Housing Demand To Continue
Yesterday, Derrick discussed the macro-economic forces that will affect real estate for years to come:
Ten More Years?
The author first explored this topic in 2015, and this follow-up article was published in February:
Welcome to the Brave New Housing Cycle: Factors indicate that an extended housing boom is underway.
A new long-term housing boom is upon us. And COVID-19 is the main reason why.
Both housing and economic cycles used to last five to seven years, but the economy has shifted to longer cycles, due to factors such as technology and monetary policy. The housing market has followed suit and the result is what I have defined as the Brave New Housing Cycle, which is poised to last seven to 10 years.
The current Brave New Housing Cycle actually started last year.
Read full article here:
Working-From-Home Buyers
Those with good-paying jobs who’ve discovered the benefits of working from home are the ones who are most-likely fueling the ferocious demand – especially in what’s now the $1,000,000-$2,000,000 starter-home range between La Jolla and Carlsbad (can’t believe that I just said that).
Evaluating the economic impact of “social distancing” measures taken to arrest the spread of COVID-19 raises a fundamental question about the modern economy: how many jobs can be performed at home? We classify the feasibility of working at home for all occupations and merge this classification with occupational employment counts.
We find that 37 percent of jobs in the United States can be performed entirely at home, with significant variation across cities and industries. These jobs typically pay more than jobs that cannot be done at home and account for 46 percent of all US wages. Applying our occupational classification to 85 other countries reveals that lower-income economies have a lower share of jobs that can be done at home.
Home of Tomorrow
In 2021, how many garages have 2-3 cars parked inside? We should change the name from garage to ‘flex space’, or ‘California basement’. Hat tip to my friend Ken:
JBREC was pleased to be asked to be part of a team assembled by Pro Builder Magazine to collaborate on a concept home for their “Immersive Show Village” that was highlighted last week at IBSx and is available to tour all year long. The home was dubbed “The New New Home” and JBREC’s research, in collaboration with Pro Builder and Woodley Architecture Group helped form the vision.
Link to ProBuilder digital magazineOver the past year, the pandemic provided the opportunity for us to examine how people live now and how they will be living in the future. The team considered the functionality of the entire house from the front to the garage, outdoor spaces, and casitas. The following provides a glimpse into the research.
- A 2,500-square-foot home that is right-sized for the family. The team chose to challenge itself by designing a home on a typical lot that is readily available throughout the country. The profile is a family with two children (around 9 and 12) with parents working from home and children attending school from home. Selfishly, this describes Ken’s family so we had a little bit of a head start.
- A need for privacy. The New New Home was designed to look inward instead of toward the street with an interior courtyard rather than a larger front porch. This layout offers a private retreat while connecting almost every room on the lower floor to the outdoors. The courtyard also provides a safe place to drop off packages just inside the front gate.
- Will we always need a two-car garage? Maybe not. While the home’s design highlighted a two-car garage, it included a single-car option to inspire and ask “what if?” In a future where we rely less on cars, the flexibility to offer a single car garage creates the opportunity for extra square footage, building in options to suit the preferences of different owners. The single-car option still allows for storage space in the garage and opens the possibility for more entertaining space in the courtyard.
- A casita for multifunctional space. While the main house stays under 2,500 square feet, the guest house adds livable space. This multifunctional room could work as a guest quarters or multigenerational suite for extended family, whether a parent or a boomerang child who graduated college but is not ready to start their career. In the July 10, 2020 edition of The Light, we noted that more than 1.1 million 23-to-30-year-olds had moved “back home” since February. The casita could also function as a home office that is separate from the house.
- A large, functional backyard. When asked to choose between a large backyard and a larger front yard, homeowners indicated the backyard was more important. The New New Home offers a private courtyard and a nicely sized backyard. The yard is large enough to include outdoor seating areas, a space to garden, an outdoor kitchen, and includes a covered outdoor room with transition space between the great room and the backyard.
- A simple and open kitchen layout with all of the appliances along one wall is supported by a spacious island providing space for the kitchen sink and informal dining. Storage is important, and while this home doesn’t have a walk-in pantry, a run of cabinetry between a “clean room” (designed as a healthy transition space from the outside) and kitchen takes the place of the walk-in setup.
