It’s natural to wonder what is going to happen next.
Today’s hot employment report squashed any hope for lower rates this summer. Home sales are waning. The realtor cartel is a mess. Yet, more listings are hitting the market at all-time high prices without any regard for market conditions.
Home sellers don’t care – they just want their money.
Let’s reflect upon a case we had here at the end of 2022. We know that Carmel Valley has excellent schools and tend to draw the affluent family buyers, which is great for those who can afford $3,000,000+ now.
One of the first neighborhoods built in Pacific Highlands Ranch was a group of what is now considered smaller homes on tiny lots with zero lot lines.
After the mortgage rates took off in 2Q22, the sellers there waited as long as they could – but finally started dumping on price to get out. These are in the order of closing dates – check the first four sales:
When we listed 6065 African Holly, I was determined to stop the bleeding. What good would it do to to list for $1.7 or $1.8 when the last three sales were $1,600,000?
It worked. We got a bidding war started and a cash buyer who was picking up rentals in the neighborhood was the winner, paying $1,660,000.
What’s happened since?
The next four sales sold for about the same, roughly, with three of the four homes taking weeks to find a buyer even though this is PHR entry-level and these are walking distance to Trader’s Joe which has to account for something.
The most interesting fact?
Not one home has listed for sale in the last 12 months!
NO ONE IS MOVING!
The same thing is happening in La Costa Valley, a master-planned community of 1,075 houses built mostly in the late 1990s – and stock full of empty-nesters loaded with equity. In 2024, there have been 12 LCV listings so far, out of 1,075!
I think we could see two things coming down the pike:
- As the market slows, fewer people want to sell because they get the idea that the market is ‘bad’.
- Estate sales make up most of the inventory.
It would mean that inventory in the newer neighborhoods (less than 30 years old) will dry up like a peach seed, and most of the action will be selling the fixers in the older neighborhoods.
