Today we are going to hop into what’s happening towards the end of 2022, right here in Encinitas. So if you’re thinking about selling your house, you just want to know what’s going on with the market, stay tuned. We’re going to get into basically three things that we’re seeing in the Encinitas market right now. Show you the market action index, which gives you kind of a breakdown of are we in a seller’s market? Are we in a buyer’s market? We’re going to show you how many homes in Encinitas, percentage wise, have had price decreases. And then we’ll show you what’s happening in different levels throughout Encinitas, because you have that entry level Encinitas, you have that mid range. The closer you get to the beach, obviously you get more expensive. So there’s different markets throughout Encinitas. We’re going to show you what’s going on in each little one, so stay tuned for that. I’m Chris Erickson.
Loren Sanders:
Loren Sanders with the Beach Life Group.
Chris Erickson:
And we are real estate agents right here in North County San Diego. So if you have some questions, you’re living in Encinitas, you want something answered, it’s never too early to reach out. Think about selling your home, hit us up, call, text, email, we got your back when moving in and around North County San Diego. So we’re going to jump into this, show you some charts, but show you what’s going on behind the charts and tell you the stories of what we’re seeing out there. Let’s hop into it right now.
Loren Sanders:
Let’s do it.
Chris Erickson:
The Market Action Index, which we’re seeing right here, it’s from Altos Research, and they do a real good job about tracking active inventory, what’s going on in the market right now. This gives you, you can see it tells you how’s the market. That’s one of the most important questions people ask. And the way that is gauged, are we in a buyer’s market or seller’s market? Obviously the last few years we’ve been in a seller’s market, meaning sellers, you guys, have had the upper hand. There’s been a plethora of buyers out there. Every home was getting multiple offers and prices were increasing and going over list price quite often.
This market action index shows you where we are. You can see last month right in here to this month, not much has changed. But if we go into the year over year, you could see what the difference is. If we’re just going to go a 90 day average, just to smooth things out a little bit, last year in October, this week in October, we’re sitting at 60.21. Now we’re sitting about 41.74. You can see when it was crazy hot, this is April, may going into June before it started falling off here. Loren, what are we seeing with the Market Action Index?
Loren Sanders:
Well, I think this graph shows it all. That the market was obviously strong building momentum coming into the end of last year. It always, market action index slows up seasonally. And then with interest rates still super low at the beginning of this year. And also part of the building is when rates jump a little bit, initially that pushes more people to make a decision. So maybe it makes the market even more intense than it would’ve been if rates were flat. And so as that started happening, it got even more intense and there was less and less inventory, which pushes everything. And then we reached the boiling point where rates get so high that everybody, oh, not everybody, but a good portion of buyers pause and say, “Hey, we got to rethink this because our payment jumped a thousand dollars a month over what it would’ve been at the beginning of the year. And so now we got to juggle some things.” And some people just got priced out of certain markets as well and had to go look at other areas.
Chris Erickson:
Which is that next chart we’re seeing right here, properties with price decreases, meaning they came on at their initial list price and didn’t sell within that first week, that second week, maybe reassess the value at that third week, what’s going on? How many buyers have seen it? How many offers do we have? And right now things have slowed down significantly. There’s been quite a shift where back in April we were only seeing less than 10% of homes had a price decrease. And if you were out in the market or you were talking to your friends and seeing what was going on, anybody who was out there as a buyer, it was pretty evident there was a lot of demand out there.
And that’s kind of what drives prices and price decreases, as there’s less demand, there’s less buyers out there. You’ll see homes will sit a little bit longer. In turn, if you are motivated, you do need to sell your home, one of the biggest things you can do to get motivated buyers in there is adjust the price. If it was a little bit high where people were listing a house, let’s say this house sold for a million dollars in this neighborhood. Well Encinitas, let’s say it sold for 1.7, the next house might list for 1.75 or 1.8, which as a seller, that makes sense.
But that story has changed a little bit. And so now we’re seeing almost 50% of homes with a price decrease, which is pretty big. You can see last year right at this week we saw just about 30%. It trends up and down. Typically we see a little more price reductions coming into the tail end of the year, which is typical. This one is much higher than, this goes back to November of 2019 and you can see it was even bigger than the normal trend back there. Well, 2020 wasn’t too normal as well, but even going back here it was a little bit higher.
