by Jim the Realtor | Dec 15, 2023 | 2024, Jim's Take on the Market
The big difference between last year and now is that the 2023 pricing has been on a slow steady climb, instead of the tumult caused last year by the sudden upward shift in mortgage rates.
San Diego is leading all the higher-end luxury markets for YTD pricing!
Another comparison where it counts – on the higher-end, where active (unsold) listings are sure to pile up quickly in a soft market. But not yet, and if we’ve made it through this stretch, then the future market with lower rates should survive ok too:
Our vacant-land listing went pending today too!
by Jim the Realtor | Dec 14, 2023 | Forecasts, Interest Rates/Loan Limits, Jim's Take on the Market, Spring Kick |
Yesterday, Jay Powell shocked the world by declaring three rate cuts in 2024! It was Fed speak of the most unusual order – open and transparent, instead of the opaque mumbling of previous chairmen.
The predictions are for rate cuts early in 2024 too. The CNBC survey showed a 90% probability of a rate cut at the Fed’s March meeting, and 100% chance at the May meeting. This Fedwatch Tool below thinks they will all be in the first half of 2024:
What does it mean for the 2024 Spring Selling Season?
Real estate prognostications are usually wild guesses without any supporting data. But next year looks more predictable than ever – and we’ll be able to track it closely.
Let’s consider how 2023 played out:
In June, I mentioned that 2023 got off to a very fast start, and that March would have the highest sales count of the year – which means buyers and sellers were active in January and February!
We had a mid-summer surge too, and the August sales beat out those in March by a nose.
Because the price points are so much higher these days, every property is a luxury home that appeals to the affluent. It means the homes for sale need to be spruced up more than ever, which takes planning and preparation for weeks and months.
We already know that our team will be listing homes for sale on January 18th and 25th, and there should be many more others doing the same. With the 2023 inventory being so bleak, the pent-up buyers will be noting the lower mortgage rates and be on the prowl early.
We will do our annual January inventory contest to give everyone a feel for how the number of homes for sale is breaking early in 2024. Between the number of January listings and the results of our listings, you’ll have quality data on how the 2024 market is unfolding!
My guess is that there will be 10% more listings in January, and combining that with lower mortgage rates could set off a mini-frenzy!
Pricing was steady this year, and it should bump around by the same +/-5% in 2024. It’s probably not worth it to try to predict your purchase or sale by the price history – it will bounce around just because the metric is flawed.
by Jim the Realtor | Dec 8, 2023 | Jim's Take on the Market |
by Jim the Realtor | Dec 6, 2023 | 2024, Forecasts, Jim's Take on the Market |
We’re in the forecasting time of year!
The chart above is from Realtor.com. We are used to the ivory-tower types who don’t bother to get out of their office or even pick up a phone. They just shine up their previous guess with some current events, like lower mortgage rates, and tell everyone we’re going to be fine.
But their guess that sales will be up 11% in San Diego is preposterious, and giving credit to lower rates doesn’t address the ultra-low inventory that is so likely to persist:
For sales to increase by 11% means that inventory will have to increase by the same or higher amount. While an 11% to 20% increase in the number of homes for sale would be fantastic for the market, there is virtually no evidence to support that idea – other than I have three listings booked already.
https://www.realtor.com/research/top-housing-markets-2024/
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If you’d like to make your own predictions, here is some local data (La Jolla to Carlsbad):
NSDCC Detached-Home Listings & Sales, Jan 1 to Nov 30
I’m guessing that sales will be flat/same in 2024, and the median sales price will be +4%.
Why? Because I think we’ll see mortgage rates in the sixes, which will help to energize the demand. The number of listings may grow slightly but not up by more than +10% and many will be wronger on price, which will cause the number of sales to be about the same as they were in 2023.
We know it will be hot during the selling season, it’s what happens in the second half of the year that will drag down the median sales price.
Here’s what I thought last December:
San Diego County Detached-Home Listings & Sales, Jan 1 to Nov 30:
by Jim the Realtor | Nov 30, 2023 | Jim's Take on the Market, Sales and Price Check |
The market is so much different now than it used to be that we should jettison all previous assumptions (paraphrased from a Rob Dawg comment years ago).
