Fed Rate Cut

by | Nov 8, 2024 | 2025, Forecasts, Jim's Take on the Market, Market Conditions, Thinking of Selling?

The Fed came through yesterday and lowered their rate by 1/4%.

It caused mortgage rates to come all the way back to….7%.

This is probably as good as it will get for the next few months.

The market feels fairly balanced currently, with some tilt towards a buyer’s market for the fixers and older listings. Creampuffs are still selling for a premium!

I think any distractions from the election have passed and the housing market should be better than expected for the rest of the year! Those who are thinking about selling in 2025 and who are ready to go now should consider expediting their plans.

When to sell your home:

  1. When no one else is.
  2. When you have good comps.
  3. When you know where you’re going.

If you have all three going for you now, let’s go!

Wait Until 2025….Or Sell Now?

by | Oct 10, 2024 | 2024, Market Conditions, Market Surge, Why You Should List With Jim | 2 comments

We just had it happen. A potential seller who had decided to wait until next year had not one but TWO competing new listings hit the market nearby. Both listings were priced $100,000+ LOWER than what we were thinking. Ouch.

When is the best time to sell your home? It is case by case.

Ideally, it’s when all three of these are in play:

  1. When there’s no competing active listings nearby.
  2. When you have recent neighborhood sales that support your price.
  3. When you know where you are going.

For many, those three conditions are happening now.

Who should sell now, and who should wait until next year?

In spring of 2023, I sold 2,797sf for $2,000,000, and 2,631sf with pool and view for $2,200,000in LCV.

Are those holding up? Here is the recent activity at La Costa Valley:

The two sales in orange were a shock, and could have led the pricing trend downward. But the last four sales are positive, helped greatly by those with a green star that are one-story homes.

If future buyers gloss over the one-story premium, they might be willing to pay $2,000,000+ for the next new listing. Because there are NONE for sale currently, it would be an opportune time for a La Costa Valley homeowner to list their home for sale right now, and avoid a potential springtime surge of inventory.

How about the Foothills in NE Carlsbad?

I sold Mastodon in July and pricing has been crushed since – mostly because of the inferior home/locations.

Here I would suggest a Foothills homeowner to take a chance and wait until another $2,000,000+ comp goes first to right the ship, and then list for sale. If the next listing is superior in every aspect, it could buck the trend, but I’d like someone else to chart that path – hopefully someone who can fight off the trend.

It’s case-by-case. Measure all the variables, and if there are NO other active listings, it might be better for you to sell now, rather than wait.

Zestimates in 2024

by | Sep 12, 2024 | Market Conditions, Why You Should List With Jim, Zillow | 3 comments

Borrowing this from Rob’s blog, this is known as Amara’s Law in technology spheres.

It goes:

“We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run.”

When the zestimates first came out in 2006, their accuracy was really bad – wrong by 10% to 20% – and those of us in the business laughed them off as a joke. The idea of being able to find out the value of a home with one click was inticing though, so Zillow kept throwing millions of dollars into the project.

They found out that putting a value on a home isn’t so easy, and they still state today that their zestimates have a median error rate of 7.49% – which on a $3 million home is +/- $224,700!

From wiki:

While factors contributing to estimates are described elsewhere, Zillow seemingly overemphasizes home square footage as the major metric driving property valuation. This method may not be unique to Zillow, but unduly distorts value expectations. Listings in areas where land is priced at high premiums often reflect an identical Zillow estimate to that of nearby homes with comparable interior square footage, but where the home might be decades older. Condition, age of home, special features, and proximity to nuisances are insufficiently factored into the estimate. Zillow has made some effort to add balance by including an option for owners to provide their own value estimate, but these figures can be similarly unreliable as being opinion instead of quantifiable.

But homeowners have come to adore their zestimate.

Why? Because it’s been around so long, they believe it to be true.

I had a potential seller tell me last week that their zestimate was how much she could sell her house for. Not that it was the approximate value within +/-7% of being correct, and just a starting point. She believed it was going to be her sales price!

It wasn’t a problem during the frenzy because in the 2020-2022 period you could put any price on a home and it would sell. The homeowners were pleasantly surprised at the extra bonus above their zestimate, and didn’t complain.

But it is different now.

I’ve heard it twice in the last week from two different agents that their price is “right in there”, suggesting that they have evidence of their price being right and just get my buyer to pay it. But there they sit, unsold.

Having a zestimate, or having cherry-picked comps to support today’s list price is precarious – it ignores the current market conditions, which are squishy to say the least. The premium, fixed-up, and staged homes are selling briskly, and the others are sitting.

But because the zestimate has been around so long, people believe it must be right. Sellers certainly don’t want to take less! Include 1-2 older sales and sellers and listing agents want to believe the mythical nuclear buyers with 2.2 kids are right around the corner.

Get Good Help!

Changing Market Conditions

by | Sep 8, 2024 | Jim's Take on the Market, Market Conditions, Over List

The presidential election is less than 60 days away and even if one of the candidates is a clear winner at Tuesday’s debate, the fight will get nasty from here on out.

