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San Diego: Buyers More Critical, But Stable

This company surveys new-home and resale agents every month, and this report confirms more of what we’ve been experiencing:

  1. A few more listings (but NSDCC listings are dropping off now).
  2. More listings not selling/buyers getting pickier.
  3. Buyer traffic is steady, and better than expected.

The Home Listings Index dropped from 70 to 37.5, which means the number of listings increased, which is bad for the new-home agents.  But for resale agents, it’s good!

San Diego County Real Estate, August 2021

My favorite pet peeve of the media insisting that ‘home prices’ and market conditions are interchangeable with the direction of the median-sales-price made the front page of the newspaper today.

https://www.sandiegouniontribune.com/business/real-estate/story/2021-09-20/san-diego-home-price-drops

But there is more to it.

Here are other factors they mentioned in the story:

  • The number of listings in August were 47% fewer than in August, 2019.
  • The median sales price for condos hit an all-time high, as more buyers get priced out of single-family homes and are forced to consider other alternatives.
  • The quality of the homes for sale was crap.

The truth?  Due to seasonality – which does play a role as summer closes out – it is better to compare to previous Augusts, not July. But the best indicator of market health is the number of sales:

San Diego County Detached-Home Sales, August

Year
Number of August Sales
Median Sales Price
Median Days on Market
2017
2,445
$610,000
19
2018
2,145
$660,000
19
2019
2,207
$650,000
19
2020
2,380
$739,000
9
2021
2,225
$850,000
10

There have been fewer listings (-16% YTD) than in 2019, yet there were MORE AUGUST SALES!

Never mind that the +15% YoY increase in the median sales price was an all-time high for August, and ignoring that the median market time was nearly identical to August, 2020 (which will go down as the most hysterical frenzy in the history of real estate), just that the number of sales last month were similar to previous Augusts indicates that the market is fine.

Yet the UT headline writer wants you to think there’s a problem.

Get Good Help!

Pacaso Strikes A Nerve

They will get some flak in the tony areas but it’s a great way to make 12% commissions on expensive luxury properties ($2,000,000+ minimum) plus management fees. An excerpt:

Pacaso announced today that annualized revenue run rate has hit $330 million. In the second quarter of this year, Pacaso drew 1.8 million visits to its website and mobile app, up nearly 200 percent from the prior quarter. Its distributed team across 20 states has also grown from 30 people to more than 120 since January.

Pacaso declined to share specific metrics on the number of owners or houses sold, but said it has helped “hundreds” of people find second homes. It manages nearly $200 million in real estate assets. The company landed $1 billion in debt in March.

The startup is riding tailwinds from rising vacation home sales, driven in part by the pandemic and shift to remote work. Vacation home sales rose 16.4 percent year-over-year in 2020, and 57.2 percent during the first four months of this year compared to the same period in 2020, according to the National Association of Realtors.

And even if the real estate market cools down from record levels, Pacaso’s model becomes “more interesting in a softer market than a hot market, because it’s a more responsible way to own,” said Allison, who sold real estate document signing service dotloop to Zillow in 2015.

“In moments of correction, people don’t stop living, they just dial back the way they spend,” he said.

Owners must hold on to their share of a vacation home for at least a year, but can then sell it at any time — either for a profit, or a loss, depending on housing prices.

Pacaso is now live in 25 destinations around the U.S. It plans to expand internationally for the first time later this year in Spain, and has plans to launch in Mexico and the Caribbean next year.

Gaingels, Greycroft, Global Founders Capital, Crosscut, and 75 & Sunny Ventures also participated in the Series C round. Other backers include former CEO of Amazon Worldwide Consumer Jeff Wilke; Sukhinder Singh Cassidy and Theresia Gouw of the Acrew Diversify Capital Fund; First American Financial; Maveron; and Shea Ventures.

Read full article with Napa NIMBYs here:

https://www.geekwire.com/2021/softbank-leads-125m-round-pacaso-splits-ownership-vacation-homes-sparked-controversy-wine-country/

Skip the Bidding Wars

Are you thinking of going somewhere that doesn’t have bidding wars? You need to go a ways!

Just in case you haven’t heard, snagging a well-priced home in today’s real estate market can feel a bit like winning Powerball. It’s all about beating sky-high odds. Scant inventory, worsened by a pandemic-crush to buy new homes, has led to prices reaching new records and competition bidding them up even higher. All-cash bids and multiple offers way above asking are pricing many would-be homeowners right out of the market, or leaving them feeling hopeless.