- Multiple spots to accommodate working from home. JBREC’s consumer research found that 60% of households earning $50K+ who are working from home right now anticipate continuing to work from home at least part-time post COVID. The New New home includes two work spaces located on separate floors. Both offices were designed to incorporate lots of light, while considering the background behind the workspace. The offices have smaller dimensions to accommodate a built-in desk and storage but no space for clients “sitting across” from the worker.
- Your kids live at home too! Our August 14 edition of The Light highlighted the need for spaces dedicated to remote learning as more than 4.0 million students were impacted by school closures. This home was designed to accommodate a growing family with the children’s “wing” featuring two secondary bedrooms that share a bath, and a layout that maximizes separation between the kids’ wing and the primary suite. The children’s bedroom provides space for separate study or remote learning areas.
Our New Home Trends Institute, our consumer research, and our constant “on-the-ground” consulting work continues to help inform our knowledge of how people live and how their homes are evolving. Let us show you how to implement these strategies into your next new home community.
If you have any questions, please contact Ken Perlman, Managing Principal, at (858) 281-7214 or kperlman@realestateconsulting.com.
https://www.realestateconsulting.com/
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Here’s Rick’s forecast of 15% appreciation for 2021, and another 15% for 2022-2024:
Zillow & ShowingTime
Wouldn’t it be great if they published the number of showings publicly? It would help buyers know how competitive the bidding will be (or not), and later it would help to qualify the comp. When pricing the next listing down the street, you never know if the sales being used were a result of open-market activity or if a crazy buyer paid too much when they didn’t have to. Knowing how many times the home was shown would be quality intel for future buyers and agents.
SEATTLE, Feb. 10, 2021 /PRNewswire/ — Zillow Group has entered into a definitive agreement to acquire ShowingTime.com, Inc., an online scheduling platform for home showings, for $500 million. Touring is one of the most important steps in the home shopping and selling journey, and ShowingTime’s technology has streamlined and dramatically improved the touring experience. They are an industry leader, and Zillow Group will continue to invest in ShowingTime and increase its engagement among agents and partners.
“We have been impressed with ShowingTime’s ability to simplify a cumbersome but critical part of the home shopping experience by integrating with MLSs, agents and brokers, and giving buyers’ agents an easier way to schedule showings with listing agents,” said Errol Samuelson, Chief Industry Development Officer at Zillow Group. “ShowingTime will remain an open platform available to all industry participants, and we expect to grow ShowingTime’s engagement through all channels to ensure touring is easier for the industry and consumers.”
ShowingTime has a network of nearly one million agents across North America and has developed relationships with hundreds of Multiple Listing Services (MLSs). ShowingTime coordinates schedules behind the scenes so that agents can seamlessly book a confirmed home showing online and focus on their clients, not coordinating a complicated process. In 2020, the company facilitated more than 50 million showings industry-wide. Agents can update their listings’ availability for showings through the network, enabling interested buyers’ agents to schedule home tours online with the click of a button.
ShowingTime’s industry-leading technology will help increase tour volume and transactions for industry partners, including Premier Agents. Many Zillow Premier Agents are already using ShowingTime and value the ease it brings in scheduling tours. Zillow shoppers who request tours are high-intent buyers, and ShowingTime’s service enables more seamless tours for those buyers and sellers.
“This is a pivotal moment in real estate, and customer expectations for a simplified, tech-enabled experience are rising,” said Mike Lane, President of ShowingTime. “The ShowingTime technology serves nearly a million real estate professionals, and we look forward to sharing our technology solutions with even more customers, enabling a truly seamless real estate transaction that is efficient and simple.”
The acquisition will accelerate adoption of ShowingTime’s technology as home shoppers and sellers, agents and industry partners move toward a more efficient, digital future.
