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How Much Over List, February

Here are the percentages from January:

Link to January Blog Post

Here are February’s winners:

Most % Over List Price

List Price
Sales Price
Percentage Over List Price
$1,595,000
$2,060,000
29%
$1,300,000
$1,602,000
23%
$1,550,000
$1,825,000
18%
$1,079,000
$1,225,000
14%
$1,395,000
$1,600,000
15%
$899,000
$1,016,000
13%
$1,150,000
$1,300,000
13%
$1,150,000
$1,305,000
13%
$1,350,000
$1,510,000
12%
$1,399,000
$1,561,000
12%
$1,949,000
$2,180,000
12%
$1,900,000
$2,100,000
11%

Those are the only double-digit winners out of 216 sales, and only 43% of the total sold for more than list.

How much crazier could it get if we did auctions?

NSDCC February Stats (so far):

Sales: 216 (+16% YoY)

Average LP: $2,308,952

Average SP: $2,263,457 (98% of list)

Median LP: $1,699,500

Median SP: $1,736,000 (102% of list)

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California Showings

No surprise here, given what we see in the market today.

But interesting that 2021 is off to 2x the start we had last year – which was pre-covid!  New listings are down 20% to 25% while twice as many people are looking!

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Sell for the Zestimate?

Would you sell your house for the zestimate? They say their accuracy is within 1.9% with on-market homes – no kidding! Of course, they concoct the zestimate after the list price is published, just like Redfin does.

There’s been no shortage of news when it comes to Zillow, a company that kicked things off in the early 2000s with a home-search portal that consumers now recognize as the place to go for market inventory. Now, the Zestimate, introduced by the company in 2006, is the latest cog in a machine that has taken on an entirely new model: brokerage, iBuyer, lender, title and escrow service, and, most recently, showing service.

Zillow has just announced that it will be pairing its Zestimate with its iBuying arm, Zillow Offers, as the latest way to use technology to “simplify and streamline real estate transactions from beginning to end.”

The Zestimate is now available as an initial cash offer for eligible homes in the following cities:

  • Phoenix and Tucson, Ariz.
  • Charlotte and Raleigh, N.C.
  • Miami and Jacksonville, Fla.
  • Orlando and Tampa, Fla.
  • Portland, Ore.
  • Denver, Fort Collins and Colorado Springs, Colo.
  • Nashville, Tenn.
  • San Diego, Los Angeles, Riverside and Sacramento, Calif.
  • Dallas, Houston and San Antonio, Texas
  • Las Vegas, Nev.
  • Atlanta, Ga.
  • Minneapolis, Minn.

However, the cash offer for a property’s Zestimate is only available in a limited subset of homes in these markets. Those who own qualifying homes will see the cash offer displayed at the top of their property information on Zillow, the company reports. As Zillow Offers grows, the company expects to continue expanding the number of eligible homes for the Zestimate cash offer.

Additionally, the company states the initial offer is before taxes and fees and is subject to both eligibility and the accuracy of the property’s description.

“For 15 years, homeowners and home shoppers have come to rely on the Zestimate as an essential first step. This exciting advancement demonstrates the confidence we have in the Zestimate and the lengths we are willing to go to make selling your home truly seamless and easy,” said Zillow Chief Operating Officer Jeremy Wacksman in a statement. “This is a proud moment for Zillow’s tech team and speaks to the advancements they’ve made in machine learning and AI technology. Zillow is transforming the way people sell and buy homes. Presenting the Zestimate as a cash offer to qualifying homes up front will save time, reduce friction and provide greater transparency—getting us closer to our vision of helping customers transact with the click of a button.”

A hot-button issue in the past has been the accuracy of Zestimates. Real estate agents have long complained of sellers pushing back on proposed listing prices that don’t meet the expectations set by their Zestimate.

“Zillow’s move to use their Zestimate as the basis for a cash offer is bold, although I’m more amused than concerned. The accuracy of Zestimates have long been a running joke among the real estate community, but I wouldn’t put it past Zillow to make it work through careful selection and their continued acquisition of more data,” says Josh Harley, chairman and CEO of Fathom Realty.

