The results are in!
We reached 1,692 people, of which 89 participated in the survey, which is about right.
Let’s go through each question.
Q1. Most of the participants (2/3) already live in San Diego County. The question was passive in nature, but it was interesting that 10 out of 86 people have thought about moving here!
Q2. No surprise that 2/3s aren’t moving, but stunning that the next highest category was those who are selling and leaving California! Of those who are moving, 37% are leaving the state!
Q3. (No chart) Their results chart was poorly formatted, but 10 out of 70 rated their likelihood of moving as an 8,9 or 10.
Q4. Of those who plan to move, 27% are jumping right on it in the first quarter of 2021!
Q5. Covid-19 only caused 5 people to change their plans about moving?
It’s still 7% of those surveyed, which is enough to change the outcome, especially if we had that much more inventory to sell. The tipping point is probably more like 15% to 20% additional inventory to sell – then buyers might take a step back to see where this is going.
Q6. A bit of a shocker here: Getting My Price was the least concern! It may look easy, but getting your price in 2021 will require skill and some luck. Finding the Next Home is by far the biggest concern, and if we have more inventory it could grease the wheels a bit.
Q7. Those who aren’t moving would have selected the #4 answer, but glad to see the majority believe in good help!
Others left warm thoughts appreciating the blog and the effort. It’s my pleasure – thanks for participating!
Let’s get some intel on how people feel about moving next year!
Take this survey, and when completed, you can share it on social media. I’ll publish the results on Tuesday:
The 2021 market is shaping up to be a humdinger!
Will ultra-low rates and more inventory cause it to be the Frenzy of All-Time? Or will a surge of home sellers – namely the baby-boomers – bring about a flood of homes for sale that swamp the market?
Frenzy, or Glut?
Or as the market transitions from one to the other, shall we call the combo a Frut?
We know pricing will be higher than it is today. It is inevitable that the 2021 sellers will add a little mustard to the comps; after all, this is their opportunity to hit the jackpot.
It will look like a frenzy, right up to the point where buyers back off because they see a few too many homes not selling. It won’t happen in February or March because it will be too early. But by April and May the unsold listings could start stacking up, and what looked like a frenzy could turn into a glut in a matter of a few days.
If sellers don’t flood the market in April and May, we should experience a full-blown frenzy straight through to summer….as long as pricing seems reasonable to buyers. But some areas, and maybe only a few, won’t have enough demand to soak up the April/May supply.
Buyers AND sellers will struggle to identify which is which.
Here’s a way to know.
It will be different for every neighborhood, but let’s say in a neighborhood of 100 homes, the current average length of ownership is 12 years. It means the number of sales should average around 8 homes per year, with them bunched up around the spring selling season. Let’s say 4-6 of those sales would happen between March and June.
You can also calculate how many homes sold in your neighborhood this year, and compare.
In either case, if you saw new listings hitting the market in early spring that would double the number of sales in either of the two measurements above, then you’ll know that something unusual is happening.
The demand has overwhelmed the supply this year, at least in the NSDCC Under-$2,000,000 category. We should survive, and probably thrive with additional supply. So it would take about double the number of homes for sale to make it obvious, and cause concern.
Buyers are known to stop on a dime, so the impact will likely be immediate.
For a precursor, track the number of new listings hitting the market, and whether they go pending in the critical first 7-10 days they are for sale.
Did you hear Dr. Fauci last night?
It’s likely US health officials will know whether a Covid-19 vaccine is safe and effective as early as next month, Fauci said Monday. “I think comfortably around November or December, we’ll know whether or not the vaccine is safe and effective,” he said.
There are currently 10 Covid-19 vaccine candidates in late-stage, large clinical trials around the world, according to the World Health Organization. Several of those are in the US and at least two have been in Phase 3 trials since late July.
Once a vaccine is deemed safe and effective, it’s likely companies will already have doses to begin distributing, Fauci said.
“There will be vaccines available, likely, for some people, limited amount, by the end of this calendar year, the beginning of 2021,” Fauci predicted. Experts including Fauci say health care workers and people with underlying health conditions will likely take priority for vaccinations.
It didn’t make this article, but he also said that vaccines are already being manufactured, and they should be available for the masses by the middle of next year.
Just the thought of the pandemic coming to an end should be enough to goose the Spring Selling Season!
