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Zestimates During Frenzy

Today:

This isn’t the type of environment that you should put much stock in your latest zestimate.

A month ago, on March 3rd, the zestimate was $1,336,035.

Today, on April 4th, it is $1,723,510.

Zillow wants you believe that their zestimates are within 1.9% of being right. But if you would have sold this home to them for the latest zestimate amount, you still would have left $100,000+ on the table.

Pay-Per-Showing

We have another disrupter who is providing a service you didn’t know you needed until now.

Traditionally, a buyer’s agent accompanies their clients to show them the homes for sale, and to give expert advice about each house while on site. But other real estate companies – who don’t appreciate that valuable service – have dumbed it down by just paying door-openers that allow buyers into the house, but leave them on their own to figure out the rest.

A new company has taken it one step further, and is providing an Uber-like service where random agents can get paid for opening doors for other agents.

The company charges $39, and pays $24 of it to the door-opening agent – who agrees to not offer advice to the buyers, and to direct them back to the agent who paid the $39 showing fee.

https://showami.com/

Will it happen some day that the buyers will be charged a fee to see a house?

Mortgage Rates And Home Prices

Matthew makes the case here that the current uptick in mortgage rates may not affect home prices:

There was a big rate spike at the end of 2016 that had no discernible effect on prices.  This is notable because that rate spike was fueled by economic optimism as opposed to 2013’s rate spike which happened after the Fed said they would begin decreasing their rate-friendly bond buying program.  2018 was somewhat similar as the Fed was continuing to tighten monetary policy and raise short term interest rates.

A case could be made that the current rate spike shares some similarities with 2016.  The path of 10yr Treasury yields (a benchmark for longer term rates like mortgages) has largely traced pandemic progress and economic recovery hopes.  Yields (aka rates) began rising late last summer as vaccine trials showed promising results and economic data began to improve.

Rates spiked more quickly in the new year as vaccine logistics ramped up and covid-relief legislation was passed.  Fiscal spending hurts rates both due to both its positive implications for the economy (a stronger economy supports higher rates) and the implication of more US Treasury issuance (more Treasury supply = lower bond prices = higher bond yields = higher rates).

But it is predicated on mortgage rates staying about where they are today, which is around 3.0% – 3.25%.  The demand has been strong enough that rates in the low-3s should be acceptable and that the bidding wars will sort out the rest of what happens to pricing.

He also makes the case that the 10-year bond yield and mortgage rates have re-connected.  The 10-year closed at 1.71% yesterday, and if things go right, it will stay in that ballpark.

But there has been times when the 10-year has kept rising. If that happens again, we might see 4% rates:

 

If mortgage rates get back to 4%, we should see pricing flatten out. Let’s keep an eye on the 10-year yield!

Read full article here:

http://www.mortgagenewsdaily.com/consumer_rates/971650.aspx

Back On Market During Frenzy

Our 4S Ranch escrow fell apart yesterday on a quirk in the loan underwriting process.  The buyer had a glitch in his visa record with the government, where it showed as pending, not approved. Boom – bank wouldn’t give him a mortgage.

It is usually hard to re-ignite the original urgency, but this is 2021!

Our original list price was $1,599,000 on March 1st.

I raised the list price to $1,770,000 to help give guidance to everyone in the marketplace (it was our agreed-upon sales price). Since we got started, these four listings have happened:

  • 16175 Deer Ridge 3,451sf closed for $1,775,000 on March 1st.
  • 15288 Cayenne Creek 3,877sf closed for $1,800,000 on March 30th.
  • 16342 Cayenne Creek 3,446sf listed for $1,825,000, now pending.
  • 9716 Wren Bluff 3,780sf listed for $1,835,000, now pending.

We are 3,780sf and we’re sticking with our $1,770,000 list price. On Easter weekend!

https://www.zillow.com/homedetails/10541-Galena-Canyon-Rd-San-Diego-CA-92127/96742404_zpid/

NSDCC Over List, March

The trend of paying over the list price is increasing.

NSDCC Detached-Home Sales, % Closed Over List Price

January: 38%

February: 43%

March: 53%

Most sellers and agents are happy just to get 1% to 5% over list which will cover some or all of the commission. There were 22 of 244 (9%) that went double-digit over list. The big winners:

Most % Over List Price

List Price
Sales Price
Percentage Over List Price
$1,299,000
$1,655,000
27%
$989,000
$1,200,000
21%
$749,000
$900,000
20%
$1,325,000
$1,580,000
19%
$1,900,000
$2,255,551
19%
$1,535,000
$1,800,000
17%
$2,800,000
$3,200,000
16%
$2,198,000
$2,510,000
14%
$2,695,000
$3,075,000
14%

NSDCC Sales, March: 244 

Average List Price: $2,285,792

Average Sales Price: $2,252,883 (99%)

Median List Price: $1,788,500

Median Sales Price: $1,810,000 (101%)

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Over List By Price Point:

Under $1.0M: 6

$1.0M – $1.5M: 44

$1.5M – $2.0M: 39

$2.0M – $3.0M: 32

Over $3.0M: 8

A real bell curve there!

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

The most sales over list are happening right where you’d expect:

Most Sales Over List By Area:

SE Carlsbad, 92009: 32 of 41 sales were over list (78%).