Link to Press ReleaseCalifornia Dreaming
I’m not sure a 30-minute TV show will change anyone’s destiny, but hey, at least they are trying:
As part of C.A.R.’s 2021 consumer advertising campaign, the Association has partnered with ABC to be the presenting sponsor of their new documentary, California Dreaming. The 30-minute special will air on KABC-TV, Los Angeles, KGO-TV, San Francisco, and KFSN-TV, Fresno at 9 p.m. (Pacific) on Saturday, Feb. 13. It can also be streamed online.
As part of this partnership, C.A.R. President Dave Walsh introduces the documentary, and closes out the film. Click the link below to watch the documentary’s trailer.
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Real Estate Commissions and the DOJ
Hat tip to the three people who sent in this article:
https://www.axios.com/real-estate-fee-showdown-lawsuits-5e88b18c-3baa-4cb0-8302-2a2a8fa16eda.html
It’s a sexy topic because the realtor industry is terrible at explaining commissions, and then reporters jump into the middle of it with their pre-conceived ideas and write articles like this one that make it worse.
Let’s sort out the two issues.
#1. Do agents steer their buyers based on commission being paid by listing agent? Yes.
Will disclosing the commission rate stop steering by agents? No. Will buyers insist that their agent show them those listings any way? Maybe, but agents will find a different reason why they don’t want to show it so it won’t be about the discounted rate.
Sellers should insist on rewarding the buyer’s agent – pay them a bounty for selling your home. If the listing agent is paying 2% or less to buyer-agents, it discourages them from showing your house.
#2. Everything else is an assault on buyer-agents, who are getting squeezed out of the business.
Redfin and Rex want to convince buyers that they don’t need help. Just find yourself a house that you want to buy, and they will do the paperwork for you. They will say anything to convince you it’s all you need.
If the day comes that buyers have to pay for their agent, then they will just go straight to the listing agent who will have worked out a deal with the seller to handle those cases.
In either case, buyers won’t get good help. They will get no help – not from an agent who represents the best interests of the buyers, and advocates on their behalf.
Buyers don’t realize how much they want and need good help until it’s too late – but this doesn’t get considered by the Department of Justice, NAR, or reporters.
From 2018:
Top Markets in 2021
Zillow Survey Predicts Austin will be the Nation’s Hottest Housing Market, Leading a Sunbelt Surge
More affordable metros are replacing expensive coastal areas as top drivers of home value growth
— A panel of economists and real estate experts expect Austin to outperform the national market by the largest margin, followed by Phoenix, Nashville, Tampa and Denver
— Expensive coastal markets New York, San Francisco and Los Angeles are most likely to underperform, though Zillow expects growth in every market
— Key tailwinds include an improved economic outlook underpinned by progress on coronavirus vaccines, while affordability and available supply are potential drags
SEATTLE, Jan. 19, 2021 /PRNewswire/ — Austin will be America’s hottest housing market in 2021, leading a list of mostly Sun Belt cities expected to continue heating up faster than the nation’s large coastal markets, according to a new Zillow® survey of experts.
The booming Texas destination heads a lineup of sunny and relatively affordable metro areas — Phoenix, Nashville, Tampa and Denver — that are most likely to outperform the nation in home value growth, according to a panel of economists and real estate experts recently surveyed by Zillow.
The Zillow Home Price Expectations Survey, sponsored by Zillow and conducted quarterly by Pulsenomics LLC, asks a large panel of economists, investment strategists and real estate experts for their predictions about the U.S. housing market. The Q4 survey also asked about their expectations for 2021 home value growth in 20 large markets compared to the nation.
An overwhelming 84% of those surveyed said Austin values would out-perform the national average, compared to just 9% who believe it would fare worse. Phoenix came in second with 69%, followed by Nashville (67%), Tampa (60%), and Denver (56%). Page views on Zillow for-sale listings in Austin by out-of-town searchers were up 87% in November compared to 2019.
The top-five metros are all affordable options compared to expensive coastal areas that have led home appreciation ranks in recent years, providing relative value for Millennials looking to take advantage of low mortgage rates to buy their first home. The top five are also, for the most part, sunny locales. Four of the five counties holding the largest cities in these MSAs all rank in the top-third of counties in the contiguous U.S. for average daily sunlight, according to NASA data analysed in The Washington Post. Davidson County, home to Nashville, ranked just below the midline.
