San Diego Housing Bubble News and Analysis

I thought I was the only one that was getting irritated by this. I have one in mind where the seller has plenty of equity and might be able to make a sale if they priced the house somewhere in the low/mid 400’s. Instead they list it for 635 and when it doesn’t sell in 60 days they lowered the price to 619. I wonder if I offered 575 they would counter at 600? Whats the point?

Yeah, it's funny. People turn down offers less than asking but those offers may still allow them to cover their loans, or even make money depending when they bought.

The longer they hold out the worse it will be. In a year they'll be asking what they were offered today and by then they will still be too high.

Cut the price today and get it over with, unless you really like having open houses.

Awe, come on now, at least 1/2 the listings I see say "priced below market value". They wouldn't lie now would they?

Thats a good point, and I wonder as I look at listing prices, with so few sales taking place...

Dose anyone really know what the market values are?

What IS considered below market value in a falling market. I don't consider anything below market value until the prices come in line with rents and income, but then again there are plenty of uneducated people who will pay well above this floor.

The RE and sellers try to use Comps to justify to the uneducated that what they are buying is "worth it".

but with little recent sales history the prices are still way way way up there.
It a tough spot I would imagine. the sellers want to sell their house but they want to get as much money as possible. Price it too low and you get a quick sale and less money...
price it to high and you get no sale and less money later...
price it just right and you....get the lessor of a bad situation.

It is all about the starting prices. and in this market I think that some agents are using a dart board and blindfold tto pick a good starting prices.
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A few examples. As many of you know, I am a buyer who has been looking patiently in RSF since June and had been looking up here in the Bay Area since January.

In terms of areas, IMHO, the worst offenders of overpriced homes are in Santaluz. Prices per sf are generally higher than RSF, except it is not RSF, it is SD, usable lot size is much smaller, you have Mello Roos, and a the school you kids will attend is a big ??.

Skipping Santaluz for that reason, I have a few favorites in the low high end to middle high end of the market in both RSF and here in the Bay Area. In all these cases (except as noted), comps are selling for lower than asking for these examples by at least 10-20% as some modicum of protection against catching that falling knife.

SD.

House 1. My favorite in SD. Seller bought the house near the peak of the market for almost $800k below their current asking price. Seller did put around $200k into landscaping so the difference is $600k. House has been on the market 150+ days this time. It had been on the market last year at $1.3 million above what they paid for it at the peak of the market. Seller's agent says, since they "already drastically" dropped the price by $500k when they relisted it this year, they will not budge on price again, and indeed, they have not. So this seller is trying to make a $600k profit in this market on a house they bought near the "peak" of the market!

House 2. Home listing for $3.2-$3.7 million and has been on the market almost 2 years. Seller will not budge on price. Comps in the neighborhood are selling for about $2.8-$3.0 million. House has been vacant all year.

House 3. Seller stuck to his $3.9 million asking for over 100 days and turned down offers as high as $3.7 million (second hand knowledge). House ultimately sold for $3.45 million.

House 4. Seller listed for $2.9 million and turned down all offers. Seller's agent indicated they had turned down a $2.65 million offer. House still for sale listing at $2.3 million.

Bay Area (just last night the news reported that prices are going up in the bay area (Penninsula and San Jose). Yes, they reported "medians").

House 1. Seller listed for near $3 million and said would not budge on price when asked if they would take $2.75 million. That is now their listing price after 170 days on market.

House 2. My favorite up here. a 4,600 sf 4 BR home in Los Altos Hills that listed for $4.4 million close to 200 days ago. Not a single drop in price. Despite this market not dropping as much as SD, that is still about $1 million over priced. The problem, a few other comps of comprable size are similarly priced (e.g. 5k sf at $4.3 million) and also not selling.

House 3. Or maybe this is my favorite. Try 4k sf 4br with no view and no pool on 1 acre for $4.2 million since January despite a slightly older 400 uphill yards away 5 br, 4k sf house with a great view and a pool on 1.5 acres selling for $2.5 million in June!

House 4. On market for 140 days+ at $2.95 million for a 4br 3700 sf house. Went off market for one month and back on the market for $3.2 million for about 90 days. Went off market again for a while and is now back at its original price! Seller relisted indicating "relisted at a significant discount." Very generous.

p.s. I have observed in a number of cases that when homes I have seen sold for asking or slighly above asking, from what I have been able to learn, the home sold in the low end of the buyer's range. Indeed, I must admit that when I look at houses in the low end of my range, I don't think about low balling an offer as much as I do at the high end, for obvious reasons.

I have also seen a few houses below the low end of my range that I liked so much I was willing to consider a smaller house than I am looking for. In those cases I would consider paying above asking if there was competition for the home, since my goal would be location and subsequent upgrades.

When you see that you can put down 50% and can qualify for twice as much house, you are not as price sensitive as when your down is exactly 20% and the difference is at the extreme top of what you can finance. My sweet spot is somewhere in the middle (about 30% down) and I want to pay 10-20% below asking.

Enough Realtors know how to sell houses in this market.The ones that don't would learn quickly if the owners of the for sale inventory would let the the ones that do get things started.
Ultimately the house belongs to the owner and they can do what ever they want. Currently most sellers think that it will get better, so they want to wait if they can. Some agents are willing to take listings for these people. probably to appear prominent in the business and always willing to help, especially if they are the type that have a "farm". Some are taking listings hoping the seller will change opinion and get motivated while under contract. A small minority are actually clueless as to why overpriced homes won't sell.

I agree with Rustico, which is why my examples were based on seller mentality and not of their agents.

I note that I have previously posted examples where it was the selling agent that was off base.

Recall my example of the selling agent who added $200k to the asking price to cover built in electronics, but only after I indicated interest in the house, only to see me walk. Later he sold the house for $300k less than asking.

Recall those examples of selling agents who discouraged me from writing offers.

And I also encountered some agents in Santaluz that must think this is a huge seller's market with all the mutilple offers they are getting. Funny, that was months ago and those houses are still for sale.

But, by and large, it is the sellers who are the problem. Since I may be a seller soon, I hope to be part of the problem. :)

Ah, heck, I will just rent it out.

I agree with the above. It is predominantly seller not REALTOR driving. Yes there is a % of Realtors out there who really don't know what they are doing, but at the end of the day the boat is driven by the seller.

Case in point is a house listed forsale down the street from me. It's the typical case of best house in an OK neighborhood. The seller is asking $900-$mil in a sea of $500k to $600k homes. The house has been on the market for months and hasn't moved. They have been through FOUR BROKERS. Sorry it's not the fault of the broker that the house isn't moving. It's the seller not listing at a reasonable price.