The Mortgage Bankers Association (MBA) released its latest mortgage application numbers this morning and the modest movement belies the drama unfolding in the world of mortgage rates. As usual, the MBA does a good job of capturing average rate movement week to week and they correctly identified last week’s big spike to the highest levels since the first half of 2019.
Despite the surge, mortgage applications didn’t respond in a major way. Refi applications only fell 3% from the previous week. Purchase applications actually managed a small uptick of 1% after last week’s more substantial 9% improvement. But context matters.
As seen in the following chart, refi applications have declined massively from Summertime highs and even more massively from the high levels at the beginning of 2021. MBA notes this week’s tally is 49% lower than the same week last year. The news is less dire on the purchase side. Applications are still lower than most of the past few months, but higher than most of the late summertime months from 2021:
Speaking of context mattering, a longer term chart of the same data really helps put the magnitude of this most recent rate spike into perspective. It’s not an exaggeration to say it’s now the sharpest move higher that any of us have seen in more than a decade (the overall size is about the same as 2016-2018, but this one has happened in roughly 6 short months… not only that, but 2016-2018 was really a 2-parter).
The other takeaways from the chart include the notion that the purchase market is still firing on all cylinders relative to most of the past decade (even then, we can responsibly conclude it would be even higher if not for the low inventory situation) and that refi demand doesn’t have much farther to fall before hitting the historical bottom. In fact, due to the immense equity build-up of the past 2 years, the doldrums of 2017-2018 may not be a relevant baseline this time around.
Let’s see which areas are picking up steam early in the selling season:
We used to think that a normal and healthy market has a ratio of 2:1 actives to pendings, so it’s stunning to see five areas that have 3x the number of pendings as actives! And SE Carlsbad has more than 4x!
The trend of the average days-on-market can give us a feel for the market direction too:
In 2020, we had 400+ pendings from June 22nd to November 30th – with a peak of 491 pendings on September 7, 2020.
Last year, the high pending count was 386 on May 12th – and this year’s peak will likely be in May too.
It looks like I made an error on the Del Mar A/P counts in the last reading.
I spoke with Jordan at the San Diego County Tax Assessor’s office about their Prop 19 processing. He said they have received about 1,000 requests since Prop 19 went into effect last April 1st, and have completed about half of them. He said there is a backlog of 6-9 months because they are appraising/analyzing every property in question to ensure compliance.
There were 36,936 sales of attached and detached homes in San Diego County since April 1, 2021, so the 1,000 requests (3%) gives us a feel for how effective Prop 19 has been in getting seniors to move (not very).
From Liam at the LAT:
Rose Liebermann opened her property tax bill and did a double take.
The $15,584 she owes on her new West Hills home was almost four times as much as the taxes on her previous house in Granada Hills where she had lived for more than 30 years.
“This bill, when I saw it, I said, ‘This can’t be real,’ ” said Liebermann, 71, a clinical social worker.
It wasn’t supposed to be that way. Proposition 19, narrowly approved by California voters in 2020, gives older homeowners a property tax break when they move. Specifically, it allows those 55 and older to blend the taxable value of their previous home with the value of a new, more expensive home they purchase, resulting in significant tax savings.
But processing delays at the Los Angeles County assessor’s office have left property owners like Liebermann facing hefty tax bills that must be paid while they wait for their applications to be approved.
Nearly a year after the law took effect, the assessor’s office has not completed any of the 1,271 applications it has received to recalculate the property taxes for older and disabled homeowners under the law, according to the agency. And it hasn’t finished any of the nearly 3,700 applications for parent-to-child and grandparent-to-grandchild inheritances, the other major piece of the tax measure.
Liebermann moved last summer because she wanted to help her daughter, Natasha Gershon, who is divorced and raising two young children, including a 10-year-old son with autism. Believing the tax measure would make it possible for her to afford a nicer place, Liebermann decided to buy the larger single-family home in West Hills where they all could live.
Liebermann has since borrowed money through a refinance loan to help pay the property tax and to build an accessory dwelling unit for herself.
Currently, the entry level for Carlsbad houses is around $1,200,000, so when this one first hit the market at $1,119,000 you can bet it stirred up the frenzy!
They raised the list price to $1,199,000, but it didn’t slow anyone down. The agent received 28 offers, and they countered the best five. It closed for $1,525,000!
