17%, so only half as bad as San Diego in general. But the first 15 days of February are -20% YoY, so the local inventory isn’t exactly getting better.

The drop from 2019 is 55%!

Jim’s Last 25

Are you thinking about selling your home and are trying to identify the strategies used by listing agents to get you top dollar with minimal inconvenience?

Are you finding that agents aren’t real specific about how they do their business, and just want you to trust that because they sold houses in the past that they can do it again?

Here is my specific strategy to achieve top-dollar sales with minimal inconvenience: 1) Do a minor tune-up of the home prior to hitting the open market, 2) Price attractively, 3) Make the home easy to see via the open-house extravaganza, 4) Allow all buyers to bid it up, 5) Treat buyers and agents with respect and deliver full transparency that encourages participation.

Here are the results of our last 25 listings:

None of these were priced artificially low to generate a bidding war. When a property is ‘attractively priced’, it means the presentation is worthy and it causes buyers to want to see it in person.

I have not come across any agent who sells homes like I do, and rarely do I ever meet an agent who has any strategy about handling multiple offers.

It happened again yesterday – the listing agent said on the phone that he had 3-5 offers, so I asked how he planned to handle it. Literally, he said, “I don’t know”, to which I replied, “How about doing a highest-and-best round?” He said, “Well we will probably counter the best 2-3 offers”.

Why he would eliminate any buyer is beyond me – I always counter every buyer because who knows how much higher they might go when asked.

In further discussion, he made it sound like none of the offers received were full price, and later I sent him a text that we were sending in a full price offer. Two hours later, he sends a text back that said, “It sounds like the seller wants to move forward with the first offer he got”.

This is the standard procedure in the realtor business – just grab one.

If your listing languishes on the market, it gets worse. Even the chief economist says so:

You want to sell early – during the first week on the market – when urgency is highest, and not languish for weeks or months just to take less later. In case everything goes right and multiple offers are received, you want an expert who creates a proper bidding war. In 2023, when buyers are more tempted to cancel and move on, you want your escrow handled in a way that it closes successfully, and on time.

Your eventual sales price can vary 5% to 20%, depending on your listing agent.

Get Good Help – hire Jim the Realtor!

Orderly and Balanced

Let’s revisit yesterday’s graph and add the sales to compare the relative health of the market.

If higher mortgage rates were stopping home buyers, then sales would plummet, especially in relation to the number of listings. But if the number of listings plummets too, and we’re down to just the most serious buyers and sellers, we can still have an orderly market:

NSDCC Listings and Sales Between Jan 1 and Feb 15

Number of Listings
Number of Sales

The local market isn’t in shambles or falling apart.

The number of buyers AND sellers are much lower than they were previously, but they are acting in concert and fairly similar to the frenzy years. By the time the late-reporters log in, this year’s L/S will get down to 1.8 or 1.7 which is remarkably similar to the hottest frenzy years of all-time!

Inventory Watch

As you can tell in the graph above, there hasn’t been a flood of inventory (yet), and the number of pendings is rising steadily. All of the frenzy conditions are in place this year, just like they were since the pandemic broke out and inventory plunged.

The casual observers will struggle to notice, however.

With so few homes for sale, it won’t be as obvious how hot the market is…or could be!

NSDCC Number of Listings Between Jan 1 and Feb 15

Number of Listings
Median List Price

When is the best time to sell? When no one else is!


Frenzy Monitor

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.

Most areas look healthy (ratio of 2:1 or better), and those in red have very similar to numbers to last spring which was probably the hottest frenzy on record:

The number of pendings has risen 33% in the last month, and the active listings are restrained. There aren’t any signs of panic and there have been some eye-popping sales already this year that makes you think the frenzy conditions are still around.

We are set up for a boisterous selling season, in spite of high prices, high rates, and high skepticism!

Higher Rates = Less Volume

The mortgage rates are heading for 7% again, which is shocking, given it was 5.99% on Feb. 2nd.

Higher rates will discourage both buyers and sellers, and make them want to wait for a “better market” some day in the future.  Whether that day will come isn’t considered – all they know is that it isn’t today.

It should mean that the market will be cleared of any casualness, and only the highly motivated buyers and sellers will be engaging. Buyers will be more picky, and sellers will need to be sharp on price.

How sharp?

It will be different in each neighborhood, but I’ll give you one example.

After I set the market on fire in Encinitas Ranch at the end of 2021, this one-story house went for sale. It got bid up a million over the list price (which was deliberately set low by the seller), and the buyer paid cash:

I think the buyer passed away, unfortunately, and the house is coming back on the market.

Today’s list price, just a year after purchase? $2,900,000.

It is possible that 2023 is going to be as good as it gets for sellers – at least for the next few years. The Fed is adamant about crushing the economy, and we could see mortgage rates well into the 7s and, dare I say, we might be pushing 8% mortgages by summer.

The number of sales will be lower than ever, which means more volatility.  It will be wild and crazy for some, and that might be entertaining for the casual participants but it won’t draw them off the sidelines.

The higher the mortgage rates go, the less volume there will be and some markets could freeze up.

And this could be as good as it gets for a while – yippee!

Over List, January

Paying over the list price wasn’t a new thing created by the frenzy – there have always been over-list sales in the past. But getting down to 8% last month begged for a comparison to a previous January!

In January, 2019 there were 151 NSDCC sales, and 18 of them (12%) closed over the list price. Of the eighteen, seven were among the 37 sales that closed under $1,000,000 (which were a quarter of all sales).

Thirty of the 37 sales under $1,000,000 closed for less than full price?

Last month, we didn’t even have ANY sales that closed under a million!

With 92% of closings last month selling for list price or less, it must mean that today’s sellers are more willing to ‘give away’ their home. They have gained huge gobs of equity in the last couple of years, and only the seriously-motivated sellers would dare try to sell their house in a ‘bad’ market. If they need to give back a bigger portion to make the deal, they might do it.

Let’s predict the next few months.

Sellers will still try to get full retail, and based on the over-list stats from last month, 10% or less will get it.  The rest will be priced to sit, and after 30+ days on the market, be prone to receiving lowball offers.

This is where the 2023 Spring Selling Season will be made. Will 80% to 90% of sellers take a low offer?


NSDCC Average and Median Prices by Month

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

In the months when the average and median sales prices increased, it didn’t mean your home’s value went up – it just means that the set of homes were a little bigger and nicer than other months.

The number of sales is the real indicator. Fewer and fewer homes are deserving of today’s pricing.

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