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Dear Homebuyer

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:

  1. 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.
  2. Inventory is dry, but you only need one.
  3. You can still get a mortgage rate that starts with a 2.
  4. 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.

Future of San Diego Real Estate 2

The turnover and upgrading of neighborhoods is commonly called gentrification, and what it means around here is that the affluent buyers (many, if not most, from outside the county) take over the real estate market, one house at a time.

Their money does the talking – they pay more for houses because they can.

Those with the most horsepower tend to gravitate towards the coast, and once they arrive, they stay – heck, it’s paradise!  This has been happening for the last 100 years.

As a result, the North San Diego County coastal region is comprised of older homes, and homeowners who have lived here for 20, 30 or 40 years.  We are overdue for more turnover!

Who will be selling in the next 1-2 years?

Homeowners used to be more mobile when real estate was civil.  There were up & down cycles that kept a throttle on pricing, and moving up was more feasible. For example, you could have bought a home in the mid-to-late 1980s, had a kid or two, and then in the mid-to-late 1990s move up to a bigger home without too much financial strain because the market took a dip in between.  But if you bought anytime before 2015, it is extremely tough now to justify a move-up today due to the much-higher home prices and property taxes – unless you really need it.

Once the covid & politics simmer down (i.e., Spring, 2021), we should have more boomer liquidations.

We have to – they own all the houses around here, and they will be the only ones moving – they are the market.  We will be dependent upon how many of them will be clearing out.

Oh, you say, “Boomers are settled in, and they’re not moving!”

It certainly has been the trend for the last ten years, but we’re all much older now.  Isn’t it inevitable that more boomers – or their kids – will be selling?  Each day, 12,000 Americans celebrate their 60th birthday – look how it’s stacking up:

Even if the vast majority of boomers don’t sell in the next 1-2 years, there will be more selling than we’ve had recently.  Covid-19 has added a new dimension that held back the majority of boomers – 57% are waiting to put their home on the market, which means a potential surge next spring:

The number of boomers selling will be different in each neighborhood, and they will be selling for different reasons besides just being old:

  • Be closer to grandkids.
  • They need the money.
  • Kids need the money.
  • Neighborhood has changed.
  • Tired of the maintenance.
  • Politics.

We’ll have the usual number of home sales due to death, divorce, and job transfers (The Big Three).  It will be the number of younger boomers, ages 60-75, that move for the reasons above that will supplement the supply and create more balance between sellers and buyers than we’ve had in recent years.

More balance = more sales, and less pressure on prices.

It’s a fine line though. A few more sales would build more comps to keep prices rising faster. But if we get 57% more listings in one spring, the competition will settle down and pricing will do the same.

Results will vary in each neighborhood.  Just do a count – how many homeowners around you are 60+ years old? Don’t be surprised if you see more of them move in the next 1-2 years than ever before.

Why Are They Selling?

The coronavirus adds another curiosity as to why the sellers might be selling. Does this home not quarantine well? Or the neighborhood? Or did they get the bug?

With the protocols encouraging more scrutiny of showings, buyers and buyers’ agents should have more in-person encounters with the listing agent at the house.  It’s a great opportunity to gather more information that could assist you!

If you hit the listing agent between the eyes with, “Why are they selling?”, don’t be surprised if if you get a vague answer, or no answer at all.  Listing agents are notorious for being reluctant to talk about their sellers, even though it’s their opportunity to be different and answer tactfully to help elicit an offer.

Here’s a better question to ask, because it’s answer will not only give you a clue about their motivation to sell, but also a snapshot of their timeline:

“Where are the sellers moving?”

Listing agents don’t mind answering that one, and it makes it easier to follow up with with more pointed questions if needed.

The real estate disrupters want you to believe that old-fashioned real estate is antiquated and all you need to do is place your order online after watching a Matterport. But having quality communication with the listing agent – who probably is more willing to talk to the top buyer’s agents – can put you in a much better negotiating position.

The Last Move

Are you of the age (40+) where you might move one more time?  Here are my resources to assist you.

Reasons to move again:

  1. Be closer to family (primarily to be near the grandkids).
  2. Change from two-story to one-story home.
  3. Better neighborhood for you.

Being closer to family, and especially to be near the grandkids, is high up the list of reasons for seniors to move. Not only will it be easier for you to get some help from them as you grow older, but they will appreciate the free babysitting and help around the house!

If that means you will be leaving San Diego County, then Donna is the best at finding a quality agent in your new neighborhood.  We are part of two different agent networks, and she will screen agents from those and make a recommendation. Cut & paste her email: donna@klingerealty.com

Are you thinking about buying a single-level home around here?

I input the best one-story homes from the MLS into my public collection here – it might ask you to sign-in but I promise I won’t call you every day until you buy or die:

Link to Jim’s Favorite One-Story Homes For Sale

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If you want to buy and wouldn’t mind getting a reverse mortgage with no monthly payments, then Dean Jones is your guy. There are other private lenders that can do larger amounts but they cost more and the lenders want a piece of the equity – Dean only does government-backed FHA reverse mortgages:


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You may already be in a terrific neighborhood, but it may not be the best for you at this age.  There are several active communities for those who are 55 and older – both for sale and for rent. Some examples:

https://www.oceanhillscountryclub.com/

https://aubergecommunity.org/

https://www.portolaseniorapts.com/

I can help you with the ones that are for sale.

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If time got away from you, and now a senior facility is needed, then one of the most popular websites to search for alternatives around the country is A Place For Mom.

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We just had a fantastic experience with seniormovemasters.com in San Marcos. They moved the belongings and set them up in the new home for $1,000!

