I saw these questions from Ed DeMarco on Twitter. My answers:
1. Have the M.I.D. apply towards primary residence only (not second homes), and lower from $1,000,000 to $500,000. Those buying in hopes of a bigger write off will still buy a house, and take the partial benefit – and be in it for the appreciation and to raise a family (make wifey happy).
2. Have the mortgage interest deduction be in effect for the first ten years of ownership only. It would encourage borrowers to pay off mortgages in the ten years, and not refinance every year.
3. Require that only the buyers can pay for mortgage insurance (sellers can pay in full now).
4. Redirect the disadvantaged folks to subsidized rentals until they aren’t disadvantaged. Only stable, secure, affluent people should buy a house – it’s too late for the rest, unless they drive to the suburbs/outer edge of town.
5. There are several loan programs available to help the disadvantaged already. NACA is still around, helping buyers purchase with no down payment and no closing costs (H/T daytrip):
6. Lower the capital-gains tax for 1-2 years to incentivize those reluctant-but-motivated possible sellers to unload a rental property or two. Cut federal rate to 10% for the first year (currently 20%), and then back to 15% in the second year. The crotchety old guys still won’t sell, so there won’t be a flood. But more inventory = more sales while stabilizing prices.
7. Keep Fannie/Freddie the way they are for now. If they can keep operating in the black, let’s allow the mortgage industry to enjoy the fluidity. I attended a seminar today on the new loan disclosures coming on October 3rd, and it is clear that Fannie/Freddie will be extremely strict on compliance. It doesn’t mean tougher credit, it means the mortgage industry needs to submit the cleanest loan packages ever – which is good for the taxpayers.
8. The new compliance crunch will virtually eliminate mortgage brokers – wholesale lenders won’t want to take a chance on them. Yes, we still have room for you over here to be a realtor – there’s only 11,000 of us chasing 3,500 sales each month.
9. Encourage a private jumbo-MBS market without subsidizing it. Eventually, a private MBS marketplace could help shift the burden from Fannie/Freddie.
10. Run a tight ship. We can handle it.
The powers-that-be have made some great moves to get us this far, now bow out gracefully and let free enterprise take care of the rest.
Houses that have been on the market for more than 60 days (which includes 507/1,079 = 47% of NSDCC active listings) missed the hot season.
Buyers presume,
“If it hasn’t sold by now, something is wrong with the house, or the price.”
Some people use the days-on-market statistic has a primary search feature. Even if the list price has been reduced, just the longer market time can cause buyers and agents to miss the longer-listed properties.
So not only are those listings easier to pass up, the buyer pool in general is shrinking due to the time of year. It’s too easy for them to pack it in.
It’s going to get tougher for the older listings to find a buyer, unless they get aggressive on price. But how many sellers will knock 5% to 10% off their price? Not many.
Hypothesis:
1. The list price has to be at least 10% wrong if not selling for months.
2. Most unsold listings aren’t that far off. Buyers would be interested in many of the active listings at 10% to 15% under list.
3. Sellers are reluctant to chop that much off their price.
This is what you get when a college professor looks at today’s real estate market – faulty assumptions. 1) The graph he included shows the two years (2012-2013) of rapid appreciation; and 2) the building-permit numbers are skewed by the lack of land available, plus 3) rapidly rising rents help to reduce the home-price-to-rent ratio.
If history is any guide, the L.A. housing price cycle seems to last about 12 years on average, of which seven years is spent in the bull market with at least 65% real price appreciation, and five years is spent in the bear market. We are three years into the housing recovery that started in 2012, with 27% appreciation so far. On average, there will be four more years or 38% more price growth before we reach the turning point.
Of course, it’s possible the bear market could come earlier or later than four years, but that is quite unlikely to happen in the very near future.
How can I be so sure? Often, during a bubble-making period, we see an accelerating rate of home price appreciation, as in 1988-89 and 2004-06. In the last two years, we haven’t seen that kind of rapid appreciation in Los Angeles.
Another way to understand housing price cycles is by looking at building permit numbers. Speaking roughly, if developers are investing in new properties, that’s a good sign that demand, and prices, are rising or keeping steady. If developers are holding back, that suggests demand, and prices, will soon fall.
L.A. housing permit units peaked in 1977, 1988 (50,500 units) and 2004 (26,900 units), one to three years ahead of the real housing price peaks in 1980, 1989 and 2006. Permits bottomed in 1982, 1993 (7,300 units) and 2009 (5,700 units), a few years before the housing price troughs in 1984, 1997 and 2012.
