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Bay Area Crazy

Sally’s former home in Los Altos closed yesterday for what seems to be the obligatory $500,000 over the list price (LP was $3,195,000):

https://www.zillow.com/homedetails/1200-Brucito-Ave-Los-Altos-CA-94024/19620416_zpid/

The bump over the list price is so customary in the local area that the zestimate was raised by $763,480 about the time it was marked pending – the algorithms already had the expected increase baked in!

 

They are enjoying The 2022 Lucky Windfall of the First Quarter, and we’ll see how well it holds up. But as long as home sales in the Bay Area keep selling for much-higher pricing than in San Diego, one of our main feeder areas will keep sending happy buyers our way!

The list prices mentioned here all say that they sold for 100% of the LP, but it’s a typo – they all sold for well over. For example, Patrick Way sold for $1.1 million over, and William Henry sold for $800,000 over list:

Paying ~$2,000/sf for modest homes in Los Altos has been fairly routine lately!

Hopefully, those sellers keep coming our way. Even if their market were to dip 10% to 20% from these dizzy heights, they will still love what they can buy here for the money.

ER Inventory Surge

The new listings of 2022 are only trickling out, but we know that there can be spurts.

We’re seeing one underway in Encinitas Ranch, where five listings are hitting the market this week! The three Coming-Soons will all change to active listings on Saturday.

Buyers – there is hope!

Whenever there are two or more homes for sale in a neighborhood, there is one fact of life:

Either yours is selling mine, or mine is selling yours.

The chances of EVERY house being perfectly priced to reflect their condition AND compare favorably to all other choices is about the same as the Padres chances of winning the World Series.  It’s possible every year, but come on.

There are times when NONE are perfectly priced, causing a stalemate and no sales.

The market is hot enough that at least one of these listings will compare more favorably than the rest, and will sell this weekend.  With few or no other choices for sale currently, the ultra-hot frenzy conditions could pick up two of more of these listings.

Let’s see how many go pending in the next seven days!

Does Tilt Matter?

During the inspection of the fixer in Olde Carlsbad, it was determined that further investigation was warranted due to the slope in the floor.

A geologic engineer came out with his fancy altimeter and found that there was a 5-inch difference between the foundation height from one side of the house to the other.

Here’s how it looked. When you have seen me do this, I have set the ball down and let it go where it goes.  In this case, the buyer rolled the ball in one direction, only to have it make a U-turn and go the other way…..and it picked up speed:

In the course of the discussion, I asked, “What is the worst you have seen?”

The engineer said, “A nine-inch differential.”

I said, “Ok, so this is kinda in the middle”.

To which I added a solution. Install the popular wood-tile, and have the installer add some extra mortar to help make up the difference. It doesn’t have to get to zero – if it was down to 2-3 inches it wouldn’t be as noticeable.

The buyers asked for a $50,000 reduction in price, and the seller agreed.  It could have been worse – cancelling this sale and finding a new buyer who would pay more than $1,050,000 seemed unlikely.

Our sale closed on Tuesday, a couple of days after this closed nearby:

https://www.compass.com/listing/2992-elmwood-street-carlsbad-ca-92008/881820694284113633/

On the same day we closed, the model-match flipper directly behind us RAISED their list price from $1,299,000 to $1,510,000 and went pending:

https://www.compass.com/listing/1801-ratcliff-road-carlsbad-ca-92008/909359166289330529/

Not only does it appear that the tilt didn’t matter much in this case, it also seems like prices in the area just went up 10% to 20% in a month!

Forbearances

Another update on the forbearance exits. Nobody is going to get foreclosed in North San Diego County’s coastal region, mostly because of the ample equity position every homeowner has in place – but those positions could cause them to sell. Won’t the homeowners be spoiled from the 12+ months of free rent, and, once they recognize the alternatives (renting for ridiculous rates here or moving out of state), be more likely to work out a payment plan with their lender? Yes! But this would be a good time for a surge, if it happens!