We gave credit to the ultra-low rates when they were in the 2%-range for helping to create the frenzy. Likewise, higher rates will have something to do with the way the market turns out in 2022.
It’s not because the payment are so much different. When the rate changes from 3.0% to 3.85% on a $1,000,000 loan, the payment only changes $472 per month.
The change will be because of the effect that higher rates have on market psychology.
We’re not going to get a memo on the day when buyers decide that they have had enough.
We know what signs to look for – higher market times, declining SP:LP ratios, and a growing amount of active (unsold) listings – to recognize when the market conditions are adjusting, and it’s been quiet so far.
Harder to measure is how quickly the demand could subside.
With the quality homes fetching an average of five offers each (roughly), then for every sale there is probably 2-3 losers that are literally priced out or voluntarily quit the race. At that rate, the demand could be cut in half or less within a couple of months.
Add the war in the Ukraine, rates well into the 4s, and list prices starting at 10% above the comps, and you have all the ingredients needed for a slowdown. Because the market is so hyped up, there will be ample overshoot and the frenzy should last into summer. But everyone knows it won’t last forever.
Bill is reporting a 3.1% increase in inventory nationally, which sounds hopeful and we can only pray that it happens here. But we were really far behind after the holidays and we’re still struggling to catch up:
NSDCC Inventory:
March 15, 2021 – 332 Actives, 333 Pendings
March 14, 2022 – 195 Actives, 196 Pendings
The number of houses for sale between La Jolla and Carlsbad is 41% lower than last year!
There wasn’t an obvious winner at the TinyFest – everyone is asking full retail for their product, and it makes you think that going custom is a better choice. And they all do custom!
Some homes are selling for less than their list price!
The original list price was $4,925,000 and this just closed for $4,226,625 for 6 br/6.5 ba, 6,031sf on a 37,026sf lot. Buyer had a license so they discounted the price instead of taking the commission:
I guessed that we’d have 5% more NSDCC sales this year because I expected a surge of delayed sellers who would finally come to market in order to cash in on the record pricing.
But it’s not happening, at least not yet.
The number of NSDCC listings for the first two months of the year is 32% BELOW last year! It means buyers are only going to have a few shots at winning a home.
Here’s what home buyers will have to endure in 2022 to succeed:
Long Waits – Days and weeks will go by without any quality new listings to review. It makes you soft and it’s difficult to keep your chops up.
Coming Soon – Listing agents will tease you by advertising a home for sale, but you can’t see it yet. It’s not always clear when you can see it, and you better not miss the date because…..
Quick Exposure – Once the listing agent is willing to show the house, they will be overcome with the demand, and will likely hit the panic button.
Many will insist that you show them a bank statement and pre-approval letter just to see the house! If you get an appointment, it will be limited to a 15-minute period that is convenient for the listing agent AND be subject to cancellation prematurely because they already took an offer before your scheduled time. Hopefully, you don’t have a job or other responsibilities that limit your scheduling. You will get the feeling it is best to quit your job so you can devote your entire life to home-buying.
No Transparency – If you want to buy it, then just make an offer and you will hear back in a few days.
Over Pay – Not only will you have to pay well over the list price to win, but there won’t be any recent sales to justify any of it. The logic and common sense you usually employ will be your enemy here.
Waiving the Appraisal – What was once an insider trick to improve an offer has turned into a standard on every deal. If you refuse, the listing agents will think you aren’t a serious buyer, and move on.
Shorten the Contingency Periods – You will have 7-10 days to sign off all contingencies. You will need to have a great home inspector on speed dial and who can schedule quickly.
60-Day Free Rentback – Listing agents demand free rentbacks whether the seller needs them or not. Those homes that provide immediate occupancy is a bonus for which buyers will pay extra.
No Repairs – Most buyers are submitting a blank repair-request form with their initial offer.
In spite of all those hurdles, there will still be stiff competition for the quality buys. Once the listing agent has collected enough offers that fit the criteria above, they will then huddle with the sellers in the back room and decide on a winner. This is where having a great agent with a good reputation in the community will pay off. Discount agents, out-of-town agents, buyers who are agents, and agents who don’t look good or don’t smell right are ignored and/or sent to the back of the line.
