Last Wednesday I was discussing the current market conditions with Candis while at her listing of a Davidson home on Calle Pera – which we both thought was priced right and should be selling in spite of it being on the market for 50 days.
I mentioned to her that it seemed like home buying comes in waves, or surges now. The market goes quiet for a few weeks, then a bunch of homes will sell at the same time. We agreed that her listing should be the next to go pending….and if/when it does, will several more will go pending too?
Looks like it!
Since Wednesday, we’ve had 63 new pendings, including hers on Calle Pera! You could say that we’re just coming off the holidays, but this isn’t the spring selling season…yet. Or is it?
It’s not just the hot new listings either – only 15 of the 63 new pendings had been on the market for seven days or less. Here are eleven that had been on the market for 100+ days:
When eleven homes go pending that have been on the market for months, it’s not a fluke – those are retail sales happening early! With good weather and no football this weekend, the lucky streak should continue.
Are you waiting to put your home on the market? The reason to list it sooner instead of later is to avoid competition. There probably aren’t many if any other listings around you now, and that could change in a hurry – and have impact on your eventual sales price.
I’m nervous about the competition between two-million-dollar condos in downtown San Diego, so I put our new listing on compass.com as a Coming Soon to gain some awareness among buyers while we do a quick spruce up. It appeared on our website yesterday morning, and since then Compass agents have inputted another 19 new Coming-Soon listings!
Hopefully the early momentum will feed on itself. Let’s go!!
In three out of the last four years, our highest median sales price was in May – which are the sales that were decided in March and April:
I think we can expect a similar fast start to the selling season next year as pent-up demand that went unsatisfied in 2019 rushes in and grabs something just to get it over with while rates are still in the threes.
The average cost-per-sf is more choppy due to being skewed by abnormal sales prices, but this graph demonstrates the same – look at the hot start we got in Feb-May in both of the last two years:
Our proprietary model using Google search trends shows a bottoming & re-acceleration in resale and new home sales growth YOY into year end. Lower mortgage rates, better affordability, and an easy comp vs. last year’s dreary 4Q help these YOY stats.
You would think that the sales slump at the end of 2018 would make this year’s comparison look rosy, but it looks like we’ll be lucky just to match the 2018 sales around Coastal North SD County. We need 62 more sales reported for October, 2019 just to match last year – which had been 5% lower than the year before:
I was talking to Nick yesterday about the current market conditions, and how home sale have been affected by the low mortgage rates recently.
You can see in the graph above that over the last five years we’ve been accustomed to rates in the threes, so it seemed obvious that when rates almost hit 5% that a market slowdown was in order.
Likewise, wouldn’t sales pick up as rates came back down?
But interestingly, in another statistical quirk, sales this year are the same as last year:
NSDCC Detached-Home Sales, August 15th – October 15th
# of Sales
Sept 30yr Rate
Last year when sales were plunging 8% (again), it was easy to blame it on the higher rates. But as rates settled down this year, the best we can say is that sales have flattened out.
Higher pricing is offsetting the lower rates.
Buyers expect rates in the threes. Rates would have to get into the 2s to create a surge now.
Not many homes for sale provide a compelling value to buyers (either the house or price is wrong).
The lower rates this year have provided that mythical soft landing that no one thought was possible. It is giving sellers and agents a sense of security that higher prices are supportable. But wouldn’t rates have to keep going down further for prices to go any higher?
If rates and pricing stayed about the same, the market should plateau along.
But can sellers resist adding that extra 5% on top of the last sale comp? Probably not.
We’ll need an Election Year Miracle for prices to keep rising in 2020!
The C.A.R. is forecasting +0.8% in sales, and +2.5% in median sales price for 2020, which is about as safe as it gets. Here is a comparison of how their forecasts have compared to the actual numbers recently:
SFH Resales #
% off forecast
SFH Median SP
% off forecast
From the C.A.R.
LOS ANGELES (Sept. 26) – Low mortgage interest rates will support California’s housing market in 2020 but economic uncertainty and affordability issues will mute sales growth, according to a housing and economic forecast released today by the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.).
C.A.R.’s “2020 California Housing Market Forecast” sees a small uptick in existing single-family home sales of 0.8 percent next year to reach 393,500 units, up from the projected 2019 sales figure of 390,200. The 2019 figure is 3.1 percent lower compared with the pace of 402,800 homes sold in 2018.
The California median home price is forecast to increase 2.5 percent to $607,900 in 2020, following a projected 4.1 percent increase from last year to $593,200 in 2019.
“With interest rates expected to remain near three-year lows, buyers have more purchasing power than in years past, but they may be reluctant to get off the sidelines because of economic and market uncertainties,” said C.A.R. President Jared Martin. “Additionally, an affordability crunch will cut into demand in some regions such as the Bay Area, where affordability is significantly below state and national levels. These factors together will subdue sales growth next year.”
