Happy New Year…..how about a contest to get it started?
My case for a full-blown frenzy is based on having additional supply to fuel the seemingly-insatiable demand brought on by the pandemic – having more homes for sale will help spike sales and prices. Betting on more people selling their piece of paradise sounds insane as the coronavirus rages throughout the region, but we’re overdue – and there are a number of reasons why it could happen:
We will know how the selling season will unravel just by the number of new listings in January.
Here is the history:
NSDCC January Listings
Number of January Listings
The range is 275-471, the median is 412, and the average is 396 listings. Last year we had 5% fewer listings, but 13% more sales than in 2019. My 2021 prediction is 10% more NSDCC listings year-over-year, 10% more sales, and a 10% increase in the NSDCC median sales price.
OUR CONTEST: GUESS THE NUMBER OF NSDCC LISTINGS IN JANUARY, 2021!
In 2020, saw a big drop-off in January listings year-over-year (-16%), and that was before the pandemic. If we see a similar amount, or fewer, then prices will go nuts but be limited to the neighborhoods that actually have sales, and the lucky few who can win a bidding war.
If we have a surge in listings, then more of the demand will be satisfied and the frenzy will reach more areas – and prices go up faster because of the additional comps, all of which should close for a higher price than the last sale.
Having a contest based on the number of January listings will help to keep our focus on one of the leading indicators for the 2021 selling season.
The winner will be who guesses the closest (above or below) to the actual number of January listings as counted on the morning of February 15th. The winner will receive two tickets to a day at the U.S. Open at Torrey Pines, June 17-20, and four tickets to a game with World-Series favorite, the San Diego Padres!
I have purchased tickets to both events already, so as long as the ‘rona cooperates and fans are allowed, we will have prizes. Neither the PGA or the Padres have committed to a set policy on fans yet though, so if they both cancel out then I’ll think of something else for a prize.
Our Padres tickets aren’t front row, but they are decent:
Leave your guess in the the comment section on how many NSDCC SFR listings we’ll have in January!
We’ll be all frenzied up for the next few months – when will it cool off?
The real estate market will likely mirror the course of the pandemic.
You’ve probably heard the comparison to the Roaring 20s – the boom that kicked off when World War 1 and the Spanish Flu of 1918 were over and automobiles and telephones fueled the new economy. Just the relief of seeing the coronavirus beginning to clear should cause more people to get out and about….but getting back to normal could mean less real estate frenzy.
Mortgage rates will reflect the improvement, and rise accordingly.
Don’t expect rates to budge the moment he takes the oath of office, but a Biden administration could eventually impact the direction of mortgage rates.
“Expect tax rates to rise, the Fed to offset increasing inflation with higher rates, and the economy to slow,” Guy Baker, founder of Wealth Teams Alliance, tells The Mortgage Reports.
And there’s this, from Rick Sharga, executive vice president at RealtyTrac: “Biden has called for more government investment in affordable housing, which could be funded in part by proceeds from fees attached to home sales backed by government agencies like Fannie Mae, Freddie Mac, and the FHA.”
Baker, Sharga and other experts polled by The Mortgage Reports in October predicted 30-year rates would rise to an average 3.51% in 2021 under a Biden administration.
When home buyers hear that rates are going up, they will be tempted to hit the brakes and wait until sellers start lowering their prices to compensate. Think sellers will lower their prices? Me neither, and the market will probably stall out for months or years, much like it did after the Rocking 2013 Frenzy.
My guess is that we have six more months of frenzy in the bag.
But there will be enough other distractions that the super-hot market will fizzle out by July/August.
Or the first day that mortgage rates hit 3.50%, whichever comes first!
Would you move this year if you could figure out where to go?
The chart above helps identify the best values by cross-referencing income and costs. To no one’s surprise, living in San Diego comes with a hefty premium!
If getting more bang for your buck is important, then they suggest moving to Houston….with Dallas, Las Vegas, Austin and Charlotte also in that quadrant. Phoenix is a great place to retire, and if you don’t mind spending a little more money then Oregon, Washington, Denver, and Miami might be worth considering.
