After another weekend of multiple-offer situations where the listing agents made no attempt whatsoever to create a bidding war, and instead just shut down the showings, it’s hard to believe there is any downturn coming our way. When you can get a mortgage rate in the twos, the demand is unyielding.
But some authors still want you to believe that doom is around the corner – they should talk to realtors on the street! An excerpt:
The price of low-tier housing in San Diego County skyrocketed after the latter half of 2012. 2015 experienced another price increase, due to the boost given by decreased mortgage rates throughout 2015 and 2016. Lower mortgage rates free up more of a buyer’s monthly mortgage payment to put towards a bigger principal. Thus, San Diego’s high home prices continued to find fuel from increased buyer purchasing power.
But in 2018, home price increases sharply declined in reaction to slowing sales and rising interest rates, which began in late-2017. Home prices have since turned back up, but today lack the fundamental support of home sales volume to continue. The annual pace of increase is now just 5%, lower than in recent years when the annual rise averaged around 10%.
Accurate home price reports run about two months behind current events. Even when caught up, sticky prices tend to persist several months beyond the moment when home sales volume begins to slow. Starting in March 2020, economic volatility and shelter-in-place orders caused home sales volume to decline dramatically. However, historically low interest rates have provided a boost for buyer purchasing power, which has propped up home prices thus far.
Later in 2020, the impact of record job losses will see downward pressure on home prices. The overall home price trend for the next couple of years will be down, the result of job losses and plummeting sales volume. As during the 2008 recession, the drop in sales volume and prices will first be most volatile on the coast, before rippling outward to inland areas.
Sales and pricing should be directly connected to inventory.
When there is hardly anything to buy, sales may decline, but pricing would stay the same or go higher because only the quality homes would be selling. A surge of homes-for-sale in 2021 would fuel the demand and energize the marketplace…..to a point.
There will be a fine line between frenzy and glut!
The pandemic is being blamed for people leaving town.
I think it’s more that Covid-19 is the last straw that is causing people to take the action they would have taken at some point anyway. The ‘rona will be gone in 1-18 months – moving is a major life-changing event.
But these two conflicting articles probably demonstrate who is being impacted.
On one hand, we have people – probably those who want/need to be economical – who are moving themselves and are being ripped off by the rental-truck agencies (hat tip SM):
But a survey of full-service moving companies describe a different scenario:
Are people in the U.S. migrating during the coronavirus crisis in different ways than pre-pandemic? Are they leaving cities? Moving to the suburbs? These are popular questions without definitive answers — yet. But there is some data emerging that can paint a better picture of Americans’ geographic response to the pandemic.
One thing’s for certain: So far, there is little support for the dramatic claims that people are fleeingcities writ large. In fact, available data indicates that overall, fewer people moved at all since the beginning of stay-at-home orders and through June — even with interest in moving on the rise again.
Among those who have moved, it’s unclear how many of those moves will be only temporary. But that doesn’t mean there aren’t interesting migration takeaways worth following. A select few cities including New York City and San Francisco do seem to be seeing more out-migration than most. But guess where many of those people are going? Other very large metropolitan areas, like Seattle and Los Angeles.
If there is a perception that the pandemic has ushered in a mass migration, it is not supported by the data. According to figures from two national moving companies, Americans moved less during the pandemic than they normally would have, not more.
Several surveys have found that the great majority of people who did move duringthe first months of the pandemic did so for reasons unrelated to the coronavirus. In one such survey of 1,300 individuals conducted by Hire A Helper, just 15% said they had relocated because of Covid-19.Out of these pandemic-induced migrations, 37% of respondents said they moved because they could not afford current housingdue to a Covid-related income loss. Thirty-three percent of the respondents said that they moved to shelter in place with friends or family, and 24% that they didn’t feel safe where they were.
A Pew Research Center survey in June looked more closely at Americans who said they did make pandemic-induced moves. It found that overall, young people between the ages of 18 and 29 were moving because of Covid-19 in higher numbers, whether permanently or temporarily (college closing for in-person education might be to blame, at least partially.) Only 3% of the respondents said they had moved because of Covid-19, and 6% said someone else had moved in with them because of it.
What the pandemic is exposing is the gap between the haves and have-nots.
Those who are moving are seeking financial relief – either homeowners cashing in their home-equity lottery ticket and moving down, or those who flee so they can afford to start their American dream in a cheaper area.
The affluent don’t have to worry about that stuff. But they’ll move closer to the grandkids!
