In 2023, pricing should feel remarkably the same as in the last quarter of this year!
If everyone is relying on the zestimates….are they any good?
It’s a scary thought that we’ve become dependant upon an algorithmic computation of home values run by a third party for profit. Good thing they got out of the home-buying business!
The zestimates have been more accurate lately, but it’s hard to track because they still adjust them once a home is listed for sale. When you get notified of a new listing, check their zestimate immediately because it takes them a few hours to fabricate a new zestimate.
Here are the zestimates that are dated before my last three listings hit the MLS:
This was run on August 11th. We listed on September 15th for $1,800,000, and closed for $1,750,000:
Here’s the zestimate of Oakridge, dated April 21st. It closed for $1,265,000 on November 18th. There is a big gap in the timeline, which means I may have gotten close to peak pricing in October:
This Carmel Valley zestimate was dated September 12th. It closed for $1,660,000 on December 2nd:
The Carmel Valley example is probably the most interesting because it’s a master-planned community of similar tract houses – their algorithm should be most accurate here. But they still modify their zestimate once a home hits the open market. They must expect homes to sell under the list price now:
At the bottom it says, ‘estimated value of this home based on local comparable homes’. Instead, they should just use their ‘Estimated sales range of $1.48M – $1.63M’, and add this, “depending who your realtor is”.
We played in the charity whiffleball tournament to benefit Camp Kesem, a week-long camp for kids who have parents who suffering from cancer. We raised enough money to send another TEN kids to camp! We got smoked 13-2 in our game though.
Here is the story on Camp Kesem – Natalie was a camp counselor 4x, and loved it:
https://donate.kesem.org/fundraiser/4297920
Channel 10 was there – check their newscast later today!
Mud on the mound (Mark Grant, the Padres TV announcer)
Frank on the left (Kayla’s boyfriend) and Mike
Here is the full broadcast on internet radio – our game starts at the 49:00-min mark with Frank giving up a home run on the first pitch:
It would be natural to assume that home buyers are much more concerned about paying the right price today. Certainly, they will be perusing the recent sales very carefully, won’t they?
I’m not so sure.
Putting a sharp price on a home stopped being a priority about 25 years ago with value-range pricing. Then the frenzy obliterated it when paying $100,000 to $1,000,000 over the list price became the norm.
What now?
Have we succumbed to relying on the zestimates? Pretty much, and buyers who are in a hurry and think the zestimates are close enough will proceed with the purchase unless the spread between the zestimate and the list price is more than 10%.
What matters more is the condition of the home.
Back in the day, people were more tolerant of doing home repairs – but not now. They don’t have the time or know-how, and if they have to pay these prices, they expect more…and you can’t blame them.
Maybe the idea about pricing your home attractively isn’t for you. If the plan for selling your home in the spring is to set a new record-high list price, then it would be smart to fix everything that is visibly wrong.
Because at this point, we can say that buyers prefer to purchase an immaculate home in top condition, more than they worry about getting the price exactly right.
If you hire a salesman (like me) who knows how to pit buyers against one another to run up the score, the attractive pricing is the critical part of the equation. But if there is a struggle with attractive pricing, then doing more to spruce it up will at least ensure that you’ll get more eyeballs. Hopefully, that will be enough!
There’s a big difference between low offers, and no offers.
If you are getting low offers, you probably didn’t fix it up enough.
No problem, you figured you’d have to sell it for less, didn’t you? Expect that buyers will want a discount that will be 2x the actual cost of repairs/improvements, because it will be a hassle for them too. Whoever does the work deserves to be compensated for the time-and-hassle factor.
If you aren’t getting any offers, well then that’s different. Your price is wrong.
I know, I know…..what does it hurt to start a little high? You can always come down later, right? Unless a neighbor beats you to it, which can leave you hung out to dry.
Think of what happened in Carmel Valley when the active listing down the street lowered their list price from $1,750,000 to $1,650,000. My listing was superior in almost every way, so when I came on at $1,599,000, mine was the obvious deal.
I still helped them out by closing two weeks later for $1,660,000, but only because I recognized that somebody had to stop the bleeding. Look at how the others that sold had been bludgeoned on price after testing the market for weeks:
If you are getting no offers, you should react quickly and get in the game by lowering your price – before someone else beats you to it. Once a home is on the market for 30+ days, they are going to get low offers.
You can’t count on the one who submarines you to be so good at this that they will start a bidding war and sell it for more. If theirs sells for less, where does that leave you? Higher and drier.
The reason for breaking down the active and pending listings by zip code is to give the readers a closer look at their neighborhood stats. Typically, we’ve considered any market to be healthy that has a 2:1 ratio between active and pending listings.
SW Carlsbad, Carmel Valley, and Encinitas all have a ratio that is better than 2:1 – and we are half way into December! Six areas (in green) have more pendings today than they did before Thanksgiving!
I’m declaring victory for 2022.
We survived the fastest rise in mortgage rates in history, and not only are sales still happening (38 closed in December so far, so we should get close to 100), but the new-pendings count has been hanging tough too.
Observations:
Maybe we can get a quicker start in 2023? If buyers are on vacation and come back next month to see some price reductions, we could have a decent January too.
We lost another one of the most talented this week, Stuart Margolin. He was better known as an actor (he won two Emmys) and director, but few ever heard what a great songwriter/musician he was – except those of us who knew that he and Arizona’s favorite son, Jerry Riopelle, were good friends.
Jerry wrote this little ditty and Stuart sounds like he is singing it in character as Angel from Rockford Files. Stay for the end (2:40-min mark) and enjoy the real estate joke.
Shadash said, “Right now the only thing propping up prices is limited supply.”
Indeed, and it’s how the pricing got here in the first place. The demand for homes in the San Diego coastal regions has been higher then the supply for decades now, and it’s probably not going to change that much – at least, not until more of the existing homeowners want to leave town or they go out feet first.
When selling, those who own the one-story homes will fare better.
It’s already happening – the market is splitting into one-story homes, and everything else:
The buyers who need a big house are comforted in knowing they will pay less per-sf, but their appreciation rate will lag behind. The only thing that will inhibit an even-greater appreciation rate among the one-story homes is that we are transitioning into a market with more estate sales – which will primarily be fixers.
Either way, the current NSDCC pricing averages and medians are still very positive year-over-year. Nobody who sells next year should mind selling for more than they could have gotten in 2021.
It’s not that bad!
159 YouTubes this year!
It’s been 16+ years on YouTube. Thanks for watching!
WASHINGTON (December 13, 2022) – Lawrence Yun, NAR chief economist and senior vice president of research, forecasts that 4.78 million existing homes will be sold, prices will remain stable, and Atlanta will be the top real estate market to watch in 2023 and beyond. Yun unveiled the association’s forecast today during NAR’s fourth annual year-end Real Estate Forecast Summit.
Yun predicts home sales will decline by 6.8% compared to 2022 (5.13 million) and the median home price will reach $385,800 – an increase of just 0.3% from this year ($384,500).
“Half of the country may experience small price gains, while the other half may see slight price declines,” Yun said. “However, markets in California may be the exception, with San Francisco, for example, likely to register price drops of 10–15%.”