Do you have suggestions for places to move? 🙂
Here’s a brief look at small towns around Arizona:
Though last year had many challenges and was the worst year ever for many, it turned out to be a phenomenal year for us, business-wise. We are very grateful for our clients’ faith and confidence – many of whom found us here at the blog!
The Klinge Realty Group had a record year with 41 sales and just over $50,000,000 in volume!
Here’s the new year message from my wife Donna:
Yes 2020 was one for the books – a year no one will ever forget.
As we bid adieu, many of us will look back and reflect on the many valuable lessons and gifts this year brought to us. It was a year full of uncertainty, fear, and doubts; but we also bore witness to a year full of love, service, human sacrifice, collaboration, and a sense of belonging to one same world – all of us in this together.
As we walk into the promise of a new year, we are thinking about all of the people who helped us get through so much unexpected change, and we are filled with gratitude and hope for 2021. We appreciate our loyal clients for their faith and confidence in us in helping them buy and sell their homes; our co-workers and team who said “Yes we can” and were beyond inspiring; and our family and friends who loved and supported us along the way. We love making people’s home dreams come true!
Who thought our generation would face a pandemic. But here we are, fighting together as one world.
We already know it’s going to be hot – look at the sales count for this month, plus we have 285 pendings:
NSDCC December Sales
The Following January Sales
We knew that 2020 was going to be better than usual just by the 185 sales in January. Then the pandemic derailed us for a couple of months, but we gained it all back in the second half of the year and 2020 wound up with the most annual NSDCC sales ever.
The drop-off from December to January a year ago was only 19%, so if we see about the same decline next month, we’ll know that the frenzy is continuing. We have 283 December sales this morning, and once we add today’s sales plus the late-reporters we’ll probably be around 310 sales for this month(!!!).
If next month’s sales end up around 251 or higher (310-19%), then we’ll know that the frenzy is continuing.
The last frenzy happened in 2013, and you can see how it continued into early 2014 with only a 17% drop off. But by the end of 2014, the frenzy was over – expect the current frenzy to die down by the end of 2021.
“Did they just get caught up in the frenzy fever – or is Jim really that good”?
“Or does he just list ’em low just to stir up the frenzy?”
Let’s consider the two most recent sales, #3 and #6 on the list above.
Number 3 is a model-match to the subject property, but it did not have the additional bedroom and full bath down like we did. Our list price of $1,379,000 reflected a $54,000 premium for those.
Number 6 is the bigger floor plan and is RIGHT ACROSS THE STREET from our listing – and it closed for $1,410,000. We would have to expect that buyers would consider it strongly.
Two things to note about the subject property:
We have a downstairs master suite, which is an in-betweener. Seniors who want the traditional one-story think it’s too much house for them, and some families with little kids don’t like having them on a different floor. It’s probably why we had three offers, and the pending listing had eight offers.
Our backyard was a similar size as all the other comps and was tastefully landscaped, but it didn’t have any extras that would cause people to pay more. It also had a window that stood out:
All considered, our original list price of $1,379,000 looked like full retail when we started.
Nobody offers $91,000 over list just for the heck of it. Only two of comps closed substantially over list price, and just by $30,000 – which is way different than $91,000 over.
Admittedly, our market conditions have been hot and the inventory had dwindled down to there being virtually nothing similar for sale when we listed. But it was also December, so the holiday spirit or the raging pandemic could have cooled our chances too.
Someone must have created an ideal environment for buyers to pay the extra pop!
Two other notes:
Mr. Seller has read the blog since 2005 – my second seller this year who has been here since the beginning!
I first met the sellers on December 1st, and thirty days later they closed for $91,000 over list price. Is that the type of efficiency you’d like to have? Then contact me to sell your house!
Yesterday, Rob Dawg got started on his prediction on next year’s market:
Is this the official JtR 2021 prediction thread? If so I will post again but for now…
The huge demographic groundswell of house-ready millennials will drive prices much higher. The municipal imposition of covering costs plus will make new supply rare. Money printing drives investment into tangible assets.