Kit Fitzgerald, regional designated broker for the Kit Fitzgerald Team at Equity Northwest Real Estate, says that because the Zestimate is algorithm-based, it’s impossible to get the same accuracy that a living person such as a REALTOR® can provide. “It plugs in a bunch of numbers, zip codes, mapping, etc., and spits out a general number,” says Fitzgerald, who adds that without going inside of a home, assessing the overall condition of a home, the layout, amenities, street scene, etc., the accuracy is just not there.

According to Zillow, the Zestimate is available for nearly 100 million homes in the U.S. with a “nationwide median error rate for on-market homes of 1.9%.” To come up with a property Zestimate, Zillow reportedly uses data from public records, multiple listings services, brokers and artificial intelligence that pulls information from photographs.

Is photo-based data enough to support neighborhood comparables to come up with a home valuation, however? Michael Hickman, CEO and president of Seven Gables Real Estate, a member of Leading Real Estate Companies of the World®, doesn’t think so.

“The issue with Zestimates is the interior,” says Hickman. “Any AI can look at comps, but what about the interior improvements that an AI would not pick up? Without AI scanning interior upgrades, the Zestimate will never be accurate.”

As Harley suggests, Zillow’s recent endeavors suggest the company is seeking out more data to build out their capabilities, and according to David Serle, broker/owner of RE/MAX Services, this could be a good thing—at least when it comes to Zestimates.

“I think this is a positive thing. There have been concerns since 2006, when Zestimates first became available, about the accuracy of these valuations,” says Serle. “This will create greater transparency for the consumer and the real estate industry.”

What it comes down to, however, is that Zillow’s iBuyer solution won’t meet the needs of every home seller, according to brokers and agents, regardless of whether or not they are offering an initial cash offer based off the Zestimate.

“There is a certain amount of people who would gravitate to an iBuyer sale and many who will not,” says Serle. “Typically, a cash offer in most iBuyer programs could be as much as 10-15% off the market value, especially in a ‘hot’ seller’s market around the country. I do not believe real estate brokers or agents are competing against iBuyer programs or consumer portals; we are relationship driven and strive to push forth the best consumer experience possible. All of these tools cannot replace what an experienced, knowledgeable and excellent real estate agent does.”

In today’s market, for example, Cathy Strittmater—team leader of Cathy’s Home Team of Keller Williams Solutions—says sellers can expect multiple-offer scenarios, and that should impact decisions about going on the market or accepting an instant cash offer.

“In today’s market of multiple offers on properties, and values rising quickly, it’s in sellers’ best interests to sell their home on the open market rather than sell to a single vendor who is also ascertaining value,” says Strittmater. “I would personally consider that a conflict of interest—no differently than dual agency is also a conflict of interest.”

Fitzgerald is of the same mindset, stating a Zestimate might give sellers a general idea of their pricing ballpark, but it’s not a great overall tool to assess value.

“In an ever-changing real estate market, you’d hate to potentially leave money on the table by not opening up the sale of your home to a much larger number of well-qualified buyers,” says Fitzgerald. “The instant purchase is a good tool for some, but I believe that for the vast majority of homeowners, the open market provides more healthy competition for your home.”

While the iBuyer model won’t appeal to all, Harley does caution that industry practitioners should maintain a competitive stance when it comes to Zillow and these instant-cash business models.

“They’re smart and they are a monster of our own creation,” says Harley. “We allowed it to happen and now agents are shocked that the foil-hat wearing conspiracy theorists were actually right. iBuyer programs have a long, long way to go before they are a real threat. Right now, it’s more smoke than fire, but if we’re not careful and figure out ways to compete effectively and provide a true value exchange for our services, REALTORS® and their clients will be the ones who get burned.”

Link to Article

Easement Impact

This one was better than the last one, but it had a funky easement granted to the neighbor that killed one sale and probably hampered this one. The list price was $950,000, and it just closed for $910,000 for 1,236sf built in 1959 on a 10,800sf lot:

Low Inventory, More Sales

The NYT has another article lamenting the drop in the number of homes for sale, and offered some reasons, like covid reluctance, sellers skittish about finding their next home, forbearance relief, the lack of building new homes, and people keeping their old home as an investment property when they buy a new one.