Have you been searching for homes all summer, and still haven’t bought one?
Do you feel like the inventory has been mostly garbage that you wouldn’t buy at any price? Then once or twice a month you see a nice buy that turns into a bidding war and you don’t win it? It happens, and unfortunately it might keep happening so be resilient.
This is the time of year when buyers want to give up.
It’s easy to get discouraged because you aren’t seeing as many new listings come to market these days – it’s hard to pay attention when days or weeks can pass without seeing a decent house.
Here are reasons why you should hang in there:
Competition is waning. Some of the people we’ve been competing against have bought houses, but most importantly, more buyers have given up on 2020, and will wait for 2021.
Inventory is dry, but you only need one.
You can still get a mortgage rate that starts with a 2.
It will be worse next year.
Looking at houses has never been more annoying. Agents have gone nuts with their demands for masks, gloves, booties, bank statements, preapproval letters and your first-born just to see a house. Many aren’t even nice about it – they have plenty of showing requests, so their attitude is if you don’t like it, kiss off.
If it bothers you that much, just wait a couple of weeks – they get more accommodating the longer the house is on the market. But know that these demands have become a tactic to screen out buyers so they don’t have to work as much. I heard a listing agent complain recently about having to process paperwork for 52 showings – you know many just stop answering their phone.
While it is a hassle, you must see the best homes in person in case it’s a winner and you want to grab it.
What can you do to make the search more bearable?
Here are a few tips:
Revise your auto-searches. They are ‘upgrading’ the MLS this weekend, and our realtor auto-searches will need to be re-inputted. It will be a good time to re-visit yours to make sure they weren’t affected, and while you are there, bump your price up. It’s the best way to see better quality!
Use the 3D tours to save time. You’ve heard me say that Matterport 3D tours are terrible for sellers because agents rely on them to do the selling. But the 3D tours are fantastic for buyers – be patient with them and remember that you will find something wrong with every house.
Use Google Street Views to cruise the neighborhoods. How many times to you roll up to a new listing and the immediate neighbors make you want to keep driving? Avoid those time-wasters by viewing the neighborhood online.
Accept the fact that every house will need $25,000 to $50,000 in improvements/upgrades. You will have to compromise somewhere – don’t give up on a house just because you find a defect. Money will fix everything except location – rejoice when you find something to fix!
Be prepared to make strong offers. Know the comps, have a solid preapproval letter, and shorten contingency timelines – which I hate to do but it’s one of the addictions now.
The market isn’t going to go down. Today’s inventory is almost entirely full of the homes that have been passed over for weeks or months. Longer market times and price reductions only mean that those are dogs, not that the market is suffering. You want to buy a premium property anyway, and those will always be in fashion.
Keep the goal simple: Buy the right house, at the right price.
Be picky, rely on your tools, keep a laser focus and remember that it only takes one.
This article is written by a professor at the Wharton School who has a book coming out this week. It appears we have a glut of boomers – will we stay put, or sell the family homestead (once the covid is solved) and explore the world during retirement?
Population aging is a powerful force. By 2030 the population above age 60 will have grown so much that other generations like millennials and Gen-Z will be outnumbered by them in Europe, China, Japan and the United States.
Each day, 12,000 Americans celebrate their 60th birthday; in China, 54,000; and in the world, about 210,000, according to the United Nations Population Division. The pandemic will only accelerate this trend given the predictable decline in fertility — which tends to occur whenever unemployment is high — and the shifting demographics of cases and deaths, which are trending younger as time goes by.
The 60+ crowd will become very important economically for three reasons.
First, they own more than half of the net worth around the world, a proportion that reaches 80 percent in the United States, according to a study by the Federal Reserve. Second, the same study concluded that the net worth of seniors is more evenly distributed than among younger age groups, and poverty rates are also lower. And third, their incomes tend to be more resilient because many of them depend on pensions or investment income, and they can do some work on the side to cover potential shortfalls.
Not all seniors are financially secure, but they tend to be less exposed to large-scale financial disruption during episodes of crisis. Moreover, there are 25 percent more women above the age of 60 than men, they tend to be much better at managing their money and making it last, and they account for a smaller percentage of COVID-related health problems and hospitalizations, mainly because they heed the advice of health authorities and they have more robust anti-viral immune responses to begin with.
The gray market is quickly becoming in vogue because ever larger proportions of seniors are enjoying life by using their income and wealth wisely to procure goods and services that enhance their experiences.
Moreover, a 70-year-old nowadays lives the life of a 50-year-old in the 1980s.
The pandemic has also accelerated the technological savviness of this group, and not just in the area of e-commerce. In fact, a study in the Journal of Gerontology found that use of the Internet increases cognitive functioning rather than vice versa. Myriad new applications in virtual reality, robotics, and artificial intelligence are seeking to capture a rapidly growing market.
Other areas of technology will help seniors live longer and more fulfilling lives. Virtual reality can stimulate motor functions and the overall performance of the nervous system, and it can help reduce loneliness, a key problem afflicting large numbers of people at advanced ages. Artificial intelligence and robotics will also contribute to quality of life. Over the last decade, Japanese companies have invested heavily in robotics to aid with daily tasks like lifting weights, conduct physiotherapy sessions, and provide for companionship.
We know that covid, and it’s impact on schooling in particular, is causing some people to want more space around them. Bigger houses, with bigger yards, are becoming more desirable…..and buyers are scrambling to get situated and comfortable before school starts – or at least not get too far into the school year.
The Poway area offers such relief at a fairly affordable price.
My buyers and I finalized this list of homes on Monday, and picked yesterday as our tour date. By Wednesday night, this is how the list looked:
17307 St Andrews Dr., Poway. $1,399,000 Active listing
14260 Hacienda Ln., Poway. $1,150,000 Active listing
16105 Lakeview Rd. Poway. $1,350,000 Active listing
12612 Stoutwood St., Poway. $1,070,000 Pending
13615 Sunset View Rd., Poway. $1,100,000 Pending
11828 Clearwood Ct., San Diego. $1,290,000 Pending
12429 Damasco St., San Diego. $920,000 Pending
14473 Trailwind, Poway $1,465,000 Pending
14220 Primrose Ct., Poway $1,249,000 Pending
3428 Tony Dr., San Diego $1,329,000 Pending
12020 Blue Diamond Ct., San Diego $1,300,000 Pending
9972 Falcon Bluff, San Diego $1,389,000 Pending
14048 Old Station, Poway $999,000 Pending
12488 Caleta Way, San Diego $1,098,000 Pending
13427 Calle Colina, Poway $1,250,000 Active listing
Out of the 15 listings, eleven of them already went pending this week!
After looking at several houses along Alabama’s Gulf Coast, my new wife and I decided the sunny cottage on Audubon Drive in Foley was the one—so long as the seller came down a little on the $145,000 asking price.
There were two bedrooms, two bathrooms, an attached garage, a tidy shed that was painted picnic-table red, and a pair of towering longleaf pines. It sat in an oval subdivision of cookie-cutter homes on a lot roughly the size of a basketball court. There was just enough room for the dog to run in the backyard without trampling the vegetable garden. It was convenient to my newspaper office in Foley’s antique downtown and to the elementary school in Gulf Shores where my wife taught kindergarten in a trailer parked outside of the overcrowded elementary school.
The beaches along the Gulf of Mexico were a short drive from the house. Just built and bland as an egg inside and out, it offered a blank canvas with years to go before we could expect major repairs. I replaced the tacky ceiling fans and planted bushes in my head as we looked around. The real estate agent walked us over to see the neighborhood playground.
A week before Thanksgiving in 2005, we signed papers to buy the house for $137,500. We painted the walls and hung blinds in time to have friends over for the holiday.
Twelve years later, little about my life remained the same. I’d left the Mobile newspaper to take a job at The Wall Street Journal. I was no longer married. Pierre, the dog, had died of old age. But I was still sending mortgage payments each month to a bank in Alabama.
I would have sold the house, and in fact I tried. But when the U.S. housing market collapsed in 2007, the property’s value fell far below the amount I had borrowed to buy it. Walking away was never an option. I’d signed papers promising to pay the money back and I intended to do so one way or another. In case my moral compass ever needed a shake, laws in Alabama, as in many states, allow lenders to pursue the difference between the mortgage debt on a property and what it fetches in a foreclosure sale. For much of the next decade, that number kept growing. At one point, it would have been more than $70,000.
Our new listing of a 2005-built home on a culdesac for only $739,000! The Zillow history shows that the house was rented the first of April, and as soon as the new tenant moved in, she told the landlord that she was not going to pay rent because of the eviction moratorium. The owner decides to cheap-sell it with a non-paying tenant inside, but no takers. The ensuing hysteria around the house caused by people thinking they might be able to buy one for $100k under value eventually caused the tenant to move out.
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