“The pandemic has not upended the housing market so much as accelerated trends we saw coming into 2020,” said Zillow senior economist Jeff Tucker. “These Sun Belt destinations are migration magnets thanks to relatively affordable, family-sized homes, booming economies and sunny weather. Record-low mortgage rates and the increased demand for living space, coupled with a surge of Millennials buying their first homes, will keep the pressure on home prices there for the foreseeable future.”
An improved economic outlook thanks to COVID-19 vaccine roll-outs and better treatments was pegged as the most likely tailwind for the housing market in 2021, followed by sustained strength in first-time home buying among Millennials. It proved a powerful demand driver in 2020 and is expected to persist for years to come.
Link to Zillow ArticleZillow vs. Realtors
We wondered what might happen when Zillow changed from a search portal to a brokerage last week.
Zillow showed us who’s the boss.
They deleted the last 50-100 sales from EVERY agent I checked, and ALL active listings were wiped off the agent profile.
They also tweaked my headshot!
None of my past sales on Zillow had any connection to the MLS – they were all manually uploaded, so this wasn’t a MLS-related event. So I guess Zillow deliberately removed the past sales and active listings!
They haven’t responded to requests as to why, or whether they will put them back.
The MLS-listed properties used to have the listing agent plus the three-headed combo of Premier Agents who were prominently featured in the right-hand column. The PAs pay hefty advertising fees for placement, but now they are listed below the schools which is down towards the bottom of the listing. They are called ‘personal guides’ now:
The listing agent does get a one-liner mention too.
Zillow demonstrated their killer instinct previously when they tried to squash Trulia by out-spending them on advertising. Then Zillow bought Trulia and made them a sidekick. Has anyone heard of Trulia lately?
The days of Zillow playing nice with agents are over.
Today’s realtors might survive as long as the baby boomers, who are the only people left who might remember – and appreciate – getting good help. After that, Zillow will declare that the cabal has been broken, and convince you that all you need is a transactional brokerage to handle your paperwork.
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Hot Pockets
An update from the agent on the new listing (now pending) in La Costa Oaks:
27 showings, 8 offers significantly over asking. It was crazy! So many buyers from the Bay Area!
I had seven agents contact me for details about my sale that’s pending across the street. Because of the old wives’ tale about not divulging the sales price before closing, most agents don’t expect much from these calls, and just hope for a crumb to take back to their buyers about pricing.
I told the listing agent, and all seven buyer-agents, that my sales price was $1,470,000.
Transparency is good for everyone. The closest we can get to open auctions, the better – where all the evidence is available to everyone to make decisions with. My primary responsibility is to my sellers, who benefit from a higher price nearby that keeps our buyers happy and closing as scheduled.
The agent didn’t offer her sales price, but we’ll come back later and revisit. Key fact is the number of offers. I had three, and she had eight offers. Could demand be increasing as we get past the holidays? Zillow expects pricing to go higher than in 2020, which means a crazier market in 2021 than we’ve had recently!
LOCAL OBSERVATIONS AS WE ENTER 2021:
- There are 20-30 buyer groups looking to pay $1,300,000 – $1,500,000 for a tract home around La Costa Oaks and maybe/probably La Costa Valley. There have been 92 sales this year in that range, and last year we had 50.
- There are 30+ groups who looked at a 1980s one-story 3,000sf home in Encinitas for $1.6M.
- There are hundreds of buyers for homes under $1,000,000 in Carlsbad & Encinitas.
- There are unlimited buyers for one-story homes with nice ocean views – at any price.
- Attractive pricing works!
Results will vary for sellers of homes that are older, unique, and not staged properly. Buyers are going to be picky, which means the creampuffs will be hot, and everything else will be……well, we’ll see!
Jim Klinge
Klinge Realty Group
Broker-Associate, Compass
Are you looking for an experienced agent to help you buy or sell a home?
Contact Jim the Realtor!
- 682 S. Coast Hwy 101, Suite #110
Encinitas, CA 92024 - (858) 997-3801 call or text
- klingerealty@gmail.com
CA DRE #01527365, CA DRE #00873197
