There have been 12% more listings YoY in the first two months of 2024, and buyers are responding!
Closed SFR sales between La Jolla and Carlsbad are +20% YoY in the first two months of the year!
It’s why the number of active listings (red line above) isn’t exploding, AND there have been 88 new pendings in the last two weeks – which is about twice the pace we had in January. The median LP of those 88 pendings is $2.5 million, which means pricing will be at least +10% higher than last year. Wow!
There had to be skeptics to my Los Altos Adventure last weekend.
Did you mis-price the houseby more than a million dollars on purpose – or just by accident? Come on – you were 440 miles out of your normal market area….dude….you got lucky!!
I like to pay close attention to the market activity in the days before inputting a new listing. This was the latest listing by the guy who has just captured nationwide attention of his lowball $10,000-commission offer to the buyer-agents. As of Wednesday night, this was still active, and I told my sister that I didn’t want to compete directly because mine would help to sell his. If it was still an active listing when I woke up on Thursday, then I’m not coming up and we will postpone the listing for at least two weeks due to weather:
Miraculously, when I woke up the listing was marked pending – so I left for Los Altos.
All I had to be was the most attractive new listing in a very exclusive area (Nvidia is based in San Jose). There had to be losers from the Parma bidding war who were motivated to buy the next one, and there was nothing else for sale at this price point.
I was talking it up with every agent who came to my open house, and eventually I found an agent who was in the same office as the buyer-agent of Parma – and they confirmed that it sold for $4,150,000! Do you think I told that to every person I met over the next 48 hours….yes!
Let’s note my options: Either price attractively and have buyers bid it up, or price at retail and wait.
Here’s an example. The size of house and lot are pretty similar to mine, and it’s a busy street too. How are they doing? They listed for $3,998,000, and 30 days later they are still unsold:
The more obstacles that need to be overcome, the more attractive the price needs to be.
I’ve been showing houses to buyers the last couple of days, and this theory has never been more clear. As we walk into a house that appears to be priced at the top of the range (or higher), the skepticism builds with every step – and we’re looking for any reason NOT to buy.
But when you walk into an attractively-priced home and see defects, they just confirm why the price is attractive – buyers don’t expect perfection when the price is attractive!
What happens once a home hits the open market depends on the listing agent. Yesterday, one was blaring his Jesus music, and another was chatting with the sellers who were still hanging around even though the open house started 15 minutes earier. Most listing agents aren’t implementing any bidding-war strategy – heck, yesterday there was one agent who didn’t even know the price of the home!
In reviewing the Los Altos comps, about half of them had closed over the list price, so I knew it was going to be hot. I knew that I was selling a house that looked all original, and was on a busy street. So we priced it attractively and I aggressively implemented my tried-and-true bidding war strategy that works!
We can expect that the election season will be like no other in the history of the USA!
Prepare accordingly!
Can you imagine how this will play out? If Biden wins, there will be a civil war. If Trump wins, he’s promised that there will be full chaos on Day One. We can write off the 4Q24, and maybe more!
These are updated on the first of the month and are interactive:
No real concerns there. The low volume causes the bumpy appearance, but for the most part, the pricing is fairly steady. If there were a downward trend for a few months, it would be different.
The blip in active listings over the last week isn’t too concerning and could just be from the weather.
The count of active listings is a good indicator of the demand though. During the mega-frenzy conditions from late-2020 through early-2022, you can see that the new listings were being gobbled up as quickly as they came on the market, and there was no build-up of the supply. Last year, the demand was hot enough in the early months that the active-listing counts were fairly flat too.
If this year’s count of active listings surges above 400, it will mean that we are exiting the frenzy days, and the market’s normalization is underway.
It is subject to the overall number of listings, and I’ll reuse yesterday’s chart to show the flow:
NSDCC Listings and Sales, Jan 1 – Feb 15
The total number of listings in 2024 is still in the frenzy range.
It’s the number of active listings that help demonstrate the velocity of the demand. Are they being gobbled up as fast as they hit the market like in recent years, leaving the number of actives fairly steady? Or are the actives starting to pile up, like they used to do? (see the 2019 green line in graph at top)
This is how we will know where the Spring Selling Season is going.
