I describe the strategy for sellers here, because buyers need to be on alert 12 months out of the year. Why? Because you only care about buying the right house at the right price – which isn’t affected by the general market conditions. You are looking for the one-off.
Word on the street is that there are 11 offers on this new listing in Leucadia, and it’s up to $1,200,000:
https://www.zillow.com/homedetails/460-Parkwood-Ln-Encinitas-CA-92024/16709568_zpid/
It goes to show you that you don’t have to worry about under-pricing a home…..as long as you put it on the open market so every buyer gets a crack at it!
One of the main reasons to set up shop at the La Costa Resort is to help support our efforts in the area.
When my current listing on Segovia came on the market, we were the only house for sale in the area.
But since then, TEN other similar – older one-story – homes have hit the market nearby:
We had listed for $888,000, and with a uniquely large backyard, we thought we had a shot at attracting a buyer who had a vision.
But now that we’re vying with eight others for the next buyer, we had to adjust on price. The house on Cima came on at $899,000, but lowered quickly and found a buyer on Monday – so we did the same thing, and lowered to $859,000.
The number of views has been incredible – there is no shortage of lookers:
Note that there are twice as many views on Zillow as there are on the MLS!
The auto-valuations are close too, so it shouldn’t be long now:
When a flood happens, adjust early and often, because you don’t want to get left behind.
Rich has done a fantastic summary on the San Diego real estate bubble – read more here:
https://www.piggington.com/shambling_tiny_halting_step_towards_affordability
If Ivy said it, it must be so! P.S. 10-yr bond yield down to 1.54%:
While Wall Street panics about falling rates, Main Street is benefiting, especially in the housing market, according to housing guru Ivy Zelman.
She says every quarter-point cut in mortgage rates is equivalent to a 3 percent drop in the price of a home.
“Right now housing prices are down for the consumer more than 10%, so it makes it much more affordable,” Zelman, told CNBC’s Diana Olick on Wednesday. “We are seeing very good activity, especially in the low end of the market.”
Zelman is known for predicting the 2005 housing peak and the 2012 housing bottom. She is the founder or Zelman & Associates, a research firm that surveys housing market experts for institutional investors and corporate executives.
Interest rates have been falling in the U.S. and abroad as worries about a trade war and a global slowdown cause investors to ditch riskier plays and buy into bonds, a historically safer trade. The yield on the benchmark 10-year Treasury note was at 1.623% on Wednesday, below the 2-year yield at 1.634%, causing a key yield curve inversion that sent markets tanking.
Although stock market investors are worried tumbling rates and an inverted yield curve mean recession, Zelman said home buyers are not as “laser focused” on market headlines.
Though there has been a lot of noise and commotion in the real estate business lately, our local market has been relatively solid, given how unaffordable homes are for the masses:
NSDCC Between June 1 – July 31
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| 2019 |
Of these six years, the mortgage rates were the lowest in the summer of 2016, so there doesn’t seem to be a direct connection between rates and sales – the L/C ratio was the worst then.
The number of sales were the lowest this year, and you could blame it on the lack of opportunity – there hasn’t been that many new listings. It’s surprising we had that many sales.
Look how close we have been hugging the median L/C ratio of 1.6 lately!
As long as the supply remains in check, our market conditions probably won’t change much.
The big news about the Fed dropping their rate last week didn’t cause people to rush out and buy a house – in fact, we didn’t even do as well as last year when rates were 1% higher (51 new pendings over the last seven days vs 54 last year at this time).
Rates being 1% lower means they are 22% better than last year:
Remember when rates in the threes used to set off a flurry of sales? Not any more:
This would be a good week for sellers to lower their price!
So we got the expected 1/4% from the Fed, and mortgage rates didn’t move – it was priced in.
What’s worse is talk of another Fed cut is needed just to keep mortgage rates where they are today.
From MND:
That means, all other things being equal, if the Fed were to say “we’re done cutting for now and will keep rates at these levels for the next 6 months,” you’d see an immediate and rather large move higher in rates. In other words, we’re already counting on another 1-2 Fed rate cuts simply to sustain the low rates that are already here. If those cuts don’t come, rates will move back up.
It sounds precarious, doesn’t it?
Eventually, people will start wondering, “Are home prices going to come down?”
Homes priced under a million should be fine for now; it’s the higher-end that could struggle.
But the detached homes in San Diego County that have sold over $1,000,000 have been in a fairly tight range of $525/sf to $575/sf for years now.
