This is the easier part – charting the next six months.
Either the Fed will pause and delight us all, or their threat of higher rates will make buyers antsy and ready to pounce. The best-looking inventory usually happens in springtime, so all the necessary the ingredients for a selling-season surge should come together nicely.
There are only 88 pending listings today, which means we are unlikely to get up to 100 sales between La Jolla and Carlsbad this month.
How radically different is that? Here’s how this month will compare to the previous Januarys of interest:
NSDCC Detached-Home January Sales & Listings
| January Year | ||
| 2009 | ||
| 2019 | ||
| 2022 | ||
| 2023 – projected |
Discard all previous assumptions, and prepare for market conditions that we have never seen before.
I might leave this fact on every blog post this year, because it probably matters most:
There are over 76 million American baby boomers. All will be 65 years or older….IN EIGHT YEARS.
Even though I’ve had a record amount of inquiries already, I don’t think there will be many sales early on. The inventory of quality homes is excruciatingly low, the prices are filled with early-season exuberance, the market uncertainty is off the charts, plus come on – it’s only January 8th!
Sales in the first quarter will be done by those who go out and create them while most people are standing around, waiting to see what happens. The tougher, the better for me. This should be my favorite year ever!
For those who have moved in the last three years, Texas, Florida, and Tennessee have been popular destinations – with North Carolina making a surge last year. Here are things to know about moving there!
Here is the summary of 2022 predictions from November, 2021:
https://www.bubbleinfo.com/2021/11/02/2022-forecasts/
My guess was that the NSDCC annual sales would be +5%, and pricing +15% in 2022.
It was a tough year for prognostications!
NSDCC YoY Statistics
| Year | ||||||
| 2021 | ||||||
| 2022 | ||||||
| Diff |
The smaller square footage takes a little bit of the sting out of it, but anyone who guessed right about the 2022 statistics was just plain lucky.
I was close on the annual price increase, but it doesn’t mean much after considering what the median sales price was last month – which is now back to the mid-2021 range.
I would have been way wrong on the sales prediction, even if the frenzy would have continued. The sales between January and May – when the frenzy was still raging – were down 28% YoY. It shows how insane the market was in 2021, and how unlikely it will be that we will ever seen anything like it again.
But have you seen ANY superior homes selling for a discount yet? Me neither, and one reason is because there are so few for sale. Once we wade into the spring selling season, we’re going to see how the market has divided in two segments – superior vs. inferior properties – and how the affluent buyers will pay the price for the top-quality homes.
The big question is what the realtors will do.
Any agent can sell a creampuff – the homes that are well-located, upgraded, tuned-up, easy-to-show, and priced attractively. But how many properties are in that category? Maybe 5% to 10% max? The overall market, and the changes in these dumb statistics that everyone thinks mean something, will be made in the trenches by the listing agents.
Will they game up and provide excellent salesmanship that keeps homes selling for about the same prices? Or will they be like prancing bullfighters and just get out of the way as the buyers come barreling through with their demands for discounts?
When we look at these stats next year, we will know the answer.
There will be one overwhelming factor in selling real estate this year:
They are coming into every situation with that mindset. Whether it’s online or in person, they will be looking for ANY reason to NOT buy this house. If they can’t find one, they will at least be doing the mental math on how much money they will have to pay to customize it to their tastes……and they will want someone else to pay for it.
It’s a 180-degree change from the frenzy era when buyers just wanted to win a house. Nothing mattered during the frenzy – bad floor plans, bad locations, bad improvements, bad agents, and bad prices didn’t stop buyers from paying insane amounts OVER the asking price. And what’s worse – those are now the comps!
Will sellers adjust?
Will listing agents adjust?
Here’s the first thought to go through their mind:
Let’s add a little extra to the list price to compensate. We can always come down later!
Oh, great.
How is it playing out so far? These are NSDCC sales from the last 30 days:
These are starter homes and mid-rangers for the area – not the high-end where it’s more challenging.
It will be easy for sellers to shrug it off, and mentally prepare to sell for 2% to 4% under their list price…..because they already added it on top! But 31% of the recent sales closed for a double-digit percentage below their list price.
Get Good Help!
Photo taken from our seats
In the last couple of years, we’ve followed how many new listings happen in January. It’s been a good indicator of what to expect for the Spring Selling Season!
Here is some historical perspective (below). I included the stats from 2009, which was the last time the sky was falling and nobody wanted to sell their house. I would gladly take those numbers now!
For those who were thinking it’s so bad that January’s count might be single digits, there has already been seven new listings this year – though four of them were refreshed listings from last year.
