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!

Good news for Real Estate..."appropriate policy accommodation"!!!

The stock markets finished the day up 421.28 points yesterday preceded by a good day before that.  It was the largest 2 day gain we have seen in over 3 years.  So what's everyone so happy about?  The Federal Reserve issued their monthly Federal Open Market Committee meeting Press Release where they basically gave all good news.

1. Economic activity is expanding.
2. Labor market conditions continue their improvements.
3. Solid job gains.
4. Lower unemployment rate.
5. Household spending is rising moderately.
6. Businesses are expanding their fixed investments (i.e. their spending money).
7. Recovery in housing continues.
8. Measures of long-term inflation remain stable.

Sounds good to me.  There was basically no bad news in the Press Release.  But, in addition to that, there were 2 key phrases that the stock market cheered.  The first was "The Committee expects that, with appropriate policy accommodation, economic activity will expand at a moderate pace...".  What this means is that the Federal Reserve will continue to keep interest rates low.  The stock markets keep thinking that if the economy continues to improve, the supports that the Fed has put in place to carry the economy through the latest recession...mostly keeping interest rates low and buying lots of mortgage-backed securities...will begin to end.  Every time the Fed says things will continue, Wall Street looks at it as free money.

The second phrase in the Press Release from December 17th was "...the Committee judges that it can be patient in beginning to normalize the stance of monetary policy."  This means, first, that the current policy isn't normal.  For interest rates to be this low and for the Fed to be investing so much money in buying MBS', is unusual.  It was a response to an economy in recession.  Most are defining now that the Recession began in December of 2007 and ended in June or July of 2009.  But, you see, that's really the point.  That is really why Wall Street continues to cheer inaction by the Fed.  The Recession ended 5.5 years ago and the Fed continues to prop up the economy.  There are all sorts of questions as to whether or not the gains in the economy are real are just based on the Fed's loose policy.  But that's not what I'm here to answer for today.

The news from the Fed is great for real estate because it means that those First Time Homebuyers who have been sitting on the fence, either because of the lack of confidence in their own job status or because of their doubts about the real estate markets, it gives them more time with lower interest rates to get in the game.  This is what will really bring some stability back to the markets.  While we have worked through most of the distressed sales (foreclosure activity continues to decline back to normal levels and Short Sale activity continues to decline) the last piece to add to get us back to stable growth is adding this First Time Homebuyer.  The Millennials are the ones who don't seem to be participating yet and that is understandable.  Millennials were the largest buyers of homes during the most recent housing boom/bust cycle and it would tend to be reasonable to say that they then were the most heavily burned.  But even if they did not participate or get burned by the recent market crash, they sure saw the pain first hand.  Lack of jobs, moving back in with Mom and Dad, rental rates skyrocketing and heavy Student loan obligations and a continued tight lending market are all reasons for this group to not prioritize housing.

But the Fed's stance on keeping rates low keeps the window open for this group to jump back into a market that has always served our nation and our local communities well.  In Ventura County, in cities like Camarillo, Thousand Oaks, Newbury Park and even Westlake Village and Santa Rosa Valley, home-ownership is one of the things that creates stability and community.  It is the American Dream.  Even though it costs more today than every before, I still believe in the benefits of the American Dream and, apparently, so do the people who serve of the Federal Reserve. We thank you for your patience.

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.  

Safety in Real Estate...in spite of our fear!

"Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid for in full, and managed with reasonable care, it is about the safest investment in the world." - Franklin D. Roosevelt

It seems like our world these days is so unstable.  Maybe it's just me but it seems like everything is in flux.  The stock market hits record high and then plunges. Interest rates are at their lowest levels in the history of the mortgage market yet every day we keep hearing they are bound to jump. What happens to the housing market when that happens?  Real Estate markets in Ventura County and around the US have plummeted since 2006, hit bottom around 2012, jumped by 20-25% over the next 12 months or so and then have begun to show signs of weakening.  ISIS and Al Queda continue to exert their presence on the World's stage causing a heightened sense of fear.  And now we need to be concerned about our neighbor or co-worker or my child's friend coming down with Ebola.  Peak election season always causes worry because politicians on both side convince us to vote for them or their party because of something we should be afraid of.  Fear inspires us.  It motivates us to take action...sometimes to act and sometimes to cower. Fear sells. Fear gets our attention because it makes us sit up and listen. Even in Real Estate it works.  "Buy now before prices go higher." "Sell now before prices drop even further." "Be aggressive with your offer so that you compete with the multiple buyers." "Take this offer.  It might be the only one you get."  See how that works?  Crazy.  