But who cares about inventory when we’re having MORE SALES THAN EVER.

It’s true that the number of new listings this year is about 23% behind where it was last year at this time.

The other day I compared just to 2020, but here’s a look at the last ten years:

NSDCC Closed Sales Jan 1 – Feb 15

Year
# of Sales
Median Sales Price
2011
158
$810,500
2012
153
$749,000
2013
197
$845,000
2014
261
$1,007,500
2015
252
$1,200,000
2016
253
$1,125,000
2017
260
$1,200,000
2018
231
$1,300,000
2019
242
$1,288,000
2020
254
$1,394,775
2021
299
$1,695,000
% Change, YoY
+18%
+22%

We haven’t had this big of a jump in number of sales AND median sales price to start the year since the Frenzy of 2013 bled into early 2014 when we had a 32% increase in sales and +19% in median sales price. Back in 2004, we had a 26% increase in the median sales price (from $635,000 to $799,000), but the number of sales dropped from 253 to 209.

This is the new reality – more people chasing fewer homes for sale.

Buyers who might think we’re going to get a pullback because rates have gone up are going to get a good lesson on who’s in charge here. Sellers don’t care about rate hikes, lack of inventory, or your lease expiring. They just want their money, and if they don’t get it today, they will wait until they do.

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Mortgage-Rate Massacre

This is turning into the February mortgage-rate massacre, and there’s no real end in sight.  But home sellers aren’t going to believe for weeks or months that they might have to back off their price, so don’t expect any changes.

To say that bond market volatility has been elevated recently is an understatement of extreme proportions.  Things are happening that haven’t happened in years.  Some measures of volatility rival the March 2020 panic surrounding covid, only this time, there’s no catalyst other than the market movement itself.

Today was by far the worst of the bunch when it comes to this most recent spate of volatility.

Most any mortgage lender added another eighth of a percent to their 30yr fixed rate offerings.  Over the course of the past week, most lenders are .25-.375% higher.  And compared to the beginning of last week, many lenders are a full HALF POINT higher.  In other words, what had been 2.75% is now 3.25%.  What had been 2.875% is now 3.375%.

Are this high rates in a historical context?  Not at all.  Before covid, they’d be in line with record lows.

But relative to the recent lows, this rate spike is getting to be about as abrupt as we’ve seen in the past few decades–not quite on par with the worst offenders, but close enough to be in their same league.

http://www.mortgagenewsdaily.com/consumer_rates/968604.aspx

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Frenzy of the Month

This is the property where the listing agent received 50+ phone calls in the first 24 hours on the market.

She raised the list price from $1,595,000 to $1,795,000, but the bidding war persisted.

Ten offers were submitted, and it sold for $2,060,000 cash, or 29% above the original list price!

https://www.realtor.com/realestateandhomes-detail/3212-Circa-de-Tierra_Encinitas_CA_92024_M28960-15742

Hopefully the new owner will split the lot and build $3M homes so more can enjoy.

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Gene Taylor, RIP

Gene Taylor, a renowned blues and boogie-woogie pianist in Los Angeles in the 1970s and ’80s who moved to Austin in the 1990s to play with the Fabulous Thunderbirds, died Saturday at home in North Austin. He was 68.

Taylor’s housemate, filmmaker Monty McMillan, said Sunday that he found Taylor’s body in bed on Saturday morning. The house had been without heat for five days as a result of statewide power outages related to the recent winter storm.

“I don’t really know exactly what happened.” McMillan said. “I don’t know if he had some underlying health condition, but I know the cold didn’t help.

“We both stayed in our own beds trying to stay warm. I came out of it OK, and he obviously didn’t.”

Born July 2, 1952, in Norwalk, Calif., Taylor had family ties in the Fort Worth area. Grammy-winning Los Angeles guitarist Dave Alvin, who played with Taylor in roots-rock band the Blasters for several years in the 1980s, said Sunday that he’d known Taylor since they were both teenagers.

(more…)

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