Confidence in the real estate market remains mixed, as the market continues to move and prices remain stable.  Here is a brief summary of what is happening in the Carlsbad Market.

Good News:  Home Sales & Interest Rates

Homes are selling.  The number of residential properties recorded as sold is around 1300, in comparison to 1470 during the same time last year, not taking into account the sales of new construction or homes privately transferred.  Long-term interest rates are fantastic. Historically, adjustable-rate mortgages are roughly 2 percentage points below 30-year, fixed-rate mortgages.  The gap has closed as 30-year, fixed-loan rates remain in the 5% range, giving consumers the ability to refinance their short term adjustable loans (which have been the majority of loans issued in the last several years) or purchase property with a predictable, longer-term payment plan. Currently, there is more property for sale than in previous years, which allows Buyers a wide variety of housing options.  Average sale prices have been stable throughout the year.

Grey News:  Increased Inventory & Price Adjustments

As Buyers are blessed with a number of housing choices, Sellers are facing an enormous amount of competition; 29% more resale property than at the peak of 2004. There are also new-construction projects, such as La Costa Greens, that had not been available in 2004 that are offering incentives to buyers and agents to consider their product.  Many sellers are following the builders lead and offering more money to the cooperating real estate agent that represents the buyer for their property.  Commissions to the Buyer’s agent have moved up from around 2.58% of the sales price in 2004 to nearly 3% for currently pending properties.  Some Sellers have turned to ‘refreshing’ listings, a practice frowned upon by the Multiple Listing Service, which involves canceling their current listing in the MLS and remaking the property to show less market-time.  This is used to attract Buyers fixated on exciting, newly listed property in the search for a ‘great deal’. 

Bad News: Short-Term Investments and Market Time

Since the middle of 2004, the average sales price in Carlsbad has leveled.  Consumers who had purchased property within the last year, with the intention of ‘flipping’ their investment for profit, have found the current market unforgiving.  Carlsbad sale prices have stabilized since last year leaving little room to cover the costs of improving and/or selling their property. Investors must weigh their options carefully, and consider several scenarios, which may include selling for a loss.  Also, if your intention is to receive full market value, yet sell within a week, you may be disappointed.  The average time on the market is 57 days.  The average market-time is actually higher, if you take into account the number of cancelled listings that have been put back on the market.  70% of the current pending listings (those properties that have accepted an offer, but not completely transferred ownership) have had a price reduction, or use a ‘value-range’ price.  A reduction in the ‘original list price’ and ‘Value-Ranges’ are competitive pricing strategies.  In a Value-Range Listing home sellers utilize a high and low price and ‘entertain’ offers within their range.  Value Range Pricing is the preferred pricing method and used by more than 60% of the San Diego County market. Either way, Sellers must be extremely competitive in the current market.

Summary