California Net Migration

The number of people moving is half of what it used to be.

The gap between who’s left California by major van lines, and who’s arrived, is now at its widest in 13 years.

Every January three major van lines put out data on their state-to-state moving business. Such interstate moves by van lines are a shrinking migration niche for folks with deep pockets. Corporations have shied from paying the pricey tab for professional relocation services. Not to mention that Americans overall aren’t relocating like they once did.

Inbound moves: The state’s real problem. Americans may visit the Golden State, but don’t want to live here. So just 19,196 inbound van moves last year vs. 22,492 in the previous year — down 15%. Last year is 37% below the 16-year average. Census data for 2018 showed the total number of Californians arriving from other states was the lowest in five years.

Outbound moves: Departures, a focus of the grand California “exodus” discussions, are falling, too. Last year’s 23,595 outbound van moves were down 8% in a year to 25,618. Last year is 27% below the historical average. Census figures for 2018 show Californian’s total departures rising for the seventh consecutive year.

The “net” result: Last year California suffered 4,399 more outs to other states vs. arrivals, the largest since 2006, and up from 3,126 in the previous year. Since 2004, California has averaged a net van-line outflow of 1,731 a year. By Census math, California’s total “net outmigration” was at its widest gap since 2009.

Link to Article

Median SP:LP

The SP:LP ratio has been very consistent for those selling a home under $2,000,000 – you can expect to get pretty close to your asking price.  Above $2,000,000 is a different story.

Mortgage rates had averaged 3.99% in 2017. You can see how the lower-end buyers became less concerned about getting a discount as rates started rising in early 2018 (they reached 4.59% in May, 2018):

This is another place that listing agents manipulate the data. When marking their listings as sold, many will lower the list price to match the sales price in order to make it look like they sell their listings for ask.

Where to Move

Would more people leave California if they just knew where to go?

Here are my favorite links to get your research started:

Best Places to Retire – 2020:

https://realestate.usnews.com/places/rankings/best-places-to-retire

Best Places to Live 2020:

https://realestate.usnews.com/places/rankings/best-places-to-live

Money Magazine, Best Places to Live in the U.S., 2019:

https://money.com/collection/best-places-to-live-2019/

Best 100 Places to Live, 2019:

https://livability.com/best-places/top-100-best-places-to-live/2019

Sunset Magazine, Best Small Towns – 2018:

https://www.sunset.com/travel/travel-tips/best-small-towns-to-live-in

 Charming Small Towns Across America:

http://www.countryliving.com/life/travel/g2294/must-visit-small-towns-across-america/

15 Best Small Towns in California

http://101usa.com/top-15-small-cities-in-california/

Best Towns in California to Raise a Family:

https://wallethub.com/edu/best-worst-cities-for-families-in-california/15993/

‘January is the new April’

The severe shortage of homes for sale is upending the sales calendar for the whole housing market. Spring has historically been the busiest buying season, but as competition for homes heats up across the country, January is the new April. Spring starts now.

The numbers are telling. From 2015 through 2018, the peak month for average views per listing on Realtor.com was April. January lagged by a full 16%. In 2019, however, January was the busiest month on the site in 20 of the largest 100 metropolitan markets.

Those markets included New York City, Los Angeles, Chicago, Dallas, Houston, Seattle, San Francisco, Atlanta, Denver and San Jose, California. In 2018, January was the busiest month in just three of the largest 100 markets. This year, the expectation is that January will be the strongest month in even more markets.

“As shoppers modify their strategies for navigating a housing market that has become more competitive due to rising prices and low inventory, the search for a home is beginning earlier and earlier,” said George Ratiu, senior economist at realtor.com. “With housing inventory across the U.S. expected to reach record lows in 2020, we expect to see this trend continue into the new year.”

https://www.cnbc.com/2020/01/02/competition-for-housing-is-so-high-the-spring-market-is-starting-now.html

2019 Wrap-Up & 2020 Forecast

Last December, I had guessed NSDCC sales would drop by 20% this year, but that was back when mortgage rates were touching 5%.  With rates back in the 3s for most of 2019, our sales exceeded my expectations – here are the NSDCC detached-home listings and sales for the first 11 months:

NSDCC Detached-Home Sales, Jan-Nov

Year
Total # of Listings, Jan – Nov
# of Sales, Jan – Nov
Median Sales Price
2016
4,984
2,868
$1,165,000
2017
4,500
2,873
$1,225,000
2018
4,689
2,615
$1,325,000
2019
4,573
2,587
$1,325,000

We’re only 28 sales behind last year, and the late-reporters should pull us up real close to 2018.

This year’s sales AND pricing statistics are virtually identical to last year!

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There should be more forecasts coming in the next week, but let’s consider what we have so far.

