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!
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:
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.
I was on a national sales call yesterday where agents from coast-to-coast were complaining about how bad their market is currently. I kept thinking, “It’s nothing price won’t fix!”
Instead, the common fallacy that ‘it just takes longer to sell a home‘ will prevail.
It’s been a belief among sellers and agents for decades. Could it be wrong? Yes.
Of the 21 NSDCC closings over the last 30 days that sold for $5,000,000+, the median time that it took to find the buyer was 34 days. Of the 17 homes in escrow today that are priced over $5 million, the median market time is 31 days.
Why does the belief keep lingering? It’s because it’s easier to digest than “Your price is wrong”.
How does the market really work? The house that sells today is the one that is the best deal for sale.
All a seller has to do is price their home to be the best deal on the market. They can do it from the beginning and get into escrow in the first week or two, or they can wait for weeks or months before getting their price right. Some get lucky when strong demand clears out all the better deals in a hurry, causing the over-priced-turkey to look competitive quickly. It’s just dumb luck though, rather than a deliberate strategy, because it can go the other way too when newer listings at lower prices leave the OPT high and dry.
This is the type of market where some listings will never sell. They price too high from the beginning, never adjust, and they just help to sell the better-priced listings down the street or around the corner. The market can just fade away, or like we will see in 2025, a flood of new inventory can set a new standard for pricing in the neighborhood.
Some days there is enough demand that the best few deals will all sell at once. A surge like that usually happens when there aren’t other distractions like 4-day weekends, Easter, graduations, vacations, etc. We’re due for a wave of demand here over the next 2-3 weeks. But will any of the current homes for sale be considered a good enough deal? it can happen that NONE of the active listings look like deals – especially this time of year when everything is so picked over.
All that a seller has to do is price the home so it is the best deal available, and it will be the next to sell.
We started with an aspirational price here (my recommended LP was $2,200,000). But we adjusted quickly, and once the price got down to $2,250,000, we found the buyer within two weeks (more on this one later):
Anyone can do it!
Here’s a snapshot of how fast the local market has changed. It went from a relatively-modest suburban area where 3/4s of the houses sold for less than a million dollars in 2003……to a very affluent market!
NSDCC Detached-Homes Annual Sales
True, the inflation rate since 2003 was 70% and a dollar doesn’t buy what it used to back then. But the median sales price went up from $730,000 in 2003 to $2,344,000 this month – an increase of 320%!
Pardon the casual presentation. I’m used to working with this same basic graph format but it’s limited to 50 datapoints – we’d really like to take these back a few years to see the long-term trends.
But in early 2023, the active listings in the $3M – $4M category were range bound between 1,170/sf and 1,342/sf, so there is some normal optimism in springtime. But not like this pop in 2024 (above). These two subsets are the meat of the market, and aren’t swayed by radical outliers that would tweak the averages.
Starting right after the Super Bowl, there was a huge swing from $1,252/sf to $1,515/sf in the $3M – $4M category, and it has stayed elevated until the last couple of weeks. The reason for pricing to relax a little?
The number of unsold listings are starting to stack up now:
There isn’t any reason for home buyers to think mortgage rates are going to drop significantly this year. If there were one or two Fed cuts, it would only cause mortgage rates to get back into the 6s which isn’t enough to compensate for the sky-high prices that buyers are seeing today.
Then we have the changes from the commission lawsuit, which will have a clunky start over the next few months as buyers grapple with hiring a buyer-agent in writing just to tour a house. All we need is the Padres to go on a run this summer and we will have all the excuses we need for a very sluggish rest of the year.
It’s been obvious that the entire real-estate-selling business has been deteriorating towards single agency. I see it every day on the street, and I’ve posted evidence of the shift regularly.
The trend is moving quickly now on multiple fronts.
The DOJ is going to decouple commissions, which will prohibit sellers from offering to pay the buyer’s agent. The buyers can include it in their offer, but it likely won’t get that far. The buyer-agents who are left will want a written agreement to get paid by the buyer if the seller won’t pay. How many agents will be able to demonstrate why they are worth it? Not many, but maybe the buyers won’t ask too many questions.
Homes.com is spending millions and billions on advertising their website to compete with Zillow. Their twist? They funnel all the leads back to the listing agent, instead of farming them out to the highest bidders like Zillow does. I’ve been called by several phone jockeys from Homes.com to sign up for their enhanced listing packages, and I’ll sign up. Robert Reffkin responded positively to the Homes.com program, and you can see how Gary Keller feels about it above.
Agents are giving up on representing buyers because it’s too hard and doesn’t pay enough. Most of the unsold listings are grossly over-priced and the occasional deal gets multiple offers within minutes. Agents have to spend months or years working with their buyers before they get lucky, only to then get a reduced commission from the listing agent. Now I have to convince the buyer to pay the commission too? Great, thanks.
Listing agents are advertising for buyers to avoid paying the buyer’s-agent commission by coming directly to the listing agent instead. Realtor cannibalization is what we deserve. (link)
This house priced at $1,985,000 in Rancho Penasquitos received 15 offers and likely sold for 15% to 20% over list (an offer that was 12% over with free rentback wasn’t enough).
I remember when $2,000,000 got you a decent house in Carlsbad!
This is what a surge in listings looks like.
We won’t see a hundred new listings hit the market in one day….it will be two here, three there, four over here, etc. and pretty soon the buyers will think about stepping back to see where it might go.
While a surge in inventory next year would help to change the market dynamics, there isn’t any hard evidence of it happening yet:
How many would be considered a surge? If the number of new listings rose 10% or even 20%, would anyone notice? Probably not.
Using these November numbers, and adding an extra 20% would only get us back to last year’s total – which we thought was bleak then. but now I’d take it!
It would take a real bump to get buyers to step back and say, ‘hold on, I’m going to wait and see where this goes for a month or two’.
Let’s guess that it would take at least a 25% increase in new listings for buyers to pause.
I was asking around yesterday, but nobody had anything definite to report about their new-listings flow for next year. One agent thought that we’re going to see a lot of short sales though (???).
The San Diego Case-Shiller index has the largest YTD increase in America, and is the only higher-end market with a 50%-plus increase since March, 2020!
A whopping 53.75% increase in three-and-a-half years!
Could rates get so high that it turns into a cash-only market? It’s heading that way.
Of the 118 closings this month between La Jolla and Carlsbad, 45% were all-cash, and it’s competitive. My buyers made a cash offer that was $101,000 over list on this one and didn’t make the final round. There were 13 offers.
Interest rates are based on trading levels in the bond market. Bond traders began their day looking at significantly weaker levels (i.e. higher yields/rates) versus last Friday, but for no apparent reason. Actually, it would be more fair to say “for no new reason.”
Reasons for the rising rate momentum are apparent and ongoing. Decades-high inflation required decades-high rates to fix. The higher rates are supposed to be damaging the economy more than they have. Until that damage shows up, rates have a green light to continue higher.
As more and more market participants abandon their preconceived notions regarding an imminent rate reversal, the upward momentum takes on a certain glacial quality. In other words, it’s self-sustaining, often resulting in days like today where rates look like they’re acting on some obvious catalyst despite the absence of any such news.
Mortgage rates were already new 7.4% by the end of last week and today’s increases bring the average lender closer to 7.5%. This is the highest since late 2000. Lower rates are still available for certain scenarios and discount points, but many scenarios are also seeing higher rates.
Link to Mortgage News Daily
Are you looking for an experienced agent to help you buy or sell a home?
Contact Jim the Realtor!
CA DRE #01527365, CA DRE #00873197