C.A.R.’s forecast projects growth in the U.S. gross domestic product of 1.6 percent in 2020, after a projected gain of 2.2 percent in 2019. With California’s 2020 nonfarm job growth rate at 1.0 percent, down from a projected 1.5 percent in 2019, the state’s unemployment rate will tick up to 4.5 percent in 2020 from 2019’s 4.3 projected figure.
The average for 30-year, fixed mortgage interest rates will dip to 3.7 percent in 2020, down from 3.9 percent in 2019 and 4.5 percent in 2018 and will remain low by historical standards.
“California’s housing market will be challenged by changing migration patterns as buyers search for more affordable housing markets, particularly by first-time buyers, who are the hardest hit, moving out of state,” said C.A.R. Senior Vice President and Chief Economist Leslie Appleton-Young. “With California’s job and population growth rates tapering, the state’s affordability crisis is having a negative impact on the state economically as we lose the workers we need most such as service and construction workers, and teachers.”
In fact, according to C.A.R.’s 2019 State of the Housing Market Study, nearly a third (30 percent) of those sellers who planned on repurchasing said that they will buy their next home in another state outside of California — the highest level since 2005. Older generations were more likely to buy outside of California as 37 percent of baby boomers and silent generation planned on repurchasing in another state, but only 30 percent of Millennial sellers planned to do the same.
I noted on Instagram today that a couple of new listings in Carlsbad went pending before they got to broker preview today. While the sales and pricing statistics may look flat, sellers shouldn’t give up on selling when rates are still in the 3s.
These are the listings from the last seven days that already found a buyer – these aren’t giveaways:
The big bidding war in Leucadia also closed…..at a whopping 30% over list price – in this market!
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.
We’ve been actively engaged is selling these two listings over the last 45-60 days, and then found buyers for both houses this weekend.
The Bridge House went pending just ten days after a 10% price reduction, which got us down into the next lower bracket of buyers who might not have seen us. The second listing was purchased by people who had their house in escrow, and needed to find a replacement – movement in the move-up market!
Both buyers saw the house during our open houses, and then went to get their realtor.
Both relied on advice from long-time veteran realtors.
Both offered under list, but were willing to come up.
Most importantly, we are on duty and pushing the product, which makes it easier and more convenient for buyers and agents to see the potential!
Rob Dawg left this comment regarding the seniors who are aging-in-place:
Wait until autonomous vehicles add another ten years.
Self-driving cars have the potential to change everything about real estate:
Seniors be able to stay in their home longer.
Homebuyers could live farther away and get more home for their money.
Kids wouldn’t need parents driving them around.
But one of the big hurdles is whether people will trust computers to drive the cars for them. You may know that Mercedes-Benz has installed automatic braking systems, and I have one on my car – and hate it.
When I drive up slowly at an intersection, the computer is overly-sensitive, and brakes too early – and it’s not gentle. With no warning, the computer slams the brakes on, giving riders a whiplash, and in one case, causing the driver behind to hit me! The system has a manual turn-off button, but it’s hard to find and not permanent so it’s a constant battle. Donna agreed that I’ve altered my driving considerably, but I’m giving up. I’m going to get a normal car instead.
More hurdles that will cause autonomous vehicles to be delayed:
Have you seen homes going pending that weren’t selling a few months ago?
You could make a case that the market is somewhat seasonal, and just the increase in the number of buyers would improve the market. But junk is junk, whether you’ve been looking for days or months.
We already discussed how sellers of newly-listed homes are bursting with optimism now that the selling season is underway. But those sellers who have been lingering for weeks or months have already tested the market, and should be more realistic.
My theory is that some buyers are cutting deals on the older listings.
Multiple offers are back. Three examples from the last 24 hours:
One-story house that had been on the market for 30 days (plus Coming Soon)
Two-story house that just listed for $1M in SEH, plus
A contingent buyer around $2 million getting beat out twice to non-contingent buyers.
It is remarkable that in 2019, realtors still don’t have rules, laws, procedures, or any effective guidance on how to handle a bidding war so the sellers get the best deal while giving every buyer a fair chance to compete.
But we do have a summary form! We could do this on a napkin:
"Jim and Donna Klinge are by far the most professional, personable and responsive realtors I have ever worked with. They provide VIP concierge level service in every area of the process of selling your home. My home was marketed so successfully that we received an offer the day after our first and only open house. Thanks to Jim's pricing and negotiating, our house is now the highest sold in our community... more "
by Ann Romanello
"Jim educated us, helped us find the perfect house, and then negotiated us a great deal. I would hate to be sitting across the negotiating table from ... more "
"Jim is thorough and will be brutally honest about the homes he shows you. He provides great service and follows through until the very end and even ... more "
"I highly recommend Jim as a buyer’s agent. Working with Jim, we closed this week on a San Diego condo. Jim prepared a list of comparable sales to ... more "