2019 was a year of surprisingly low interest rates and low inventory. And, great news, we anticipate those low rates to continue for 2020 and ending the first year of the new decade at around 3.75%. Just to gauge that a little, my 1st home purchase in 1994, the interest rate was at 7.5% and for that time, everyone was ecstatic for that rate. Today, anything below 5% is considered a fantastic rate. Who remembers the 13% interest rate?
In discussing the overall Real Estate Market, we also must look at:
- Inflation – Currently at 1.8% which is very low
- Unemployment – 3.6% – Historically low
- High Labor Participation – 63.3%
- Consumer Confidence 96+
Since they can have a positive or negative effect on the Real Estate Market, we need to understand these numbers and plan accordingly for your current and future Real Estate needs.
We have experienced 7 straight years of rising prices (sourced by CoreLogic Data (from September 2018-September 2019)
- Riverside County: 3.9%
- Orange County: 2.3%
- San Bernardino County: 5.7%
- San Diego County: 0.9%
- Ventura County: 0.3%
California’s Home ownership Rate hits 9-year High New census data shows 56.3% of households statewide lived in a residence they owned in the third quarter. While that’s the 6th lowest amount the states, its California’s highest ownership level since 2010. Between 2005 and 2009, California ownership averaged 58.5% in an era that saw aggressive lending. From then, as lenders made it harder to get a mortgage and home “affordability” worsened, ownership has averaged 54.7% in the state
The past year’s dramatic reversal in mortgage rates, continued strong job growth statewide and moderating price home-price appreciation seems to have put more Californians into their own homes. For example, home ownership in the Inland Empire hit an 11-year high. In Riverside and San Bernardino counties, 67.7% of households lived in a residence they owned in the third quarter, ranking No. 23 among the 75 largest metro areas, according to the Census Bureau
TransUnion projects a flood of 8.3 million first-time home buyers will hit the market in the next three years, more than in any three-year period in the last decade.
The state of the market differs depending on where you live. Still, there are a few national trends to consider. Here are some statistics to help answer the age-old question, “how’s the market doing?”
3 Weeks: Median length of time recently sold homes were on the market, (consistent since 2017)
Median Home Price: $257,000
Existing Home Sales: 3.9 Months of Inventory in late 2019 (SELLERS MARKET!!!)
Due to lack of construction, new home purchases continue to drop; 13% of homes purchased were new construction – the lowest rate in years.
Recession likely years away
Robert Shiller, American economist and Sterling Professor of Economics at Yale University has stated “recession likely years away”.
Update – March 13-2020
The last recession in 2007/2008 was nothing like any other since the great depression. Think about that for minute. Many of the up and coming home buyers and sellers, this past recessions was their 1st one (one that they can remember and truly experienced). So when they hear the word recession, they get “freaked” out. But let’s face it, recessions are very necessary. Were would we be today is this recession didn’t happen…how many could afford a home, buy groceries, gas,etc? we would have been primed for another “great depression”.
Recession are like pressure cookers and earthquakes. We need to let out some steam or built up pressure to avoid a large disaster. Recessions happen around two times a decade. So we can expect the next one to hit us in the next 2-3 years.
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Don’t Settle for just a CMA! – Market Evaluations done right!
Real Estate Market Predictions for 2020
NAR Cheif Economist “New home sales will hit a 13-year high in 2020, up 11%, to 750,000. Existing home sales, at 5.56 million, will be the highest since 2017”.
This is something exciting to note: The predicted 2020 existing homes sales of 5.56 million will represent the 4th best Real Estate Market in HISTORY!!! That’s a big deal I think!!!!!
Freddie Mac’s chief economist feels “the steady improvement of the housing market is a reassuring sign that the economy is on solid ground heading into next year,” noting “purchase mortgage applications rose 15% over…a year ago.
Median Price Growth: 4.3% (slightly lower than 2018-2019, but that’s good) – This is a very normal growth and it’s what we want. We already know what happens when we see double digit growth ……..POP go the bubble!
3-Year Loan Rate: 3.75%
Continued shortage of inventory and we will remain in an almost equal buyer/seller market with dips into the seller’s market.
Is it a Good Time to Buy a Coachella Valley Home?
Buyers who are waiting on the fence, may be waiting awhile for “deals” to come back. Instead of waiting for deals, buyers should be thinking of:
- You live in the payment not the price/interest rate. Find out what your “comfort zone” is for your payment and look for homes in that price. If the home fits the location, layout, condition, then you have “found your deal”.
- You live in the floorplan not the square feet. Sometimes buyers get caught up on the size of the home. Never overlook a smaller floorplan in a location you desire. A well-designed floorplan can look and feel larger than a bigger home.
While there can be some correction and/or movement in the market and prices adjust to respond accordingly, we don’t anticipate anything we saw in 2007/2008. So, while you don’t need to rush to buy, you can and should keep looking. Don’t stress about the price and the interest rate, if the payment fits your budget and you love the home, buy it! Waiting, more times than not ends up biting you in the butt.
Is it a Good Time to Sell my Coachella Valley Home?
Depending on your needs to sell, where you live and the time of year, are all factors that help you decide if it’s a good time for you to sell your home.
For 2019, we maintained a seller’s market throughout the year and the trend has continued so far into 2020 and is predicted to stay the same.
Laura Lake Real Estate
Market Evaluations Done Right!
We look at several aspects when meeting with you to determine if the time is right for you to sell. We don’t just look at the market overall, we dive into your needs, reasons and goals. Then we analysis the market for your neighborhood and city to determine the best time to sell that will help you achieve your goals. We have systems to tell you what months the most homes sell in your neighborhood and when they get their highest price. How that work for you in deciding to sell? We don’t just show with a CMA, the common theme among average agent. Laura Lake Real Estate is not your average agent.
We don’t know when we’ve hit the top or the bottom of the market….until it’s over….Laura Lake