The results are in from the first months of residential real estate sales in Carlsbad and, to the surprise of some, they are positive. The winter selling season was expectedly slow and brought about the price reductions buyers were demanding. Carlsbad awoke to a new year and a rebirth of activity, as the pace of homes sold showed that the Carlsbad market is in fine shape.
A changing market
In 2006, Carlsbad experienced a steady increase of homes for-sale until inventory levels peaked near August. Mortgage rates also continued to incrementally increase peaking near seven percent, almost a full one percent higher than current rates. The general consensus of the summer 2006 buyers was that a price correction was due, however those selling their homes did not agree. Many buyers flocked to the remaining new construction developments, as the developers increased their incentive packages and lowered their asking price on their remaining homes. Faced with higher interest rates and tough competition from their neighbors and builders, homeowners struck a deal. Tracking the winter 2006 sales and comparing them with previous years, it can be inferred that the average Carlsbad home sold between six to eight percent less – in some cases more – than it could have sold for in the height of the frenzy of 2004 and 2005. These rogue sales caused a necessary change in seller expectations, and buyers saw the new year as an excellent time to negotiate a deal on their dream home.
Single family homes
Although some neighborhoods have experienced a correction, a general statement in regards to Carlsbad homes being worth less or selling for less is false. During the frenzied market, buyers did not have time to decide what they truly wanted in a home. The mentality was that if they did not buy, they would miss the opportunity to purchase this one-of-a-kind home. And they paid the asking price or more. The buyers of the current market take their time to decide what is important for them, while debating the true value of the home. If the buyers do not see value in the home for the asking price, the property will sit for sale without offers. The good news for single family homes is that there are only about five months of inventory on the current market, about half as much as in the summer market of 2006. Less competition means it is a good to sell, as motivated buyers have fewer choices. The average sale price of a Carlsbad home closed during the first months of 2007 is about $811,000, down from $840,000 in 2006. Demand for a Carlsbad address continues to be high, and between 70 and 80 homes have sold per month since the start of the year; close to the number of sales during the spring months of 2004 and 2005.
Town homes and condominiums
In the attached market, sales continue to be mediocre. During January 2004, there were 94 attached properties that recorded sold in the multiple listing services. This January there were 38 that went under contract; a low in almost a decade. Although these numbers do not reflect any of the new construction sales, like Mystic Pointe in Calavera Hills, the slower sales may point towards further price reductions if more homes come on the market. At the current pace, it would take about six months to sell all of the currently available attached homes for sale. Price reductions are likely to occur if that number nears eight or nine months, as desperate sellers discount their asking price to stand-out amongst the competition. The average price of an attached home sold this year was around $426,000, down from an average of $450,000 during 2006.
Mortgage rates
Mortgage rates are expected to stay around their current levels of 6 percent. Ben Bernanke, chairman of the board of the Federal Reserve, appeared before the Senate Committee on Banking and indicated that the fed rate would stay put, as inflation is, for the time being, as they want it. Buyers and sellers must know that a low mortgage rate is vital to keep the pace of the current Carlsbad market.
A changing market
In 2006, Carlsbad experienced a steady increase of homes for-sale until inventory levels peaked near August. Mortgage rates also continued to incrementally increase peaking near seven percent, almost a full one percent higher than current rates. The general consensus of the summer 2006 buyers was that a price correction was due, however those selling their homes did not agree. Many buyers flocked to the remaining new construction developments, as the developers increased their incentive packages and lowered their asking price on their remaining homes. Faced with higher interest rates and tough competition from their neighbors and builders, homeowners struck a deal. Tracking the winter 2006 sales and comparing them with previous years, it can be inferred that the average Carlsbad home sold between six to eight percent less – in some cases more – than it could have sold for in the height of the frenzy of 2004 and 2005. These rogue sales caused a necessary change in seller expectations, and buyers saw the new year as an excellent time to negotiate a deal on their dream home.
Single family homes
Although some neighborhoods have experienced a correction, a general statement in regards to Carlsbad homes being worth less or selling for less is false. During the frenzied market, buyers did not have time to decide what they truly wanted in a home. The mentality was that if they did not buy, they would miss the opportunity to purchase this one-of-a-kind home. And they paid the asking price or more. The buyers of the current market take their time to decide what is important for them, while debating the true value of the home. If the buyers do not see value in the home for the asking price, the property will sit for sale without offers. The good news for single family homes is that there are only about five months of inventory on the current market, about half as much as in the summer market of 2006. Less competition means it is a good to sell, as motivated buyers have fewer choices. The average sale price of a Carlsbad home closed during the first months of 2007 is about $811,000, down from $840,000 in 2006. Demand for a Carlsbad address continues to be high, and between 70 and 80 homes have sold per month since the start of the year; close to the number of sales during the spring months of 2004 and 2005.
Town homes and condominiums
In the attached market, sales continue to be mediocre. During January 2004, there were 94 attached properties that recorded sold in the multiple listing services. This January there were 38 that went under contract; a low in almost a decade. Although these numbers do not reflect any of the new construction sales, like Mystic Pointe in Calavera Hills, the slower sales may point towards further price reductions if more homes come on the market. At the current pace, it would take about six months to sell all of the currently available attached homes for sale. Price reductions are likely to occur if that number nears eight or nine months, as desperate sellers discount their asking price to stand-out amongst the competition. The average price of an attached home sold this year was around $426,000, down from an average of $450,000 during 2006.
Mortgage rates
Mortgage rates are expected to stay around their current levels of 6 percent. Ben Bernanke, chairman of the board of the Federal Reserve, appeared before the Senate Committee on Banking and indicated that the fed rate would stay put, as inflation is, for the time being, as they want it. Buyers and sellers must know that a low mortgage rate is vital to keep the pace of the current Carlsbad market.