If you need senior-moving help in other areas of the country, then check the website of the National Association of Senior Move Managers:

Link to NASMM website

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If you need to donate stuff to a good cause, rather than move it to your next home, then Rancho Coastal Humane Society is a good option because they take most everything.

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Hauling the remainder, including mattresses, can be done by Junk King in Carlsbad.

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One more thing – if you are thinking about giving your house to your kids, read this:

House Gift To Kids

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This is my first draft, and I’ll add more as time goes on. I’d love to hear your suggestions!

What’s Hot!

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!

The agent sent this message on his Blue Diamond listing, priced at $1,300,000:

The sellers don’t want any more showings, they have 10 offers and half of them are over $1,400,000.

Yowsa! Get Good Help!

Foreclosure Gen

The joys of homeownership tend to be positive for most.  But there is risk – here’s an example:

Link to Article

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.

(more…)

Buyer’s Worksheet for Home Showings

It’s more complicated to look at homes for sale these days.  Open houses have been banned, everyone who enters must sign disclosures for each house in advance promising not to sue realtors if you get the bug, and of course you have to wear the PPE and sanitize before and after the experience.

It was already a challenge before Covid-19 to gather enough information in 10-20 minutes to make a decision that will affect the rest of your life.  Compound the difficulty with a mask that makes it harder to breathe (and fogs up your glasses) while the listing agent is pestering you not to touch anything.

Today’s covid tip: TAKE A WORKSHEET WITH YOU.

Customize it with your own questions – here’s a start:

  1. Is there a suitable downstairs-bedroom suite?
  2. Is there extra space for office(s), or do I need to use a bedroom?
  3. Is the floor plan suitable for longer quarantines?
  4. Do I feel secure? Is it possible to improve security, and if so, how much cost?
  5. Can I go in the backyard and relax day and night?
  6. Does the kitchen have a gas or electric stove?
  7. Is the fridge built-in, and if not, do I want the sellers to leave it behind?
  8. Do I want the sellers leave the washer and dryer?
  9. Does the garage have extra storage?
  10. What improvements need to be done just to move in?
  11. What improvements are needed long-term?

If the listing agent didn’t get the memo that matterport 3D tours are the worst thing for sales and is using them as a substitute for live showings, then use your worksheet while navigating the online tours too.

Why Home Prices Will Keep Rising

Over the history of real estate, buyers have determined the market.

They decide how much education and investigation they need to complete before making what is now the biggest decision of their life, and then they proceed when ready – or when they see an attractive house, hopefully in that order!  There isn’t much education available on how to do it, so people just trust their gut and start looking around – even those who already own a home.  HGTV makes it look easy (see three, and buy one), and the disrupters keep promoting that their agent-lite program is all you need.  In a hot market, the investigation/education phase usually gets obliterated.

You’d think it would cause people to Get Good Help, to compensate – and many do (thanks!).

But once on the playing field, the buyers are split into two categories:

  1. Those who own a home here now, and are trying to do better.
  2. Those who don’t own a home here, and want/need to get in.

Buyers from the second category are determining the market.

They see every decent home get snatched up by those who got desperate sooner.  It becomes a race for those newcomers to get desperate enough so they can compete with those ahead of them.

Buyers in Category 1 already have it good.  Even if their home doesn’t suit their current needs, it’s what got them here.  The property taxes are lower, the neighborhood is a known quantity, and they are comfortable.  Are they going to rise to the same desperation level as those who don’t own a home here yet? It’s doubtful, even if the Prop 19 passes and sellers can take their property-tax basis with them anywhere – nobody is desperate to leave coastal San Diego.

It’s what is causing the inventory to be so thin, and why I’m convinced it’s only going to get worse.

Consider these factors:

  1. Baby boomers are older now – if they haven’t moved yet, it’s probably too late.  They will make do with their current residence, and make it last for the duration.  Kids will inherit, and one of them will occupy as their primary residence – and the cycle of low inventory for sale will continue for another generation.
  2. San Diego is a mid-range market – there are a number of more expensive areas that makes us look cheap, relatively.  It’s those move-down buyers from affluent areas who are filling up Category 2, making it very tough for locals to compete, which prevents them from moving…..which means less inventory.
  3. There aren’t any new-home tracts left to build in Coastal North County.
  4. There will be massive pressure on the Fed to keep rates low for years to come.
  5. The business is being dumbed-down for easier consumption, not smarter.

These factors will keep the inventory low, and competition high for a long time.  It also means that the deliberate, informed buyers will keep getting run over by those who are just in a hurry to buy a house.

The old adage of buyers determining the market is being snuffed out.

Sellers can name their price now, and there is probably someone who will at least consider paying it.  Until unsold listings are stacking up to the rafters, sellers will ensure that prices keep creeping upward.

Off-Market Sales

Yesterday, we closed our fourth off-market buyer sale of the year (Richard, 1 and Jim, 3).

Here’s how they happened:

  1.  Reaching out to other agents working the neighborhood.
  2.  Saw one in the Compass Coming Soon section (which was public).
  3.  Saw one on Zillow as a Coming Soon.

I haven’t been a proponent of this method for my sellers.  But pursuing off-market inventory is a good way for buyers and their agents to increase their choices.

One challenge to completing an off-market sale is that the seller will use the idea of going on the open market as a negotiating tool, and they are prone to beating you over the head with it.  But at least the chances of getting into a bidding war are greatly reduced.

The new Clear Cooperation policy allows for in-house sales, which is legitimizing the off-market sale.  Brokerages everywhere are being forced to develop their own exclusive off-market platforms.

Now we have Coming Soons being uploaded to our MLS only (and not to the search portals).

Get Good Help!

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