Yet, with all of this fear and instability happening around us, for most of us, we can always find peace and comfort AT HOME. This is the place where we usually find comfort and rest. It's the place we long for. I saw the quote above from FDR and thought it was so true.  He was speaking about the economics of HOME and that is certainly true.  But, to be honest, most of my clients aren't really thinking about the economics when they walk through the door for the first time.  It's more emotional than that.  They are asking themselves questions like..."Does it feel right?" Does it fit my family?" Can I see myself here long-term?" "How's the neighborhood?" "How are the schools?" "Does it have a pool?" "Does it have an attached garage with direct access?" "Is the backyard big enough for my kids?" "Is the backyard small enough that I don't have to spend all weekend caring for it?" Each one of us has our own needs when it comes to housing and that is what makes my job enjoyable.  Each client has a new set of parameters that create the ideal home and it's my job to get as close to that ideal as possible.  Sure, money plays a part.  As FDR says, "purchased with common sense" is important.  Today I suspect he would replace "paid for in full" with "paid for with financing you can afford".  Money is a factor, but once you have hit that parameter, the rest is all emotion.  

During the most difficult of times in real estate when values began to plummet in 2006, the thing I had to remind people who were losing their home is that HOME truly is where your heart is.  I know it is trite, but it's true.  Like any investment, you take risk and most of the time, if you are able to own a home long enough, it will also payoff financially, but when it doesn't you have to remember that HOME is where you are with your family and those who love you.  

I hope you find peace today in your HOME. If you are not at "Real Estate peace" and would like help finding it, please call me for an immediate, peaceful, confidential consultation.  

Have a great day!

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.

...and the summer bubble continues!!!

Ok.  Last month, the Case-Shiller index had the largest month-to-month gain in its history.  As I outlined in my last blog entry, I suspected that most of this increase was due to an overall lack of inventory pushing values higher.  Well, today, Case-Shiller came out with the news that their index has jumped by 6.9% from the 1st quarter of 2012 to the 2nd quarter of 2012.  This also is the largest gain, quarter-to-quarter, in the history of the index.  In addition, their 20-City index rose by 2.3% just from May to June. This is also the largest month-to-month gain (last month was 2.2%). For all the details, please go to the Standard & Poors website for details.  http://www.standardandpoors.com/indices/sp-case-shiller-home-price-indices/en/us/?indexId=spusa-cashpidff--p-us----

So we are seeing some sustained growth which is really good news, but I wanted to put the inventory issue into perspective.  In Ventura County, we have had 8,461 sales of Residential Properties in the last 12 months.  As of today, we have 1,323 Residential Properties on the Active market.  That is an inventory of 1.88 months.  To get more specific, in Camarillo alone, we have had 932 sales of Residential Properties in the last 12 months.  As of today, we only have 115 Residential Properties on the Active market.  That is an inventory of only 1.5 months.  That is insanely low.  A natural/neutral inventory of homes where it is not having an impact on value one way or another is typically around 4 months.  Someone asked me this past weekend at my Open House at 350 Commons Park Dr. in Camarillo why inventories were so low.  There are a few basic reasons.  First, if you own a home today, unless you are forced to sell via a distressed sale (Short Sale or Foreclosure) or a job or life relocation, then you are likely going to do everything you can to hang onto your real estate and what is still a depressed level.  Second, the level of new bank-owned homes has not jumped like most have expected.  This is the infamous "Shadow Inventory". Most experts are now predicting that this "Shadow Inventory" will not have a dramatic impact on values over the next few years as we continue to see the level of bank-owned homes decline.

Unless we see some major shifts in the market for Seller's I would anticipate that the inventory levels would stay low and that values would continue to rise until we get back to some normalcy as it relates to the numbers of buyers and sellers.  Expect that it will be a Seller's market through the end of this year.

If you are thinking about Selling your home, now is a great time to call me to discuss strategy.  If you are thinking about Buying a home, there is no time better to be represented by a Realtor who is working hard to quickly identify opportunities that fit your requirements than now.  Do not try to do this on your own. I appreciate you taking the time to read this blog entry and...as always...if you know anyone who is thinking about buying or selling in the next few months, your advocacy is my greatest form of advertising.  Thanks for your referral!!!