Over the last three years, we have seen L.A. building permits increase from 11,200 units in 2012 to 18,200 units in 2014. The 2015 number will most likely be higher than 2014. Therefore, we can predict the next home price peak is at least two years away.
Yet another measure of rational housing value is a simple price-to-rent ratio. The ratio is calculated by taking the median home price over the annual median rent in L.A. If the ratio is high — meaning that home prices are beyond their fundamental value based on expected rental revenues — that points to a bubble. Again, let’s look at history.
Two previous peaks were in December 1989, with a ratio of 14.8 to 1, and in February 2006, with a ratio of 24.4. According to Zillow, the current price-to-rent ratio in L.A. was 17.1 in May, which is far below the 2006 bubble level but still higher than any time before 2003.
That doesn’t worry me, though. A high ratio doesn’t spell danger for Los Angeles because, similar to New York (ratio: Manhattan 25, Brooklyn 23) and San Francisco (ratio: 21), it’s now a “superstar” city. L.A.’s size, amenities, weather and geography make its houses an investment target for the global elite. Wealthy individuals from all over the world don’t care that it might make more financial sense to rent, because they’re not simply buying Los Angeles houses to live in them, they’re also trying to diversify their financial portfolios.
Even though Los Angeles is one of the least affordable cities in the U.S., all factors indicate that it is not in a housing bubble. Of course the bull market will end eventually, but that doesn’t mean we’re heading for a devastating crash, like in 1990 or 2007. Whether you should put up a million bucks for that bungalow is another story.
I live and work in Irvine, California, which many consider to be ground zero for Chinese new home investment in the United States. In addition to everything else great about living in America, Irvine has fantastic schools, many new homes (Chinese have a huge preference for new over resale), a very well established Chinese culture, and is within one hour of Los Angeles International Airport. Some of the new home communities we have worked on in Irvine have sold more than half of their homes to Chinese buyers, and I am being conservative here. Prices often exceed $1 million, and frequently there is no mortgage.
Chinese interest in US housing is not confined to California, as our consulting team has noticed Chinese home buying in areas served by all of the major airport hubs. In South Florida, agents have been flying directly to China to compensate for declining demand from South America.
While the recent Chinese stock market correction has caused a decline in sales (one of my builder clients has noticed a sharp pullback, another just told me about a home sale cancellation specifically due to the buyer’s stock market losses, and one publicly traded home builder even mentioned the pullback on their earnings call.), our research has convinced us of tremendous Chinese demand to buy US real estate for their families and as investments.
Nonetheless, we remain very uncertain about the level of future Chinese home buying:
1. Is the number of people who can no longer afford to purchase a home after the stock market correction and currency devaluation greater or less than the number of people who will be encouraged to buy here by the stock market and currency instability?
3. Will the government lift the $50,000 annual overseas investment cap later this year as anticipated, which could cause a flood of Chinese investment in US housing?
We don’t know the answer to any of these questions, but the future success of many new home communities depends on the answer. If you have some particular insight based on your knowledge of China, please let us know. We are constantly in search of new and better information.
Rob Hahn discusses his thoughts about the future of real estate agents after reading this in the Zillow 2Q/2015 Earning Call:
For example, at the end of Q2, the number of agents spending more than $5,000 per month, grew 48% year-over-year. Agents spending over $2,500 per month, grew 44% year-over-year. And the number of agents spending over $1,000 per month grew 34% year-over-year. The churn rate among these cohorts is very low, validating our strategy of focusing on high performing agents.
The two best attempts of creating an agent-ranking website got shot down by realtors themselves. But outside entrepreneurs keep plugging away, and one of them could find the right mix and hit the jackpot some day.
One website called homelight.com has agent data. To see what they presented, I looked up my own name. They don’t go into details of where they found this data, or how to interpret this data. No time periods are given either:
Realtors complained about accuracy, but this is what we get instead – outsiders who are running an agent-referral business and using our names and numbers for eyeball bait. They hope you’ll inquire about an agent, submit your contact info, and then they will send you two other agents who are paying them a referral fee of 25% to 30%.
I don’t know where this company gets their data. I’ve sold around 32 homes within the city limits of San Diego, but did they get that straight from the MLS? A title company?
The average days-on-market should only be for listings sold – unless a longer average means the agent’s buyers are waiting out the sellers more effectively. On the MLS, my average days-on-market with sellers is 29 days, and buyer sales average 50 days so I don’t know where they got the 64.
