Obviously, this year isn’t over but it’s close – and we’ll be lucky to hit 1,800 sales this year (there have been 22 sales closed in December so far).
The identical Sales/Listings percentage over the last two years includes a blazing hot first half of 2022 so the demand has been steady-hot, but there just isn’t the inventory like we used to have.
The median LIST price in 2022 and 2023 was the same $2,199,000 each year. In 2022, people preferred to pay over list, and this year…..not so much!
No evidence yet of a possible surge in inventory next year:
Let’s look at the graphs that were updated with November’s data today:
About 50,000 people live in Carmel Valley, 92130, and only seven houses sold there last month?
The pricing is holding up for the few who do sell:
The wildest frenzy period was from Spring, 2021 to Summer, 2022 when the median DOM was really low for a year. Higher rates shook up this measurement, but it has since settled down in 2023:
This looks solid too – under 2 months is healthy:
The 92037 is La Jolla, which is higher-priced, but look at how similar the median sales price is around Carlsbad, Encinitas, and Carmel Valley now (graphs are interactive):
While a surge in inventory next year would help to change the market dynamics, there isn’t any hard evidence of it happening yet:
How many would be considered a surge? If the number of new listings rose 10% or even 20%, would anyone notice? Probably not.
Using these November numbers, and adding an extra 20% would only get us back to last year’s total – which we thought was bleak then. but now I’d take it!
It would take a real bump to get buyers to step back and say, ‘hold on, I’m going to wait and see where this goes for a month or two’.
Let’s guess that it would take at least a 25% increase in new listings for buyers to pause.
I was asking around yesterday, but nobody had anything definite to report about their new-listings flow for next year. One agent thought that we’re going to see a lot of short sales though (???).
A columnist reflected on history to help measure whether it’s a seller’s market, or a buyer’s market. I like it!
House-hunting’s transformation includes several market trends including people moving less often, consumers accessing detailed market info, near-instant cash buyers and tighter lending standards. Maybe the buyer/seller-market math should morph, too.
From 1990 through 2006, just before the bubble burst, California was a “buyer’s market” in 49 percent of all months and a “seller’s market” 17 percent of the time — using the traditional 6-month/3-month template and Realtor data.
Looking at the past 12 post-crash years — assuming you’d want to match that pattern — a buyer’s market would be 3.25 months-plus of supply and a seller’s market would be 2.25 months or less.
This evolving gap in homebuying supply is another reminder of today’s steep house-hunting challenges.
Link to the Full Article with data
Currently there are 359 active detached-home listings between La Jolla and Carlsbad, and last month there were 140 sales. The 359/140 = 2.56, which, by the new definition, is pretty close to a seller’s market!
Could there be trouble brewing under the surface?
Are there home sellers scrambling to get out with whatever money they can? Maybe get just enough net proceeds for the family to have a steak dinner at closing? It was like that last time…..but it’s different now.
It’s a lot different now!
Let’s check the home sellers who purchased during the pandemic days. Those who bought their home before 2020 are having no problem selling for substantially more than they paid, so we only need to check the recent purchasers. Is anyone losing their shirt?
This month’s NSDCC sales are up to 117 – here are the ones that were purchased since 2020, and comparing what they paid then to their sales price this month:
- Twenty-six of the 117 sales had purchased since 2020 (22%), but 12 of the 26 were corporations in the business of making money. They succeeded!
- The median gross profit was $750,000.
- Fourteen of the 117 sellers (12%) were regular buyers since 2020 who found a reason to sell this month.
- Even if they were in some sort of trouble, they still made out nicely – and for all we know, there were many who sold JUST BECAUSE they could hit the jackpot!
- The only seller who lost money had purchased 1,700sf for $5,500,000. Think twice about doing that!
- There are at least 100 sellers EVERY MONTH who are walking away with $1,000,000+ in their pocket!
Could there be trouble ahead for those who bought this year if prices declined substantially? Maybe, but rates have been rising for 18 months so they shouldn’t be surprised about future market shifts – if any.
For them to purchase a home in spite of market conditions must mean they are in it for the long haul.
P.S. The flip that made $8,000,000: Click here
There have already been 101 detached-home sales close this month between La Jolla and Carlsbad!
With five business days left in the month, plus the late-reporters, it means we should match last October’s count of 133, and maybe even approach last month’s 153 sales.