The distraction is likely to cause potential home buyers to want to wait-and-see. Thankfully, the hope of lower mortgage rates will keep more than just the bottom-feeders in the game – but the serious buyers will have to dig out a deal, because the sellers are being tough on price. Why? They have comps!

It was noted earlier how the market shifted in the middle of May.

In the last 90 days, there have been 531 closed sales between La Jolla and Carlsbad. Their stats:

Median LP: $2,399,000

Median SP: $2,370,000

Median Days on Market: 14

Any casual observer will quickly conclude that the market looks to be in fine shape.

Just the fact that there have been 531 sales sounds pretty good!

But it is easy to miss. What can we learn from the active (unsold) listings?

To derive some conclusions about the overall market conditions, let’s examine the 83 actives priced under $5,000,000 that have been on the market for more than 60 days. After they have been on the market for 2-3 weeks, the showings dwindle down to zero or close, so the market is talking if they’re listening and want to do something about it.

Of the 83, there are 26 who haven’t lowered their price, and three that have raised their price! That’s 35% whose motivation is so low that they’re going to wait until the right buyers come along.

For the most part, those who have lowered their price didn’t do much. We are now in the post-summer soft-and-getting-softer environment, so a meaningful price reduction needs to be 10% or more to get anyone’s attention. Here are samples of the current NSDCC active listings:

Those who have dumped more than 10% and are still unsold are asking themselves, ‘what’s it going to take?’. We just saw that 20% of last month’s sales were still closing OVER their list price – what gives?

The difference is the condition of the home.

The most amazing frenzy of all-time lasted for two years and spoiled everyone. Not only did homes not need to be fixed up much, but the pricing could be sloppy too and yet virtually every house was selling. There were times when 70% to 80% of the homes sold were closing over their list price!

We’ve had an astounding change of market conditions in a relatively short period of time to think that we went from that 70% to 80% to now 20% or less closing over list. It means those 20% are the really spectacular buys, and those seemingly premium listings now need to have aggressive pricing and/or be substantially improved recently to have a shot at getting their price.

Sellers need to be doing everything better. Do more improvements (especially on curb appeal), better staging, premium photography/video, more-attractive pricing, and hire the best agent you can find!

How do you know about the agent? They are talking about the shift, and what to do about it!

Get Good Help!

Looking Forward to Next Year

by | Aug 29, 2024 | Forecasts, Market Conditions, Spring Kick

Can we learn about what to expect in 2025 by reviewing the other recent metrics available? Here are alternative ways to gauge the market conditions – the most interesting numbers in red:

Number of Sales – Just incredible that out of nowhere the July sales set the high mark for 2023-2024!

Median SP:LP – This month setting a new low for the group, proving that there’s nothing price can’t fix.

DOM – Buyers move quicker in springtime, but the average DOM is steady.

Volume – July was huge!

Average $$/sf – This month is 24% higher than in January, 2023!

In May, 2022 at the peak of the frenzy when rates were still 3%, the average $$/sf was $1,063/sf.

I will update the August numbers in a few days.

NSDCC Under List

by | Aug 28, 2024 | Commission Lawsuit, Market Conditions | 2 comments

During the frenzy there were months where 70% to 80% of the sales were closing over their list price.

Recently it’s been down to around 25% of the buyers paid over the list price.

How many paid under?

We’re in an affluent area so let’s get our money’s worth.

How many buyers this month paid at least $100,000 UNDER the list price?

Of the 142 closings in August, 36% of them closed at least $100,000 under their original list price.

And you’re going to try and do this without an agent?

Get Good Help!

 

The Rest of 2024

by | Aug 15, 2024 | 2024, Commission Lawsuit, Market Conditions | 5 comments

Here’s why home buyers should be optimistic – as demand falls off, it will probably be a wide-open playing field for the rest of 2024! No seller is going to be dumping on price though, especially the sellers of the better homes that you want to buy. You gotta be able to dig them out.

Creative and tactical lowballs can do that!

My last version from July 1st:

https://www.bubbleinfo.com/2024/07/01/the-rest-of-2024/

Lowest Rates of the Year

by | Aug 3, 2024 | Interest Rates/Loan Limits, Market Conditions, Mortgage News | 2 comments

Mortgage rates plummeted yesterday, making people wonder if the housing market will perk up for the rest of 2024.

Getting a lower rate will be a nice sweetener, but buyers aren’t going to overpay just because their payment went down a couple of bucks. Just the turbulence from the realtor fiasco will force extra caution into the equation.

Who will benefit are the sellers of fresh new listings entering the market.

The current inventory is picked over, and unless those sellers dump on price, they still don’t have much chance of selling, even with lower rates. The remaining buyers have waited this long – they aren’t going to cave now.

Sellers – it’s the time to give it everything you got!

https://www.mortgagenewsdaily.com/markets/mortgage-rates-08022024

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