Last month's article outlined the pullback in the booming real estate market. Carlsbad single family property has appreciated nearly 30 percent since early 2012. But the freshest data on local home sales are affirming the slowdown 'felt' by local brokers both in buyer traffic and written offers on local listings.
Single family home sales in Carlsbad between May and June represented a peak in home pricing for 2013.
Out of 237 sold single-family homes between May 1 and June 30, the average single family home sold for $313 a square foot, in 27 days with a list price of $835,000 and a final sales price of $820,000.
Of the 41 homes that have closed escrow in Carlsbad between Aug. 1st and Sept. 19th, (104 are Pending awaiting close) the average sales price was $304 a square foot, selling in 38 days with an average list price of $820,000 and average sales price of $805,000. The recent sales in Carlsbad are showing that single family homes are selling at a discount when compared to the most sales of only a few months back.
Real estate brokers credit the recent slow-down to a combination of seasonality, higher costs and the near exit of investor home buyers. The local market typically begins to slow in October and continues through the winter months as fiscal year end, fall sports commitment and holidays dominate home buyers already busy work and life schedule.
Time strapped home buyers have fewer hours to commit to the emotional process of buying a home. The result is an annual slowdown of around 30 percent in number of home sales from spring and early summer months. But a seasonal slowing is only part of the equation to the recent change. Home buyers have been saddled with higher home prices as well as higher mortgage rates. The result is a higher monthly payment than in early 2013. Even those buyers capable of affording the higher payments are pushing back, even cooling, on the prospect of buying at today's prices. Home buyers are weighing the cost, responsibility and permanency of homeownership.
When rates and prices were lower, buying a home was less expensive alternative to renting.
This fact also caught the attention of both large institutional funds and small mom-and-pop investors who were finding returns on capital hard to come by. Real estate was able to provide 10 percent or more annual returns, a rarity for single family real estate. But as with most "great deals" the time came and went fast. The average price and rate increase has eliminated the 'juicy' return provided to real estate investors in 2011 and early 2012.
The same property now yields a 3-4 percent return on 30 percent down. Hardly a great return for the risk associated with tenants, repairs and vacancy. With the general consensus that higher rates may cause further price declines, many buy-and-hold real estate investors have moved to the sideline. So this triple-whammy has flattened appreciation and created a new normal for our local market.
As of Sept. 18 Ben Bernanke and the Federal Reserve renewed their bond-buying in an effort to keep rates artificially low and further stimulate the economy. Average mortgages rates barely budged and are hovering still around 4.5 percent. Nowhere near the low 3 percent levels seen previously. Average 30-year fixed rates are around 4.5 percent as of mid-Sept. Home buyers will have to warm up to the idea of the higher mortgage rates in the future.
As the current trends unfold through the winter, home buyers will gain greater power at the negotiating table and are expected to work for a larger discount off today's asking prices. Today's home is sitting on the market longer and sellers will become more open to the idea of are more apt to negotiate a discount. The average list-to-sale discount is now around 2 percent off asking.
Lund can re reached at [email protected]
Single family home sales in Carlsbad between May and June represented a peak in home pricing for 2013.
Out of 237 sold single-family homes between May 1 and June 30, the average single family home sold for $313 a square foot, in 27 days with a list price of $835,000 and a final sales price of $820,000.
Of the 41 homes that have closed escrow in Carlsbad between Aug. 1st and Sept. 19th, (104 are Pending awaiting close) the average sales price was $304 a square foot, selling in 38 days with an average list price of $820,000 and average sales price of $805,000. The recent sales in Carlsbad are showing that single family homes are selling at a discount when compared to the most sales of only a few months back.
Real estate brokers credit the recent slow-down to a combination of seasonality, higher costs and the near exit of investor home buyers. The local market typically begins to slow in October and continues through the winter months as fiscal year end, fall sports commitment and holidays dominate home buyers already busy work and life schedule.
Time strapped home buyers have fewer hours to commit to the emotional process of buying a home. The result is an annual slowdown of around 30 percent in number of home sales from spring and early summer months. But a seasonal slowing is only part of the equation to the recent change. Home buyers have been saddled with higher home prices as well as higher mortgage rates. The result is a higher monthly payment than in early 2013. Even those buyers capable of affording the higher payments are pushing back, even cooling, on the prospect of buying at today's prices. Home buyers are weighing the cost, responsibility and permanency of homeownership.
When rates and prices were lower, buying a home was less expensive alternative to renting.
This fact also caught the attention of both large institutional funds and small mom-and-pop investors who were finding returns on capital hard to come by. Real estate was able to provide 10 percent or more annual returns, a rarity for single family real estate. But as with most "great deals" the time came and went fast. The average price and rate increase has eliminated the 'juicy' return provided to real estate investors in 2011 and early 2012.
The same property now yields a 3-4 percent return on 30 percent down. Hardly a great return for the risk associated with tenants, repairs and vacancy. With the general consensus that higher rates may cause further price declines, many buy-and-hold real estate investors have moved to the sideline. So this triple-whammy has flattened appreciation and created a new normal for our local market.
As of Sept. 18 Ben Bernanke and the Federal Reserve renewed their bond-buying in an effort to keep rates artificially low and further stimulate the economy. Average mortgages rates barely budged and are hovering still around 4.5 percent. Nowhere near the low 3 percent levels seen previously. Average 30-year fixed rates are around 4.5 percent as of mid-Sept. Home buyers will have to warm up to the idea of the higher mortgage rates in the future.
As the current trends unfold through the winter, home buyers will gain greater power at the negotiating table and are expected to work for a larger discount off today's asking prices. Today's home is sitting on the market longer and sellers will become more open to the idea of are more apt to negotiate a discount. The average list-to-sale discount is now around 2 percent off asking.
Lund can re reached at [email protected]