2017 will be remembered as the year of shrinking inventory. We finished the year with a 10 year low inventory level. There were just 2905 single family detached homes fro sale as of December 31, 2017. What will 2018 hold for the market? Great question, but for now here’s a recap video for you. I’d love your thoughts and feedback.
I am sharing the latest from InfoSparks, which is data driven by the San Diego Regional Multiple Listing Service, SANDICOR. What an interesting time to be a seller!
So just what is going on in the San Diego real estate market? Well, it is interesting to say the least! The 3 things I see happening are as follows:
- Prices are trending up. There is fierce competition out there, especially in the entry level price points. Do your homework, have your loan in place, and hire an ultra-aggressive REALTOR to represent you!
- Inventory is still down. But homes are selling! Don’t get caught up in the drama, just keep your eye on the ball and you will find the right home.
- Interest rates are still low…but trending up. If you are getting a mortgage, it may be a good idea to lock your interest rate. Your loan officer can help you with that. Don’t get priced out of the market and miss out on the great rates out there.
OK, I have a couple more observations to share based on market data. A recent report courtesy of Altos Research, shows exactly what is going on in certain segments of the market. This report looks at the market in quartiles, which represents the 25% most expensive, upper middle, lower middle, and least expensive homes in the marketplace. In looking at the lower two segments, you’ll see what you get for the money. In the lower middle segment you will get a home with 3 bedrooms, 2 baths, 1500 square feet , about 50 years old for around $455,000. In the least expensive segment, what do you think you get? Pretty much the same thing with one exception…it will cost you about $175,000 less!
Guys, these are the sort of things you can capitalize on to get the best deal. Even if you qualify for a $450,000 home, that doesn’t mean you can’t find something just as good for $325,000, right? Same thing happens with the upper middle segment compared to the lower middle. A very similar home in the lower middle costs $200,000 less! No matter how you slice it, that’s a great deal! Take time to learn the market. If you’d like to have access to this type of information on a weekly basis, delivered right to your inbox, then just visit our web site and click on the “How’s the Market Today” link. You can select cities and zip codes all across the country. Then, when ready to start looking, give one of our great agents a call to get inside!
Working with investors gives you the opportunity to dive into the numbers. And while I’m no accountant, I certainly understand the basics of buy low and sell high. I also understand market stats and the role they play in tracking trends, etc. Recently there has been a lot of talk about publishing MLS data in a public forum, that’s another post for another day. That said the MLS is n important source for what is going on in the market place. I want to look at some data we track and share with investors to help them compare investment opportunities.
In terms of data we track four areas: Active, Pending, Contingent, and Sold MLS listings. Within each of those categories we look at the number of properties in each category, number of days on market, average sale price, and list to sale price ratio. Knowing these numbers allows us to compare traditional transactions with opportunities at trustee auction.
Let’s look at some recent data pulled from Sandicor MLS in San Diego. Currently there are 9300 Active single family properties for sale in San Diego County. The average days on market is 101, and the average list price is $808,000. Pending homes, those under contract and in escrow, show 3900 homes with an average list price of $426,000 and on the market for an average of 73 days. Contingent homes, aka short sales, show 3400 homes at an average list price of $325,000 and on the market for 140 days. OK, so what does this all mean? Notice how the prices and days on market change based on status? Short sales are on the market longer and sell for less. Safe to assume we all know that. But did you really know to what extreme these numbers fluctuate? More importantly, can you see how sharing this type of information can help your clients make better decisions? Investing in real estate is like solving a puzzle. It can be frustrating and risky, but it sure feels good when you get all the pieces in the right place.
On the surface you can see that nearly half the properties under contract are short sales. But when you look deeper you realize that a good portion of the pending units were at one time contingent. The contingent status is specifically for short sales and is used when a buyer and seller have agreed to terms, but the bank has not yet approved the sale. We found that nearly 40% of the pending homes were contingent. So the reality is that perhaps 70% of all homes under contract are short sales.
In speaking with an agent this week that does a lot of short sales, he estimated that short sales actually sell at about 90% of market value. We already saw above that they take longer to close, and sell for about $100,000 less than traditional sales. What about trustee auction properties? Well, here is where our very unscientific poll comes into play. And I say unscientific because these numbers represent our personal experiences at auction over a 3 day period. I am tracking on a larger scale and will write a follow-up to this in the near future. Here’s what we found and the big benefit to buying at trustee sale: Properties sold at 77% of market value! How would you like to put 13% more in your pocket just for showing up? There are risks, but they are calculated and minimized when you work with a Smart Company that has a successful track record in this arena. Stay tuned for more.
Check out this great Spanish home in the exclusive Horizon Hills/Mt. Helix area. It’s a one of a kind for the area with panoramic views, pool, spa and a one half acre lot. Designer touches, custom decor…it’s a beautiful thing!
This is just a quick post…really a link to an article on Inman News…about recent information that could have major ramifications on where your listings are displayed online. What are you thoughts on this? Will this have an impact on your business? It could…so pay attention! I’d love to hear your feelings on this topic after reading the article below!