If sellers can just live with the same money as the last guy got, we should muddle along….for now.
Where to move by color! Just find an affordable blue area that suits you.
From NPR:
Ten years after the housing collapse, a new and different housing crisis has emerged.
Back then, people were losing their homes as home values crashed and homeowners went underwater. Today, home values have rebounded, but people who want to buy a new home are often priced out of the market. There are too few homes and too many potential buyers.
Home construction per household is now at its lowest levels in nearly six decades, according to researchers at the Federal Reserve Bank of Kansas City. This isn’t just a problem in San Francisco or New York, where home prices and rents have gone sky-high. It is also a problem in midsized, fast-growing cities farther inland, like Des Moines, Iowa; Durham, N.C.; and Boise, Idaho. In Boise, an analysis by the U.S. Department of Housing and Urban Development showed there is a demand for more than 10 times the number of homes being built right now.
Ryan is probably the most similar blogger to me because he’s in the business and sees what is actually happening on the street. He does a ton of charts and graphs, so if you’re analytical give his blog a look:
www.sacramentoappraisalblog.com
He sums up his current market conditions quite well with these thoughts:
Normal: The market felt really dull last year, but it’s been a somewhat normal year so far in 2019. There are certainly concerns about affordability, but from a stats perspective it’s been a pretty standard first half of the year. Pendings continue to be strong also, so buyers still clearly have a strong appetite for the market.
14 months in a row of slumping volume: Despite mortgage rates being low we’re seeing somewhat sluggish sales volume. In fact, sales volume was down 11.6% in the region last month and it’s down 8.6% so far in 2019. Moreover, we’ve had fourteen months in a row with lower sales volume compared to the previous year. In my mind it’s still best to say we’re having a slower year instead of a volume meltdown because levels aren’t alarmingly low by any stretch. Let’s watch this carefully.
Dude, rates will never get below 4% again: It’s been a little surprising to see how low rates have gone again, right? The narrative for a while was, “Dude, they’ll never go below 4% again. We’ve bottomed out.” Yet here we are. My sense is if rates keep going down it’ll only increase competition and artificially inflate prices. That would be temporarily nice for buyers, but an unfortunate byproduct is low rates in a wider picture tend to create less incentive for sellers to move. Why sell if you’re sitting on a 3.5% mortgage rate?
Purplebricks & the tech invasion: Last week it was announced that Purplebricks will be exiting the United States housing market after a 75% loss in shares. This company is going to the grave in the U.S., but the reality is we’re still in a market where tech companies are trying to disrupt the traditional real estate model. Next up? Zillow is said to be coming to Sacramento by the end of the year.
Joe Montana’s $49M overpriced listing: Former Quarterback Joe Montana listed his property for $49M and it didn’t sell because it was profoundly overpriced. In fact, the price has now been reduced to $28M. Many sellers are like Joe in trying to attract mythical unicorn buyers who will mysteriously overpay for some reason. My advice? Be aware that today’s buyers are incredibly picky about paying the right price.
The dream of selling at the top: I met a guy who wants to sell because he says the market might top out soon. His concern is a friend sold two years ago thinking the market was at its peak, but it wasn’t. The truth is it’s not so easy to time a market perfectly. We talk about how simple it is to do this, but most people pull it off from dumb luck more than anything. The reality is the bulk of buyers don’t buy based on price metrics, but rather lifestyle and affordability.
My thoughts on his thoughts:
The first time mortgage rates went under 4%, it did spark a mini-frenzy because no one had seen that before. Those who moved up – or refinanced – were able to mitigate their payment shock with a lower rate than they had before. But now the sub-4% rates are a yawner for those who already have them, and as a result, we’re not seeing the same enthusiasm we saw previously.
I’ll add a bit to his thoughts on Joe’s mansion. Are buyers being extremely picky? Yes, absolutely, yet it’s more about finding the perfect house than the perfect price. Once buyers find a great fit, they will pay whatever it takes. I saw a starter home in Carlsbad yesterday get four offers over list price, which will make it the most expensive sale for that model ever. But it was also a great location and house was dialed in.
Selling at the top used to be a big driver for decision-making back in the old days. But the market is so tight today that you can’t just go out and replace a quality home without a real struggle. Now, selling at the top is only one of the criteria for home sellers, and it’s dropped down the list for most.
Ryan has more thoughts and graphs here:
Are you looking for an experienced agent to help you buy or sell a home? Contact Jim the Realtor!
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