Black Knight estimates that nearly 630,000 forbearance plans, more than one-third of those currently active, are slated for review this month. Of those, 400,000 will have reached the end of their 18 months of forbearance eligibility unless the maximum term is extended again.

The end of August saw a significant decline in forbearance numbers as servicers worked through the month’s crop of three-month reviews. Plans declined by 53,000 over the week ended August 31 with more than 23,000 from FHA or VA portfolios. The number of GSE (Fannie Mae and Freddie Mac) loans dropped by 20,000 and loans serviced for bank portfolios or private label securities (PLS) saw a 10,000 unit decline. The number of plans is down by 9 percent since the end of July.

Black Knight estimates that approximately 1.71 million borrowers remain in forbearance, 3.2 percent of the 53 million outstanding mortgages. Those loans have an unpaid balance of $331 billion. The total includes 514,000 GSE loans, 676,000 FHA and VA loans, and 520,000 portfolio/PLS loans. The loans remaining in forbearance represent 1.8 percent of the GSEs’ totals and 5.6 percent and 4.0 percent of FHA/VA and portfolio/PLS loans, respectively.

http://www.mortgagenewsdaily.com/09032021_black_knight_forbearances.asp

Number of Offers

To provide some transparency on the deal-making on the street, here’s a review of properties that have gone pending this week.  I didn’t intend to make a blog post out of it, but I had inquired about the availability of these listings, and for my own knowledge I like to ask how many offers the listings agents have received.

 

They had FIVE OFFERS on 1833 Willowhaven, and another similar home that listed on the same side of the street for $1,299,000 also had multiple offers.  A good example of how a few more listings in the lower price ranges should all get picked up.

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They had SEVEN OFFERS on this one.  Any of the one-story homes listed under $1,000,000 should attract a crowd for the foreseeable future.

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They had SIX OFFERS on this one.  Newer Davidson homes are always going to be popular, and though the yard was brief, this has a pretty good view.

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They had TEN OFFERS on this one, and you can see why. Houses on a culdesac with a backyard this big will draw a crowd in any market.

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They had EIGHTEEN OFFERS on this one, because it checks most of the boxes. Well-priced single-level with nice private yard that’s been tastefully renovated.  The 17 other buyers will be battling it out for months on these!  I commend the listing agents for providing enough access to accommodate that many people and offers.

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Backlog Forming?

Hat tip to Ryan for his excellent job documenting the real estate frenzy underway in the Sacramento area:

http://sacramentoappraisalblog.com/

Susie says the Boise market is on fire, Noodle said that every house in North Phoenix sells in 3-4 days, home prices in Austin are similar to what they are here (according to one buyer) and even Kayla is seeing multiple offers again in Manhattan!

The potential sellers here who want to list their house for sale so they can leave the state have to be concerned about buying their replacement home, if they haven’t bought one yet.

How many will give up and say, “heck, it’s better here anyway”, and pack it in, instead?

Will a surge of supply over the next 3-4 months – when we need it the most – be stymied because of the difficulty with buying a home elsewhere?

As crazy as it is right now, it could get crazier! It probably will!

NSDCC Actives & Pendings

Previously we experienced a healthy market when actives outnumbered pendings 2:1. Then as the market heated up, we got used to the 1:1 ratio. Now we have areas where the ratio is more than 1:2!

NSDCC Detached-Home Active and Pending Listings

Town or Area
Zip Code
Actives
Pendings
Cardiff
92007
10
14
NW Carlsbad
92008
15
24
SE Carlsbad
92009
20
48
NE Carlsbad
92010
4
11
SW Carlsbad
92011
4
19
Carmel Valley
92130
25
38
Del Mar
92014
32
25
Encinitas
92024
36
48
La Jolla
92037
95
45
RSF
67+91
87
50
Solana Beach
92075
8
9
NSDCC
All Above
336
331
West RB
92127
24
63
Scripps Ranch
92131
6
25

What can buyers do?

Going inland doesn’t help – the 92127 and 92131 are hotter than ever.

Just go up in price – La Jolla is nice this time of year!

We will re-visit these numbers in the coming months.

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