Who knows about the 177. I have more than that on my Zillow count but they may have taken their number from a few years ago? BTW, Zillow finally corrected their sales counts. Each agent has their sales tally on their Zillow page, but Zillow’s 12-month timer must have broke because recently they had displayed my count for the last 17-18 months. I doubt any agents complained! It is back to the 12-month count now.
Two broker-generated listing portals are being developed currently, and they should include agent statistics right off their MLS. They will have the accurate data at their fingertips, so let’s create a depository of identical stats on each agent so the public can educate themselves.
Would it favor the old veterans who have more stats?
It might impress the analytical people who crave data, but consumers should be willing to consider the whole package. If photos and video were included in each agent page, any realtor could create a compelling case on why people should use them.
If agents don’t develop our own website, others like Zillow will keep doing it for us. Or we’ll leave it the way it is now, with agents being able to say whatever they want about themselves because there’s no public way to verify.
Recently an agent mailed out a fancy brochure about being a rural-property specialist. But a simple MLS search of her sales revealed that she had never sold a rural property. She said she had 15 years experience, but she got her license four years ago. I guess she could have been an assistant, or sold in another state, but if you haven’t sold one here yourself in the last four years, then you aren’t a specialist. Yet many agents get away with it because there’s no transparency.
Let’s provide a simple and identical set of data on every agent, and give explanations on how to interpret them.
These are my 16 listings sold over the last 12 months:
Possible interpretations by consumers:
1. He only sold 16 listings in the last 12 months?
The blog drove a lot of buyers my way during the downturn, and I’ve been scrambling to generate organic listings since the REO listings dried up.
2. He sells them too fast.
Sellers who think it should take months to sell a house will think I’m giving them away. But it is more a reflection of pricing accuracy and a hot market.
3. He doesn’t work my price range.
4. He doesn’t work my area.
5. He doesn’t sell my size of house.
6. He’s too busy. (I’ve sold twice this many)
7. He’s not busy enough.
8. He only works with sellers (I closed 17 buyer sales).
If each agent inputted their own explanations, they could add texture to their stats, and make their case why they should be hired. Include a video presentation too (Zillow does).
Consumers would be making educated decisions, and we as agents should not only applaud that, we should insist on it. Agents would have to get better at selling themselves, and those that do would get the business, regardless of experience or sales history.
I am uncomfortable displaying my stats – people are prone to poke holes and find faults. It’s why realtors don’t want data released! But we should all get used to our sales histories being public, because one way or another it is happening – with or without us. Let’s make the best of it!
Over the next 15 years, Bell traveled all over the world, dividing his time between massive disasters and lurid scenes of tabloid horror. He examined such famously stigmatized properties as JonBenét Ramsey’s house, the Lower Ninth Ward of New Orleans, the nuclear-weapons test sites of the Bikini Atoll, businesses looted and burned in the Rodney King riots, the California estate where actress Sharon Tate was killed by followers of the Manson family, Chernobyl, the Rancho Santa Fe mansion where 39 members of the Heaven’s Gate cult committed suicide, the field in Pennsylvania where United flight 93 crashed, and the World Trade Center. For around $400 per hour, Bell would advise sellers on how to price their stigmatized property or make it more attractive to prospective buyers.
To determine an event’s effect on property value, Bell takes the price of a comparable, unstigmatized property and, using case studies drawn from his own research, calculates a percentage of depreciation. The exact percentage depends on the severity of the stigma, the elasticity of the local real estate market, and a host of other factors that can intensify or diminish the impact. Suicides, according to Bell, create less stigma than murders, but both create more than sexual assaults. Unsolved crimes create more stigma than those for which a suspect is apprehended. A murder that happens indoors creates more stigma than a murder that occurs outdoors. A murder involving a child is especially bad. Widely reported crimes create dramatically more stigma than those that are ignored. Peaceful deaths and nonviolent crimes carry little to no stigma. Murders in low-crime neighborhoods tend to attract more stigma than murders in high-crime areas.
On average, most stigmatized properties, Bell estimates, sell at a discount of between 15 percent and 25 percent and take significantly longer to find a buyer.
Bell says, though, that even the worst stigma eventually fades. A house is usually unsellable immediately after a crime. But within three to seven years, most properties recover nearly all their value. Forgotten violence loses its power to haunt.
“The financial penalty Mrs. Milliken has suffered was entirely avoidable had the sellers from whom she bought her home merely exercised a little more integrity and a little less greed.”
