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.  

Update on the Housing Market in Ventura County and Camarillo

In these first few days of February, the markets are feeling better than in times past. Value are up which is good for most existing homeowners and interest rates have continued to remain at historical lows making it a good time for most trying to enter the market or expand their existing real estate portfolio.  While the stock market has recently had some correction, the market has already stabilized after a few days of correction.  This is important because if your wealth isn't in real estate, its in stocks and bonds through your IRA's and 401k's and 529's, etc.  When that portfolio is doing well, you will almost always feel better about taking more risk in real estate.

And that risk has paid off recently!  Values for single-family homes in Ventura County are up by 8.8% from the same time a year ago and some cities are experiencing even greater growth.

Values for single-family homes in Camarillo, for example, are up by 10.5%. However, activity levels are down.

In January, the number of single-family homes sold in Ventura County is down by 1.5% from the same time last year, but it is the lowest number of homes sold in at least the last 5 years.  In Camarillo, the numbers are worse with the number of sales down 8.5% from a year ago and looking back over a 12 month period, they are down by 15.4%.

So, buyer activity is good, but needs improvement.  Many are still not fully committed to buying. Many of the first-time homebuyers (many of which are Millennials) are not pulling the trigger on a home purchase like they have in the past.  Some are just to freaked out by the last wave of foreclosures, many are just now starting to find jobs and feel good about their prospects of keeping their jobs and many just have no plans to buy because they feel it ties them down in terms of job prospects.  In addition, even though lower interest rates have helped the real estate markets, it has also had an affect that I am not sure has fully shown itself yet.  That is, those that own property now, if they refinanced their home at the bottom and are holding a mortgage with an interest rate below 3% or in the low 3% range, they are going to have to really need to move up in order to walk away from it.  As a result, I believe we will see the average time a property is held get extended beyond what we have come to be familiar with.  I can't tell you how many calls I get of current homeowners who want to buy a bigger house, but keep the smaller house and rent it.  That is causing fewer entry level homes to be available and when their are fewer homes available, values have a tendency to rise.  So, entry level demand is low and the supply of entry level housing, both resale and new developments, is lower than we would expect.

But, that has not stopped Sellers from trying to sell into this market.  In Camarillo, the number of single-family homes for sale is up by over 20% from the same time a year ago and over the last 12 months is up by over 42%.  The numbers for Ventura County are almost exactly the same.  So, when your number of sales is declining and the number of homes for sale is rising, the results, generally are a rising inventory of available homes.

In January, inventory levels of homes for sale in Ventura County was up by 21.8% from a year ago and inventory levels in Camarillo were up by 42.7%.  These increased inventory levels are why most economists are predicting values to rise slowly during 2015, but if they continue to rise to higher levels and we don't see more Buyer demand, values, I'm afraid will have to come down.

One additional positive sign is that we continue to see "Bounce-back-Buyers" coming back to the market.  These are people that experienced foreclosures or short sales during this last cycle.  They have re-established their credit, begun to save and are now taking advantage of the reduced timelines for those who experienced this housing distress over the last 6 or 7 years.

It is still a unique time in that it is a great time to buy with interest rates still very low and bound to go up AND it is a good time to sell as values have now almost recovered from their peaks prior to the crash.  If you know anyone who might be interested in taking advantage of this market, please have them call me right away for a confidential real estate evaluation.

Ventura County Inventory Levels Continue to Rise

Inventory levels of Single-Family homes in Ventura County continues to rise.  The number of single-family homes available to purchase in Ventura County is up 37% from the same time a year ago based on the last 12 months of closings.  

The number of homes for sale is up by 26% from the same time a year ago and the number of closings is actually down by 18%.  So, this gap has created a growing number of homes on the market.  We have seen increases in all areas of the housing market with the exception of the market over $1,000,000.  The inventory of homes available in this market is flat on a month-to-month basis as well as looking back 12 months.  Certainly you know the phrase that "all real estate is local" but that is certainly true here.  While these numbers reflect the general trends, your tract, your neighborhood, your city might look different than this.  So, if you are located in Santa Rosa Valley or Camarillo or Thousand Oaks or if you are located in The Pinnacle or Village at the Park or Lynnmere or Rancho Santa Rosa, these numbers and this assessment may not apply to you.  Call me if you are interested in a more local review of the situation for your particular piece of real estate. 

The biggest drop that we have seen in terms of overall activity is one of the things that I have been concerned about (and that we continue to hear about in the news) and that is the entry-level buyer.  We keep hearing that first-time homebuyers are not participating in this market and the data would seem to support that claim.  Because these buyers are missing from this market, the result has been a decline in the demand for housing in our middle market, where most of activity happens.  Just look at the chart below and see the drop we in had in the activity level in sales from $400,000 and below.  