Number of Listings Between La Jolla and Carlsbad
| Year | |||||
| 2009 | |||||
| 2019 | |||||
| 2020 | |||||
| 2021 | |||||
| 2022 | |||||
| 2023 |
Leave your guess in the comment section of the number of January listings, and whoever is closest to the actual count on February 15th will receive four tickets to a Padres game in 2023! This isn’t a fancy way for me to get your contact information and keep calling you until you buy or die. You don’t even have to leave your contact information – just check back on February 15th.
Reasons why January’s inventory will be LOWER than expected:
Reasons why January’s inventory will be HIGHER than expected:
There is no evidence that there will be a surge of hundreds of listings. Though there are more active listings today than there were at this time last year (265 vs 152), it only means the 4Q22 selling success rate was lower than in the frenzy years.
The guesses from last year’s contest:
142 The other Bob
181 Eddie89
201 Daniel Nicolas
210 Drew
215 Joe
222 Majeed
230 Lifeisradincbad (he was a winner in 2021)
237 Curtis Kaiser
245 doughboy
250 Deckard Mehdy
259 Susie
260 Derek (the other winner in 2021)
270 Skip
278 Haile
286 Matt
290 Esteban del Rio
294 Tom
295 Rob Dawg
300 BWell_SoCal
312 big T
325 Mortgage Guy
373 Rob
The winner will be the closest guess, so leave some room around your number to heighten your chances.
Last January’s count was 30% lower than it was in 2021, to which I made this comment:
The 2022 inventory count was 2,832 (so far).
What it’s like watching a game from these seats? Here are 15 seconds:
A slow start is guaranteed this year because the existing inventory is so picked over – and those sellers aren’t budging on price. Instead, they are willing to wait…..and whether they realize it or not, they are waiting and hoping for new listings to hit the open market at prices that make their home/price look better.
It’s a big gamble in 2023.
Are the 2023 sellers going to list their home for a price that’s higher than those that have been languishing for the last 2-3 months? Or for less? If they are smart, they will list for less and getter done.
Either your list price is selling your house, or it’s selling the house down the street.
Here is the news reel for the whiffleball tourney that raised $24,000! We are the team in all-black:
peetspark.mov from Aaron Dickens on Vimeo.
Optimistically, what are positive things that could happen this year?
The Fed pauses in March. They meet twice in the first quarter of 2023 – February 1 and March 16th. I’ll live through another 1/2% hike a month from now, but then a surprising Fed pause in March would give the spring market a welcome boost – and hopefully keep mortgage rates in the 5s.
There were close to 2,000 NSDCC homes sold in 2022. We’ll probably have between 1,200 and 1,600 sales this year? A Fed boost would give the spring market a few months to transact in a more-predictable environment, and probably be the difference between 1,200 and 1,600 NSDCC sales.
Have you heard anything new about the site of the old Power Plant in Carlsbad? Or the Ponto site? I didn’t see anything in the city-council agendas from the last couple of months, but they should be in the works. The power plant site is not big enough to be a major residential site, but it would get interesting if try to turn it into a higher-end hotel (like they did at the Alila Marea and at the pier in Oceanside). Nothing on the 14-acre Ponto site either – with a current plan for a luxury resort hotel with 274 rooms and 48 timeshares that’s been for sale at $38,000,000 but they put their listing on hold last week.
If they want to do something to increase the demand for homes, they could make it easier to get a mortgage. Self-employed people still don’t have reasonable access to mortgages at market rates. If a big lender was willing to calculate the borrower’s income from bank statements instead of tax returns, more buyers would qualify. But the loans need to be at a decent rate – and a seven or 10-yr ARM would be fine (it doesn’t have to be a 30-year fixed rate).
Speaking of ways to improve the supply and demand for homes, converting the MCAS Miramar to civilian use should be considered. When the cost of housing is so ridiculous, it makes sense to develop 23,116 acres in the middle of town into a booming, multi-use development that features housing for all. We could be the national example on how to handle the future needs of the people.
The lawsuits against realtors will get addressed towards the end of 2023 and potentially dismantle buyer-agents. It would be awesome if a new auction-based brokerage would hit the scene about the same time!
Other positives about 2023 include it not being an election year, and we’ll be further beyond the pandemic. There should be more commercial and industrial-zoned properties converting to residential uses. The ADUs and aging-in-place will be priorities for many. Every month/year that goes by will push people closer to making their next move – if you know it’s coming, then let’s give it a go in 2023!
I think everyone who buys or sells a home in 2023 will consider it a major accomplishment!