This cnbc.com article talks about how ‘crazy’ rents have become, which isn’t exactly a scientific term but rents do appear to be on the rise. But the indented paragraph below shows how low rates and big down payments have helped buyers lower their monthly ‘nut’ compared to the last boom:
In some areas, rent is even more unaffordable. In Los Angeles, California, renters sent nearly 50 percent of their income to the landlord in the second quarter, while in the New York-Northern New Jersey and the Miami-Fort Lauderdale, Florida areas, that was hovering around 41-45 percent, the survey from the real estate listing and analytics company found.
Rents and occupancies are currently hovering at historic highs. While apartment construction has seen strong growth over the past three years, construction of multifamily homes, such as apartment buildings, fell to next to nothing amid the housing bust and the new units are meeting with pent-up demand.
Buyers, however, appear to be sitting pretty, likely spending around 15.1 percent of their monthly income on mortgage payments, down from around 21.3 percent in the 1985-2000 period, the study found.
“If you can possibly come up with a down payment, then it’s a good time to buy a home and start putting your money toward a mortgage,” Gudell said.
Early last month we had that little blip in new listings that I thought could mean something, but the New Actives and New Pendings counts sure have settled down since:
We were on about the same pace last year at this time!
Click on the link below for the complete NSDCC active-inventory data:
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We sold a home with Jim and Donna and from beginning to end they were consummate professionals. Their initial walk through the property resulted in a list of items to be repaired or updated. They supplied a list of vendors and job quotes to do the repairs and updates. We originally wanted to sell ‘as is’ and just get it over with. They gave us a selling price for ‘as is’ and options for doing a few updates/repairs to doing it all with the selling price for each option. We agreed to do all they suggested and we sold for the exact price they predicted. For every dollar spent we got back more than $2 back in the selling price. And they got that price in a rising interest rate environment! Donna and Jim are extremely detailed and guide you through ever aspect of the sale. There were no surprises thanks to their guidance. We couldn’t be more pleased with their representation.
Thank you Donna and Jim,
Jerry and Mary
Heather Quejada
March 27, 2025
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We have known Jim & Donna Klinge for over a dozen years, having met them in Carlsbad where our children went to the same school. As long time North County residents, it was a no- brainer for us to have the Klinges be our eyes and ears for San Diego real estate in general and North County in particular. As my military career caused our family to move all over the country and overseas to Asia, Europe and the Pacific, we trusted Jim and Donna to help keep our house in Carlsbad rented with reliable and respectful tenants for over 10 years.
Naturally, when the time came to sell our beloved Carlsbad home to pursue a rural lifestyle in retirement out of California, we could think of no better team to represent us than Jim and Donna. They immediately went to work to update our house built in 2004 to current-day standards and trends — in 2 short months they transformed it into a literal modern-day masterpiece. We trusted their judgement implicitly and followed 100% of their recommended changes. When our house finally came on the market, there was a blizzard of serious interest, we had multiple offers by the third day and it sold in just 5 days after a frenzied bidding war for 20% above our asking price! The investment we made in upgrades recommended by Jim and Donna yielded a 4-fold return, in the process setting a new high water mark for a house sold in our community.
In our view, there are no better real estate professionals in all of San Diego than Jim and Donna Klinge. Buying or selling, you must run and beg Jim and Donna Klinge to represent you! Our family will never forget Jim, Donna, and their whole team at Compass — we are forever grateful to them.
Lou F
March 27, 2025
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WeI had the pleasure of working with Klinge Realty Group to sell our home in Carmel Valley, and I cannot recommend them highly enough!
Jim and Donna demonstrated exceptional professionalism, offering expert guidance on market conditions and pricing strategy, which resulted in a quick and successful sale.
Communication was prompt and we were well-informed throughout the entire process.
For anyone looking for a dedicated and knowledgeable real estate team, look no further!
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William Sams
March 25, 2025
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Donna and Jim Klinge of Klinge Realty Group have our highest possible recommendation. From Donna and Jim’s first visit to our house through closing their advice and counsel was candid and honest in all dealings. They kept us fully informed throughout the process. The house sold less than three days after listing with a two-week closing. My wife and I have sold several houses during our lives. This was by far the best experience. Klinge Reality is a premium service realtor. You can’t make a better choice for someone to sell your home fast and for top dollar.
Emily Hernandez
December 29, 2024
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Donna and Jim provided exceptional support and professionalism throughout the entire process. We couldn't have been happier with their efforts. They made our house shine, and thanks to their expertise, it sold above the listing price in the very first weekend! Truly a fantastic experience from start to finish.
