The raging bull real estate market took a stutter step in June when Federal Reserve Chairman Ben Bernanke outlined a sooner-than-expected pull back of a controversial bond purchasing program. Almost overnight, average mortgage rates jumped. May's record low 30-year fixed conforming mortgage rate of an average 3.35 percent moved over a full percentage point higher to 4.5 percent by the end of June. This caused confusion with many home buyers who were suddenly unable to afford the same home they were shopping for just a few weeks prior.
To add insult to injury, home prices moved higher on newly listed homes making homes ever more expensive. The average Carlsbad home sold in January / February of this year closed at $756,000 in 41 days. Fast forward to June and the same $822,600 average price in 21 days on market.
Carlsbad home prices are up 9 percent for the year and up 29 percent since January 2012. Listing brokers continue to push for higher prices with low competition and high homebuyer demand. But they remained concerned on mortgage rates and affordability. Many real estate brokers will mention the feeling of a pull-back in buyer demand for local property after the mortgage rate hike in June. Property that would have sold to multiple offers in hours during April/May sat weeks without a buyer in June.
The jump in mortgage rates increased the monthly cost of homeownership and pushed some buyers out of the market. To put the rate increase into perspective, the average Carlsbad home selling for $800,000 with a 20 percent down payment would cost roughly around $3,907 (principal, interest, taxes and insurance) with a 3.75 percent rate in May. A rate of 4.75 percent would move that monthly cost up $374 a month to $4,281. The estimated equivalent of a $55,000 – $60,000 increase in price or a similar cost of a $860,000 home. Higher rates mean less affordable homes. Carlsbad continues to have low inventory and relatively low average market-time of 35 days to sell. But with higher rates and possible future hikes, the current pace of home value appreciation is expected to slow and even level off in 2013.
Carlsbad Condo and townhomes continue to be snapped up by investors and first time home buyers. With an average market time to sell around 16 days and the average list-to-sale price ratio of 99.9 percent, it would be safe to say the Carlsbad-condo remains a hot commodity. The average 2 bedroom, 2 bath, 1,443 square-feet attached property sells for around $412,000 in Carlsbad. Carlsbad's condo market often sees a surge in homebuyer interest as an 'affordable' housing option when single family home prices rise. Entry level single family homes are in the $500's and up. This makes a 3 bedroom, 1,100 square-feet condo in Carlsbad's Rancho Carrillo neighborhood a relative deal for $350,000. Carlsbad's attached market has also benefited from fewer condo's and townhomes for-sale than in recent years. Many owners have opted to refinance into lower mortgage rates and rent their condos rather than sell in the down market of 2010-2012. With the increased activity and higher prices, opportunistic investors will have an opportunity to unload their property and shed the responsibility of property management once their leases are up for renewal.
Lund can be reached at
[email protected]
Pocket Listings
With few homes for-sale and ample homebuyers, local real estate is selling quickly to multiple offers. Buyer's brokers have become more aggressive in finding a home for their buyers by searching for homes not yet listed for-sale and consummating a deal off-market. Carlsbad homeowners are reporting sight-unseen offers from agents or homebuyers desperate to find a home. Homeowners are advised to remain skeptical of off-market negotiations. Competition drives higher prices. And pocket listings do not allow the home the benefit of full market exposure. In today's competitive real estate market, there is a good chance there may be a buyer willing to craft a superior deal netting the owner more money.
To add insult to injury, home prices moved higher on newly listed homes making homes ever more expensive. The average Carlsbad home sold in January / February of this year closed at $756,000 in 41 days. Fast forward to June and the same $822,600 average price in 21 days on market.
Carlsbad home prices are up 9 percent for the year and up 29 percent since January 2012. Listing brokers continue to push for higher prices with low competition and high homebuyer demand. But they remained concerned on mortgage rates and affordability. Many real estate brokers will mention the feeling of a pull-back in buyer demand for local property after the mortgage rate hike in June. Property that would have sold to multiple offers in hours during April/May sat weeks without a buyer in June.
The jump in mortgage rates increased the monthly cost of homeownership and pushed some buyers out of the market. To put the rate increase into perspective, the average Carlsbad home selling for $800,000 with a 20 percent down payment would cost roughly around $3,907 (principal, interest, taxes and insurance) with a 3.75 percent rate in May. A rate of 4.75 percent would move that monthly cost up $374 a month to $4,281. The estimated equivalent of a $55,000 – $60,000 increase in price or a similar cost of a $860,000 home. Higher rates mean less affordable homes. Carlsbad continues to have low inventory and relatively low average market-time of 35 days to sell. But with higher rates and possible future hikes, the current pace of home value appreciation is expected to slow and even level off in 2013.
Carlsbad Condo and townhomes continue to be snapped up by investors and first time home buyers. With an average market time to sell around 16 days and the average list-to-sale price ratio of 99.9 percent, it would be safe to say the Carlsbad-condo remains a hot commodity. The average 2 bedroom, 2 bath, 1,443 square-feet attached property sells for around $412,000 in Carlsbad. Carlsbad's condo market often sees a surge in homebuyer interest as an 'affordable' housing option when single family home prices rise. Entry level single family homes are in the $500's and up. This makes a 3 bedroom, 1,100 square-feet condo in Carlsbad's Rancho Carrillo neighborhood a relative deal for $350,000. Carlsbad's attached market has also benefited from fewer condo's and townhomes for-sale than in recent years. Many owners have opted to refinance into lower mortgage rates and rent their condos rather than sell in the down market of 2010-2012. With the increased activity and higher prices, opportunistic investors will have an opportunity to unload their property and shed the responsibility of property management once their leases are up for renewal.
Lund can be reached at
[email protected]
Pocket Listings
With few homes for-sale and ample homebuyers, local real estate is selling quickly to multiple offers. Buyer's brokers have become more aggressive in finding a home for their buyers by searching for homes not yet listed for-sale and consummating a deal off-market. Carlsbad homeowners are reporting sight-unseen offers from agents or homebuyers desperate to find a home. Homeowners are advised to remain skeptical of off-market negotiations. Competition drives higher prices. And pocket listings do not allow the home the benefit of full market exposure. In today's competitive real estate market, there is a good chance there may be a buyer willing to craft a superior deal netting the owner more money.