Most home sellers are reluctant to do much, if anything, to prepare their home for sale. The covid frenzy was very forgiving when buyers were desperate to buy anything at any price – which spoiled sellers (and agents) who were still able to sell homes for retail regardless of condition. Those days have passed:
With all the talk about the presidential election being so close, some thought it could take weeks to determine the eventual winner – and only a powerful Trump victory could avert it.
Standoff averted!
No matter how you feel about it, another Trump presidency should be good for home sales.
Why? Because we saw when Covid broke out that uncertainty encourages people to hunker down.
Buyers will be more motivated to end the search before rates go much higher – which should be in the mid-7s shortly. If my predicted surge in inventory happens early in 2025, there will be plenty of homes to go around. Some will wait-and-see, but the highly-motivated buyers and sellers (the only ones that matter) will be pushing to make deals as soon as possible.
Who should put their home on the market right now?
Just when it looked like home sales were going to take a break….here we go!
The current market conditions are fascinating.
There were 141 NSDCC listings that went pending in October, and 44 of them have already closed escrow! It leaves 133 listings in the pending category so the closed sales in November and December probably won’t set any records, but if there were 100 closings each month then I’d be impressed.
How about the closed sales? Smoking hot, compared to last year:
It all points to the 2025 Selling Season being robust, to say the least. It is going to start in January, and there might even be sellers who want to get a jump on it and list their home in December!
Here’s one more category (rich people fleeing) to add to my reasons why 2025 is going to bust loose:
A growing number of wealthy Americans are making plans to leave the country in the run-up to Tuesday’s election, with many fearing political and social unrest regardless of who wins, according to immigration attorneys.
Attorneys and advisors to family offices and high-net-worth families said they’re seeing record demand from clients looking for second passports or long-term residencies abroad. While talk of moving overseas after an election is common, wealth advisors said this time many of the wealthy are already taking action.
“We’ve never seen demand like we see now,” said Dominic Volek, group head of private clients at Henley & Partners, which advises the wealthy on international migration.
Volek said that for the first time, wealthy Americans are far and away the company’s largest client base, accounting for 20% of its business, or more than any other nationality. He said the number of Americans making plans to move abroad is up at least 30% over last year.
David Lesperance, managing partner of Lesperance and Associates, the international tax and immigration firm, said the number of Americans hiring him for possible moves overseas has roughly tripled over last year.
A survey by Arton Capital, which advises the wealthy on immigration programs, found that 53% of American millionaires say they’re more likely to leave the U.S. after the election, no matter who wins. Younger millionaires were the most likely to leave, with 64% of millionaires between 18 and 29 saying they were “very interested” in seeking so-called golden visas through a residency-by-investment program overseas.
https://www.cnbc.com/2024/11/01/wealthy-americans-plans-leaving-united-states.html
Last October, there were 140 NSDCC sales with a median sales price of $2,182,500 ($810/sf).
This month’s final count should be 160+ sales and a median sales price that’s +10% above last October!
Statistically, the political circus hasn’t caused ANY drop off in sales or pricing!
It probably means the momentum will be hot going into January too!
What would a frenzy of inventory look like?
There has only been a 15% year-over-year increase in the number of homes for sale in 2024, which isn’t that noticeable, especially to the casual observer. Plus, the top-quality homes still get swept off the market quickly, so there aren’t many great listings lying around unsold.
For an frenzy of inventory to be dangerous, it would take so many new listings to hit the market that there aren’t enough buyers to grab all the top-quality homes for sale.
There will always be the half-baked offerings looking to get lucky.
There is only a problem when the great homes aren’t selling (aka switching to a buyer’s market).
Though there has only been 15% more listings this year, the current active inventory is about 30% higher than last year. There is the sign that buyers are being more picky, and that the pressure on pricing is rising. Sellers either need to do more sprucing up, or sharpen their price. Some need to do both.
I have said before that I thought the market had been so dry that the pent-up demand would absorb a 15% to 20% increase in the number of homes for sale. Well, here we are! There have been 6% more sales this year, which didn’t pick up ALL the extra supply – just the best ones for sale.
I think we will call 2024 the year of equilibrium where the supply and demand has been more balanced than in recent years. I’ll resist calling it a ‘normalization’ because nothing feels normal these days! But statistically it looks like a decent balance.
What would happen if/when the flood comes?
If 15% to 20% was reasonably absorbed this year and it balanced the supply and demand, then any increase in 2025 above that would be nervous time.
How much growth above the 2024 homes for sale can the market endure?
I’m going to say not much more, and it’s why sellers should get out while they can in early 2025.
Adding ANY more inventory in 2025 above this year’s number of homes for sale would only get absorbed if rates drop to 6% or lower – which could happen – and the political circus dies down.