“Demand has actually been growing stronger than supply going all the way back to 2014,” says Doug Duncan, chief economist at Fannie Mae. “It’s just that in 2020, incredibly low interest rates augmented that demand.”

In other words, we’ve found ourselves in an extreme seller’s market.

But not everywhere. The Realtor.com® data team found the places where buyers could actually have the advantage. Buyers in these spots—which tend to be smaller cities and college towns—have more properties available to choose from, and prices haven’t risen too much (if at all) compared with where they were at the start of the COVID-19 pandemic. This doesn’t mean home prices haven’t risen and the competition isn’t fierce in these cities—they’re just better than the rest of the country.

Looking ahead, buyers may get some more relief in the coming months as sellers become more comfortable listing their homes. Rising mortgage rates and the increase in inventory could slow down price gains. And while prices likely won’t drop, or at least by much, it could lead to a bit less competition.

But where can buyers get at least a little relief right now? To come up with our list of places, we looked at cities where home prices had not risen more than 10% in the past year (compared with 16% nationally) and calculated the number of homes for sale per 1,000 households—the more the better. All of the cities had at least 50,000 residents, and we limited the list to one city per state to achieve geographic diversity.

https://www.realtor.com/news/trends/best-cities-for-home-buyers-right-now/

Multi-Gen Demand

The new NAR report on the characteristics of homebuyers was released today.

Let’s note how many homes were bought to accommodate kids moving back home – or who never left.  Past generations never had to worry about kids moving out when everybody could afford a home.

As the prices go sky high, more kids will be faced with either having to move far away if they want/need to buy an affordable home, or live with their parents for the duration – yikes!

One more variable to add to the Reasons-To-Move theories, and help explain why demand is exploding!

How Much Over List?

We’ve had 208 closed SFR sales between La Jolla and Carlsbad this year.

How crazy is it?

Eighty homes sold over the list price, which is 38% of the total number of sales. Of those, most were just $10,000 to $50,000 over list, but there were some big bombers:

Most % Over List Price

List Price
Sales Price
Percentage Over List Price
$1,150,000
$1,500,000
30%
$1,500,000
$1,750,000
17%
$1,850,000
$2,100,000
14%
$1,500,000
$1,710,000
14%
$650,000
$740,000
14%
$2,199,000
$2,475,000
13%
$2,395,000
$2,660,000
11%
$2,250,000
$2,495,000
11%
$2,995,000
$3,300,000
10%
$1,449,000
$1,600,000
10%

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It’s not just paying more than the list price. The listing agents will test your mettle too.

Here’s a seller counter-offer on a million-dollar home with nine offers on it:

The house was built in the 1980s, and you expect the buyer to take it as-is without a home-inspection contingency? And you’re going to get 5% to 10% over list price, but you can’t throw in a home warranty?

There will be buyers who would have paid more money but who drop out when they see the extra demands.

Listing agents believe that this is how you get rid of the buyers who ‘aren’t serious’, but in reality it just limits the remaining buyer pool to the emotionally-charged-and-will-sign-anything buyers.  They are the ones that are less likely to close escrow.

Inventory By Area

What’s it like being a home buyer today? It’s a bonanza if you are in the multiple-millions category – there are hundreds of choices! If you want to stay under $1,500,000, the inventory looks bleak:

NSDCC Active Inventory

Town or Area
Zip Code
Actives Under $1.5M
Actives Over $1.5M
Overall Median List Price
Cardiff
92007
1
11
$2,895,000
NW Carlsbad
92008
4
10
$1,872,000
SE Carlsbad
92009
7
9
$1,594,000
NE Carlsbad
92010
2
0
$842,000
SW Carlsbad
92011
5
2
$1,149,000
Carmel Vly
92130
2
21
$3,450,000
Del Mar
92014
0
42
$5,423,000
Encinitas
92024
6
34
$2,737,000
La Jolla
92037
3
95
$4,245,000
RSF
92067
1
100
$5,295,000
Solana Bch
92075
0
12
$5,075,000
NSDCC
All Above
31
336
$3,995,000

Should the lower-end buyers be discouraged? No! There are 92 pending sales listed under $1,500,000 – they just sell fast. The lower-priced you are, the more tuned up you have to be to win a bidding war.

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Will Prop 19 Increase Inventory?

The U-T asked their twelve real estate experts about the effects of Prop 19:

Q: Will Prop. 19 substantially increase home inventory in California?

Of the local experts, 11 out of 12 said NO, and the justification for the one YES answer could have been just as easily been reasons to say NO.  Gary’s answer above was the best and most-accurate. See the rest here:

Link to Article

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