Of this month’s 101 sales, 45 were all-cash.
The 8% mortgages won’t kill the market – especially for the superior homes for sale, which are hot. They may be the only ones selling, unless sellers of the inferior homes will accept an appropriate discount – a gap which is probably 10% to 20%.
We’re having another amazing month, and should get close to 150 sales!
The pricing appears to be holding up nicely too (and more evidence that July’s collection of lower-priced sales was an anomaly).
Here are each year’s sales counts for the January-through-August time frame.
It shows the extraordinary 2021 sales numbers in most areas!
But if you thought getting back to the numbers we had in 2019 would feel normal, we’re not there yet. In fact, most areas are well under their 2019 sales counts, except for Rancho Santa Fe!
The new normal is lower sales with sticky prices.
The Natalie dance video collection is taking forever to upload! While we wait, let’s cover the short-term rental policies in North County:
Unpermitted short-term rental units have accounted for most of the reported code compliance violations throughout the North County coastal region, based on a review of records from each city that cover 2018 to midway through 2023.
As platforms such as Airbnb and Vrbo remain popular, short-term rental regulations have been a priority along the coast from Del Mar to Oceanside. With concerns ranging from disturbances to neighbors to housing units that are essentially erased from the market as a statewide housing crisis persists, here is how cities have been addressing short-term rentals:
Approximately 45 percent of the 263 reported violations recorded by city staff over that five-year span were for illegal short-term rentals. Last year, the City Council approved an ordinance that limited short-term rental permits for non-hosted properties to no more than 2.5 percent of the city’s total housing units. “The rules that we have in place currently make it somewhat painful for cheaters,” Encinitas Mayor Tony Kranz said. “So if people engage in short-term rentals that are not permitted, it’s very likely they’re going to get caught and the fines we have make it a little more painful.”
Another common description for reported violations was “lack of best efforts,” which was a catchall term that the city used for multiple complaints at a single address. City officials now use more specific terms.
Other reported violations recorded by code compliance included illegal use of a short-term rental as a wedding venue, loud music, excessive noise, excessive number of vehicles and permit not displayed. Encinitas also works with an outside company that helps track Airbnb and other listings within the community, which the city uses to monitor potential permit violations.
Council members have been discussing updates to the city’s short-term rental ordinance, which is almost 20 years old. Mayor Lesa Heebner said they will consider potential changes later this month or in October. According to city staff, there have been about 250 to 350 STR permits issued each year, equal to about 5 percent of the housing stock in Solana Beach.
The city had 37 reported code compliance violations from 2018 to June 2023, most involving permit issues. “The intent here is to solicit as much feedback as we can get to understand what should be done,” Solana Beach Deputy Mayor David Zito said earlier this year.
The Del Mar City Council is discussing a short-term rental ordinance this month. The city has been beset over the past several years with legal challenges, battles with the California Coastal Commission and delays from the COVID-19 pandemic that have prevented passage of a permanent set of regulations. The current law is a temporary forbearance policy that allows properties to operate as short-term rentals if they can prove they were in operation before April 2016.
According to city records, reported violations of illegal short-term rentals typically lead to a process of verifying whether the unit really was being used as an STR, and, if so, whether the unit qualifies under the forbearance policy.
“There has been a long-term tradition of having short-term rentals and vacation rentals,” City Councilmember Dave Druker said during a July meeting. “We want to make sure as we create these ordinances that we understand that is what’s happened in the past. My assumption is that we’re not going to turn around and say that short-term rentals are not allowed, period.”
Carlsbad allows short-term rentals only within the coastal zone, based on regulations approved by the City Council that took effect in 2015.
About 84 percent of the 666 reported violations involved illegal short-term rentals, either unpermitted within the coastal zone or operating in the non-coastal zone where they are banned.
This is what it feels like in Plateau City. It’s a little bumpy but the pricing looks range-bound.
Sales cool off towards the end of the year – even during the frenzy. Surprisingly, last month might end up being the best of the year for sales, and the market should settle down for the rest of 2023….shouldn’t it?
There are only 157 NSDCC pendings today, so it’s likely that in the 4th quarter of 2023, the monthly sales will slip under 100 per month, which is fine. Everyone will be anticipating the spring selling season!