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Low Inventory, More Sales

The NYT has another article lamenting the drop in the number of homes for sale, and offered some reasons, like covid reluctance, sellers skittish about finding their next home, forbearance relief, the lack of building new homes, and people keeping their old home as an investment property when they buy a new one.

But who cares about inventory when we’re having MORE SALES THAN EVER.

It’s true that the number of new listings this year is about 23% behind where it was last year at this time.

The other day I compared just to 2020, but here’s a look at the last ten years:

NSDCC Closed Sales Jan 1 – Feb 15

Year
# of Sales
Median Sales Price
2011
158
$810,500
2012
153
$749,000
2013
197
$845,000
2014
261
$1,007,500
2015
252
$1,200,000
2016
253
$1,125,000
2017
260
$1,200,000
2018
231
$1,300,000
2019
242
$1,288,000
2020
254
$1,394,775
2021
299
$1,695,000
% Change, YoY
+18%
+22%

We haven’t had this big of a jump in number of sales AND median sales price to start the year since the Frenzy of 2013 bled into early 2014 when we had a 32% increase in sales and +19% in median sales price. Back in 2004, we had a 26% increase in the median sales price (from $635,000 to $799,000), but the number of sales dropped from 253 to 209.

This is the new reality – more people chasing fewer homes for sale.

Buyers who might think we’re going to get a pullback because rates have gone up are going to get a good lesson on who’s in charge here. Sellers don’t care about rate hikes, lack of inventory, or your lease expiring. They just want their money, and if they don’t get it today, they will wait until they do.

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NSDCC Pendings Overtake Actives

This morning we have more homes in escrow than we have for sale!

NSDCC Detached-Home Listings

Listing Status
# of Listings
Median List Price
Active
352
$3,950,000
Pending
353
$1,925,000

Once upon a time I was discussing the actives/pendings relationship with local agent Peter B.  He agreed that a 2:1 ratio of actives to pendings was a sign of a healthy market.  If 2:1 was healthy, what is 1:1?

One thing that’s happening is that the action is rising into the upper price ranges. Today we have 94 homes in escrow that are priced over $3,000,000, which I doubt we’ve ever had before.

If we don’t see a surge of more listings, the pendings could extend its lead in the coming days/weeks!

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Actives & Pendings By Area

Historically the market has felt healthy and balanced when we’ve had a 2:1 ratio of actives vs. pendings.

Remember when the Ranch was 10:1 for years? Now look at the market – especially on the lower-end:

NSDCC Actives and Pendings

Town or Area
Zip Code
Actives
Pendings
Cardiff
92007
11
16
NW Carlsbad
92008
17
19
SE Carlsbad
92009
9
38
NE Carlsbad
92010
1
12
SW Carlsbad
92011
2
17
Carmel Valley
92130
26
43
Del Mar
92014
43
13
Encinitas
92024
39
45
La Jolla
92037
101
46
RSF
92067
96
35
Solana Beach
92075
11
10
NSDCC
All Above
356
294

Carlsbad, a town of 110,000+ people, has 29 houses for sale?

It’s probably going to get crazier too as the traditional selling season opens up and we see a few more listings trickle out. It would take a flood of new listings to cause the market to slow down now.

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San Diego #1 in USA

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

Encinitas One-Story

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:


https://www.compass.com/listing/2222-silver-peak-place-encinitas-ca-92024/635047271721032977/
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Red Hot December

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!

https://www.compass.com/listing/7168-sitio-corazon-carlsbad-ca-92009/664477436107162137/

Plus I showed properties to three other buyers today!

P. S. My hand-written calendar is easier when driving.

 

The Trend Towards Larger Homes

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
Median SP
# of Sales Over 3,000sf
Median SP
2019
265
$1,135,000
204
$1,800,000
2020
362
$1,255,444
320
$2,150,000
% Diff
+37%
+11%
+57%
+19%

Rapidly-increasing prices aren’t slowing down sales….and may be speeding them up!

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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

Jan-Nov
# of Listings Under 3,000sf
# of Listings Over 3,000sf
2019
2,454
2,307
2020
2,273
2,127
% Diff
-7%
-8%

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!

Sizzling November

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

Year
Total # of Sales
Sales with <14 DOM
% of Sales <14 DOM
2019
219
74
34%
2020
251
136
54%

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!

‘End of Forbearance To Be A Non-Event’

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

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