Frenzy Monitor
La Jolla hit the century mark in active listings but with 28 pendings it seems to be in decent shape.
It’s Rancho Santa Fe that is angling back to its favored 10:1 ratio of actives to pendings.
Off-Market Armageddon
I was in Orange County yesterday and saw this in a local publication:
The off-market craze is just getting started.
We’ve already been hearing the hucksters at open houses who lead with their only pitch:
“I operate in the off-market space.”
“Does your agent offer you off-market deals?”
“Would you like me to alert you to our off-market listings?”
“Ok, great – sign my buyer-broker agreement right here.”
When the inventory of superior homes being so tight, it is inevitable that buyers will be lured into thinking that there might be something they’re missing.
But the real benefit to the off-market action is that realtors regain control of the market.
The industry loved it during the frenzy when the MLS/search portals were publishing sales that closed several hundred thousand dollars over the list price in the first few days on the market.
But now, the MLS/search portals are the enemy.
They publish the number of days-on-market, and the price reductions….ouch. If you are a listing agent of one of those listings, you are begging for ways to hide those facts. The agents who ‘refresh’ their listings have been thwarted now because the MLS also publishes the CDOM, or combined-days-on-market to highlight when a listing was just cancelled and re-inputted:
This is one of the main reasons why the Clear Cooperation Policy will be attacked by the brokerages.
Operating in the off-market space avoids racking up days on the market, and public changes in price. Think about the commercial brokers – you have no idea how long they have been sitting on that listing, or what the price was an hour ago, let alone tomorrow.
When the market is great, then the truth is our friend.
Nowadays? Not so much.
Potential home buyers must think that the real estate gods have it out for them. Rates and prices went through the roof and never came back (yet), the bidding process is a disaster, and now they are forced to pay for their own agent (maybe). In spite of the internet, the real truth about the market has never been so well disguised. They can’t get a break!
Sellers just want their money.
Compass needs a partner. If we split from the pack over the CCP then we will be labeled the sole renegade. But if eXp, Realogy, KW, or Berkshire joins us then the rest will fall in line (the eXp CEO said so). We can quit the MLS, and make Zillow/Homes.com publish our listings the way we want them published.
In the meantime, we can expect the off-market craze to thrive.
Inventory Watch
You could say that the market has extended some of the summer momentum – the counts above are similar to what they were in June!
How can that be explained?
Anyone who is spending five-figures every month on their business is paying attention to every detail. Don’t listen to Aunt Bea the Agent whose box of business cards is getting dusty and who hasn’t washed her car since Easter. Listen to the guys on the street fighting it out every day:
You don’t have to feel bad for Tom. I mentioned his flip in Carlsbad that listed for $1,649,900 – he had to dump to $1,599,000 to find a buyer so it’s not catastrophic for him. But for others who have been listed for sale for months without an offer….they have to be wondering what it will take to get out.
Get Good Help!
Max ADU
Hat tip to Jakob who left this in the comment section but it deserves full exposure. If you live within a half-mile of a transit station in the City of San Diego, this type of ADU construction is permissible.
Hi Jim, here’s one of these ADU complexes for sale. They bought the 1,385sf house for $1.1m two years ago (it was listed for $899,000). Then built 10 1br ADUs in the back and converted the garage to another 1br. For sale now as a 12-unit for $5.5m.
Omni Penthouse
Prop 5
I try to avoid politics here but the housing-related measures get some attention.
Hat tip to Peter for providing this valuable data on Prop 5:
Though California is known as a liberal blue state, we don’t like it when Prop 13 is threatened. The last attempt was in 2020 when Prop 15 tried to change the taxation for commercial and indutrial properties, but was voted down by 52% of the people. The landmark SB 9 which allows units to be added to single-family properties was approved by the state government and not put to a vote by the people.
Interesting how the California Association of Realtors first provided $19 million to fight Prop 5:
Then the C.A.R. conceded when the bill’s author agreed to exempt 1-4 units.
The Santa Barbara Association of Realtors president Michelle Allyn writes a good synopsis on Prop 5:
https://www.independent.com/2024/10/07/vote-no-on-prop-5-stop-the-tax-hikes-on-homeowners/
The bottom line is that Prop 13 established the 2/3s majority vote to increase property taxes, and this measure would reduce that to just a 55% majority for affordable-housing bonds. I don’t trust what politicians could do with that, and I don’t like the flip-flop by the C.A.R. so I’m voting NO on Prop 5.
Best Small Towns in California
These aren’t the cheapest – these are the best. This video briefly highlights the top features of each town:
25. Nevada City
24. Half Moon Bay
23. Capitola
22. Bodega Bay
21. Calistoga
20. Ferndale
19. Dunsmuir
18. Morro Bay
17. Arcata
16. Del Mar
15. Tahow City
14. Cambria
13. Julian
12. Mendocino
11. Idyllwild
10. Coronado
9. Healdsburg
8. Pismo Beach
7. St. Helena
6. Solvang
5. Ojai
4. Sonoma
3. Sausalito
2. Avalon
1. Carmel-By-The-Sea
I like this list!
