Thursday, January 31, 2008 at 05:27AM
High-End Slinky
Talk all you want about consumer sentiment and buyer psychology, those are hard to measure.
Let's look at the facts, and specifically focus on what has happened since the the mortgage meltdown in August, and the results here in the first month of 2008.
Where is the higher-end market in 2008?
Let's start in 92067. "The Ranch", Rancho Santa Fe, regularly ranks in the top five exclusive neighborhoods in America. If you want to be in the heart of the Ranch, the Covenant, and spend $3,000,000, you'll get an older house that needs work on a couple of acres, but in the outlying areas that'll get you a newer estate on an acre or so.
Here are the current stats for detached listings above $3,000,000:
115 active listings, list prices averaging $830/sf.
21 closed since 9/1/07, averaging $574/sf.
3 closed since 1/1/08
3 have gone pending since 1/1/08
Rancho Santa Fe continues to defy gravity, as markets go, and sales keep happening. The average 'days on market' for these 115 active listings is 149, and that's not counting the relists, so it's probably closer to 200.
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The 92024 zip code is the City of Encinitas, just north of RSF, and consists of coastal properties, tract homes, and a number of ranches in Olivehain.
Here are the current stats for detached listings above $2,000,000:
36 active listings, list prices averaging $629/sf, 157 DOM
10 closed since 9/1/07, averaging $651/sf. 95 DOM
3 closed since 1/1/08
2 have gone pending since 1/1/08
When you only have 10 pieces of data in a sample, the averages can be skewed somewhat. If you look at the solds since 1/1/07, they average $601 per square foot, and 80 days on market. (We should add 50% to these days-on-market stats to account for relists.)
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The 92130 zip code is commonly referred to as Carmel Valley, and is official a City of San Diego address. The real estate values benefit from top-rated schools and proximity to downtown and other employment centers. It is known for its tracts, but there are a number of large estates in the outlying areas.
Here are the current stats for detached listings above $1,500,000:
45 active listings, averaging $521/sf, 102 DOM
18 closed since 9/1/07, averaging $486/sf, 65 DOM
2 closed since 1/1/08
0 gone pending since 1/1/08
Oh-oh, none have sold so far this year, and 45 are waiting. The 102 average days on market is more like 160 counting relists, and the gap between average asking price-per-sf and sold-per-sf isn't that far apart.
Will there be adjustments made by the sellers and their agents? Or can they hold out like they do in the Ranch?
Carmel Valley is approximately 20 square miles, and has an estimated 2005 population of 27,839. The average adjusted gross income in 2004 was $131,876 - is that enough to keep it all afloat, or will sellers be forced to lower their prices substantially to effect a sale?
The buyers are waiting, judging by the goose-egg for 2008.
For more statistics on 92130, here's a link to city-data:
CV is the area east of the I-5 freeway, south of RSF (orange area)
Jim the Realtor
in Thinking of Buying?, Thinking of Selling?, Tips, Advice & Links
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Reader Comments (9)
Hold your breath when the slinky pull actually grabs RSF. There could be some wild rides. Somebody should buy one as a birthday present to themselves.
I like to use physical phenomena to describe what sometimes happens in things like housing markets. In this case think of those perfect surf waves. cresting and holding and then the tip gets out in front and defies gravity before dissolving and crashing. there's that majical instant when the crest is at its highest and furthest out. the rest of the wave is already slumping, blowing out but the curl... mmmm... mmm transcendental while it lasts.
According to the Tribune and there new way of thinking, "The average adjusted gross income in 2004 was $131,876" even this income isn't enough to afford the median price home in SD as a whole, let alone the higher priced CV.
"Its study found that in San Diego County, the household income needed to purchase a median-priced home during the third quarter of last year dropped 12 percent to $143,738, compared with $163,404 a year earlier.
That may sound like good news, but the county's median household income is a little more than $68,000, and with wages forecast to remain stagnant this year, there is little room for optimism among entry-level buyers, say some analysts."
This is assuming the median home price in CV is higher then 440K. That is the number the article uses for the 144K income needed with 10% down.
Hate to break it to would-be-buyers: we live in CV, and, save for the froth on the top (overextended speculators and PR artistes), household income is more like $300k and above. Business owners, Qualcomm executives and such carry the statistics. I hated the price we paid on spec home (that should be only 500k if we were in normal land), but do not believe that we could have gotten in by waiting any longer (and we did wait for 3+ yrs). Let us face it, stratification of the classes was very dramatic - those in the upper middle class (not RSF class) DID fare much better than backbone of the country (i.e. middle class). As always, there will be hell to be paid for allowing the backbone of the country to rot to this extent...
In the meantime, try shielding your family within semi-safe enclave such as CV.
Anon,
I don’t want to live in CV, nothing against it, just not for me .What are you basing the 300K plus average income on? Does that mean that all the median income data for SD is at least 50% low or is it just in CV that this anomaly is occurring?
For Carmel Valley:
Average Household Income $164,212
Median Household Income $110,128
Median Income Under 25 $63,643
Median Income 25-34 $102,465
Median Income 35-44 $120,116
Median Income 45-54 $117,893
Median Income 55-64 $113,286
Median Income 65-74 $79,167
Median Income Over 75 $86,094
Percent increase/decrease in income since 1990 56.0 %
Percent increase/decrease in income since 2000 16.0 %
Average Household Net Worth $190,830
Median Household Net Worth $58,952
http://homes.point2.com/Neighborhood/US/California/San-Diego-County/San-Diego/Carmel-Valley-Demographics.aspx
Both CA renter and SMC have a good point - statistically speaking. We make more than 250k a year and I felt pretty smug about CV statistics (to which we now, unfortunately, belong) - the real data was sampled from interaction with the neighbors - it turns out that (at least locally for us), 300k is norm and the houses are 1.2 to 1.5M. Please note that these houses would NEVER be supported by census income medians!
Thanks for the feedback Anon. I know one guy that lives in CV, he makes 750K salary a yr, plus gets about 1M of stock options granted yearly. He has a home he bought a few years ago for around $3M, he can afford it. Obviously someone like him skews that median up too....
Jim--
Talk about defying gravity...
RSF is one of the 5 most exclusive neighborhoods in the US, and you have closings there at $574 a foot!
Hell, I live in Santa Monica, 90402, and up here it makes RSF look cheap! Currently, minimum lot value in 90402 is $2 M for a 7000 foot lot. SFR's and townhomes are still selling between $1000-$1400 a foot.
$3 Million for a newer estate on an acre or so? There are tear-downs in the flats north of Montana listed at $2.7 M!
I hope someday Santa Monica gets as cheap at Rancho Santa Fe! Never thought I'd hear myself say that!
Hi there, very nice article and summary! Also here in Toronto neighbourhoods is high value section doing pretty well.Despite having difficult year, people are willing to buy expensive homes more and more. If somebody has lot of money, his first investition is usually buying a dreamhouse. So I think high value property market will be always solid and firm...