In the old days, prices would be coming down by now because the demand would have been severely impacted by higher prices and rates – but not today:
Is it just early? Maybe, but are sellers going to dump on price when there’s always next year? With virtually no foreclosures and unemployment, there aren’t the usual pressures on sellers, and most will wait it out, rather than lower their price in a panic.
The real impact will be on the number of sales. We’ve already experienced – and survived – around 100 sales per month in the off season, and if that happened every month of the year, we’d find a way to live with that too.
Sellers need to choose – do more to spruce up the house for sale, or be willing to take less. If the house is already dated and needing a full renovation, the discount will probably be getting larger, because buyers are putting up a fight.
Here are examples of the November discounts – only one sold over list:
The median sales price could levitate, or even rise, while more discounts off the aspirational list prices keep happening!
by Jim the Realtor | Nov 29, 2023 | Inventory, Jim's Take on the Market, Market Surge, North County Coastal |
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 (???).
by Jim the Realtor | Nov 28, 2023 | 2024, Forecasts, Jim's Take on the Market, Same-House Sales, Why You Should List With Jim |
Ok, ok – yesterday I said that we’re at the highest pricing ever, but the San Diego non-seasonally-adjusted Case-Shiller Index isn’t quite there yet.
But it feels like record pricing around the north county coastal region, doesn’t it?
The index dropped eight months in a row last year, and it might track negatively over the next few readings of 2023 – big whoop. The index gave back 11% last year, and we’ve regained all but 2% of it this year. It is a seasonal event that will probably repeat in the coming years.
If the pricing keeps trending upward in 2024, at least it should be somewhat offset by lower mortgage rates this time. The quick rise in rates in the middle to late 2022 had to be reflected in the pricing, which it was. But this year, pricing held up nicely in spite of touching 8% rates recently.
I’m predicting an increase in listings next year, and it could amount to a full-blown surge. I already have three listings lined up for early-2024, which has never happened this early – there have been years where I get well into January without sniffing a new listing!
I’ll survey my fellow agents over the next couple of weeks to see what they say – two have already agreed!
by Jim the Realtor | Nov 21, 2023 | Jim's Take on the Market, Why You Should Hire Jim as your Buyer's Agent, Why You Should List With Jim
What a great day! Delivering pies and talking real estate – what a privilege!
Talking points you might hear over Thanksgiving dinner.
– It’s too unaffordable. Prices have to adjust.
There will be the occasional seller who gets caught in a pinch and has to sell that day – and might take a 10% to 20% discount. All you have to do is be there on that day. It is why you have a realtor!
But will it be a superior home on a premium lot? Highly unlikely – those owners know what they got.
Buyers need to decide: Are you a lowballer, or are you trying to buy a high-quality property? It’s either/or.
Bottome line: Prices may adjust downward on the inferior properties. Take your chances.
– There seems to be more homes for sale – is it the big slowdown?
As time goes on and the market gets tighter, it will be natural for sellers to price too high and cause inventory to grow. It’s easier than ever to overprice and miss the market! What to do?
Spruce up the home and price attractively, which is about where the comps are….and not 5% to 10% higher.
Tip: Lately the local prices have been going up about 0.5% per month. But once a home is on the open market, the buyer expectations drop about 1% per week on price.
Once as home has been on the market for 2-3 weeks, there might be some negotiations on price!
– Are commissions negotiable now?
Yes, absolutely and agents who are desperate and have no skills will be happy to represent you for 1% or less. It’s a ripoff. Find an agent who will produce beyond expectations. The best thing to come out of these lawsuits is that consumers will investigate agents more thoroughly!
Get Good Help!
If it gets hot, just call me. I’m happy to talk to people on the phone!
by Jim the Realtor | Nov 18, 2023 | 2024, Jim's Take on the Market, Realtor, Realtor Post-Frenzy Playbook, Realtor Training, Realtors Talking Shop |
Zillow CEO Rich Barton weighed in on the bombshell cases in both an investor call and a shareholder letter. Barton’s key comment came early in the call when he said “We also believe complete disruption to the existence of buyer’s agents is improbable for a few reasons.”