If the 2025 NSDCC inventory matches, or slightly exceeds, the 2024 red line below, then we should be fine. If it pops higher – and especially if it pops higher in January – then stagnation could set in as buyers wait-and-see where it goes.
You’ll be able to watch it all transpire right here at bubbleinfo.com!
I thought the run-up to the election would cause potential home sellers to wait it out.
Wouldn’t it make sense to NOT list your home in the month or two before the most contentous election in history? Certainly home sellers would have foresight and believe that buyers would be distracted. Everyone would be doing the wait-and-see!
Nope – and we’re not done with new listings this month. There will probably be another 10-20 homes go on the market before Friday (plus late-reporters).
It means that a surge of listings is in the works.
Our stager told Donna yesterday that she is already getting booked up for January. Our regular contractors have been voicing the same thing – they are very busy, and getting busier.
How about this as an indicator:
I already have three listings signed for January/February, and another 2-3 in the works. Never before have we had a January listing signed in October!
It means the first quarter of 2025 is going to be insane – a frenzy of inventory!
Get Good Help!
He’s not just passing through – Mark Wahlberg is setting up shop in South O:
We’ve heard of the metric that measures the supply and demand in residential real estate sales. Lance called it the key housing metric going into 2025, but he is suspicious of its accuracy:
A rule of thumb in real estate is that anything below a 6-month supply of inventory is considered a ‘seller’s market,’ while anything above a 6-month supply is a ‘buyer’s market.’
However, that hasn’t always held true this cycle, and ResiClub’s view is that this rule of thumb is a bit outdated. In many housing markets, including Austin’s metro area, where house prices began to decline in June 2022 with only 2.1 months of inventory, that rule hasn’t applied effectively.
In fact, despite Austin’s months of inventory only reaching a high of 4.8 as of August 2024, house prices have already dropped by -19.8% from their 2022 peak in Austin. A better measure of this incoming pricing weakness was the abrupt active inventory jump that occurred in Austin in spring/summer 2022 (going from 0.4 months of inventory in February 2022 to 2.1 in June 2022), which quickly pushed active listings above pre-pandemic levels.
I agree that using six months is outdated, and four is probably too high also.
Let’s use three months as the new standard.
It is hard to believe how well our local market is doing.
There have been 120 closed sales this month between La Jolla and Carlsbad with a median sales price of $2,617,500 which is about 9% higher than last month when there were 165 sales! With the 120 sales already in the books, it means the final count should be around 150 sales in October – even with the political circus going on!
There are 470 NSDCC houses for sale currently, and the number has been steady.
Let’s do the math: 470/150 = 3.13
If three is the new standard, it means we are at the limit of a seller’s market. With higher rates and election backwash in November, it means this measuring stick will almost certainly be indicating a buyer’s market for the last two months of 2024.
If there is a surge of inventory next year, will sales increase too?
Yes, probably.
There have been 6% more sales this year.
Oh – but there were 15% more listings. Hmmm it sounds like not every seller gets out.
We could be set up for an old-fashioned price war, where only those sellers willing to deal can find a buyer.
It won’t be vicious.
It will be civil and gentlemanly, and the condition of the home will play a big role in the outcome.
There are several reasons why I think the local inventory will surge in 2025. It will be due to several causes contributing more houses for sale, and all combined it may look like a flood in some areas.
Been Trending That Way in 2024 – The inventory this year has been +15% more than last year, making it look like we have already hit bottom, and the number of listings will keep growing. It may not get back to the 4,000+ like it was in the pre-covid years, but 3,000+ should be a lock in 2025 (+22% over this year).
2024 Leftovers – We have 100+ of this year’s listings waiting until 2025 to not sell (unless they adjust).
More Baby Boomers Are Dying – According to the CDC, the number of deaths per year in the U.S. has been steadily increasing, in part because of the Baby Boomers’ advancing age. Estimates suggest that Boomers will account for millions of deaths over the next two decades as they continue to reach their 80s and beyond. There were 1.6 million boomers who died last year, and the number will be above two million by the year 2030.
Prop 19 – Those who have already inherited a home from their parents or grandparents since 2020 have had to occupy the property as their primary residence to inherit the lower property tax rate too. But the old family homestead needs work and/or the other siblings want their dough. Renting the house triggers the higher property taxes, so that’s no longer a viable choice. More of these will decide to sell instead.
Politics – The 49% who don’t have the election go their way will threaten to move to cure their ills. Most won’t actually get around to it, but I’m guessing more will move than before.
Jackpot – In 2023, total U.S. credit card debt surpassed $1 trillion for the first time, reflecting a significant increase over pre-pandemic levels. More homeowners in that group will throw in the towel and finally decide to sell the house to lighten the load, and move out-of-state where they can live the rest of their life on their home-sale proceeds.
There is enough demand to soak up all of the additional inventory – but at what price?
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