A brief moment of equilibrium may have been met in a classic battle of supply and demand in Carlsbad's real estate market. As of Aug. 21, 37 percent of the current for-sale single family homes in Carlsbad have had a price reduction from their original listed price. With some price reductions occurring in as little as 10 days.
Also, roughly the same percentage of the 94 single family homes currently under contract and in "pending" status in the Sandicor MLS required a price reduction before selling. This is a recent and telling trend in Carlsbad's real estate market, as only a few months ago, price reductions were less than 15 percent of the active market.
Owners and their agents were continually testing higher prices through the spring as market time stayed low and homes sold quickly.
Today's owners are eager to recapture higher, pre-recession pricing and have been emboldened by spring's robust results. The average single family home in Carlsbad has become much so more expensive.
The price reductions is a telling sign that the market is starting to push back. Carlsbad (and other cities in North County) is over 24 percent more expensive today than in January of 2012. The average 2,600 sq.ft single family home in Carlsbad that sold for $630,000 today sells for around $790,000. And they are paying higher average mortgage rates of about 1 percent; the difference between 3.55 percent and today's 4.5 percent.
Mortgage brokers have been advising their borrowers to lock-in a mortgage rate as they find a home, as rates have been making dramatic increases over a short period. An unpredictable and volatile mortgage market makes it difficult for the borrower to plan and maximize the amount borrowed on a loan.
With home price appreciation leveling off, it appears that the local market is entering a more traditional slowdown that typically occurs during the fall to winter months. The number of homes for sale is expected build up into in the fall, as home buyers begin to hunker down for the start of the school year. The number of home sales has historically dropped as much as 30 percent from the summer months. This does not necessarily mean prices will drop, but it may take longer than a few weeks to sell.
Homeowners will need to be aware of the market to stay competitive and have success in 2013. Selling strategies may need to change in the face of possible higher mortgage rates or new competition from newly reduced and unsold homes.
A recent article in the Wall Street Journal cites a new study out of Wharton that finds buyers use 'price anchors' to value property and that over-pricing a property yields better results.
Many real estate agents have long advocated pricing a property competitively, even underpricing a home, to get a bidding war started. See Bravo's new real estate reality show "Bidding War" with LA agent/host Kennon Earl who encourages pricing a property lower than market to generate a frenzy and drive up the final price. In the entertaining pilot episode, one home bidder puts a bid $150,000 over asking-priceand throws in his Porsche to help secure the home.
In an appreciating market (as has been the current market), pricing a home higher, setting the price anchor, and waiting out the buyer has been the favored strategy. Seller's do not want to potentially leave money on the table if the auction-like environment is unsuccessful.
But with the market showing signs of a pushback and price corrections on the rise, homeowners may decide to price their home more aggressively to assure themselves a timely sale. And homebuyers should welcome the news that the possibility to buy better this winter is within reach.
Also, roughly the same percentage of the 94 single family homes currently under contract and in "pending" status in the Sandicor MLS required a price reduction before selling. This is a recent and telling trend in Carlsbad's real estate market, as only a few months ago, price reductions were less than 15 percent of the active market.
Owners and their agents were continually testing higher prices through the spring as market time stayed low and homes sold quickly.
Today's owners are eager to recapture higher, pre-recession pricing and have been emboldened by spring's robust results. The average single family home in Carlsbad has become much so more expensive.
The price reductions is a telling sign that the market is starting to push back. Carlsbad (and other cities in North County) is over 24 percent more expensive today than in January of 2012. The average 2,600 sq.ft single family home in Carlsbad that sold for $630,000 today sells for around $790,000. And they are paying higher average mortgage rates of about 1 percent; the difference between 3.55 percent and today's 4.5 percent.
Mortgage brokers have been advising their borrowers to lock-in a mortgage rate as they find a home, as rates have been making dramatic increases over a short period. An unpredictable and volatile mortgage market makes it difficult for the borrower to plan and maximize the amount borrowed on a loan.
With home price appreciation leveling off, it appears that the local market is entering a more traditional slowdown that typically occurs during the fall to winter months. The number of homes for sale is expected build up into in the fall, as home buyers begin to hunker down for the start of the school year. The number of home sales has historically dropped as much as 30 percent from the summer months. This does not necessarily mean prices will drop, but it may take longer than a few weeks to sell.
Homeowners will need to be aware of the market to stay competitive and have success in 2013. Selling strategies may need to change in the face of possible higher mortgage rates or new competition from newly reduced and unsold homes.
A recent article in the Wall Street Journal cites a new study out of Wharton that finds buyers use 'price anchors' to value property and that over-pricing a property yields better results.
Many real estate agents have long advocated pricing a property competitively, even underpricing a home, to get a bidding war started. See Bravo's new real estate reality show "Bidding War" with LA agent/host Kennon Earl who encourages pricing a property lower than market to generate a frenzy and drive up the final price. In the entertaining pilot episode, one home bidder puts a bid $150,000 over asking-priceand throws in his Porsche to help secure the home.
In an appreciating market (as has been the current market), pricing a home higher, setting the price anchor, and waiting out the buyer has been the favored strategy. Seller's do not want to potentially leave money on the table if the auction-like environment is unsuccessful.
But with the market showing signs of a pushback and price corrections on the rise, homeowners may decide to price their home more aggressively to assure themselves a timely sale. And homebuyers should welcome the news that the possibility to buy better this winter is within reach.