FLW Auldbrass
Architecture deserves its place:
Daring You To Buy
In the last couple of weeks, you may have seen prices on new listings reflecting today’s exuberance.
Homes that are priced attractively will generate the crowds, and likely get bid up over list.
Others are listed for a price that raises an eyebrow. In areas where we’ve seen 10% to 20% appreciation in the last six months, are sellers packing that much on to their list price PLUS another 5% to 10% – or more?
How do you recognize the difference?
The difference between a bidding-war listing, and a seller just daring you to pay their price?
Thoughts for Buyers Wondering If The List Price Is A Dare:
Compare to the Pendings
If you only consider the sold comps from the last six months, you probably won’t buy a house in this market – one which should last at least a couple of more months before there’s any possibility of unsold listings starting to stack up.
Who is the Listing Agent?
Known and successful listing agents aren’t going to list a home for some crazy too-high price. They know it’s better to keep it attractive, and let the market do its thing. If you’ve never heard of the agent and he acts more like a kook from Montaluk, then know that their list price is more likely to be outrageous.
Quiz the Listing Agent
The number of showings doesn’t matter as much – the number of offers does. If there have been 50 showings but only 2-3 offers, it means the price turned off 90% of the buyers. Unfortunately most listing agents are shutting down the showings so fast that it’s hard to get an accurate count – or to get them to fess up.
The Age of the Home
The older the home is, the less likely it’s worth a premium. The floor plans aren’t current and the upgrading over the years is likely to be inconsistent – those will be even more difficult to sell in a normal market. They do tend to be in the better locations, so the home’s age isn’t a hard stop. But typically the older homes are less likely to be worth a big premium today, let alone in the future.
Days On Market
If you’re not sure if the price is right, then wait it out. The initial frenzy dies off quickly, so if you don’t need this house like you need air to breathe, let ride and see if it goes unsold for the first 7-10 days. It’s really the only way to know for sure if the price is wrong.
Stay Picky
Only pay a huge premium if it’s the perfect house for you. There’s a decent chance that appreciation flattens out over the next few years and you end up high & dry for a while. But you don’t care because you’re in it for the long haul, so make sure this home fits ALL your needs. No compromise.
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The market for the best homes has been hyper-competitive for years – it’s only because of the covid/low-rate cocktail that buyers are flooding the streets in numbers we’ve never seen before.
Maybe you should wait it out? Aren’t all sellers daring you to buy now?
You’re just buying homes today at tomorrow’s prices. If prices go up another 10%, and appreciation flattens out and you can score a deal at 10% off, then you’re only back to where you would have been today.
Homebuyer Ages
There is a real curiosity about who the buyers are, yet there isn’t much information available about the demographic trends. So I thought this was an interesting factoid.
My YouTube video of the listing in 4S Ranch has been seen 363 times, which is a good sample size and quite a bit above normal – which means the extra traffic was from the video being in the listing. I choose to mark the box on YouTube that my videos aren’t for kids, so I miss the Under-18 group, which is ok. Yet, you’d think there would still be some variety among the viewers.
But the buyer pool in 4S Ranch – a typical newer tract neighborhood with good schools – is very consistent:
I don’t know how accurate their analytics are, but the 35-44 age group is similar to what I saw in person.
Inventory Watch
I’ve joined the San Diego Association of Realtors, and have dual citizenship for the time being. Though the SDAR and the NSDCAR allegedly have a data-sharing agreement where all realtors in the county have access to the same information, there are some discrepancies.
Today’s listing counts between La Jolla and Carlsbad:
NSDCAR
Actives: 341
Pendings: 369
SDAR
Actives: 332
Pendings: 333
It appears that NSDCAR and the CRMLS have some of the townhouses and attached homes included, so I’m going to use the SDAR counts from now on. Either way though, the market is hot – and should get hotter as the spring season really kicks in!
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Bressi Ranch Beauty
6307 Di Vita Dr., Carlsbad
5 br/4.5 ba, 4,040sf
YB: 2005
SP = $1,900,000
Bressi Ranch blowout! Our buyers won a furious bidding war for this perfect floor plan on culdesac with one of the best ocean views in all of BR!
Pristine Single-Story in Poway
10725 Coachman Ct., Poway
3 br/2 ba, 1,878sf
YB: 1978
Lot size = 10,018sf
No HOA or M-R
SP = $1,080,000
18,600,000 Millionaires in US
San Diego County has 3.338 million people, plus more affluence arriving daily.
There is 27.5% of the SDCo population that is under age 18.
3,338,000 x 72.5% x 7.6% = 183,923 millionaires in SD County!
You can imagine the horsepower that homebuyers are up against – millionaires trying to outdo millionaires!
- Credit Suisse’s latest global wealth report shows there are 46.8 million millionaires (measured in USD) worldwide.
- Of those, 40% or 18.6 million individuals are in the United States.
- This means that about 7.6% of the U.S. adult population are millionaires.
- Which indicates that approximately 14% of U.S. households are in the millionaire club
- With a median wealth of $65,904 for an adult in the U.S., $1,000,000 represents 1517% of the median.
- The annual increase in global wealth per adult was 2.6%.
- After the U.S at 40%, the next highest 5 countries for millionaires are China 10%, Japan 6%, United Kingdom 5%, Germany 5%, and France 4%.
- These top six countries represent 70% of the world’s millionaires.
- If you’re a millionaire, you are in the top 0.6% of wealth for the world’s population.
- The nine cities with the most millionaires, in decreasing order are Tokyo, New York City, London, Paris, Frankfurt, Beijing, Osaka, Hong Kong, and Shanghai.
Tinge of Nic
I’ll probably see two properties around the flight path all year – might as well show them back-to-back:
Market Imbalance
Everyone says that inventory is low because potential sellers don’t want people in their house during covid……but that’s not stopping the buyers! The showing counts are rising quickly and more people are looking – maybe more than ever for early March:
The competition among buyers is increasing daily, yet the number of homes coming on the market is still well behind previous years, creating an imbalance of gigantic proportions – twice as many lookers to buy 18% fewer listings than last year:
San Diego County Number of New Listings, January + February Combined
| Year | |
| 2013 | |
| 2014 | |
| 2015 | |
| 2016 | |
| 2017 | |
| 2018 | |
| 2019 | |
| 2020 | |
| 2021 |
This year we were 26% below the average of the previous 8 years!
The extraordinary demand mixed with fewer properties is causing everything to get bid up.
In past years, any defects or concerns might limit the number of buyers, and affect the value. These days, it just means you’ll have less than ten offers. The flipper paid $911,500 for this in November, listed for $1,089,000, got seven offers and two bid it up to $1,300,000:
Disclosing Offer Prices
To say it’s the Wild Wild West out here is putting it lightly, and how realtors handle multiple offers is the primary reason. There isn’t a standard way to handle a bidding war – and heck, we don’t even agree on what is confidential, and what isn’t. Here is the variety of opinions from a FB thread:
Even when presented with a copy of the actual verbiage from our contracts, she comments, “Wrong”.
Is anyone surprised why buyers are so frustrated?
