Rob Dawg suggested that we look at the quartile pricing again. The list pricing (above) has been very comparable to last year, but those are the unsolds. Below are the quartiles for the NSDCC monthly sales:
Pricing measured by quartiles is still above last year, and now the mortgage rates are below where they were towards the end of 2023.
Will pricing hold up the rest of the year? Probably. It will be the number of sales that will fluctuate first.
Mortgage rates plummeted yesterday, making people wonder if the housing market will perk up for the rest of 2024.
Getting a lower rate will be a nice sweetener, but buyers aren’t going to overpay just because their payment went down a couple of bucks. Just the turbulence from the realtor fiasco will force extra caution into the equation.
Who will benefit are the sellers of fresh new listings entering the market.
The current inventory is picked over, and unless those sellers dump on price, they still don’t have much chance of selling, even with lower rates. The remaining buyers have waited this long – they aren’t going to cave now.
Sellers – it’s the time to give it everything you got!
https://www.mortgagenewsdaily.com/markets/mortgage-rates-08022024
When choosing a new place to settle, the cost of living is a major consideration. It’s no surprise that a survey of more than 3,000 U.S. residents on the importance of various factors in determining where to live reflected rising consumer concerns about housing affordability and increased cost of goods and services. U.S. News weighted its value at 27% – making it one of the key metrics used to calculate the Best Places to Live ranking.
To pinpoint the most affordable places on the list, we looked at the proportion of the median annual household income that goes toward the average cost to own or rent a home, including the typical cost of utilities and taxes, as well as price parity, which compares the cost of goods and services across the country.
Here are the Best Affordable Places to Live in the U.S.
https://realestate.usnews.com/real-estate/articles/best-affordable-places-to-live-in-the-us
After the appraiser butchered his appraisal of our sale on Los Robles in May – he brought it in $220,000 below the sales price based on one bad comp when I gave him five others that justified the higher price all day long – I had some concerns about going 0 for 2 on our sale of 3711 Mastodon.
It has become a common occurrence in our era of lower volume/fewer comps. In many areas there are NO recent sales to justify the value of a premium home because virtually nobody is moving.
In speaking with neighbors, they all agreed that Mastodon is one of the best homes in The Foothills. It’s one of the few at the end of a culdesac that has the big view (above).
I mentioned earlier that my recommended list price was $2,200,000. The seller was the brother of the seller of 3710 Bergen Peak, which we sold for $2,000,000 in July, 2023.
The Bergen Peak seller reads the blog, so they were happy to go with our recommended upgrades (paint, carpet, and staging) and price it attractively. It sold right away for $50,000 over list even though there was only one offer (which was pretty slick given there was no frenzy).
But the sellers of Mastodon weren’t blog fans and they toyed around with listing their home with a discount broker or maybe selling it themselves – the horror! But they had already moved out of state and the house was tenant-occupied, so getting good help was the best solution in the end.
Look at the action this year though:
With only one sale above $2 million (and that was 24% larger), and a real dog that was listed for sale at $1,745,000 a block away, my $2.2 million sure looked like full retail.
I agreed to test it at $2.3 million, then the seller talked me into $2.4 million, then they wanted $2.5 million. And no staging. Yikes.
I went ahead with it to test the market, because who am I to say? The view is spectacular, the house is a creampuff, and if a cash buyer came along who just had to have the best house for sale in the zip code, I might get lucky. But if that was going to happen, it would only be in the first week.
Thankfully, the tenants were moving out so the seller was motivated. When I suggested that we lower the price early and often, they agreed:
Meanwhile, I’m getting no showings.
As mentioned in a previous post, the market seemed to shift in mid-May, and the results here fed that belief. But it’s only June – doesn’t there have to be at least one buyer being transferred from out-of-state who will want a premium offering?
Once we got down to $2,250,000, I finally got two contenders to look at it. One ended up buying the similarly-priced 4,000sf+ home on Lemon Leaf, and the other lowballed us at $2,050,000. Their agent tried to hold tight, but when I told her that we’re not budging off $2,225,000, she relented.
But I had to agree to the deal being contingent upon the appraisal.
I had to battle the 3,725sf in the only comp of the year that might help me. The house on Glen is right across the street from townhouses, and the street parking is full – at night, you have trouble parking in front of your own $2.2 million house. There is no view, and it’s as flat as a pancake, which means you have neighbors in your face on three sides.
