Sellers: Drawing a line in the sand
By Tyson Lund, Real Estate Business Analyst
After driving the economy and rewarding homeowners with hundreds of thousands of dollars in appreciation, the real estate market has won the attention of our nation. However, this financial windfall, which many of us have experienced in only a few short years, has raised questions on the stability of the market.
Current state of the market
If you watch the market closely, you will see we have a record number of "For Sale" signs in Carlsbad. There are more than 700 residential resale properties on the market, about a 14 percent increase over the record summer 2004 inventory. Traditionally, the end of the summer is marked by an influx of homes up for sale. Too many homes on the market causes some real estate watchers to worry that too many homes on the market will cause prices to fall. In 2004, the increase in inventory during August and September led the average sale price of a home in Carlsbad to soften by around four to six percent in October. It is important to note that there are an increasing number of "canceled" and "expired" listings.
Cancelled or expired
When a contract is signed between an agent and a homeowner, a time period to sell the property is agreed upon. At the end of the time period, usually three to six months, the binding nature of the contract expires and the relationship ends. Some agreements have a clause in the contract that will allow the seller to cancel the listing for any number of reasons. Although the details of either scenario are too complex to delve into in this column, it is important to note that there are an increasing number of cancelled and withdrawn listings being recorded in the Multiple Listing Service.
Why is this important?
The number of cancelled and expired listings has not been a significant statistic to track in past years. In 2004, Carlsbad homes were selling in short order and, in many cases, over the asking price. An expired listing did not signal any market trend other than buyers did have a threshold on how much they were willing to pay for a particular property. A large number of expired or cancel listings in the Multiple Listing Service mean that those properties are not selling in the timeframe the sellers or agent expected, and solidifies claims that the market is changing and buyers have more negotiating power. The large number of withdrawn listings shows how sellers are essentially drawing a line in the sand and are unwilling to sell their property below their expectation. If this trend continues, prices will remain steady throughout the year.
What's selling?
Town homes and condominium projects with three bedrooms have been selling very well. It is one of the few types of properties that have actually sold more this year, 175 units, versus the same time period last year (160 units). When compared to a three-bedroom detached home, a three-bedroom town home is a cost-conscious alternative, while not sacrificing much living space. South Carlsbad's Aviara, a master-planned community built around 1992, has been a sought-after purchase for many Carlsbad homeowners. This year, Aviara homeowners have seen continued appreciation due to the fact that not many homes in the award-winning community have been put on the market. Scarcity has also been the driving factor for property west of I-5, which has remained popular throughout the year. Four thousand square feet and larger detached homes have dropped off significantly in comparison to the last two years. Many of the new construction projects in Carlsbad feature larger estate homes and are luring buyers to customize their dream home. One of the more successful communities has been Castlemar in the La Costa Greens community. Nearing phase four of the development, the functional floor plans and lot locations are making it a must stop for home searchers.
By Tyson Lund, Real Estate Business Analyst
After driving the economy and rewarding homeowners with hundreds of thousands of dollars in appreciation, the real estate market has won the attention of our nation. However, this financial windfall, which many of us have experienced in only a few short years, has raised questions on the stability of the market.
Current state of the market
If you watch the market closely, you will see we have a record number of "For Sale" signs in Carlsbad. There are more than 700 residential resale properties on the market, about a 14 percent increase over the record summer 2004 inventory. Traditionally, the end of the summer is marked by an influx of homes up for sale. Too many homes on the market causes some real estate watchers to worry that too many homes on the market will cause prices to fall. In 2004, the increase in inventory during August and September led the average sale price of a home in Carlsbad to soften by around four to six percent in October. It is important to note that there are an increasing number of "canceled" and "expired" listings.
Cancelled or expired
When a contract is signed between an agent and a homeowner, a time period to sell the property is agreed upon. At the end of the time period, usually three to six months, the binding nature of the contract expires and the relationship ends. Some agreements have a clause in the contract that will allow the seller to cancel the listing for any number of reasons. Although the details of either scenario are too complex to delve into in this column, it is important to note that there are an increasing number of cancelled and withdrawn listings being recorded in the Multiple Listing Service.
Why is this important?
The number of cancelled and expired listings has not been a significant statistic to track in past years. In 2004, Carlsbad homes were selling in short order and, in many cases, over the asking price. An expired listing did not signal any market trend other than buyers did have a threshold on how much they were willing to pay for a particular property. A large number of expired or cancel listings in the Multiple Listing Service mean that those properties are not selling in the timeframe the sellers or agent expected, and solidifies claims that the market is changing and buyers have more negotiating power. The large number of withdrawn listings shows how sellers are essentially drawing a line in the sand and are unwilling to sell their property below their expectation. If this trend continues, prices will remain steady throughout the year.
What's selling?
Town homes and condominium projects with three bedrooms have been selling very well. It is one of the few types of properties that have actually sold more this year, 175 units, versus the same time period last year (160 units). When compared to a three-bedroom detached home, a three-bedroom town home is a cost-conscious alternative, while not sacrificing much living space. South Carlsbad's Aviara, a master-planned community built around 1992, has been a sought-after purchase for many Carlsbad homeowners. This year, Aviara homeowners have seen continued appreciation due to the fact that not many homes in the award-winning community have been put on the market. Scarcity has also been the driving factor for property west of I-5, which has remained popular throughout the year. Four thousand square feet and larger detached homes have dropped off significantly in comparison to the last two years. Many of the new construction projects in Carlsbad feature larger estate homes and are luring buyers to customize their dream home. One of the more successful communities has been Castlemar in the La Costa Greens community. Nearing phase four of the development, the functional floor plans and lot locations are making it a must stop for home searchers.