Carmel Valley, 92130: 22 of 32 sales were over list (69%).

Encinitas, 92024: 24 of 41 sales were over list (59%).

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

88 Offers, 76 Cash Offers

This is the other article that several people sent in – thank you!

Rob Dawg wondered if these cases of dozens of offers could be tempered by putting the right price on these from the beginning. The agent’s Zillow profile shows 30 sales in the last year – and 26 of those were seller sides which is great and it means she knows something about pricing.  But I think when you are pricing a home on the lower-end of the market these days, you can add easily 10% on top of the comps and buyers won’t notice – because other sellers are already doing it too. Note: the agent didn’t take the highest offer here either.

Ellen Coleman had never received so many offers on a house in her 15 years of selling real estate.

She listed a fixer-upper in suburban Washington, DC for $275,000 on a Thursday. By Sunday evening, she had 88 offers. “The offers just kept coming,” she said. “I felt like Lucy with the chocolates. I’m thinking, ‘This is just out of control.'”

Of those 88 offers, 76 were all-cash, said Coleman, who works for RE/MAX Realty Centre. There wasn’t even enough time for all of the bidders to visit the property. She said 15 offers were sight unseen.

The four-bedroom, 1,800 square-foot home sold for $460,000, nearly a 70% increase from the asking price. She said the winning bid was not the highest offer, but it was all-cash with no contingencies and it had paperwork in place.

The buyer, she said, is an investor who is likely to renovate and resell at an even higher price.

“It was a lower priced property for the area and may have been an outlier,” she said. But even her other listings have typically been getting closer to 15 offers. “Several people came in wanting to be homeowners and do the repairs themselves. There is such low inventory out there and people feel like that is a way they can get into a home.”

Read full article here:

https://www.cnn.com/2021/03/29/success/when-will-housing-market-cool-off-feseries/index.html

NSDCC March Sales – Preliminary

Pending home sales, a measure of signed contracts on existing homes, fell a wider-than-expected 10.6% in February compared with January, according to the NAR. Sales were 0.5% lower year over year. There were just 1.03 million homes for sale at the end of February, a 29.5% drop compared with February 2020. That is the largest annual decline ever and the lowest supply on record.

Yesterday’s real estate news was filled with drops and declines, but around here we’re doing fine:

NSDCC March Sales – Preliminary

Year
March Closings
Median Sales Price
Median Days-On-Market
2019
211
$1,299,999
17
2020
206
$1,445,000
12
2021
241
$1,810,000
9

The median sales price rose 25% year-over-year!

Double Bubble?

Are we in a bubble?

Who cares about the label.

All that matters is whether the bubble going to burst.

Four reasons why it won’t:

  1. No easy money – buyers have to be solid qualifiers.
  2. Foreclosures are extinct.
  3. Everyone has loads of equity (except 2021 buyers).
  4. No easy place to move to.

For the bubble to burst, we would need an event to drive down prices. Sellers would have to panic and cheap-sell for less to start a downward cycle. Even an earthquake probably wouldn’t be enough.

Link to Wolf Article

 

122 Offers

Thanks to the readers who sent in this article – and it makes you wonder how many offers any house for sale would get if listing agents didn’t shut down the showings so quickly:

CITRUS HEIGHTS, Calif. (KTXL) — A Citrus Heights home in a quiet cul-de-sac received 122 offers in one weekend on the market.

The 1,400 square feet home has three bedrooms, two baths and a spacious backyard with a swimming pool and an asking price of $399,900.00.

“People would think that it was underpriced. It was not underpriced. It was straight on with the comps,” said Deb Brittan, the listing agent for the property. “I had hoped, I thought, maybe if we get 20 offers that would be amazing.”

Barry and Anita Jackier are the sellers of the Citrus Heights home.

“We had this little friendly wager going. I’m like, ‘I think we’re going to get eight offers,” Anita Jackier said.

“I said 10,” Barry Jackier said.

They all underestimated the number of offers, by a lot.

They received 122 offers in one weekend.

“That’s 121 people who didn’t get a house. And that’s kind of heartbreaking in this market to think that there are so many buyers out there. And if you don’t have an agent that understands how to put a strategic offer in on a house and get it accepted, you’re just out burning your gas and a lot of emotional turmoil because of the nature of our market currently,” Brittan said.

Brittan says the highest offer was above $500,000, but that was not the winning offer. There were other factors to consider.

The couple is buying a home in Idaho.

They need time for the escrow to close on that home, so one big factor was they needed a buyer to wait until that happens before moving in.

“I’d like to think that the buyer that was supposed to have gotten the house, has gotten the house,” Brittan said.

The selling price of the home was in the mid-$400,000 range.

“We have so many great memories. And that’s going to be hard to let go of,” Barry Jackier said.

“But you know what I’m excited about is now another family gets to have a blank palate to make all those memories on. We are keeping those memories and they have an opportunity to start their own,” Anita Jackier said.

The couple said they felt called by God to move to Idaho and from that perspective, it’s a miracle they were able to find a home there.

“That house was on the market for three hours,” Anita Jackier told FOX40.

“So I don’t know that it’s going to slow down any time soon. And I don’t know what it’s going to take to slow it down,” Brittan said.

https://fox40.com/news/home-for-sale-in-citrus-heights-receives-122-offers-in-one-weekend/

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