I saw this on Greg’s twitter, and thanks to Charlie too. On the ground it seems like the market is wildly out of control, but looking at this chart it looks like we’re just one of the pack.
Does it give buyers any comfort to know that the price explosion is happening everywhere?
The NSDCC median sales price in 2021 was $1,900,000.
The NSDCC median sales price in the fourth quarter of 2021 was $1,996,875.
Today’s NSDCC median list price is a mind-boggling $5,972,500!
To better reflect the rapidly-escalating home prices between La Jolla and Carlsbad, I’ve combined the two lower price ranges and added the $4,000,000+ category.
Here are the inventory counts by price range to begin the year:
The $0 – $1,500,000 Market:
| Date | ||||
| Jan 3, 2022 |
The $1,500,000 – $2,000,000 Market:
| Date | ||||
| Jan 3, 2022 |
The $2,000,000 – $3,000,000 Market:
| Date | ||||
| Jan 3, 2022 |
The $3,000,000 – $4,000,000 Market:
| Date | ||||
| Jan 3, 2022 |
The $4,000,000+ Market:
| Date | ||||
| Jan 3, 2022 |
NSDCC Weekly New Listings and New Pendings
| Week | ||||
| Jan 3, 2022 |
For those who are interested in the history of the Inventory Watch, there are 2 ways to access the data at the top of the blog page:
Here we go!
Taking a cash offer is a sexy option but no guarantee to get past the home inspection. The best buyers work with the best agents, and another variable worth considering when selecting the winner.
Almost 27 percent of San Diego County home sales were in cash in the third quarter — the highest in seven years. Attom Data Solutions said cash purchases, instead of loans, were up from 15.4 percent at the same time last year.
Sellers typically prefer cash buyers because it guarantees money for the home quickly, whereas mortgages can be delayed — or fall through — for a variety of reasons. San Diego has seen an increase in cash offers before, said Attom records going back to 2000. The real estate data provider said 36.2 percent of homes were purchased with cash in the first quarter of 2013 as the region came out of the Great Recession. At the time, many loan programs were still suspended from the housing crash and that made cash sales more of a necessity. The last highest level for cash sales was in the third quarter of 2014, with 27.2 percent.
The difference now is potential buyers face increased competition for a limited number of homes for sale and are trying to make the best offer possible, said Raylene Brundage, a Windermere agent who sells in several North County communities. “If it’s not contingent on a loan, there is less that can go wrong,” she said.
Brundage said sellers often go for cash sales over other loan types designed for first-time buyers and the military. Those types of loans require appraisals and inspections, making it possible a transaction could be halted. Cash sales not only mean money flows quickly into bank accounts but inspections, which are needed on loans, are often waived. A deal with a mortgage could take a month or longer to complete.
Brundage said she worked with two millennial couples this year who borrowed money from parents so they could make cash offers. Both were successful in getting homes. The majority of cash sales are coming from typical homebuyers, not investors.
Attom said 7.9 percent of the San Diego County sales in the third quarter came from institutional investors, which was lower than much of the nation.
In Atlanta and Phoenix, investors are making up 19.5 percent of sales; in Charlotte, 19.3 percent; in Jacksonville, Fla., 19.1 percent; and Tucson, Ariz., 18.4 percent. Parts of the South and Midwest have some of the smallest interest from institutional investors. In Madison, Wis., investors made up 2.3 percent of sales.
The best thing about 2021 for Kayla? Her new boyfriend Frank, who is a great guy and quite a golfer too!
Natalie signed with a new talent agent and has high hopes for next-level work in the new year. Dancing on a concert tour would be ideal, all while being our marketing director!
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I said that pricing will likely seem a lot higher this year.
With few recent sales to guide them, sellers and listing agents will wonder how much can they get away with on price. There are tales of a old blogger guy being wildly successful with his transparent open bidding, but other agents aren’t experienced in conducting a slow-motion auction and don’t have the guts.
Instead, the list prices will be getting packed.
When sellers wonder how high, it will be easier to lump 10%, or more, on top of the initial guess (which was probably +5% optimistic already). The zestimate, or other automated valuation, that is higher and supports the dream will be collected as proof!
But it’s the METHOD of selling that makes the +10% possible.
Bidders are turned against one another and compete for the prize. Their ego takes over and directs the bidding……and the contest is on, with no ceiling.
Will a list price that starts at 10% to 15% higher than comps produce the same results as my slow-motion auctions? Maybe, but only with the homes that are highly upgraded with all the bells & whistles and have a superior location. The real creampuffs.
The early buyers will have to tolerate such sloppy pricing, but for those who are already frustrated from not buying a house in 2020/2021, it won’t matter and they will grab whatever they can. It virtually guarantees that the first 1-3 months of the season will be scorching hot.
But there will come a day when we run out of those buyers, and the frenzy conditions will be over.
I’m sticking with my +15% appreciation, and it all happens in the first half of 2022.
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Two new laws that address the housing crisis begin today (above).
Baby boomers are another year older, and more will need help with living. The multi-gen home buyers will grow in numbers, and granny flats will be an ideal solution. Many will buy a suitable property with grandma’s money, and take care of her until the end.
Some multi-gen home buyers will cope with finding an existing single-family home and adding their own granny flat. But the real opportunity will be for those sellers of properties that already have an ADU. Because the supply is low and the need is very high (and because grandma’s money came a little too easily), the prices paid for homes with existing granny flats will be excessive. There will be a separate category of comps too – those with ADUs, and those without, with a pricing differential of 10% minimum.
