State to Invest in Homes?

by | Jun 4, 2021 | Local Government | 9 comments

When the Fed cut the Fed Funds rate to zero at the onset of Covid-19, it caused mortgage rates to drift under 3%, giving the illusion of helping home buyers.  But it has been the sellers who have reaped the big rewards. 

The San Diego Case-Shiller Index has gone up 19% in 13 months, and the NSDCC median sales price has INCREASED 38% between March, 2020 and May, 2021.

Creating a state program to increase demand would do the same thing.

Hat tip to both Mitch and Anna for sending in this article.

An excerpt:

Flush with a historic budget windfall of more than $100 billion, state lawmakers have a chance to put their money where their mouths are on housing. Assembly and Senate budget leaders alike have identified homeownership as key, but must still agree on the details.

The Assembly has made it a priority to increase investment in the finance agency’s down payment assistance program. By how much, or the source for that funding, is yet to be hammered out.

In his revised budget that he submitted to the Legislature on Friday, Gov. Gavin Newsom proposed a $100 million state and federal investment in the same program. Newsom also proposed $100 million to finance “granny flats” and other accessory dwelling units for low- and middle-income families.

Senate Democrats have a more radical idea. Under their pandemic recovery budget blueprint released last month, the state would partner with first-time homebuyers to buy through what they’re dubbing “California Dream for All.” The state would pay, and own, up to 45% of the home, cutting the purchase price for people by nearly half. For example, a family could buy a $400,000 home for $220,000 under the program.

The money would come from a yet-unspecified revolving fund set up by the state, with shares sold to investors. As home values increase, so would the value of the shares.

The Democrats have proposed commissioning the state treasurer to hash out the program in greater detail and present it back to the Legislature for approval in 2022.

The expansion in homeowner aid would disproportionately favor low-income communities of color who most need the help, allowing the state to “circle around” the constitutional provisions that bar the state from considering race in programs, said Muhammad Alameldin, economic equity fellow at the Greenlining Institute in Oakland.

Link to Full Article

Twitter comments here:

https://twitter.com/CalMatters/status/1400129342282383366

Median Sales Price vs. “Home Prices”

by | Jun 3, 2021 | North County Coastal, Sales and Price Check | 1 comment

Hey Jim – did you say home prices went up 9% in one month?

No, the NSDCC median sales price went up 9%, and there’s a difference.

Here’s a look at the mix of homes between La Jolla and Carlsbad that sold in their respective months:

Month, Year
Total # of Sales
Avg SF
Median SF
# Sales Under $1M
# Sales Over $3M
May, 2019
297
2,980sf
2,686sf
71
26
May, 2020
143
2,981sf
2,759sf
30
11
April, 2021
357
3,339sf
2,881sf
14
71
May, 2021
295
3,542sf
3,029sf
9
79

More of the larger homes are selling.

The NSDCC Median Sales Price in May increased 9% over April, but the median size went up 5% too.

It’s probably too simple to calculate 9% – 5% = 4% but the local annual appreciation has been at least 30% lately so a month-over-month increase of 3% to 4% in the hottest months of the year seems reasonable.

Though the May sales will be down 10%, the number of sales over $3,000,000 went up 11% in one month!

Cacti Family

by | Jun 2, 2021 | Realtor

We have five times as many realtors as we need, and the market has never been so competitive.  Any advertising that would help consumers differentiate between agents would be the most helpful and pertinent information possible.

But hey, these guys are just trying to drive traffic to their website:

Over List, May

by | Jun 2, 2021 | 2021, Frenzy, Over List | 2 comments

The number of  May sales dropped month-over-month, even when we tack on another 10-25 late-reporters to the current tally:

NSDCC April sales: 357

NSDCC May Sales: 294

The April, 2021 sales were 35% higher than in April, 2019, but this year’s May sales were about the same as in 2019 (297). Was it due to less inventory? Not really:

NSDCC April Listings: 378

NSDCC May Listings: 371

But about the same percentage of buyers paid over list price:

NSDCC Detached-Home Sales, % Closed Over List Price

January: 38%

February: 43%

March: 53%

April: 55%

May: 54%

Most sellers and agents are happy just to get 1% to 5% over list.

The big winners who got 20% or more over list:

Most % Over List Price

List Price
Sales Price
Percentage Over List Price
$985,000
$1,251,000
27%
$1,495,000
$1,900,000
27%
$1,349,000
$1,657,500
23%
$1,375,000
$1,688,000
23%
$1,500,000
$1,850,000
23%

Is anyone surprised that sales are slowing down?

Not when you consider how fast the pricing went up just between April and May. The average list price jumped $200,000, and median list price increased $100,000 in just one month:

NSDCC Pricing of Monthly Listings

Average List Price, April: $2,396,667

Average List Price, May: $2,596,992 (+8%)

Median List Price, April: $1,799,900

Median List Price, May: $1,900,000 (+6%)

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But how we measure the sales prices went up more. The average sales price went up $177,753, and the median sales price went up $166,500 – which is a 9% INCREASE IN ONE MONTH!

NSDCC Pricing of Monthly Sales

Average Sales Price, April: $2,403,962

Average Sales Price, May: $2,581,715 (+7%)

Median Sales Price, April: $1,828,000

Median Sales Price, May: $1,994,500 (+9%)

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Percentage Who Paid Over List By Price Range:

Under $1.0M: 89% of all sales

$1.0M – $1.5M: 84%

$1.5M – $2.0M: 72%

$2.0M – $3.0M: 34%

Over $3.0M: 22%

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It is natural to have sales decline with rapid price increases. The buyers at the margins can get priced out in a week or two, and then we have others who give up and aren’t going to play this game any more – or not until it becomes more rational.

We could be in for a Frenzy Soft Landing, where fewer sellers get lucky as we coast into the pricing plateau that should be coming later this year.

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