Tuesday, January 19, 2016

HAPPY NEW YEAR!! 2016 PROMISES TO BE ANOTHER SOLID YEAR FOR REAL ESTATE

The economy continues to roll with jobs being added at a brisk rate in Orange County and Southern California. The most current stats available are from November 2014 - November 2015 with 39,000 (non farm) jobs being added. Unemployment dropped in November to 4.2% from 4.3% in October, both 2015. Why should this be another solid year? The economy is poised to keep growing, this latest jobs report a 2.5% increase year over year. The Feds did in fact raise the short term rate, the rate charged to banks. However, for most lenders, this increase was factored in a month ago and expect to see very little change in long term rates. This should keep buyers very interested in the current market. Remember that experts have cautioned that the price of money must rise at some point, as soon as inflation is spotted, but economically, that hasn't happened yet. This speculation of when and how much will likely drive true buyers to make a decision to buy sooner rather than later. And sellers need to be aware that they must stay realistic in the pricing of their home, because new inventory will hit and hit hard in January, creating more competition for sellers. Ultimately what could keep a lid on pricing is a rise in interest rates causing borrowers price point to go down as monthly payments rise in response to higher rates. So perhaps, "he who hesitates is lost," is not a bad bit of advice if you plan to buy in 2016.

WHAT EXACTLY HAPPENED IN 2015?

There was a lot of movement in all sectors of real estate, another sign of a healthy market. By that, please note that there was a giant merger between homebuilders, there was release of an ocean view community, in the works for 40 years; there were many high priced, high profile listings that hit the market, not the least of which was Richard Nixon's Western White House. The median price most currently available at press time is $623,000 with the average for the year at approximately $604,000, up 4% from last year according to Corelogic. This was almost exactly what had been prognosticated by real estate economists, which also gives credence to 2016, as this is nearly the exact growth predicted for 2016. Sales were up regionally and overall, according to real estate analyst Steven Thomas of Reports On Housing, "There was real price appreciation as buyers clamored to take advantage of interest rates before the Fed made their move." But rates have been so low for so long, that it is clear this isn't the strongest or only motivator for buyers. Another factor: housing prices weren't the only thing making news in 2015; rents rose astronomically compared to housing prices. For most millenials entering or re-entering the market, their motivation was simply getting their ducks in a row-- money saved, debt paid down, and in general recovering from the great recession, and many intentionally guided themselves back into the housing market.

WHAT ARE THE ACTUAL NUMBERS?

These numbers through December 7th: 1) The inventory in OC was 4,972 down from 5,388 just two weeks earlier and down from 5,885 a month ago. 2) Million dollar plus listings equals 34.2% of all listings 3) 182 listings are foreclosure or short sale 4) Total number of sales for the 30 days November 7th - December 7th was 2,992 up 1.6% 5) new homes comprised 337 of those sales, down 4%. 6) Adjustable rate mortgages still comprise a small piece of the lending pie with only 15.3%. 7) 10,664 - Orange County building permits for single and multifamily homes hit the highest level in 15 years.

WHAT DID THE AVERAGE 2015 BUYER AND SELLER LOOK LIKE, ACCORDING TO THE NATIONAL ASSOCIATION OF REALTORS?

The typical buyer was 44 years old and had median income of $86,100, and 83% of them bought a detached single-family home. Here are some other interesting stats: A) 87% of buyers bought their home through a real estate agent or broker. B) 32% are first time buyers. C) Buyers expect to stay in their home 14 years (compare this stat with how long the typical seller actually stays.) D) 88% of buyers would use their agent again or recommend their agent to others. TYPICAL SELLER: A) Their age is 54 B) The typical tenure in the home is 9 years. C) The most common reason for selling a home was that it was too small, followed by a job relocation, D) 89% of home sellers worked with a real estate agent to sell their home. E) Only 8% of recent home sales were For Sale By Owner. This is the lowest share recorded since this report started in 1981, further underscoring how complicated a transaction has become, especially in California.

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