Barton reaffirmed his support for buyer agents and the theme of buyers having their own representation. “We believe a well-lit game is cleaner and more equitable. People deserve and need independent representation,” Barton said. “We’ve seen double-siding in the industry, which is clearly a conflict and is at certain times more expensive to the transaction.”
Damien Eales, CEO of Realtor.com said, “I don’t think that from a consumer perspective, they are paying a great deal of attention to what is occurring more broadly in the industry. And as much as these court cases play out, I think it will be in some respects very much confined to the industry conversation as opposed to the consumer conversation.”
During his own investor call, Compass CEO Robert Reffkin pointed to the Seattle region, where sellers have not been required to offer buyers’ agent commissions for several years. Despite that change, Reffkin said, commissions in the area remain in line with the rest of the country — an outcome that suggests the bombshell lawsuits may not radically upend the status quo.
“I don’t think there’s any evidence to suggest that there will be pressure on commissions,” Reffkin said.
The history of steady commission rates will be mentioned in the lawsuit appeals.
Doesn’t the history suggest a conspiracy? Especially when combined with the ascent of home prices? Lawyers for the plaintiffs will note that the annual home appreciation gives the appearance of realtors getting a raise in income every year – including +40% since 2020.
There is no conspiracy on the street. It’s too competitive between agents!
Any pressure on commission rates will come from agents who are desperate to eat. The perfect storm of market conditions should push hundreds of thousands of agents out of the business. As they exit, they might give a seller a deal – if they can find a listing opportunity.
What do sellers and buyers want – the best rate, or the best agent? It’s one or the other.
Hopefully this mess will cause consumers to thoroughly investigate the choices. Otherwise, this will all blow over in a few months – unless the Department of Justice does something permanent.
Get Good Help!
by Jim the Realtor | Nov 6, 2023 | 2023, Jim's Take on the Market, Realtor, Realtor Post-Frenzy Playbook, Realtor Training, Realtors Talking Shop, Why You Should Hire Jim as your Buyer's Agent, Why You Should List With Jim |
The first week after the realtor-lawsuit verdict went as expected – chaos, doom, and no sexy alternatives. It will take years to appeal, but it won’t matter how it turns out. Buyers are going to be paying their agents.
If sellers aren’t obligated to pay any commission to the buyer-agents, will they appreciate the benefit of incentivizing buyer-agents with a bounty, or reward? Probably not, unless their listing agent makes it very clear, and insists on it.
It is more likely that listing agents won’t push it, and because sellers naturally will want to pay less commission and not more, they will list for 2.5% or 3% and hope for the best. Both will shrug it off, and joke about how it’s about time commissions came down!
It will be a grave mistake.
Why? Because the buyer-broker agreement is a disaster:
- Buyers won’t like it.
- Agents won’t like it.
- The market won’t like it.
Today’s buyers are picky, and you can’t blame them. They’ve had to endure +40% on prices, +200% on interest rates, and -50% on inventory…..talk about challenging!
The buyer-broker agreement will be a disaster because both agents and buyers will sign a short-term arrangement and hope the seller might kick in some of the commission. But then everyone will go back to doing it the same way we always have – refreshing your feed every hour and praying!
The real opportunity will be for buyers to hire an aggressive buyer-agent who does more than just watch the MLS. When a seller hires a listing agent, they get a thorough marketing campaign to source every potential buyer in the market. Buyer-agents can do the same, in reverse!
The buyer-agents who offer a rifle-shot soliciting of specific homes that fit the needs perfectly of their buyers will eventually find one. If an aggressive buyer-agent brings the complete package to the seller’s table without having to mess with a full listing, they will likely get an audience. It could even take the place of listing agents!
Because auctions aren’t close yet, this could be what changes the world of residential resales!
It will mean more off-market sales, which means more fuzzy comps because not much if anything is known about the home’s condition. But if it catches fire and the MLS or a rogue search portal insists on buyer-agents reporting everything about their sales including photos, we could still have a database full of accurate market data. But if we don’t, we don’t – good luck everybody!
