Sure doesn't feel like a bubble!

Over the last few months I have seen a variety of different articles talking about speculation that the real estate market in Southern California and other markets are looking like potential bubble markets.  But, over the last few days, I have had a chance to look at some of the numbers at I thought I would share them with you.  First, below is a chart which outlines the Median Values in Ventura County over the last 15 years.  I have highlighted the time period from approximately 2003 to 2007 where we did experience an actual bubble.
 
If you look at values in May/July of 2001 and compare them to values in May/July 2016, it reflects an unadjusted annual growth rate of 7.4%.  While this is still historically higher growth rate than we have experienced in the past, it is also important to look at recent history for any additional signs.  The average sales price in Ventura County is up only 2% from the same month 2 years ago.  In addition, the average price for July sales in 2016 is actually down by 2.4% from July 2015.  You can see the stability in values in the chart below which outlines the average active list prices and the average sales prices in Ventura County over the last 13 months.


This stability has been nice for everyone after a long time in very unstable markets.  So, where do things go from here.  Well, certainly over the next 3-4 months, I would expect that activity levels would continue to trend lower, active list prices to trend slightly higher to stable and sales price to do the same.  The real question will come post-election to see how the overall economy withstands a presidential election in which nobody appears to happy with their choices.  Having said that, I will say that over the last 12 months, inventory levels based on the number of Closed Sales has run from as low as 1.8 months to as high as only 2.8 months.  These levels are still incredibly low and would normally predict higher values in the near future.

If you would like an evaluation of your specific neighborhood or a valuation on your particular home, please call me ASAP for a confidential evaluation of your property and your real estate goals.  #johnsoldmyhome.

Great news for Ventura County Real Estate!

Now that we are almost halfway through June, I thought I would take a look to see where things stand with real estate values and overall real estate activity since the beginning of the year and compare things to last year.  If you own residential real estate in Ventura County the news is good.

VENTURA COUNTY SINGLE-FAMILY SALES

JANUARY TO MAY 2014 VS 2015

Some of the highlights...

• The total number of sales are up almost 17.5%!
• The total volume of sales is up by almost 26%!
• The average sales price is up by 7%!  
• Averages 2014 - $638,634 to 2015 - $682,831!

Some of the details...

• The rich get richer...homes valued at $1,000,000 or more was the leader in the activity increases with activity up by 35% and overall volume of sales up by 38%.  (See the first chart below.)
• Homes from $400,000 to $1,000,000 also had nice increases as well with sales up by 33% and overall volume up by 23%.  
• The only declines in volume came in homes valued less than $400,000.  Overall sales activity was down by 20% and overall volume declined by 18%.  

The reason the sales activity in the under $400,000 category has dropped is simply due to the fact that their are fewer and fewer of the homes on the market.  You can see below that as of today there are only 50 homes on the Active market in ALL OF VENTURA COUNTY!

The real challenge will be sustaining this activity in the second half of 2015 as it appears interest rates will be on the rise.  If you have been thinking that it might be the right time to sell your home now that values are up, don't hesitate to call me on my cell at 818-391-4131.  I will look forward to hearing from you and to helping you or your friends and family with all of their real estate needs!  

Have a great day!

Jobs, jobs, jobs! Real Estate values on the rise thanks to job growth!

I have been saying for some time now that the real estate markets (and the overall economy) need more jobs in order to sustain and drive values. Over this slow recovery, we kept hearing that, while it felt like things were getting better, we were really being deceived by government intervention with things like stimulus packages, the buying of mortgages and keeping interest rates low.  As these government interventions begin to fade, it appears that the job market might actually be getting better.  For a long time, people wondered if the job creation was strong enough to drive down not only U3, the most commonly used Unemployment Rate but also U6 which also included people that were under-employed.

As it turns out, both of these numbers have come down quite a bit.  U3 is down to 5.5% from its peak in October of 2009 at 10%.  U6 stands at 11.0% which is down from its peak in December of 2009 at 17.1%.

The overall economy is always important because California is usually on the bleeding edge of these changes both positively and negatively, but as they say...all real estate is local! So, if the overall economy is getting better, that's good news but it doesn't mean you are being affected in the same way.  Well, the picture in Ventura County is similar.  As you can see from the graph, the unemployment rate in Ventura County as of February 2015 was 5.7% which is down from its peak in August of 2010 at 11.2%.

Why am I thinking about this today?  I read a report this morning on the Top Employers in each state and I was slightly surprised when I realized that the nation's largest employer is, in fact, the largest employer in 20 out of our 50 States...Wal-Mart!  That's right!  20 States in the Union are the proud owners of Wal-Mart as their #1 employer.

Alabama, Arizona, Arkansas, Florida, Georgia, Illinois, Kentucky, Louisiana, Mississippi, Missouri, Montana, North Carolina, Ohio, Oklahoma, South Carolina, Tennessee, Texas, Virginia, West Virginia and Wyoming.

Fortunately, 16 states had a University or a University Hospital as their #1 employer and an additional 8 had a network of Health Systems/Hospitals as their #1 employer.

