I made this statement at the end of 2010:
The average cost-per-sf for detached sales in SD County rose 9% in 2010. I think it’ll increase another 9% in 2011, fueled by the red-hot lower price ranges. But sales will struggle, possibly 20% fewer sales overall, because buyers will want to hold out for the best. The bar is rising on what buyers are willing to tolerate, but they’ll spend the money on a top-quality house.
I’m not sure where I got the 9% YOY increase in 2010, because looking at the detached MLS stats below, the average cost-per-sf change between 2009 and 2010 was only +7.4%.
The year-over-year change in the average cost-per-sf between 2010 and 2011 went DOWN 4.5%, not up. Maybe that had something to do with the 2011 sales actually increasing slightly over 2010.
| SD County Det. | 2007 | 2008 | 2009 | 2010 | 2011 | YOY %chg |
| Total listings, year | 46,056 | 42,567 | 34,241 | 37,226 | 35,737 | |
| Total closings, year | 15,713 | 19,103 | 22,577 | 21,036 | 21,082 | |
| Avg. $$-per-sf | $351/sf | $263/sf | $229/sf | $246/sf | $235/sf | |
| SP:LP | 96% | 97% | 99% | 98% | 97% | |
| Avg. DOM | 66 | 66 | 61 | 66 | 80 |
Our focus is on selling detached homes between La Jolla and Carlsbad.
How did North San Diego County Coastal do?
| NSDCC Det. | 2007 | 2008 | 2009 | 2010 | 2011 | YOY %chg |
| Total listings, year | 5,406 | 5,289 | 5,045 | 5,286 | 5,205 | |
| Total closings, year | 2,479 | 2,037 | 2,222 | 2,460 | 2,525 | |
| Avg. $$-per-sf | $468/sf | $438/sf | $393/sf | $380/sf | $376/sf | |
| SP:LP | 95% | 94% | 95% | 96% | 95% | |
| Avg. DOM | 67 | 70 | 76 | 73 | 81 |
Changes of 1% or 2% can be considered noise, and they reflect that the NSDCC market has been flat for the last two years. Sales are holding their own, thanks to the low rates and just enough decent listings.
What is JtR’s prediction for 2012 around NSDCC?
There were 188 REO listings and 275 short-sales closed in 2011, or about 18% of the overall sales. Short-sellers should abound, due to the expiration of the tax exemption on debt relief at the end of the year, because if it is extended it probably won’t happen until the last minute. There will probably be commotion around the election and politics, but it won’t stop buyers from grabbing the deals.
My 2012 guess: NSDCC detached sales +10%, and their avg. cost-per-sf drops 5% from 2011.
What is your prediction?
If you’d like more negativity to digest with your prediction, click here:
http://www.doctorhousingbubble.com/5-charts-exploring-financial-quicksand-real-estate-baby-boomers-real-estate-housing-home-equity-income/
I’d bet we’ll probably just muddle along like last year until election-time comes, and then it’s in the hands of who wins:
Obama – Free rent program continues
Romney – All the North County homes will be bought by 3 ultra-rich people
Paul – No one will be able to buy a home until they can transfer their assets into gold.
Santorum – God will buy the believers a home. The Realization Center in Encinitas is screwed.
Three ultra-rich people – LOL
Give them my phone number!
Rents will go up. More people will think twice about walking from home.
All the doom and gloom is getting old. Just like the mania lasted longer than most thought, the doom and gloom is lasting longer than most thought.
People make money on the buy side as well as the sell side. Take advantage of the extremes and you to will be prosperous. If it were easy to buy when everyone else is in a gloomy mood there would be no money making opportunities.
I’m getting tired of the doom and gloom myself.
Best case for buyers – a large increase in short sale inventory as underwater owners realize that they won’t see 2006 prices again soon, and they will have to send the IRS a large check if they close after the end of the year. If this happens we could quickly see lower prices as these owners rush to get out. Congress could extend the short sale income tax forgiveness, and with the lack of any new force to push the banks into foreclosing on all the delinquent loans, I expect the market in 2012 to look a lot like 2011.
Another recovery year. Buy real estate and stocks as fast as possible.
You can do this, honey!
Props for evaluating your prediction from last year. Takes a real man to admit he whiffed. 🙂
Who would have thought that 2011 would have had the strongest closings in 5 years? Not me either. Based on that, has the ship turned the corner?
5 years does not a housing recover make.
Will take another minimum 5 years to cycle down,
last bubble took 10 years and this is a larger bubble. Invest in stocks they are still in an upward cycle.
Being a commercial guy, here is how commercial fared as viewed through the benchmark index of public reits: +8.69%
source: http://www.msci.com/products/indices/country_and_regional/domestic_equity_indices/reit/performance.html
Of note (compounded annual returns):
1yr: 8.69%
3yr: 21.55%
5yr: -1.51%
10yr: 10.16%
10 yr residential is likely =<0%
Commercial is designed for annual yields first, appreciation second. Residential is designed to live in.
I predict flat to down again this year (0-5%), with plenty of calls for a bottom. I also don’t think you’ll see much on the interest rate front. I’d be really surprised to see >5% in 2012. I think we’ll see rates between 3.5 and 4.5% for most of the year.
Joe – awesome LOL!