Double digit appreciation in the recorded sales. Stagnation in the houses that don’t sell.
The demand is in place between millennials, downsizers, move-uppers, and out-of-towners to easily increase sales by 10% over this year’s record count.
The only hurdle is supply. Will there be enough people willing to sell?
Let’s break it down to a specific number, because we’ll see that achieving 10% more sales isn’t that far out of the question. How many more people need to sell? Here is the breakdown of 2020 listings and sales:
NSDCC 2020 Listings and Sales by Area (as of Dec 30th)
Town or Area
# of 2020 Listings
# of 2020 Sales
Del Mar/Solana Bch
Does my guess of +10% in all categories look and sound crazy?
It looks feasible that we could have an additional 319 sales next year, and get us to 3,500 total. If we pick up an extra 200 sales in Carlsbad, we only need another 119 in the pricier parts of town.
The median price going up to $1,626,900? We know that sellers will be tacking on their habitual extra mustard to their list prices, so $1.6-ish for the year is definitely within range.
Could we have 4,969 listings next year?
This is the big question, but it’s not some crazy number we’ve never seen before – in 2016 we had 5,182 listings and 3,104 sales when mortgage rates averaged 3.65%.
Having an extra 452 houses to sell means 1-2 more listings per day – I wouldn’t call that a flood – and it’s about the right number to whip buyers into a feeding frenzy without creating a glut.
On Tuesday at 7pm PST: CNBC series 'Streets of Dreams' puts San Diego Bay on national display https://www.sandiegouniontribune.com/business/growth-development/story/2021-01-15/cnbc-series-streets-of-dreams-puts-san-diego-bay-on-national-display
Home prices 10% higher than today should put a crimp in the roaring: San Diego could be headed for a 'roaring 2022' as its economy slowly recovers from COVID, economist says https://www.sandiegouniontribune.com/business/story/2021-01-14/san-diego-could-be-headed-for-a-roaring-2022-as-its-economy-slowly-recovers-from-covid-economist-says
I hope he didn't get pushed out - he's the best that San Diego ever had: Padres broadcaster Ted Leitner to transition to new role in 2021 https://www.mlb.com/press-release/press-release-padres-broadcaster-ted-leitner-to-transition-to-new-role-in-2021?tcid=tw_article_ via @MLB
"Where do we begin..2020 has been a year for everyone. When COVID hit and shut down both my husband and my businesses, we were left with a mortgage and very little income coming in. We were stressed, scared and felt stuck. We made the hard decision to sell our home and move out of state. We contacted the Klinges' and spent a good hour going over what we hoped we could accomplish. Jim and Donna came over with comps in hand and suggestions on improvements to get our house ready for the market. It was overwhelming to think about, but Donna was there and one step ahead in every scenario. more "
"Jim and Donna Klinge made the sale of our condo extraordinarily easy. They know the market and gave us sound advice backed by details and very considerable experience, reflected both in the initial pricing and subsequent negotiations. They work together as a team and are always available to talk. more "
"I cannot believe there are no reviews of Donna yet, ugh!! She is the secret sauce of the Jim Klinge/Donna Klinge combo! I will touch on Jim here, but Donna is why I'm so totally loyal to these two (no offense to Jim :)).
I consider myself a rather savvy buyer/seller. I've bought/sold 7 times in more "
"Jim and Donna Klinge are by far the most professional, personable and responsive realtors I have ever worked with. They provide VIP concierge level service in every area of the process of selling your home. My home was marketed so successfully that we received an offer the day after our first and only open house. Thanks to Jim's pricing and negotiating, our house is now the highest sold in our community... more "
by Ann Romanello
"Jim educated us, helped us find the perfect house, and then negotiated us a great deal. I would hate to be sitting across the negotiating table from ... more "
"Jim is thorough and will be brutally honest about the homes he shows you. He provides great service and follows through until the very end and even ... more "
"I highly recommend Jim as a buyer’s agent. Working with Jim, we closed this week on a San Diego condo. Jim prepared a list of comparable sales to ... more "