The talking heads are saying that higher rates are slowing sales, and I say it’s the lack of inventory.
If higher rates were the cause, we would see more active listings piling up.
This chart shows how the pendings have dropped off from last year – especially those in yellow:
The active-listing counts aren’t any higher – there are just fewer listings overall.
We attended the Adams Avenue Unplugged last weekend in Normal Heights, and it was a great time. We walked down to the A/C Lounge to see Chickenbone Slim & the Biscuits:
and then back to the Normal Heights Methodist Church in time to see John Doe play solo. Tony Hawk is a big fan too – that’s him over the shoulder of the lady in the black-and-white-stripe top:
Hat tip to CB Mark for alerting me to the show!
Last year’s frenzy was crazy because of the volume – there were enough listings to drive sales higher than usual. This year we don’t have as many listings, and it is driving the pricing to astonishing heights:
| Year | ||||
| 2015 | ||||
| 2016 | ||||
| 2017 | ||||
| 2018 | ||||
| 2019 | ||||
| 2020 | ||||
| 2021 | ||||
| 2022 |
The median sales price is 42% higher than it was last April.
If listings dry up further, prices could keep rising!
This house is on a 1.06-acre lot and fixers in this area have been hot, so I guess that’s enough reason to pay over list. I’m sure they will get the last laugh when they build 2-3 houses and sell them for $8 million each.
The big concern for long-time homeowners today is having to pay capital-gains tax on the net profit that’s ABOVE the exempted $500,000 for married couples. While the 2-out-of-5-year rule that was passed in 1997 is due for some adjusting, there haven’t been any indications that the politicians will re-visit the issue.
What can homeowners do to minimize the tax owed?
Virtually every long-time homeowner has seen their equity rise enough in the last 12 months to cover their tax exposure, and didn’t that feel like free money? Instead of fretting over having to pay the government, just enjoy the ample amount left over – you made more than they did! Or utilize the tips above.
Check with your tax preparer for more details.
Yesterday we saw how the NSDCC active listings shot up from 224 to 256 in one week!
The count was at 190 just a month ago.
But to keep it in perspective, let’s compare it to previous years:
NSDCC Active & Pending Listings, First Week of May
| Year | |||
| 2019 | |||
| 2020 | |||
| 2021 | |||
| 2022 |
It is a startling change in the marketplace when choices are so few. But relative to the corresponding number of pendings, the health of the market looks fine, in spite of much-higher pricing.
(We’ve considered a 2:1 ratio between actives and pendings to be a healthy market)
We hoped there would be a surge of new listings in 2022 as the pandemic winds down, but it’s not happening. Here are the total counts of new listings in the first third of the year:
NSDCC New Listings, January-April
| Year | ||
| 2019 | ||
| 2020 | ||
| 2021 | ||
| 2022 |
The monthly counts this year are 221 listings in January, 215 in February, 279 in March, and 266 in April. Fewer listings in April, than in March? No wonder the median list price is 32% higher this year than last!
Rates are getting so far ahead of where they should be that there should be some relief once the Fed bumps their fed-funds rate by one-half percent this week. But we’ll probably end up touching 6% in the next 1-3 months.
From the MND:
The hits keep coming for mortgage rates in 2022. Not since the early 80s have rates risen as quickly as they have in the past 2 months (or the past 4 months for that matter). Less than 6 months ago, some lenders were still quoting top tier conforming 30yr fixed rates just under 3%. As recently as early March, those same rates were still in the high 3’s at times. Now today, the average lender is easily over 5.5%.
Today’s new installment of pain isn’t readily attributable to any new development. In fact, the entirety of the rate spike only has a few basic ingredients (discussed most recently HERE), but a long time frame in which to play out. That process should receive some important new information this week when the Fed unveils details about its balance sheet normalization plans.
“Normalization,” in this context, is just another way that the Fed will buy fewer bonds (Fed bond buying is one factor that kept rates as low as they were). We know the announcement is coming. We just don’t know how quickly the bond-buying reduction will occur. This will happen on Wednesday afternoon. Between now and then (and afterward as well!), rate volatility remains probable.
https://www.mortgagenewsdaily.com/markets/mortgage-rates-05022022
At some point over the last 6-12 months, Zillow started revising their zestimates higher – way higher!
It has been noticed too, and now virtually every potential seller brings their zestimate to the table, and expects to list their home for that amount……or more.
But in the latest Zillow forecasts by zip code, they have SCALED BACK their big percentage increases!
Are they scaling back the zestimates too? If not, the list pricing for the rest of 2022 will be frothy.
Here are their current forecasts, with the previous forecast beside each zip code:
Previous forecasts here: https://www.bubbleinfo.com/2022/03/01/zillow-now-says-30-appreciation/
They do have something that none of the ivory-tower economists have – the real estate viewer data.
They have lowered their local 1-year pricing forecasts by 5% to 11% in every zip code, which must be resulting from their algorithms sizing up the customer viewing data….doesn’t it?
Are they lowering the zestimates too?
It is hard to track because once a home goes on the MLS, their zestimate is automatically adjusted to within a couple of bucks of the list price. But are consumers – sellers and buyers – aware of that? No, and not even the agents know it. Everyone will wonder if the zestimate is legit, and they want to believe in something.
If we see more active (unsold) listings stacking up, we can attribute some, or all of it to the list pricing being based on the zestimates taken from earlier this year……..and sellers believing that they mean something! And then if they check their latest zestimate, it will be the same as their current list price, which will embolden them to think that the lucky young couple with 2.2 kids is right around the corner.
In the last week, there were 76 new listings between La Jolla and Carlsbad, which was the most since last August. The 37 new pendings were the fewest since mid-January!
Rob Dawg suggested that we track the list prices by quartile:
What this graph doesn’t reflect is the hyper-optimism of recent sellers – have you noticed how high-priced the new listings have been over the last couple of weeks? It will be why the number of active (unsold) listings should keep rising, because they didn’t get the memo and will wait for weeks/months to test out their optimism.
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A lady built this gorgeous coastal home with big ocean view and then unfortunately passed away. Once this sale closes, the entire proceeds will be given to the Rancho Coastal Humane Society:
