Zillow has every reason to be the nation’s real estate cheerleader since they derive the bulk of their income from realtors. They had been predicting 3% to 6% appreciation locally this year….at least up until two weeks ago.
Something has changed:
Carlsbad NW – 92008
Carlsbad SE – 92009
Carlsbad NE – 92010
Carlsbad SW – 92011
Carmel Valley – 92130
Del Mar – 92014
Encinitas – 92024
La Jolla – 92037
Carmel Valley out in front with a +2% over the next year? Yikes!
It means they think that everywhere else will be flat, at best.
Now that NAR’s proposed settlement of the Sitzer/Burnett lawsuit has received preliminary approval, the industry is receiving numerous updates about the future of real estate practices.
One change, set to take place in July, is that home buyers will be required to have written agreements with real estate agents before touring properties.
Although Zillow is not required to offer consumer-facing agreements, it recognizes that this step can foster transparency, open communication and better alignment between agents and clients. It also understands that buyers may hesitate when it comes to signing a long-term contract with an agent they don’t know.
To help solve this problem, Zillow is offering a non-exclusive touring agreement for agents to use.
In the announcement, Errol Samuelson, Chief Industry Development Officer stated, “…insisting that a buyer sign an exclusive, long-term agreement with an agent, perhaps before even meeting the agent, feels premature. That’s why Zillow has created a non-exclusive touring agreement, and we’re making it available for use to the entire residential real estate industry.”
With this agreement, neither exclusivity nor compensation is required. Zillow suggests negotiating these aspects after the initial meetings when both the home buyer and real estate agent are comfortable moving forward.
“At the time when an additional agreement is signed, the buyer and the agent should be aligned on all terms and expectations, including compensation, with no surprises,” Samuelson said in Zillow’s post.
While this agreement benefits buyers who are not ready to fully commit to an agent before touring a property, Zillow also emphasized the value agents bring to transactions, noting that agents help ease the complexity and stress involved in buying a home.
Zillow is encouraging agents to embrace transparency and prioritize building trust with clients, and the group is offering its touring agreement to all agents.
“As we move forward, it’s important to remain focused on who the real estate industry serves: buyers and sellers,” Samuelson stated. “In this moment of evolution we’re extending an invitation: join us in putting consumers first.”
“Buying a home is complex and often comes with a lot of stress: half of buyers tell us they cried at some point during the process. Without an expert prioritizing their individual needs, buyers can miss out on making a competitive offer, leave money on the table in the negotiation, ignore potential pitfalls or waive important aspects such as inspections – which can end up costing them later. Most buyers want and need an expert on their side – we don’t see that changing. This makes finding the right agent that much more important and it’s why upfront conversations about expectations and compensation are critical. We strongly believe in the value of independent representation: buyers and sellers deserve to work with an agent who is committed to their best interests and only represents them.”
In February, their annual appreciation guesses were in the 3% to 4% range. In March, they got excited and bumped all local areas up to 4.9% to 6.3%! They are back to the 2.2%-3.9% range, with Carmel Valley clocking in with a solid 4.3% over the next 12 months.
It probably means that pricing will be fairly flat until next year:
Carlsbad NW
Carlsbad SE Carlsbad NE Carlsbad SW
Carmel Valley Del Mar Encinitas La Jolla Rancho Santa Fe
Homes.com says they are going to be a primary real estate search portal, and well, it’s go time! One of the 30-second Super Bowl ads cost $7 million – a great place to spend big money if you’re trying to make a splash. This are just teasers for their Super Bowl ads:
The last video appears to have CoStar’s CEO Andy Florance in a cameo board room scene (:15). Both of them teasing the “2.11.24” Super Bowl date. He likes to go big with their promotion, and nothing is bigger than a Super Bowl ad. Should be fun to watch!
We will be seeing ads for Homes.com everywhere this year:
Any agent could walk around their next listing with their phone’s camera running and comment on what people are seeing and why they should buy the house! The extra audio will be far more effective than any whiz-bang product that comes to market at any price.
There is a common belief that it takes longer to sell homes that are more expensive.
The statistics back it up too.
But the belief is a self-fulfilling prophecy that is executed by realtors and sellers every day. It’s hard enough to put an attractive price on a more-expensive custom home, and then sellers and listing agents can’t resist goosing their price by another 5% or so, just to make sure they don’t leave any money on the table.
It looks like Zillow is going to help bring an end to this sloppy practice.
We know that the zestimates are way wronger than they admit, especially with custom homes. Once a home hits the MLS, we also see them adjust the zestimate to within pennies of the list price – so they are unreliable at best, and fraudulent by most common standards.
But I’ve also noticed on this listing that the zestimate has been going down since we went for sale.
After a week on the market, the zestimate was down to $3,419,900 on Jan 22nd:
Then today the zestimate is even lower, and the spread between the views and the saves is getting larger because the highly-motivated buyers see it in the first few days and run up the count of saves:
Buyers have full access to all data now, and the longer a home is on the market, the less they will want to pay. If a recognized authority (in their mind) is also lowering their zestimate on the home publicly, it will fortify the buyers’ belief that they should offer less. Thanks Zillow!
I can’t change that belief – I’m just going to try and sell my listings early on!
It’s a new year and many, including Zillow economists, are optimistic. After a year in which almost half of agents reported selling one home or less, optimism is a valuable tool. To that end, there are a few major macroeconomic tailwinds that might fuel the early months of 2024:
The job market remains strong.
Despite a couple of blips in January, inflation continues to trend toward the 2% target rate.
The Fed has signaled that benchmark rates were likely at or near their peak while hinting at rate cuts.
Benchmark rate cuts can mean mortgage rate softening. Mortgage rate softening means more sellers loosen their grip on rate lock. Taken together, these trends drive a healthier housing market.
That’s the glass-half-full picture. Now let’s take a deeper look at a few trends.
More homeowners want to sell
Twenty-one percent of homeowners are considering selling within the next three years, according to Zillow research from December. That’s up 15% year over year.
Here are some of the most common reasons why:
Tech jobs, long-distance movers are spreading out from traditional hubs
A Zillow analysis of United Van Lines data shows that long-distance movers are heading to metro areas that are less expensive and have less competition from other home buyers.
“Housing affordability is reshaping migration trends. Buyers are moving where homes are more affordable and where there’s less competition,” says Zillow Senior Economist Orphe Divounguy. “Affordability remains the biggest challenge for most homebuyers today. Helping them navigate it by pointing them to a loan officer first is key. It’s even more crucial if they’re new to the area.”
Out are states like New Jersey, New York, North Dakota, Illinois, Michigan, and California. Top destinations include Charlotte (Zillow’s hottest market prediction for 2023), Providence, Indianapolis, Orlando, and Raleigh.
Additionally, a recent Brookings report found that tech jobs are spreading out. Traditionally concentrated in hubs like San Francisco, Seattle, and New York, tech employment is branching out to new “rising star” metros. Since 2020, cities like Dallas, Austin, Denver, Miami, Nashville and Salt Lake City are pulling larger shares of tech work.
The study found that this phenomenon was already underway, but that the pandemic, remote work, and high mortgage rates likely accelerated it.
Takeaway: Cities and states gaining workers are almost all more affordable than the traditional tech hubs. Out-of-town leads in these rising star metros may have healthy incomes and be looking to view upper-tier buys.
While rent growth slows in many markets, concessions are up
Rent growth is slowing in many major metros and rents are even falling in a few. Nationally, rents are still up 3.3% from a year ago, but they dipped (0.2% from the previous month). Forty-five of the 50 largest metro areas have seen annual increases.
Annual rent increases are highest in Cincinnati (7.1%), Providence (7.1%), Hartford (7.1%), Buffalo (6.3%), and Louisville (6.1%).
Rents fell month over month in 32 of the 50 largest metro areas. The largest drops are in Jacksonville (-0.8%), San Diego (-0.7%), New York (-0.6%), Denver (-0.6%), and Austin (-0.6%).
Rental concessions, like free months of rent or free parking, have surged unexpectedly. In December, 32.7% of rentals on Zillow offered at least one concession. That’s up just 0.7 percentage points from November but 10.1 percentage points from last year. This rise is especially prevalent in cities like Oklahoma City and Memphis, which each saw a 4 percentage point increase from November to December.
Takeaway: Leads may be weighing another lease before a purchase. But equity starts when you buy. Those who plan to live in their new home for long enough can start building that equity now, and most experts agree that significant rate drops won’t happen anytime soon.
Nine of the 22 homes for sale in the 92011 are mobile homes, and two are attached homes.
This zip code has a population of ~25,000, but there are only NINE houses for sale, ranging from $1,995,290 to $3,779,000…..and now two are for sale on the same street! We expected that the one down the hill at 7210 Aviara Drive would re-enter the market, because it had been for sale for months at the end of last year and cancelled for the holidays.
I didn’t advertise on Zillow that we are doing the broker preview today because the HOA is tough and I don’t want to stir it up. But the competition went ahead with publicizing their open house today so both of us should benefit. If you’re interested, come on by – we’re having breakfast burritos!
The specialized Zillow listing kit that they started selling this year for $529 includes prominent placement of the listing for the first seven days, but when there are only 22 for sale, it means that everyone is up front. But I don’t mind the #1 spot – here’s how our listing has scored so far:
The saves-divided-by-views = 8%, which is better than my rule-of-thumb of at least 5% for hot listings, and then Zillow adjusting their zestimate to within 0.4% of my list price doesn’t hurt either. It was just slightly different last week:
The Zillow listing kit includes photos, 30-second video (too short for big homes), drone shots, 3D tour, and floor plan. They require that agents use their 3D tour and floor plans in the MLS to receive the 7-day prominent placement, and it makes you wonder what else they will require once they gain more traction.
Here is the pro video we did with our usual guy (not Zillow). It’s the best one yet:
Come by 10:30am-1pm today, or on Saturday, 12-3pm!