In California, the article said that the UCLA Hospital Network was the #1 employer.  Locally, Ventura County is proud to say that its largest employer is our own military with over 15,000 active duty, Department of Defense employees and contractors working out of the bases in Port Hueneme and Point Mugu.  Other large employers in the County are County of Ventura, Amgen, Ventura County Health Care Agency, Community Memorial Hospital, St Johns Regional Medical Center, The Oaks Shopping Mall, Los Robles Hospital, Baxter BioScience, California Lutheran University and several of the School Districts.

So, as jobs go, so do Home Values...right? Certainly makes logical sense, but is it really true?  Clients selling real estate today in places like Thousand Oaks, Camarillo, Westlake Village, Newbury Park, Moorpark, Simi Valley are all benefiting from a declining unemployment rate and, generally, rising home prices.  Below, you will see a very impressive graph created by the people at Calculated Risk.  It outlines the unemployment rates over time compared to Home Values over that same time period.  It's not as clear as I would like it to be, but looking carefully, it does show that as the unemployment rate rises, values certainly begin to decline.  In addition, as the unemployment rates begins to drop, sometimes right away and sometimes a few years later, home values begin to rise again.  This graph is only through January of 2011, but you would certainly see similar results if the graph continued to show the declining unemployment rate and rising home values.

So, jobs, jobs and more jobs! Keep rooting on our economy and our employers so that we can all make more money so that we can buy more stuff at Wal-Mart!!!

If you or someone you know is thinking about selling or buying a home in the near future, please call me for a confidential appointment and evaluation of your own real estate goals.  John Wise, jwise@2ciDirect.com, 818-391-4131.  

Is ZERO the new normal?

Since December of 2008, the Fed has left the Federal Funds Rate at 0%-0.25%.  The Federal Funds Rate is, basically, the rate at which other banks can borrow money from the Federal Reserve.  The basic concept is that if it costs banks less to borrow money from the Fed, it should allow them to lend more money, at more affordable rates, to the consumer.

So, this rate was dropped in December of 2008 in an attempt to stem the tide of the Great Recession.  It worked to some degree, but the real question now is when will it ever rise again?  Or, will it ever rise again?

Rick Reider, a Managing Director for BlackRock, wrote the article "Jobs Report Could Be a Game-Changer for the Fed" and he reiterated what everyone has been talking about every time the economy looks like it has its legs again. That is...the Fed has to raise rates now! Right? But then he goes on to say that with overall inflation in check and some still very core problems with the economy and who it is NOT helping (mainly the low-income wage earner...and much of the middle-class) then maybe they just keep it at ZERO. Isn't 6 years enough to call it the New Normal?  What will happen once the Fed says, yes, let's raise the rate?  The economy will have to be running more than its current walk, and for a more sustained time so that consumers can bear the burden of higher borrowing costs.

Bottom line...it may be the New Normal, but it is bound to change and when it does...it will cost more to buy a home.  Don't wait!  Call me today for a confidential review of your real estate goals.

Case-Shiller Home Index - Highest Levels in 5 years!!!

Case-Shiller Index came out recently and as you will see from the chart below, the 20-City Index is now showing that values in these markets are now back to levels we saw almost 5 years ago.

For those of you that have been paying attention, this should not come as any surprise. Values have been on the rise in the last 6 to 9 months for many reasons, but the sharp increase off the bottom has many worried that this is also a bubble that is going to pop just like it did back in 2006/2007. For those of you who want to be frightened by the current market and its similarity to 2005, check out this article from DSNews http://www.dsnews.com/articles/commentary-dj-vu-all-over-again-2013-08-23.

My own feeling is that this jump off the bottom was inevitable. So many people had been waiting and waiting to buy that once it appeared we had it the bottom, there was bound to be an increase. I do expect that the big increases will slow down over the the next quarter as we move into the Fall and Winter seasons which are typically slower because people are paying attention to getting back into their lives after summer and then the business of the Holiday Season. But in addition to that, we are starting to see inventory levels rise and that will also begin to slow things down. As more and more property becomes available to sell, the competition to buy those properties is beginning to wade. I have taken more calls in the last 2 months from people that tell me "I think its finally time for me to sell." that I have at any time in the last 7 years.

Most of the time, when you have a bubble that is ready to pop, it is because it has become bigger than it should be. Outside influences that aren't normal and pressuring it to go higher and higher. In this market, I think the values have risen for good reasons, normal reasons. Buyers looking for opportunities to own a home, move up or finally buy that rental property. Investors looking to buy low and sell high. The only unnatural element is the subsidized interest rates. As we see those rise, and the first step has already begun, it will also put pressure on values increases to slow down or stop. But, it appears that we are now in a market that is still favorable to Sellers who now have values back at levels that many thought they would never see again, and for Buyers who can still take advantage of lower borrowing costs and values that are still increasing.

If you need any help or would like a confidential review of your situation, I would look forward to hearing from you. Have a great day!

April 22 Real Estate Update

April 22 Real Estate Update

Inventory levels are beginning to rise at the national level.  Inventory was up 1.6% in March from the month prior. Those small increases will begin to have an impact on the rate of increase we have seen recently.