Look around a little. Maybe you can find a place to move!
Robert In Town
Robert the big boss was in town yesterday.
He is committed to changing or ending the Clear Cooperation Policy, which is a controversial stance.
The CCP makes in mandatory that every agent upload a listing onto the MLS within one business day after any public marketing of the property. Robert (and other brokerage leaders) say that nobody should have the right to dictate how a home is sold, and sellers should have the right to market their property however they choose.
Skeptics think that is a thinly-veiled excuse to hold more listings off the market, and sell them in-house instead – which would benefit the bigger brokerages, and possibly squeeze out the little guys.
But Robert said that the real problem is that we are sitting ducks waiting for another class-action lawsuit.
The last lawsuit was about the mandatory requirement that the listing agent include a buyer-agent’s commission rate in every MLS listing. NAR tried to hide behind the fact that the rate was negotiable, but got their clocks cleaned when the jury found otherwise. Even though Compass had never sold a home in Missouri, the forced NAR settlement cost Robert and Compass $52 million.
Because the submission of a listing to the MLS within 24 hours is also a mandatory requirement, it’s only a matter of time before the class-action attorneys start lining up for another big pay day. He is literally hoping to change the CCP before we get sued again!
NAR doesn’t get it. Their chief legal counsel quit last week after 17 years, which leaves them adrift, and they are sure to bungle the next wave of lawsuits which should be arriving any day now.
Robert is taking the high road and trying to negotiate a peaceful change, but I don’t get the feeling that the people in power are listening. This is where the biggest brokerages will probably have to sue NAR to get their attention before another class-action lawsuit is filed.
Why doesn’t NAR stand up for realtors? The main reason is because they have $750 million in the bank, and they are very comfortable. They had two presidents quit, the executive director retire just in the nick of time to avoid responsibility for the last lawsuit, and now the chief legal counsel quit too. They aren’t equipped to handle any controversy, let alone one that could put them out of business.
But that day is coming, it’s just a matter of when.
Abolishing the CCP is just the start.
Eventually, the biggest brokerages will quit NAR and the MLS, and go it alone, just like the commercial brokers. Zillow and Homes.com will scramble to make deals with us to keep our listings coming, because if they don’t, they will be out of business too.
I guarantee that this is the future of home sales.
It’s just a matter of when.
Wait Until 2025….Or Sell Now?
We just had it happen. A potential seller who had decided to wait until next year had not one but TWO competing new listings hit the market nearby. Both listings were priced $100,000+ LOWER than what we were thinking. Ouch.
When is the best time to sell your home? It is case by case.
Ideally, it’s when all three of these are in play:
- When there’s no competing active listings nearby.
- When you have recent neighborhood sales that support your price.
- When you know where you are going.
For many, those three conditions are happening now.
Who should sell now, and who should wait until next year?
In spring of 2023, I sold 2,797sf for $2,000,000, and 2,631sf with pool and view for $2,200,000in LCV.
Are those holding up? Here is the recent activity at La Costa Valley:
The two sales in orange were a shock, and could have led the pricing trend downward. But the last four sales are positive, helped greatly by those with a green star that are one-story homes.
If future buyers gloss over the one-story premium, they might be willing to pay $2,000,000+ for the next new listing. Because there are NONE for sale currently, it would be an opportune time for a La Costa Valley homeowner to list their home for sale right now, and avoid a potential springtime surge of inventory.
How about the Foothills in NE Carlsbad?
I sold Mastodon in July and pricing has been crushed since – mostly because of the inferior home/locations.
Here I would suggest a Foothills homeowner to take a chance and wait until another $2,000,000+ comp goes first to right the ship, and then list for sale. If the next listing is superior in every aspect, it could buck the trend, but I’d like someone else to chart that path – hopefully someone who can fight off the trend.
It’s case-by-case. Measure all the variables, and if there are NO other active listings, it might be better for you to sell now, rather than wait.
Lot Splitter & Builder
These guys are advertising on sports-talk radio and at first I thought it was just another ADU builder.
The problem with SB9 is being able to sell the newly-built ADU.
In order to obtain regular financing and title insurance, either the property would need to be condo-ized to sell the homes separately, or the lot would need to be officially split.
You can process the lot split yourself, if you have the time and patience.
How much are you willing to pay for convenience?
If you wanted to build an ADU for your own use and had no plans to ever sell it separately, then carry on. But if you have a larger lot and didn’t mind selling off part of it just to watch a new home be built and sold there, then take a look.
Here is their web page to determine if your lot qualifies for an ADU: https://www.myhomestead.com/lot-search
I don’t know anything about these guys – I only heard their ad on the radio.
Jim Klinge
Klinge Realty Group
Broker-Associate, Compass
Are you looking for an experienced agent to help you buy or sell a home?
Contact Jim the Realtor!
- 682 S. Coast Hwy 101, Suite #110
Encinitas, CA 92024 - (858) 997-3801 call or text
- klingerealty@gmail.com
CA DRE #01527365, CA DRE #00873197
