Monday, January 23, 2017

HAPPY NEW YEAR...WHAT WILL 2017 HOLD FOR REAL ESTATE?

By all forecasters, 2017 looks to be another fairly steady year in real estate.  This column believes that prices will flatten out, prompted mainly by some very slow, but probably steady rise in interest rates.  Most are aware that the Feds raised rates the last meeting of 2016 and indicated there would be at least two more coming in 2017.  We have heard such rumors before, we will all watch to see if they come to fruition.  One thing is certain, if anyone is thinking of buying or selling, this first quarter could not be a better time.  Why?  Well, the obvious...do it before rates rise again.  If you are a buyer, you could see your purchasing power diminished; if you are a seller, you could see your potential sales price flatten if rates do rise and the buyers cannot afford the same amount of home with the rise in interest rates.  Higher rates have always had the capability to keep a lid on home prices.  Demand should stay high and career Millenials get further settled in their careers and with incomes on the rise, particularly at the end of last year, watch for many of them to seriously start looking for a home, or to upgrade their starter condo, into a single-family home.  Remember, Millenials think renting is a waste of money, and they're not wrong about that.  Expect to see Baby Boomers continue to downsize, utilize Proposition 60/90, and seed the market with much needed inventory.  Prices likely will not drop significantly due to tight inventory.  All in all, 2017 should shaped up to another great year that is fair to both sellers and buyers, what is called an equitable market.

NOVEMBER WAS A HOT SALES MONTH--WHAT WERE THE EXACT NUMBERS?

November sizzled for a holiday month, and many reasons were stated in the previous column.  Namely, a strong  job market, wage increases, fear of interest rates rising, all factored into a big month.  CoreLogic reported new and existing home sales of 2,978 for Orange County, up 20.9% from November 2015; Los Angeles had 6,450, up 23.6% from the previous year.  San Bernardino was up 28.3% in total volume and Riverside up 23.5%, all compared to November 2015.  Most striking is the statistic on the median price of a new home, which came in at $861,500, up 4.5% from a year ago as builders sold 426 new homes in November.  That makes the median price of an existing home look like a bargain at $660,000, even  as that number rose 5.9% from 2015.  Prices were up, again according to CoreLogic in 56 of 83 Orange County zip codes.  Sales volume rose in 50 of the 83.  All price ranges showed increases in volume, with the 10 priciest zip codes (median values over $1,000,000), up 9%.  Basic existing single-family homes sold well, up 20.2%.  Take away condos and the median price for single-family resale was $701,750.  

FOR SALE BY OWNER DEFINITELY NOT A GOOD IDEA IN A CHANGING MARKET

This is kind of a trick headline because the market is always changing, and that's the whole point.  One could argue that there may have been a day for a FSBO, but that era is long gone.  In today's world of litigation, multiple disclosures for the sale of a home, and so much internet competition for buyers, now more than ever, a seller needs a Realtor.  Here's a little food for thought:  1) Paperwork - In 1980, the California Association of Realtors sales contract was 1 page!  Now, it is unending paperwork, seller transfer disclosures, appraisals, need of home warranty and Natural Hazard Disclosures.  If you sell by owner, and don't use these forms or services, doesn't mean there would be any less liability.  2) Exposure to buyers - The Internet draws them in, and agents have literally a hundred sources that place their listing.  3) Negotiations - Because Agents are aware of all sales in the area, they can compare location, competition of other listings, condition, and make sure you don't under price your home for sale.  4) Pricing - See last paragraph.  This is hugely important and you could be your own worst enemy.  5) Current market conditions - Literally it can change overnight.  What if 2 properties sell overnight and now your home is the only one like it to hit the market?  Or what if you don't know that single level homes are most in demand.   Market conditions drive housing prices.

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