Loren Sanders:
Yeah,.
Chris Erickson:
The next-
Loren Sanders:
We got out of whack. I mean the one thing to really point out is everything was out of whack when rates went down to below 3% and 3% or so, which is we started this year in the very low 3% range. End of last year was right around 3% for a 30 year fixed mortgage, which is super beyond what we’ve seen in long, well, in my lifetime in real estate. We got to the lowest lows I’ve ever seen. Now we’re getting to some highs, not the highest I’ve seen in my career yet, but we’re moving up in that direction.
Chris Erickson:
… Right now, the last time I checked interest rates, they were well over 7%. They were like 7.32%, somewhere in there. It depends on your credit, all that kind of stuff, talk with your lender where you’re at.
But one other thing that we’re seeing, we mentioned the different markets, the different price brackets is what’s going on in different price brackets for Encinitas. Here’s all of them together. As we break it out, bring in that top 90, you can see everything going in. This is the top price bracket in Encinitas and then it tiers down the upper 90, the lower 90, and we’ll scroll down the bottom to show you what those price brackets actually are. But you can see down here, back in April in that bottom 90 day bracket, that’s that 1.5 and below, it was three day market time, which is nuts. You can see they trended back towards the middle, now we’re sitting about 47 days. And then the upper is sitting about 105. But you can see the difference down here. You got that 5 million, just shy at 3 million, 1.8, 1.4375, this one down here that’s sitting that, let’s call it Village Park, that new Encinitas area, you get a little bit older homes, but that’s where we’re seeing the-
Loren Sanders:
Cambria in there. Yeah.
Chris Erickson:
… Yep. Yeah, that’s where we’re seeing the market times being the quickest. And then as we’re tiering up into that Encinitas Estates, let’s call it $1.8 million, a little bit longer market times. And then you would expect it to go up even higher, but once you get into that 2.5 and above a little bit, it’s still a little bit less than that 1.8 range.
Loren Sanders:
One thing I should point out or I can tell you right now, in certain pockets there’s still not a lot of inventory in Encinitas. So if you look at certain price brackets, inventory wise, there’s not a lot to choose from. Now, given also the people searching is less, but the one thing I would say, if you see a house you really like and you can actually get it without competition, maybe it’s a little bit higher than you still want to pay, but if you can lock in something and get a real… I think the house you get is more important than getting a house. And that’s the biggest change that we saw earlier in the year, people just wanted to get a house, a lot of them in certain price brackets.
One of the things I’m also seeing is people bought a house in January, February, got in, “Hey, I got a house.” And once they get in there and get settled, they’re like, “Wow, this isn’t really exactly what we wanted.” So there’s some discontentment. Right now at least you’ve got a better shot at getting the real house you want. Nothing’s ever perfect. Right now rates are the biggest deterrent or the biggest challenge, mortgage rates. But really the other two challenges that you had earlier in the year are not there. No inventory and competition. It’s going to play out the way it does. It’ll be interesting to see how this plays out. But there’s still not a ton of inventory, so if you see the house you really like, might make sense to make an offer on it and go after it.
Chris Erickson:
And for sellers, homes, they might be sitting a little bit longer, but they are still selling, especially if they are priced aggressively, meaning they’re priced well, maybe a little bit below what the last one sold for. It all comes down to condition, location will play a big factor in that pricing. So if you guys need some help, you have some questions or anything like that, hit us up.
Just a quick reminder, we are real estate agents right here in North County San Diego. It’s never too early to start that conversation. You have some questions, hit us up. We got that number popping up right now. More than happy to help, even if you’re starting to plan into the new year. We’re helping clients right now and getting their house prepped, getting it ready. So when that new year does hit, we’re going to hit the ground running. So feel free to reach out and if you like what we’re putting down, be sure to subscribe. We’re dropping new videos here every single week. Let you know what’s going on in the North County real estate market. So we’ll get you guys all on the next one.