This market over the last two years has made up over 32% of the total sales in all of Ventura County, yet in October, it only accounted for just under 18% of our total number of sales.  We need to see this market return, otherwise it stagnates the move-up activity and really begins to shut down the real estate markets.  In order for this to happen, we will have to see a drop in the First-Time Homebuyer Affordability Index (FTHB HAI).  The FTHB HAI is made up of three basic ingredients:  Median Home Price, Median Income and Average Mortgage Rates.  All three of these have dropped dramatically during the period of time when the real estate/mortgage markets crashed around 2006.  The good news is that values and mortgage rates all came down but the problem is that so did the Median Incomes in California.  Below, you can see how all three factors were affected during this period of time.  

Median Price

Average Mortgage Rates

Median Income

While we have seen the California Median Income recently come up off of its lows, we did not hit the bottom until the 1st Quarter of 2012.  In order for things to improve for First-Time Homebuyers in areas like Camarillo and Thousand Oaks and Moorpark and Simi Valley and Oxnard and Ventura, we have to see the Median Incomes rise faster than either Mortgage Rates and/or Median Prices.  This means jobs, jobs, jobs!  We need better jobs and we need more jobs.  We need our college graduates to get to work.  Once this starts to improve, I am confident the market will continue to look a lot more normal.  

Have a great day and don't forget to let me know if there is anything I can do to help you, your family or friends with any of their real estate needs.  

Investor demand driving values up...but not for long!

As I have been saying for some time now, with demand very high, interest rates at still all time lows and inventory levels still at the bottom, I am not surprised by the rising real estate values.  The big question is...will it last?  In one area of Camarillo, CA called Village at the Park, where the average value is somewhere around $600,000 for a Single Family home, values are up apx. 18% from the same time a year ago. This is not uncommon in Wood Ranch, Thousand Oaks, and other areas around Ventura County.

The benefits of these rising prices is obvious and, for the most part, good for everyone.  The biggest benefit is that it is making all the current homeowners feel better about their own financial position.  This feeling of wealth is showing up in Consumer Spending and in people's overall mindset about the future growth of our economy. This confidence has led to record highs on the stock market and has led millions of homeowners out from their negative equity position into the positive territory again.  However, what we don't want is another bubble in the real estate markets.  Its been about 7 years since the real estate markets began to crash so we are finally beginning to see a turnaround and, again, growth is good...a bubble is bad.  Because we all know what happens to bubbles eventually.

So what are the risks?  First, Case-Shiller says that investor demand has made up close to one-third of all home sales in this recent recovery. They have come into the market for the same reason most investors come into any market. Returns and growth. When values were still low, and rents were still rising, it was an investor no-brainer. Buy it at the right price, rent it and achieve returns that out-perform the rest of the current market.  In addition, if the market continues to rise, you also get the benefit of being able to sell the asset at a higher price at some point in the future. Eventually this will begin to fade and we have already begun to see signs that this part of the recovery is beginning to fade.  With values up in Camarillo 20% from a year ago and rental rates beginning to stabilize, the investor returns have begun to tighten. So, most predict that this portion of the market will begin to slow down quite a bit in markets like this one where prices have risen at a level higher than the rest of the country.

The second risk is rising interest rates.  The Fed has committed to keeping rates low through next summer, but if the economy catches any momentum, don't be surprised if these rates start to go up sooner rather than later.  We have already seen a small increase in mortgage rates even without the Fed making any changes.  As the economy finds some traction, mortgage rates are bound to go up. However, most don't project any spike in rates, but more of a normal up tick as the overall economy improves.

The third risk to the markets has to do with problems overseas.  We have nuclear threats in North Korea and in Iran. The Middle East still appears to be a time bomb. But, to be honest, I'm just not smart enough to know how any of that might affect our local real estate values.  I just know that if we enter World War III because one of the countries decides to drop a bomb, it won't be helpful to anyone.

Now the good news.  Obviously, for current homeowners, the increase in values is refreshing.  After years and years of getting bad news about your real estate, we finally have some reasons to celebrate. Second, it appears that lending standards may finally be loosening.  Lenders are increasingly approving lower down payment loans and the larger government-sponsorded entities, FNMA and FHLMC are now buying more of these loans. You still have to provide your life history to get the loans, but at least we are beginning to see a thawing of residential credit in the US.  Now, what we don't want is to go back to the unreasonable standards that got us into this mess, but certainly a reasonable shift is welcomed.  In addition, begin to worry again if the President starts talking about trying to figure out a way for everyone to own a home.

Second piece of good news that we had this week is a report by the Pulte Group that "nearly two-thirds of millennials expressed an increased interest in buying" a home. During the most recent down cycle, this group really had no reason to invest in this market.  But now that they have seen values improving the Pulte Group study shows that "65 percent of renters between ages 18 to 34 plan to buy a home in the near future". This is probably the best news I have heard in a long time because when you add into this market the normal first time homebuyer, it means we should be back on our way to some normalcy.  First time home buyers buying non-distressed homes with equity means we are likely to have first time move up buyers buying their second home. And when that happens, then we begin to see growth again all the way up to the luxury home market.

Anyway, that's enough information for one blog post. I hope it was good and useful information. If you are curious as to whether or not you have more equity than you realized, or you are thinking about selling your home in this market, I would be honored to talk to you about it. I look forward to hearing from you.