There were a smattering of older (2023) comps over $2 million that I pieced together with full explanations as to why the market has maintained it’s value (or gone flat, depending upon who’s looking).
I got lucky when the appraiser ended up being a long-timer who has appraised others we’ve sold so we were friendly, and she bought my story.
The appraisal came in at $2,225,000, and clinched the deal.
Get Good Help!
John Doe and X played at the Belly Up last night in support of their new album, which they say will be their last (but they haven’t said they will stop playing live). Did you know John sang this tune on the soundtrack for The Bodyguard? The other more-famous version of the Dolly Parton song here.
The over-list sales help to identify the enthusiasm in the marketplace.
Looking back to 2021 and early 2022 on the graph above, you can sense how wild it was with most buyers paying more than the asking price. But since then mortgage rates have doubled, and the insanity has settled down.
The usual seasonal downturn in over-list sales got an earlier start this year. In 2023, they were steady through the summer, with the first sizable drop down to 24% not happening until September.
Last month the over-list sales dropped to 27%, which was the lowest June percentage by far.
The June median pricing looks shocking but it is easy to explain – it was an one-month outlier when the sales of lower-end homes didn’t happen as usual:
NSDCC Sales Under $2,500,000
May: 103
June: 71
July: 117
I included the preliminary July stats below to help demonstrate how the median sales price can bounce around. Your home’s value didn’t go up 14% one month, and then drop 14% the next month – it’s the quirky semi-accurate measuring stick:
Let’s talk about July sales though! After the drastic decline in monthly sales since April, it sure seemed like the market was going to be doomed for the rest of the year. What a rebound!
It could be the last hurrah though as buyers scramble to grab a house in which they can hunker down. There are only 153 pendings today, so the number of monthly sales should resume their descent in August.
The local Case-Shiller Index has been surging lately but I think we’ll be lucky if the next reading is half of the 9.1% YoY gain we have here:
New York reported the highest annual gain among the 20 cities with a 9.4% increase in May, followed by San Diego and Las Vegas with increases of 9.1% and 8.6%, respectively. Portland once again held the lowest rank for the smallest year-over-year growth, notching a 1.0% annual increase in May.
I love this new change – the sellers get to choose whether or not they get to receive love letters from buyers with their offers. Buyers should be given every chance to compete for the win, and submitting an introductory letter with photos of the kids and dog is a great way to influence the outcome.
Love letters work!
Sellers like to know about the buyers because they want their family homestead to go to someone who will adore it like they do. In a close race, a strong love letter can make the difference between winning and losing! I recommend that every buyer submit one.
Listing brokers, particularly Redfin, get all weird about discrimination and they refuse to give sellers any love letters submitted. But sellers should be making that decision, not the broker. Everyone is googling everyone anyway – there are no secrets!
Be careful if you are a mixed-race couple or minority though. I’ve had it happen twice when my minority buyers offered on multi-million-dollar homes. They offered the exact same price as what the sellers took, but we didn’t get a counter. In both cases, the listing agent had met my buyers. Did they influence the outcome? Why else would they just kick us to the curb when offering the same?
This is why I’m so skeptical of ‘seller concessions’ being a viable solution.
If agents were united in appreciating buyer-agents (doesn’t every realtor represent a buyer occasionally?), then everyone would take a stand to ensure buyers get adequate representation, and buyer-agents have a pay structure that is reasonable.
But in the chart above, most listing agents would rather just say no to ANY seller concessions. Is that because they believe that the pay system we’ve enjoyed for 100+ years has been wrong and unfair? Or is it because they are too lazy to explain the benefits to sellers?
These are fairly successful agents who read Rob’s blog. The percentage of no answers is probably higher among the general realtor population.
Rob thinks that the seller concessions will fade away over the next 18-36 months, and I agree. Even though offering seller concessions is the perfect compromise to maximize the home’s exposure to the most buyers, it means that listing agents would need to convince their sellers to pay buyer-agents, when many are not.
Will home buyers pay to Get Good Help?
Or will they just go direct to the listing agent, knowing that the new listing forms give those agents additional compensation if the buyer is unrepresented?
The new forms encourage single agency, so it is inevitable that the trend will go that way.
The self-inflicted realtor implosion is happening right before our eyes.
Another 38 NSDCC closings in the last week, making for 170 sales in July so far.
But the number of pendings isn’t reloading as fast, in spite of plenty of houses for sale. The count hasn’t been this low since mid-March, and there’s not much reason to think it’s going anywhere but down from here for the rest of 2024.