If you can endure that much and successfully get into escrow, you will be treated with disdain and disrespect that makes you will feel like a suspect, not a valued buyer. The contempt that listing agents have for their prey is palpable – they don’t trust that their initial mistreatment of you will be enough of a lesson, and they will keep it coming because they think that’s their job.
And get this – you will probably lose a few bidding wars before you get up to the desperation level of the other buyers. Oh, you’re not desperate? Then this market probably isn’t for you.
Give it a try and you might get lucky. But if you want a quality home in a good area, then don’t be surprised if the desperation among the competing buyers is higher than you could ever imagine.
The TinyFest comes back to the Del Mar Fairgrounds this weekend, starting at 10am. I’ll be in search of ADUs that can be fully installed at home for a reasonable cost – here was my tour from 2020:
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We sold a home with Jim and Donna and from beginning to end they were consummate professionals. Their initial walk through the property resulted in a list of items to be repaired or updated. They supplied a list of vendors and job quotes to do the repairs and updates. We originally wanted to sell ‘as is’ and just get it over with. They gave us a selling price for ‘as is’ and options for doing a few updates/repairs to doing it all with the selling price for each option. We agreed to do all they suggested and we sold for the exact price they predicted. For every dollar spent we got back more than $2 back in the selling price. And they got that price in a rising interest rate environment! Donna and Jim are extremely detailed and guide you through ever aspect of the sale. There were no surprises thanks to their guidance. We couldn’t be more pleased with their representation.
Thank you Donna and Jim,
Jerry and Mary
Heather Quejada
March 27, 2025
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We have known Jim & Donna Klinge for over a dozen years, having met them in Carlsbad where our children went to the same school. As long time North County residents, it was a no- brainer for us to have the Klinges be our eyes and ears for San Diego real estate in general and North County in particular. As my military career caused our family to move all over the country and overseas to Asia, Europe and the Pacific, we trusted Jim and Donna to help keep our house in Carlsbad rented with reliable and respectful tenants for over 10 years.
Naturally, when the time came to sell our beloved Carlsbad home to pursue a rural lifestyle in retirement out of California, we could think of no better team to represent us than Jim and Donna. They immediately went to work to update our house built in 2004 to current-day standards and trends — in 2 short months they transformed it into a literal modern-day masterpiece. We trusted their judgement implicitly and followed 100% of their recommended changes. When our house finally came on the market, there was a blizzard of serious interest, we had multiple offers by the third day and it sold in just 5 days after a frenzied bidding war for 20% above our asking price! The investment we made in upgrades recommended by Jim and Donna yielded a 4-fold return, in the process setting a new high water mark for a house sold in our community.
In our view, there are no better real estate professionals in all of San Diego than Jim and Donna Klinge. Buying or selling, you must run and beg Jim and Donna Klinge to represent you! Our family will never forget Jim, Donna, and their whole team at Compass — we are forever grateful to them.
Lou F
March 27, 2025
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WeI had the pleasure of working with Klinge Realty Group to sell our home in Carmel Valley, and I cannot recommend them highly enough!
Jim and Donna demonstrated exceptional professionalism, offering expert guidance on market conditions and pricing strategy, which resulted in a quick and successful sale.
Communication was prompt and we were well-informed throughout the entire process.
For anyone looking for a dedicated and knowledgeable real estate team, look no further!
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William Sams
March 25, 2025
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Donna and Jim Klinge of Klinge Realty Group have our highest possible recommendation. From Donna and Jim’s first visit to our house through closing their advice and counsel was candid and honest in all dealings. They kept us fully informed throughout the process. The house sold less than three days after listing with a two-week closing. My wife and I have sold several houses during our lives. This was by far the best experience. Klinge Reality is a premium service realtor. You can’t make a better choice for someone to sell your home fast and for top dollar.
Emily Hernandez
December 29, 2024
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Donna and Jim provided exceptional support and professionalism throughout the entire process. We couldn't have been happier with their efforts. They made our house shine, and thanks to their expertise, it sold above the listing price in the very first weekend! Truly a fantastic experience from start to finish.