It was on April 15th that I drew up the calendar above, and then I added the additional red box around June when it was becoming obvious by the end of May that the market was taking off.
June, July, and August were all dead-red-full-tilt-boogie, then we had a blip around Labor Day/heat stroke/schooling, and we’re back to a healthy-hot market. The green = good description (at the top of chart) is about right – but it could be red hot if we just had more inventory.
While we’re due for a cooling off, but the October market could be better than expected if sellers get the memo that there are buyers starved for quality homes to purchase. I’m sticking with the November flurry right after election day too, figuring that realtors will want to get in one more sale before Christmas.
If the Big Three reasons why people move (death,divorce, & job transfers) start to increase, we’ll have more inventory next year – how much is too much?
If absence makes the heart grow fonder, what happens when you’re stuck at home all day with your spouse? Some California attorneys say they are seeing a rise in divorce cases during the COVID-19 pandemic.
Joe Wolch, a family-law attorney based in Walnut Creek, says not only are more people calling to ask about divorce, many are ready to file – immediately.
“I would say the phone is ringing much more,” said Wolch. “Where they used to be able to get away from each other, during the days or in the evenings with their extracurriculars, but now they haven’t had the opportunity. So now people are more acutely aware that they just can’t stay together.”
In some cases, however, those attempts to divorce are complicated in additional ways by the pandemic.
One Southern California attorney noted that more courts are closed or operating under reduced hours and with fewer staff, making it more difficult to resolve legal issues such as child custody. And if one parent fears the other estranged spouse has been exposed to COVID-19, they may take action without waiting for the court’s approval for a change in custody arrangements.
Some sites report online searches for divorce-related information have increased more than 30% since March.
Some California attorneys have also seen an increase in cases involving domestic violence.
“It’s much more serious when you’re dealing with potential child custody or visitation issues or safety issues, whether it’s the spouse or the spouse and the children,” explained Elaine Le, a family attorney with San Jose’s Hoover Krepelka LLP.
Another factor during this deepening coronavirus pandemic: People are becoming even more aware that life is short.
“Life might be too short to be too unhappy for too long,” said Wolch. “So they’re looking for options to make their life better, maybe their children’s lives better and overall move forward.”
That said, some unhappy couples may decide to stick together amid all the economic uncertainty, because getting a divorce doesn’t come cheap.
Divorce attorney fees can run from $400 to $600 per hour.
My video on Monday touched on the different groups of buyers and sellers that should be very active in the 2021 selling season. Let’s break it down further, shall we?
Boomer liquidations – When we first started talking about boomer liquidations, people in their 60s scoffed and shrugged it off. Now they are in their seventies, and the burdens of homeownership have never been so apparent. Stuff needs to be fixed regularly, and that dang property tax bill keeps coming twice a year. If you didn’t mind leaving town, a homeowner’s equity position has never been so solid, and you could go to most towns in America and buy a house for cash and live happily ever after. It’s a temptation that aging boomers will find harder to resist in 2021.
Health considerations – Covid isn’t going away, and for those who are physically challenged, selling their house here and moving to a healthier location will feel like a life-or-death decision – they need to do it. Cashing out their equity is a nice bonus too, and provides enough grease to make it easier to leave San Diego. Let’s note that there are good doctors everywhere, and while the transition may be uncomfortable for the first couple of months, you’ll adjust.
Grandkids – Obviously, it is harder for the kids to get a foothold here than the parents who came 10-30 years ago – home prices have doubled. If the kids pack it up and take the grandkids somewhere that is affordable, it is inevitable that the grandparents will follow. They don’t have much time left, and they want to spend it with family. The grandkids may be the #1 factor in real estate decisions for the next few years.
Move-Uppers – For those who want to stay local, the best time to move up is when you can sell your existing home for more money than ever, AND get a lower interest rate. My rule-of-thumb for move-uppers is that you have to spend 50% more on the next house to make it worth the move – if you only spend 10% more, you only get an extra bedroom, and it’s not worth moving. There aren’t many in this group who finance – you still need a big cash infusion to make it work. Here’s an example:
If you bought your home for $500,000, with a loan of $400,000 at 4%, the payment is $1,910 per month. If you sell now for $1,000,000, and use $600,000 for your down payment to purchase a $1,500,000 house, the payment is $3,794 per month at 3%.
Most who are used to paying $1,910 per month will want to inject more capital into the equation.