Buyers already have reason to be cautious and wait patiently because Powell opened his big yap and said he was going to lower his rate THREE times in 2024.
If the active listings break out of the frenzy range and start stacking up unsold, it will be irresistible for buyers to wait longer to see if sellers capitulate on price, while hoping rates might come down too.
Want to know where the market is going? Just watch the number/trend of the active listings!
As of February 1st, the January sales count is 103, with the median sales price at $2,275,000, which is a nice pop over the 87 sales from last month. The graph above shows how any momentum was thwarted by rising rates in October, and some relief now is probably contributing to more sales and activity locally (though the mortgage purchase apps were down 11% nationwide today).
By Monday we’ll be able to crown Joe as the winner of the Padres tickets!
Slightly more inventory is the best-case scenario for a healthy selling season. Too many new listings might cause buyers to pause and see where it’s going, but we’re not close to a surge today. A bigger threat would be running out of affluent buyers.
217 – January 2024 Listings (205 in January, 2023)
103 – January Sales so far (median sales price = $2,275,000)
Thomas Kowal knew living expenses in Los Angeles would be steep. But he was surprised at how steep.
Kowal, 25, had lived on the East Coast for most of his life, but he applied to UCLA for a toxicology PhD program because, he said, he wanted a change of pace and scenery, and he hoped to earn the kind of salary after graduation that would let him afford the California lifestyle.
“When I came here for interviews for a couple days, I really didn’t notice things like gas prices, sales prices that you do notice once you’re on the hook for it,” he said. “Certainly you can see some red flags, and I was prompted to ignore that because I knew living here was my main interest.”
Despite California’s high cost of living, the state has continued to attract more educated and well-paid residents. New census data discount the notion that California’s housing and affordability crisis is pushing away educated residents, resulting in a so-called “brain drain.”
The numbers suggest California’s strong economy in such sectors as technology, medicine and entertainment, as well as its admired higher-education network, continues to draw people.
The NSDCC listings inputted between January 1-15 are up 11% YoY:
2023: 100
2024: 111
Take last January’s total of 205 listings + 11% = 228 for the projected winning score, which would blow by everyone. How close the monthly total gets to 228 will tell us if listings are surging or calming as the spring selling season opens. Here are the guesses of the number of January listings – winner getsPadres tickets:
Contest to Guess the Total Number of NSDCC January Listings
The NSDCC inventory is starting off the new year with virtually identical numbers as it did in 2023!
The big difference?
Last year everyone thought we had a recession coming, and this year it’s all blue sky ahead.
At the beginning of 2023, the 30-year mortgage rate was 6.48% and all we heard was that existing homeowners would never sell because their existing 3% rate had them ‘locked-in’.
Today’s rate is 6.61% and everyone says that the lower rates will free up inventory this year!
Let’s examine the statistics that will give us a better feel for the future of home sales between La Jolla and Carlsbad. These are the three areas that are full of the homogeneous tract homes that give us a better read on the trends – they had 62% of the NSDCC sales last year:
To say that we’re in a mature market controlled by baby boomers is putting it lightly. The ‘locked-in’ effect has been around for a long time for whatever reason – but mostly because we live in paradise:
Carlsbad, CA
Encinitas,CA
Carmel Valley 92130
The vast majority of those who have been in their home since 2016 or longer are ‘locked-in’ because of the price they paid – they aren’t going to pay double or triple what they paid for their current home to just move down the street or around the corner. If they have lived in the same home this long, chances are they will stay to the end – and we’re talking about 80% to 90% of today’s homeowners!
Thankfully, life happens. Death, divorce, and job transfers will keep causing homes to come up for sale.
It will take a 20% YoY surge in NSDCC inventory this year just to match the number of homes for sale in 2022, and I’ll be happy if it is just a 10% increase over last year!
But we have become accustomed to frenzy conditions, and for many it is all they know. The current environment feels somewhat like 2013 again, which was the last time we had a non-covid surge. We were coming off a hot 4Q12, even though rates didn’t change much:
But the market exploded in 2013, just because. I think it’s going to happen again this year, just because.
We’ll find out soon enough – our first listing of the year will hit the market a week from today!
