by Jim the Realtor | Sep 8, 2022 | 2023, Forecasts, Sales and Price Check |
I said: 0% appreciation for NSDCC (La Jolla to Carlsbad) in 2023.
Zillow says: +1.5% to +1.9% for NSDCC.
Goldman Sachs says: -1% for San Diego.
Moody’s has San Diego County home prices changing –3.65% between now and the end of 2023, and then -2.9% by the end of 2024.
What do you say?
Hat tip to shadash for sending this in:
by Jim the Realtor | Sep 4, 2022 | 2023, Sales and Price Check, Thinking of Buying?, Thinking of Selling? |
The wildcard on pricing is that every potential seller has sufficient equity to dump on price if needed.
Why a seller would give it away when there are so many other alternatives (renting, reverse mortgages, hard-money loans, etc.) is beyond me. Even flipper companies like Opendoor (who owns 197 properties in SD County today), have to pay somewhat close to retail to get business.
But there are cases where sellers can, and do, dump on price – like here, where I had the competing listing and we withdrew and rented, rather than give it away:
Those sellers paid $875,000 in 2016, so they still left town with a smile on their face – but you can guess that the neighbors didn’t appreciate it. Especially the two who paid over $2,000,000 just months earlier.
It would take a few desperate sellers dumping at the same time to call it a trend.
But if there were enough of those closings sprinkled throughout the county, the median sales price (a terrible measuring device) could fall 10% or more pretty easily.
When looking at 2023 and beyond, you can probably expect that there won’t be many realtors like me that advise sellers to hold out on price. It doesn’t change their paycheck much if they dump and run, and there won’t be anybody in the press or social media sticking up for sellers either.
There is a chance it could get ugly – just because sellers have so much equity that it feels like free money, and they will still walk with hundreds of thousands of dollars, even if they decide to give it away.
by Jim the Realtor | Aug 20, 2022 | Forecasts, Frenzy, Sales and Price Check |
These guys are among the most negative in the business, so if they have San Diego County home prices changing –3.65% between now and the end of 2023, and then -2.9% by the end of 2024, then prices in the better areas will be positive.
The most likely to happen is that we’ll see a few wild sales at the extreme ends, and those will get the headlines. The rest will be +/-5% of the comps. Most will just fumble along – just like during the frenzy – with little or no quality data or advice.
by Jim the Realtor | Aug 3, 2022 | North County Coastal, Sales and Price Check |
There will be a few more late-reporters, but it looks like this year’s July sales will be about half of what they were last year:
NSDCC (La Jolla to Carlsbad) July Sales
||Number of Detached-Home Sales
||Median Sales Price
The median sales price was 3% lower than it was in June, but 22% higher than it was last July. A median-priced anything doesn’t give us specific data – it’s only a vague trendline – but it suggests that the higher-priced homes are having more of a struggle finding a buyer.
The declining number of sales does tell us that most sellers are holding out on price (there are 463 active listings with a median list price of $2,999,000). If they are going to sell this year, they need to adjust their price in the next week or two!
I’ll keep this photo handy!
by Jim the Realtor | Aug 2, 2022 | 2022, Carlsbad, Carmel Valley, Encinitas, Graphs of Market Indicators, North County Coastal, Sales and Price Check |
The July stats have been updated on these interactive graphs of the 92009 (SE Carlsbad), 92024 (Encinitas), and 92130 (Carmel Valley) markets:
We hear how the inventory has exploded, but compare it to history:
Sales during the 2022 selling season have been similar to February/March numbers:
It’s good to see the insane-bidding-over-the-list-price has slowed:
We’ve pulled forward about ten years’ worth of appreciation – sellers will be reluctant to give it back:
by Jim the Realtor | Jul 27, 2022 | 2022, North County Coastal, Sales and Price Check |
Last week, we saw here how the number of July sales has been plummeting, and with three days to go in the month, we are now at 119 NSDCC sales – which means we will end up with around 40% to 50% of last year’s July sales.
We also hear about how inventory is rapidly rising in other areas of the country. How are we doing here?
Here are the recent monthly counts of NSDCC July listings:
2022: 215 so far.
The NSDCC sales really aren’t bad, considering how few new listings are coming to market.
There is a bit of a backlog of sellers hoping to get lucky, but they will likely cancel their listing in the next month or two and try again next year, rather than give it away.
Between now and February, there will probably be months when we don’t reach 100 NSDCC sales, and it will be because there won’t be enough homes available to sell!
by Jim the Realtor | Jul 23, 2022 | 2022, Jim's Take on the Market, Sales and Price Check |
The biggest barrier to prices going down is that sales are needed to prove it.
Back in the old days when we had foreclosures, the banking rules forced lenders to keep selling their REOs, regardless of price.
But who or what is going to force regular homeowners to sell for whatever the market will bear? Anyone who needs money can borrow against their sizable equity, and virtually everyone who can’t get their price today will blame it on everything but their price (“I have comps!”) and wait for a sunnier day.
How bad will sales get?
Here are the NSDCC sales counts from recent months of July:
We’ve only had 103 NSDCC sales this month, with a week to go plus late-reporters.