This in today from realtor.com – they have sales dropping in 2020, and prices flat:

Home sales will drop, the housing shortage could become the worst in U.S. history, and home values will shrink in some cities. That’s the 2020 forecast from realtor.com, which holds one of the largest databases of housing statistics available.

Sales of existing homes will fall 1.8% from 2019, according to the forecast. Home prices will flatten nationally, increasing just 0.8% annually, but prices will fall in a quarter of the 100 largest metropolitan markets, including Chicago, Dallas, Las Vegas, Miami, St. Louis, Detroit and San Francisco.

It is a seemingly contrary assessment, given the current strength of the economy and of homebuyer demand, but the dynamics of this housing market are unlike any other — the result of a housing crash unlike any other.

“Real estate fundamentals remain entangled in a lattice of continuing demand, tight supply and disciplined financial underwriting,” said George Ratiu, senior economist at realtor.com. “Accordingly, 2020 will prove to be the most challenging year for buyers, not because of what they can afford but rather what they can’t find.”

They also predict that the San Diego-Carlsbad metro sales will drop by 3.2%, and prices rise +0.2%.

Link to Realtor.com Forecast

Here are other similar forecasts:

California Association of Realtors NSDCAR (our local realtor assoc.) Forbes

From the enthusiastic Forbes article:

“Low interest rates and a shortage of starter homes will continue to push up prices,” DeFranco said. “This is especially the case for lower price points, since builders have tended to focus on more expensive, higher-profit houses and less on replenishing low inventories of entry-level homes.”

It seems the price growth may continue beyond 2020, too. Data from Arch MI shows the chance of home price declines at a mere 11% for the next two years. There are currently no states or metro markets projected to see prices declines in that period.

When to Sell Your Home

So you’ve heard that the market has slowed a bit, and you’re wondering,

“Should I sell now, or wait it out?”

If you don’t mind keeping your home forever, then fine, the value will probably go up in the long run.  But if you’d rather get your hands on your tax-free equity in the next couple of years, consider this:

Over the last ten years, we’ve enjoyed a strong sellers’ market where buyers just paid the price. There was enough competition that if you didn’t pay the seller’s price, somebody else would.

But the competition has dwindled lately – there aren’t as many buyers looking.

Let’s don’t call it a buyer’s market just yet. Let’s call it neutral.

Buyers feel they have more negotiating power now, which means they are:

  1. Tougher on price.
  2. Expect more repairs.
  3. Blow out easier if they aren’t satisfied.

The real struggle is with homes that need work – buyers are passing on the fixers altogether unless the price is right. Sellers used to get away with selling a rough-looking home for just a little less than the superior homes, but now the 5% to 10% gap is back (or more).

Once the market has turned that corner, it probably won’t just bounce back to being a seller’s market – it’s more likely to stay neutral.

How do you know if you should sell now, or take a chance?

Here are ways to decide when to sell:

  1. Sell when you know where you are moving.
  2. Sell when there are strong comps that support your desired price.
  3. Sell when your house looks spectacular.
  4. Sell when nobody else is, or at least when you are the best-priced home of the competition.

If there’s a moment when all four are happening, then you know it’s time – do it!

Could the comps get better next year?  Maybe – it only takes a couple of real premium properties to sell nearby and you could add 5% to 10% in value within a few months.  But it could go the other way too.

Once buyers they recognize a slower market, they will only want to pay the same as the comps, or less. They will wait patiently for the highly-motivated sellers who price their home closer to the comps – or wait until you lower your price.

The local real estate market around you is a fluid situation, so let the comps help determine your decision.  If the sales price of the last house sold near you is an acceptable price for your home, then sell when the inventory is low and you’ll get all the attention.

An example of how quick it can turn:

The house I just sold on Segovia in La Costa was the only house like it for sale when we hit the market. But over the next 30 days, another ten homes listed nearby, which diminished our negotiating power. We had to lower the price to stay competitive, and finally sold for 6% under our original list price, which isn’t the end of the world – but we were more optimistic when we began.

There can be a 5% to 10% variance in price when selling any home. The four nuances above will be factors, but the best thing you can do to sell for top dollar is to hire the right realtor.  Contact me at (858) 997-3801 and we’ll discuss what I can do for you!

Compass and 8.0

Compass intends to comply with NAR’s Clear Cooperation Policy MLS 8.0. In addition, the corporate staff will work the MLS to see if we can create a Coming Soon section, like many other areas are doing.

The 8.0 policy legitimizes the Coming Soon marketing, and allows for the Office Exclusives, which is already set up on our internal website.  This is why we went to Compass, because it was clear that the game was changing, and the biggest brokerages with the best listing agents would be the most successful – while the little guys get squished.

After less than two years in business, here’s how Compass is doing in Encinitas. Year-to-date sales:

Click to enlarge

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