Last Movers – You are of the age where you have one more move left in you, and it’s probably due to hanging on to the 2-story family homestead for a little too long. The kids have been gone for a while, and you’ve been rattling around in a house that should be passed on to the next generation before you fall down those stairs.
First-timers or Out-of-Towners – If you don’t own a house here yet, your motivation is substantially higher than those who do own and are just trying to re-position. It’s why current homeowners struggle to understand why homes keep selling for record amounts – because heck, they’d never pay that much. But first-timers and out-of-towners are more desperate to get in, and will pay an extra few bucks to finally get something.
Downsizers – Rarely do locals downsize in the same town – keeping the old house makes to much sense, and why we have such low inventory. But San Diego County is well-positioned to be a landing ground for those selling for big bucks in L.A./O.C./Bay Area and coming here where our prices look like a bargain. This may be the largest group of buyers, judging by how fast prices go up.
Next year’s selling season won’t be as predictable as they’ve been recently.
We are overdue for a surge of sellers.
It may be disguised in the overall stats as a blip, but if you have three houses on your street go up for sale, and two others on the next street over, don’t be surprised if buyers freeze up and wait it out. If you live in a neighborhood where most of the residents have been there for 10, 20, or 30 years, there only needs to be one from each of my five seller categories above to cause a glut of homes for sale within a week or two. If any of them are desperate for money and undercut the pricing to get out, it will affect all.
Next year will be exciting because each seller and buyer group could grow 10%+ without notice. Remember the graph that said 57% of boomers are delaying the sale of their home? Add a possible covid bump in the usual number of deaths, divorces, & job transfers and we could experience a surge of inventory that nobody sees coming.
If you are thinking of selling……are you willing to get out in February or March will all-time record money, or are you going to wait until June or July and try to milk it for another 5% because you can? And risk not getting out at all because those ‘lowball’ offers based on 2020 comps are insulting and unacceptable?
Get Good Help!
When the coronavirus shut down the economy coast to coast, it was natural to assume that the real estate market would take a hit. Being in quarantine would certainly cause sales to plummet, and with 20% to 30% unemployment, prices would follow, right?
All that was left was to guess how much prices would go down.
But a funny thing happened on the way to the apocalypse.
The Fed poured $7 trillion+ into the economy, and mortgage rates hit all-time lows, which provided just enough
levitation support that those aggravated by the quarantine shrugged off the virus and started buying homes again.
But sellers didn’t get the memo, and our supply has suffered – but not prices:
NSDCC Listings Between Jan 1 and June 15
||Number of Listings
||Median List Price
With fewer comps and less competition (listings down 19% YoY), the list prices have been rising!
The lower rates are helping figuratively, more than literally – the ego loves the thought of getting the lowest rate in history. Compared to last May, the actual benefit is $60 per month per $100,000 of loan, which adds up but jumbo rates are higher and we’ve already been used to having really low rates so today’s record lows aren’t the only thing fueling the comeback.
The spring season was already shaping up to be very positive, so the compression of the entire session into the next 2-3 months is what’s driving the demand. As long as people are feeling relatively safe, we should be seeing elevated statistics just because of the compression – which may give sellers a false sense of security that any price will work.
The lack of competition is a seller’s best friend:
The motivated buyers – which now include the additional demand from folks who now have to work out of the house, instead of an office – are seeing so few of the new listings that meet their needs that if they see a hot one, they pay whatever it takes – and bidding wars are back. Here’s a sample of home sales in Carmel Valley and Southeast Carlsbad between $1,200,000 and $1,500,000 that have closed escrow in the last 30 days (during the corona):
Click to enlarge
Ten of the 24 sales closed OVER list price, and the average SP:LP ratio is 100%!
While this is the modest end of the range for both areas, homes in the $1,200,000 to $1,500,000 range still cost a ton of money – yet virtually no discount on price, even during the coronavirus!
In spite of having about 300 fewer homes for sale to consider, our total number of pendings has exceeded last year’s count at this time! A sensational market comeback!
There were 59 new pendings between $1.0M and $3.0M in the last week:
NSDCC Actives & Pendings By List Price
||# of Actives
||# of Pendings
Last year the market had peaked in May, and mostly plateaued through the summer.
But this year, we should see some of the best summer numbers ever.
THE TOTAL NUMBER OF NSDCC PENDINGS WENT UP 25% IN THE LAST WEEK!