Jesus Adrian Sahagun
November 11, 2024
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This year has been difficult on our family, mainly due to having to sell our home. Thankfully we knew God had a plan for us and working with the Klinge team was a key part of it. It was an obvious decision to work with them again after such an amazing experience when purchasing the same home we needed to sell. The challenge was, how will we do this in so little time with so much going on? Jim and Donna held our hand every step of the way. Whenever an unexpected issue arose they found and provided a solution. Never once did we feel pressured to make a decision and the Klinges were always reassuring after providing the information that the decision was ours to make. Despite the curve balls, they never panicked and exemplified the “can do” attitude, making us feel optimistic and taken care of. Their expertise and professionalism was superb. But of all the reasons to work with the Klinges, the most impactful and valuable is their compassion and genuine care for their clients. We pray that we can one day purchase our forever home and you better believe that Jim and Donna will be representing us - as long as they will have us of course. Thank you again Klinge team! Your execution, experience, and care are unmatched.
SABIHA PASHA
July 23, 2024
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Jim and Donna were fantastic! Jim understanding my needs, recommending potential places, pointing out the pros and cons of each property was invaluable. Then when the offer was accepted Donna’s organized guidance through the inspections, paperwork etc made the whole process seem effortless.
So grateful that I had them on my side!
Anu Koberg
July 13, 2024
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We first found Jim through his blog at bubbleinfo.com, which really showcased his knowledge of SoCal real estate. Since then we've done three transactions with Jim and Donna, and they are an incredible full service agency, with Jim's deep market insight and Donna's deft contract and project management. We trust them implicitly in their analysis and strategy, which is based on years of experience. They're always available and on top of things, and we strongly recommend them to anyone.
Bjorn Isachsen
July 10, 2024
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The Good
The Klinge Realty Group operates like a finely tuned machine, with a very personal touch. We contacted them on a Sunday and they were talking to us about our family and our needs on our living room couch the following day. They carefully listened to us and worked with us to identify the best and quickest path to listing within 2 weeks to take advantage of the low inventory conditions in our South Carlsbad neighborhood. They knew our tract specifically and had many previous sales there over the years - they came prepared with a thorough analysis of comparative sales and recommended a pricing strategy that they felt confident would yield offers the first weekend on the market.
The Great
Over the next two weeks Donna coordinated a range of vendors who she knew from experience could get the preparation to list work we needed done on time and with high quality. Our light tune-up involved excellent experiences with their stagers, landscapers, contractors, electricians, and plumbers. Throughout this period Donna's daily communication was clear, concise, and responsive. Any time we had questions Donna picked up the phone or texted immediately - but almost always, she answered our questions before we even knew we had them.
The Outstanding
We had a tricky situation with a shared fence that could have delayed our escrow. Donna used superb mediation skills to negotiate the terms of replacement and was personally on site with the fence contractor to make sure everything went smoothly. The fence looks great and escrow closed on time.
The Truly Exceptional
Our house came on the market on a Wednesday and between then and Monday morning Jim was personally at all three open houses. He was in constant communication explaining potential buyer reaction and strength. As he predicted offers began to come in on Saturday and each one was incrementally higher than the last. At the end we had 5 offers, 4 of which were over list, and the final accepted offer was $100,000 over list. In addition to being over list it included rent back terms that met our needs.
The Recommendation
For all of these reasons we would strongly recommend The Klinge Team to anyone wanting to sell in North County Coastal San Diego. I had been reading Jim's bubbleinfo.com blog for 15 years and knew when the time came to sell that he would be our first call. Jim Klinge is not your standard realtor. He is keenly aware of market conditions and sales strategies. And, works his tail off - though not as hard as Donna . At this point he's gone from realtor to friend and I plan to have him over to grill and chill at our new place to talk real estate, but also just about life and raising kids in San Diego. He's more interested in relationships than his sales numbers - and that's why his sales numbers are so high. We have already recommended the Klinge's to some close friends and another successful sale is on deck right around the corner...
Chris Shea
June 21, 2024
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We recently had the pleasure of working with Jim and Donna from Klinge Realty Group to sell our house, and we couldn't be more satisfied with the experience. From the initial meeting, they listened attentively to our needs and provided invaluable guidance on specific improvements to get our home market ready.
Their responsiveness throughout the entire process was truly impressive. Anytime we had questions or concerns, they were quick to address them, ensuring we felt comfortable and informed every step of the way. What stood out the most was their team and extensive network of tradespeople, which made addressing any necessary repairs or updates seamless and stress-free.
Thanks to their expertise and dedication, our house sold quickly and at a great price. We highly recommend Jim and Donna to anyone looking to buy or sell a home. They are a fantastic team who truly care about their clients and deliver exceptional results.