Sellers get a vote in this process, and they can choose to not sell – and create the Big Standoff.
by Jim the Realtor | Jun 30, 2022 | North County Coastal, Sales and Price Check |
We knew at the beginning of June that we wouldn’t get to 200 sales, just by the number of pendings:
NSDCC June Listings and Sales
||# of Listings
||# of Sales
Our precipitous drop in the number of listings has to be considered when examining the current market conditions – and not only are there fewer listings than ever, but the quality of the homes coming to market is on the lower end. People are hanging on to the best homes!
After rates and prices have doubled, if you are going to buy a home now, you want to hold out for a good one! Yet we have fewer quality choices than ever before.
by Jim the Realtor | Jun 14, 2022 | 2022, Forecasts, Frenzy, Jim's Take on the Market, North County Coastal, Sales and Price Check |
The frenzy wasn’t going to last forever.
Coming off the initial covid months, everyone thought the red-hot market was an acceptable reaction to the way our world had changed. But it’s gone too far, and somebody had to do something – and the Fed is going to do it again tomorrow, which will continue the rise in mortgage rates.
It means sales are going to tumble, which is nothing we can’t handle.
Here’s how it looks so far:
NSDCC June Sales
Currently there are 198 homes in escrow, and 68 of those were marked pending this month.
Of those that went pending prior to June 1st, let’s guess that 100 of them will close in June – and there might be a few others that are just coming together this week with a quick close date in June too.
It will make for around 180-200 NSDCC sales this month! It’s quite a bit lower than usual, but we’ll survive.
We’ll have more unsold listings, longer market times, price reductions, and fewer sales – it’s all part of the recalibration! Additional price reductions are an unreliable indicator because you don’t know how crazy the recent list prices were in the beginning, and they have never been so optimistic, even for the frenzy.
The closed-sales pricing will be the last thing to change, if at all.
I’m sticking with my +/- 5% for NSDCC pricing here in Plateau City.
by Jim the Realtor | Jun 7, 2022 | 2022, Frenzy, Jim's Take on the Market, Market Conditions, Sales and Price Check, Why You Should List With Jim |
Realtors are saying that the market is slowing, and Marc D. suggested that we define what that means:
A slowing market is when fewer active listings are priced to sell.
It is a result of…..
Fewer buyers – Higher mortgage rates priced out some or most of the buyers hoping to finance their purchase. They are simultaneously hoping for prices to come down to compensate, and/or in the process of making other adjustments like considering smaller homes, widening their target zone, or offsetting higher rates with bigger down payments or an adjustable-rate mortgage. All of which take time, so more buyers than ever are in the wait-and-see mode, which means…..
Fewer sales – as more buyers move to the sidelines, it’s disrupting the incredible sales flow we’ve enjoyed over the last two years where virtually every home that came to market has found a buyer with relative ease. A new listing that previously had an 80% to 90% chance of selling in the first week now has a 10% to 20% chance of selling that quickly (example: there are 345 NSDCC active listings today, and there were 33 new pendings in the last 7 days), which means…..
Longer market times – with more unsold homes lying around, it gives buyers the impression that the ‘slowing market’ could mean lower prices are coming, which makes them more cautious. The longer a home is on the market, the more pressure is on the seller to do more improvements, or lower the price. Or they can also choose a third option and just wait in line and hope that they are moving slowly up into the group of 10% to 20% of active listings that have a chance of selling this week. This option is dependent upon the newest listings being more optimistic on price than those unsold currently, but because they have more recent data available on the perils of over-pricing, the newer listings should be sharper on price, not worse.
A slowing market means we have transitioned from the one-time-in-history event where every home sold quickly, to the old reliable sellers-waiting-in-the-queue, hoping for their lucky day to come.
With only 10% to 20% of the actives selling each week, it is inevitable that the unsolds will start stacking up as both sides wait longer for their lucky day. For some sellers, that day will never come, and they will cancel their listing instead.
Knowing that sellers will still insist on getting their price or close, how can buyers and sellers both know how close a home is to selling?
List-Price Accuracy Gauge
- If you are getting showings and offers, the list price is within 5% of being right.
- If you are getting showings but no offers, the list price is 5% to 10% wrong.
- If you aren’t getting showings, the list price is at least 10% wrong.
The best thing a seller can do is to lower their price so they at least get out of the bottom tier – you need to have showings to have a shot at selling. The market is still hot (see map at the top), there just aren’t as many active listings that are worthy of the attention of buyers. The sellers are still in control of the marketplace, and it will be their reaction to wrong pricing that determines the outcome – as measured by the sales count.
Back in the day (3-5 years ago), there were 10:1 actives to pendings in the high-end markets like Rancho Santa Fe, an area where sellers have always been content to wait as long as it takes. I’ll never forget the RSF listing agent who proudly asserted that her one-year anniversary of her listing was coming up! Some people don’t mind being on the open market and not selling – they are only motivated to move if they get their price, which is fine. Hope you get lucky!
Sellers will be hanging around for weeks or months, hoping the mythical market conditions improve and that lucky couple with 2.2 kids shows up, rather than go to work on their pricing. As their lease comes due or the start of school gets closer, the waiting buyers will anxiously decide whether they will step up and make an offer, or keep waiting for the mythical two-in-the-bush that might be a better value.
This is the Big Standoff whose intensity will be measured by the number of sales that find the sweet spot of being within +/- 5% of the latest pricing trend. The vast majority of sellers won’t sell for less, and buyers will be very reluctant to pay more than 5% above comps.