As Carlsbad welcomes throngs of visitors to our temperate climate, our holiday guests will notice the number of ‘For-Sale’ signs and ask: What’s the price? With the ambiguous nature of our local real estate market that question may not be easy to ascertain.  Currently, the sales prices are holding steady in the face of record inventory levels. And as more of your neighbors are choosing to sell their Carlsbad homes, it is imperative to understand the changing season the winter market brings to real estate.

What to expect during the winter months?

First, the market slows.  The number of sales during the months of October, November and December lessens as fewer homeowners choose to purchase real estate during the holiday season.  Carlsbad has seen around a 30% decrease in homes purchased in comparison to t the summer months, which tend to be the busiest season.  Also, the average sales price of Carlsbad property lowers during the end of the year.  Even in an appreciating market, as Carlsbad has been for many years, sales prices retreated 1.5% to 2% during the Fourth Quarter.  This means that it takes longer to sell a property and those that do sell will sell for less than expected.  

In years past, the number of available properties during the fourth quarter decreases around 20% from the previous quarter.   The process of selling a home is considerably stressful and the added pressure of the ‘holiday hustle’ makes it an undesirable time to sell.  Landscape reparation, minor home repairs, coordinating replacement property and hiring a real estate agent are just some of the many things the homeowner must undertake before selling their property.  Buyers must also deal with similar stresses when buying and moving during the holidays.   Both take a much-needed vacation in the market activity reflects this trend.

How are people combating the slow selling season?

The incentives that sellers are offering to the agents that represent buyers are increasing. 

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.  Also, Sellers are adding cash bonuses to the selling offices to entice agents and their coworkers to take a second-look at their property.   Most of the new construction projects, such as La Costa Oaks, are offering premium upgrades to purchasers and high cooperation incentives to agents. If you are considering purchasing a home before your property is sold, consider the impact of the increased competition and plan accordingly. 

Rates, Loans and New Rules

There is positive news in the lending community that affects the future of Carlsbad homeowners.  The conforming loan limit is currently being increased from its current level of $360,000 to $400,000.  Simply, homebuyers wanting to purchase a home will be able to borrow more money the lower, conforming rate.  In the past, loans that were above the $360,000 limit were considered jumbo loans and carry a higher interest rate. The change in the conforming loan rate will give Buyers more buying-power and help to keep sales prices level, if interest rates continue to rise.