Either we are undervalued, or we’re getting more popular….and maybe both!
The price of a San Diego home could increase by more than 8 percent this year, more than anywhere else in the nation, according to a forecast released Tuesday.
Real estate analysts CoreLogic said the price of a single-family home in San Diego County will increase 8.3 percent from November 2020 to November 2021. That means the median price of house in San Diego could be around $776,000 by the end of the year.
CoreLogic said main reason is a lack of homes for sale that will push up prices as buyers fight it out. A secondary factor is income growth for highly skilled positions in San Diego County.
It isn’t out of the ordinary for San Diego homes to increase a lot in a year — in fact, single-family homes here were up 9.5 percent last year — but the forecast is noteworthy because CoreLogic predicts most markets will see price appreciation slow in most markets.
The only regions that the real estate analysts say will come close to climbing as much as San Diego will be: Miami, predicted to increase 3.2 percent; Los Angeles, up 3.2 percent; and Washington, D.C., up 2.9 percent. CoreLogic said the total national increase should be around 2.5 percent.
“San Diego is just one of those markets that has had a lot of income growth and not enough supply to meet demand,” said Selma Hepp, CoreLogic deputy chief economist.
She said San Diego is an example of what has been seen a lot across the nation: High-wage workers who have been able to work from home have seen fortunes increase during the pandemic while low-wage workers lost income because their jobs were among the first shuttered during shutdowns.
“Income inequality is being exacerbated by all of this,” Hepp said.
Link to full U-T Article
This home looks great on paper. It’s a single-level 3,057sf home on an 0.39-acre lot in a secluded part of Encinitas, listed for $1,600,000. It drew a crowd too – the agent had appointments to show on Friday, Saturday, and Sunday and was fully booked for three days (I got the last appointment on Sunday afternoon, and there were still a few parties milling around then).
By the time we got there, she already had multiple offers.
But it closed under list price at $1,595,500.
Do some forensic viewing and see if you can tell why it didn’t sell for more:
I inputted my new listing around 10:00am this morning…..and I was showing it by 1:15.
We had FIVE showings today, and have SEVEN scheduled for tomorrow. And it’s December!
Plus I showed properties to three other buyers today!
P. S. My hand-written calendar is easier when driving.
Remember when it seemed to make sense that because home prices were escalating, people would be buying smaller homes? Boy, did Covid-19 change that – now the larger homes are driving the market, which suggests that the move-up market has come alive:
(To keep a healthy sample size, let’s combine October and November)
NSDCC Sales and Pricing Over/Under 3,000sf
|Oct + Nov
||# of Sales Under 3,000sf
||# of Sales Over 3,000sf
Rapidly-increasing prices aren’t slowing down sales….and may be speeding them up!
Could the increase in larger-home sales be due to more inventory?
No – actually we have had fewer Over-3,000sf homes listed this year than in 2019:
NSDCC Total Listings between Jan-Nov
||# of Listings Under 3,000sf
||# of Listings Over 3,000sf
The larger-home sales were already benefiting from multi-gen buyers needing a place for Mom. Add to that demand the move-uppers who may not need a place for Mom yet, but if they sense it might be coming in the near future, then might as well buy bigger now – and maybe get granny to throw in some of her dough!
I agree that homes selling quicker – evidenced by the lower market times – means crazy price increases. Sellers can get away with pricing their home at 5% to 10% above comps and buyers still come running.
How crazy is it?
More than half of our sales are finding their buyer in 14 days or less!
NSDCC November Sales
||Total # of Sales
||Sales with <14 DOM
||% of Sales <14 DOM
Let’s also note that by the time we’re done, there will be close to 300 sales this month, which is unheard of for November!
Health, unemployment, stairs, taxes, finances, politics…….selling your home is becoming the answer for everything!
More than 2.5 million American homeowners have stopped paying their mortgages, taking advantage of penalty-free forbearance periods offered by lenders.
What happens when the free pass fades away next year?
Not much, and certainly nothing approaching the flood of foreclosures that defined the Great Recession, according to the emerging consensus among economists. While some homeowners are sure to feel the pain of forced sales, housing experts increasingly expect the end of forbearance to be a non-event for the gravity-defying housing market.
That’s largely because home prices have risen sharply during the coronavirus pandemic. As a result, homeowners who find themselves unable to pay their mortgages when their forbearance periods end likely will be able to sell for a profit, rather than going into foreclosure.
“If they have equity, they can always sell off the house and pay the mortgage,” says Ralph DeFranco, global chief economist at mortgage insurance company Arch Capital Services. “It’s not a great outcome, but it’s less terrible than letting the bank take it and sell it.”
Link to Article
I ran into a 3-offer bidding war yesterday where we were competing against a buyer who had offered a $50,000 non-refundable deposit. The seller wanted us to match it to stay in the game.
We didn’t like the sound of non-refundable (or their price), even though we agreed that it would be unlikely that a judge would allow a home seller to double-dip – unless there were actual damages. If the buyer did end up cancelling, and the seller sold it again for the same price or higher, is the seller damaged? Not really, but we didn’t want to risk potentially having to battle it out in court to find out.
Here is a great article about a case involving a non-refundable deposit of $620,000 – and how the courts felt about the seller trying to keep it:
The article also discusses the liquidated damages clause, and that selling an option-to-purchase to the buyer would be a better strategy for getting them to commit non-refundable money.
For buyers, it’s Don’t Blink, and Don’t Think!
The election season is over (even if the election is not), and the vaccine news today is positive – which should bring more certainty, and relief, to the real estate market. If we just had more homes to sell!
What’s hot these days?
Yesterday, I got the last appointment to show this one-story home in Encinitas, listed for $1,600,000:
It must have been shown at least 20 times between Fri-Sun, and the agent said she had received multiple offers before we arrived. All in the November rain during the week of a heavily-contested election!
Here are the NSDCC counts for the last six weeks:
New SFR listings: 408
New SFR pendings: 509
Median list price of pendings: $1,595,000
SFR closed sales: 500
Median list price of solds: $1,605,000
These numbers are staggering for ANY six-week period!
For the market to be this red-hot leading up to the election, during a raging pandemic, is truly remarkable. These conditions should continue too, as long as new listings keep coming!
If there is anyone left who still believes in market fundamentals, here’s a graph that shows how the traditional 3:1 price-to-income ratio is still a decent measuring stick in the rest of America. But in California, it has escalated to dizzying heights!
San Diego County
Median Household Income: $75,456
Median Sales Price, YTD: $705,000
Price-to-Income Ratio: 9.3
Median Household Income: $113,175
Median Sales Price, YTD: $1,465,000
Price-to-Income Ratio: 12.9
With the affluent in full control of the real estate market, expect these numbers to get dizzier!