Jesus Adrian Sahagun
November 11, 2024
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This year has been difficult on our family, mainly due to having to sell our home. Thankfully we knew God had a plan for us and working with the Klinge team was a key part of it. It was an obvious decision to work with them again after such an amazing experience when purchasing the same home we needed to sell. The challenge was, how will we do this in so little time with so much going on? Jim and Donna held our hand every step of the way. Whenever an unexpected issue arose they found and provided a solution. Never once did we feel pressured to make a decision and the Klinges were always reassuring after providing the information that the decision was ours to make. Despite the curve balls, they never panicked and exemplified the “can do” attitude, making us feel optimistic and taken care of. Their expertise and professionalism was superb. But of all the reasons to work with the Klinges, the most impactful and valuable is their compassion and genuine care for their clients. We pray that we can one day purchase our forever home and you better believe that Jim and Donna will be representing us - as long as they will have us of course. Thank you again Klinge team! Your execution, experience, and care are unmatched.
SABIHA PASHA
July 23, 2024
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Jim and Donna were fantastic! Jim understanding my needs, recommending potential places, pointing out the pros and cons of each property was invaluable. Then when the offer was accepted Donna’s organized guidance through the inspections, paperwork etc made the whole process seem effortless.
So grateful that I had them on my side!
Anu Koberg
July 13, 2024
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We first found Jim through his blog at bubbleinfo.com, which really showcased his knowledge of SoCal real estate. Since then we've done three transactions with Jim and Donna, and they are an incredible full service agency, with Jim's deep market insight and Donna's deft contract and project management. We trust them implicitly in their analysis and strategy, which is based on years of experience. They're always available and on top of things, and we strongly recommend them to anyone.
Bjorn Isachsen
July 10, 2024
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The Good
The Klinge Realty Group operates like a finely tuned machine, with a very personal touch. We contacted them on a Sunday and they were talking to us about our family and our needs on our living room couch the following day. They carefully listened to us and worked with us to identify the best and quickest path to listing within 2 weeks to take advantage of the low inventory conditions in our South Carlsbad neighborhood. They knew our tract specifically and had many previous sales there over the years - they came prepared with a thorough analysis of comparative sales and recommended a pricing strategy that they felt confident would yield offers the first weekend on the market.
The Great
Over the next two weeks Donna coordinated a range of vendors who she knew from experience could get the preparation to list work we needed done on time and with high quality. Our light tune-up involved excellent experiences with their stagers, landscapers, contractors, electricians, and plumbers. Throughout this period Donna's daily communication was clear, concise, and responsive. Any time we had questions Donna picked up the phone or texted immediately - but almost always, she answered our questions before we even knew we had them.
The Outstanding
We had a tricky situation with a shared fence that could have delayed our escrow. Donna used superb mediation skills to negotiate the terms of replacement and was personally on site with the fence contractor to make sure everything went smoothly. The fence looks great and escrow closed on time.
The Truly Exceptional
Our house came on the market on a Wednesday and between then and Monday morning Jim was personally at all three open houses. He was in constant communication explaining potential buyer reaction and strength. As he predicted offers began to come in on Saturday and each one was incrementally higher than the last. At the end we had 5 offers, 4 of which were over list, and the final accepted offer was $100,000 over list. In addition to being over list it included rent back terms that met our needs.
The Recommendation
For all of these reasons we would strongly recommend The Klinge Team to anyone wanting to sell in North County Coastal San Diego. I had been reading Jim's bubbleinfo.com blog for 15 years and knew when the time came to sell that he would be our first call. Jim Klinge is not your standard realtor. He is keenly aware of market conditions and sales strategies. And, works his tail off - though not as hard as Donna . At this point he's gone from realtor to friend and I plan to have him over to grill and chill at our new place to talk real estate, but also just about life and raising kids in San Diego. He's more interested in relationships than his sales numbers - and that's why his sales numbers are so high. We have already recommended the Klinge's to some close friends and another successful sale is on deck right around the corner...
Chris Shea
June 21, 2024
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We recently had the pleasure of working with Jim and Donna from Klinge Realty Group to sell our house, and we couldn't be more satisfied with the experience. From the initial meeting, they listened attentively to our needs and provided invaluable guidance on specific improvements to get our home market ready.
Their responsiveness throughout the entire process was truly impressive. Anytime we had questions or concerns, they were quick to address them, ensuring we felt comfortable and informed every step of the way. What stood out the most was their team and extensive network of tradespeople, which made addressing any necessary repairs or updates seamless and stress-free.
Thanks to their expertise and dedication, our house sold quickly and at a great price. We highly recommend Jim and Donna to anyone looking to buy or sell a home. They are a fantastic team who truly care about their clients and deliver exceptional results.