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This could be the year that buyers have to pay for their own agent.
I don’t think many agents can make a case of why they are worth it – or at least demonstrate why they are worth as much as 2% to 3%. It would be cool to develop buyer-agent squads who are experts in their field and are worthy of compensation – and can prove it. But most will just fade away, or open up a shop of discount door-openers who don’t offer much, but get paid up front.
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Another political season starts in 2022, which means an increase in the vitriol and hate. The perceived volatility will cause a few people to move to areas which are better suited for their political leanings, especially if there are riots – which is what it would take to get laid-back San Diegans to reconsider a move. It may not cause a surge of additional sellers here, but it could create more demand for homes in those politically-friendly destinations.
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The difficulty of buying homes out-of-state is already tough enough, and now they are more expensive – with some now 30% to 40% higher. It could be the game-changer for potential sellers and even be the reason why the inventory has been so tight recently.
We don’t know what it will take to get more homeowners to sell.
In the past, record-high prices did the trick, but today’s prices are setting new records every month – and inventory is in decline. How many current homeowners in San Diego wouldn’t sell at any price? 80%? 90%? That’s a problem, and I’ll say that it’s something we’ve never faced before until the last few months.
At the same time, the number of San Diego County detached-home sales in 2021 will probably rank as the #2 of all-time, behind only those in 2003. There were 28,319 detached-home listings last year, and 25,029 sales, which is incredibly efficient. Virtually everything is selling!
But only 12,936 of those listings came in the second half of 2021, and if we continue at that pace or lower, it will be excruciating for buyers – and send prices to the moon.
The optimum number of listings will probably be in the 30,000 to 35,000 range. Having a small surge in listings will drive the market crazy with activity…..and force sellers and buyers to Get Good Help!
People say to me, “I bet you’re loving this market”, expecting that realtors are raking it up these days.
Not really.
I lost 50+ bidding wars with buyers this year who lost out to others who insanely overpaid with no regard for the comps, or because listing agents were too lazy to give everyone a fair chance. Neither of those are healthy for the market in general, yet no change is on the horizon for 2022.
I found myself in two more bidding wars this week!
The two properties weren’t the superior buys in top condition – instead, both were very average and priced with no regard for the comps. Yet they both had multiple offers over list price during the week between Christmas and New Years?
This is my 698th blog post of 2021, and the best way to review the year is to scroll through the highlights and lowlights here:
https://www.bubbleinfo.com/category/2021/
or here:
https://www.bubbleinfo.com/category/bidding-wars/
For those who like the videos, here is the full collection:
https://www.bubbleinfo.com/category/bubbleinfo-tv/
I’m off to play golf with Kayla – she extended her stay for another week! I’ll comment more later.
This home had a decent floor plan, and just needed a thorough refresh. But it shows how many buyers pass on fixers – heck, a single-level with view and pool in a gated community sold for under list ($2,900,000)!
Tom asked on our Facebook page about getting the actives and pendings data for San Diego County. Here is the InfoSparks data from the SDAR Resources page on the MLS – they are interactive so scroll over the graph lines for the exact counts:
The first graph charts the number of active listings on the last day of the month, the second graph shows the number of new listings in each month, the third graph shows the number of properties that were marked ‘pending’ in each month, and the fourth is the actual sales counts each month.
My initial reactions to each graph:
Active Listings: The frenzy let up in June/July, but it’s back now – and the last few months have been brutal for buyers. On the last day of November, 2019 we had 4,068 actives, and last month we had 1,420.
New Listings: Hard to grasp the cumulative effect so I calculated annual number of listings. In 2021 we have had 16% fewer listings than in 2018.
Pending Sales: This November’s count was almost identical to last year – which was the all-time high!
Sold Listings: The total number of sales for the year is 9% ahead of last year, and we’re not done yet!
This is the probably the best example this month of the type of homes that are getting top dollar – large newer coastal suburban homes that are upgraded throughout. The list price was $2,549,000, and this closed for $2,850,000 cash plus the buyer paid an additional $150,000 for the furnishings:
The prices of everything are soaring in the middle of a pandemic that’s so bad they are cancelling football games – the world is spinning out of control!
I can’t think of a better song to wrap up the Wednesday Rock Blogging for 2021:
We know that media types are looking to sell newspapers, and if it bleeds, it leads. The article in the UT this morning about the San Diego Case-Shiller Index starts with this:
San Diego continued to slide down in rankings of the nation’s hottest real estate markets in October.
The article doesn’t mention the lower inventory in 2021, or offer any other explanation. But it does use the D-word, deceleration, in their headline that everyone is using to describe the last few months.
But are home prices really decelerating?
All of the comparisons are judging the year-over-year changes, without any mention of how the 2020 numbers were rising quickly too. If we add the 2020 monthly YoY increases to those from this year, here’s what the combined 2-year increases would look like:
The indices in the last half of 2019 had flatlined, so the graph above is a pretty good visual on how our local index has been marching skyward since the pandemic started.
We can also note that the month-over-month increases are probably a better gauge of current activity – and they have picked up since we had actual deceleration:
Here’s a graph from a different article that also mentioned how price gains are slowing:
If that’s what slowing looks like, I’ll take it!
But let’s not misinterpret the recent index readings and then give potential home buyers the impression that our local market conditions are changing, because they’re not (or at least not yet).
All that matters in 2022 is inventory. Here’s how prices will be affected:
PRICES KEEP MARCHING SKYWARD:
PRICE-INCREASES SLOW:
PRICES FLATLINE OR GO DOWN:
We should know by March/April which way it’s going to break!
