Check out Richard’s new listing of a renovated 2,551sf one-story home with three-car garage on a 11,600sf lot and no HOA! Priced at $1,795,000:
https://www.compass.com/app/listing/6960-casselberry-way-san-diego-ca-92119/1582562381787199561
How does our market keep trucking along with sky-high prices AND mortgage rates 2x higher than they were three years ago? How does pricing levitate when money is so much more expensive – shouldn’t prices adjust downward?
We know that the generational wealth transfer of $70 to $80 trillion dollars is underway, and this is where some of it is showing up – purchases of quality real estate.
There have been 115 closings between La Jolla and Carlsbad this month, and 47% of them were all-cash. It’s the highest percentage we’ve seen so far, and it’s likely to continue.
Those who aren’t paying all-cash have big down payments to help cushion the higher rates. Payment too high? Put more down!
For the downsizers, it’s the best way to justify giving up the 3% mortgage too – sell the long-time family estate and buy the next one all-cash.
Last month’s 200 sales will probably be the highest monthly count we’ll see in 2024, so the market will have to endure less volume, and more listings sitting around unsold.
It means that the percentage of all-cash buys will probably be increasing. I think it could get up to 66% by the end of the year!
There used to be a belief that any defects that had been fixed, or things that happened to previous owners weren’t required disclosure items for today’s home sellers. But it’s gotten very specific now – and beginning July 1st, AB-968 takes effect. If the home is being sold within 18 months of purchase, all the contractors and their contact information need to be disclosed too on any repair over $500:
Did You Know ~ All About Historical Disclosures:
Past defects, even if repaired by the seller or others, are to be disclosed. Not only that; the seller should provide all relevant information regarding the repairs to any prospective buyer. They must also disclose any improvements or modifications made to property with or without the benefit of permit.
The disclosure would include, but not be limited to, the person(s) who performed the repairs (i) the property owner (ii) a licensed contractor or (iii) an unlicensed tradesperson. The documentation would also include all related documentation for all repairs /improvements/modifications to the property.
The authority here may be found in the Seller Property Questionnaire (“SPQ”), Question Number 5. This paragraph specifically prompts the seller to provide whatever material documents they have in their possession. Questions 7A/8A of the SPQ also address the importance of full disclosure. The Disclosure Information Advisory (“DIA”) is an excellent tutorial for sellers and should be reviewed with the homeowner before the disclosures are completed.
Let’s think about it; if a seller and/or their agent fail to disclose past defects and/or repairs, the buyer will not have the information they need to make an informed decision. For example, if a past roof leak, flooding, or other water intrusion issues/repairs are not disclosed the buyer may not choose to inspect for other damage that could have occurred as a result, such as environmental hazards or wood / drywall damage that may not be visible. The informed buyer may wish to verify that the repairs were done correctly by a licensed professional, and/or ask for more details on the repairs themselves or the tradespersons or contractor that performed the repairs. It doesn’t matter how long ago the information was obtained; if you’ve got it produce it and by all means document delivery with a Receipt for Reports or similar documents.
The fact that a neighborhood or property specific defect exists, even if “well known” by the local residents and real estate community, disclosure is still required. The buyer may be from out of the area or simply unaware of the issue.
Full and accurate disclosure is always the best practice and remember Gladys Kravitz is lurking and just ready to pounce on the buyer and share all that she knows. You can count on Gladys to be the town crier.
When it comes to improvements and modifications to the property the same logic applies. Some homeowners take great care to ensure that all modifications and improvements and even repairs are made with the benefit of permit, comply with code, and are performed by licensed contractors, many others do not.
The key is disclosure! The buyer needs to know what they will be dealing with once they become the property owners. In order to make an informed decision, the buyer needs to have sufficient information to do so.
Neither agents nor sellers should “cherry pick” or “decide” what documents are relevant, no matter how well intended. All disclosures, investigatory reports, and inspections, estimates, invoices and receipts, environmental analysis, invoices, estimates, surveys or maintenance records that are in the possession of the listing agent and/or seller are to be provided to the buyer in their totality. Regardless of when they were obtained and whether the disclosure packet is delivered prior to an offer being written or after the sale is ratified.
Last note on this subject for now; disclosures should be thorough and accurate and ought never be minimized or glossed over. Explanations should be clearly stated for the buyer’s review.
There are a few possible conclusions here.
Recent history would suggest that multiple offers might have been in order. But not here, and certainly not everywhere now…..and the fixers are the first to be taking the hit.
The NSDCC inventory has gotten off to a hot start in 2024 – it’s already at the level it was at in July of last year! As long as the pending keep up….oh wait.
Well, maybe there will be a surge of new pendings on the way? There was a late-summer surge last year, and if it was going to happen, it really should happen earlier this year too.
Pricing of the unsolds probably won’t change much:
The last time mortgage rates were 7% was 22 years ago when local home prices were about one-third of what they are today. As a result, the only semi-relevant comparisons are to last year!
Here I talk about the current market conditions and how they relate to our new listing in NE Carlsbad. It’s a real mis-match too, with estate sales supplying much of the inventory when a majority of buyers want turnkey only.
He’s using the Zillow metric for the month-over-month change and the delta for the Case-Shiller Index should be similar – San Diego home prices have been going up close to 2% per month in early 2024.
The increases could hold up too, if rates come down substantially (doubtful) or sales dry up and just the creampuffs are selling (likely).
Where to move? Every city that lost ground when rates went up are reporting small gains this year so it appears that national market conditions are stabilizing. You don’t have to worry too much about moving to town that will be more risky than any other.
Boise isn’t on this list but Susie reported that a new subdivision being built there had put their first home up for sale at $1,599,900 for a 3,250sf one-story house. She and her husband, plus four other couples, wanted to buy it – even though she has a fine newer home (built by the same builder) and a 2.85% mortgage. She said that it has been a buyer’s market recently in Boise, yet it demonstrates that the superior homes still draw a crowd (she lost out on the new home – the builder took an all-cash offer from a local Boise couple).
How will the rest of 2024 play out?
Like last year, sales will probably fade away unless more sellers are so motivated that they adjust their price in time. The number of NSDCC active listings has stayed under 400 all year – until this week.
Today there are 421 active listings between La Jolla and Carlsbad. Last year the number of actives was only above 400 during a three-week stretch in July.
There have been 90 sales closed in May so far.
People were asking about the train noise at our new listing on Vulcan in Encinitas. Here is a sampling:
