What do the Real Estate markets look like for 2014?

At this time of year, everyone has their projections for the coming year. It is always a good chance to look back at what happened and try to figure out what things might look like for the coming future. How often those projections are correct is another story. Who really knows. But, I do think the information can be useful for Sellers and Buyers if you are thinking about plans for your real estate in 2014. Recently, I sent out a link to the projections from the California Association of Realtors. You can check out the tweet at

2014 Market Forecast - As usual…some good news and some bad news. Check it out @ http://t.co/vXtcbQ9BnH

— John Wise (@1wisedad) December 23, 2013

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For current homeowners, the good news that is coming out of the projections from CAR is that we will continue to see gains in the Median home price. The are projecting an increase 5.9% from $408,600 to $432,800. But, the bad news is that they are projecting a drop in the overall number of sales by 2.6%. This means that we will continue to see fewer sellers and inventory at lower levels. To be honest, I am a little surprised their projections are so rosy on the increases in Median Value. The primary driver of this will be the lower inventory levels because the rest of their projections, quite honestly and a little gloomy. In California, they are projected Job Growth of only 1.9%. This is LOWER than Job Growth projected for the end of 2013 at 2.2%. That's awful news. And, I'm not sure how, but they are also projecting a drop in the Unemployment Rate from 9% to 8.3%. With a projection of a drop in the Job Growth numbers, their Unemployment Rate drop seems aggressive. The other scary factor for Buyers is the projection of 30 year mortgage rates jumping from 4.1% to 5.3%. When you combine the increase in mortgage rates with a projected jump in Median Value, our affordability factor is going to get to a place that will be less healthy than it already is. This will eliminate many buyers from the pool and will result in a decline on the demand side. Again, based on these projections, I am surprised they are projecting any gains on Median Value.

The part that is the most important for the real estate markets to sustain the gains we have seen in 2013, we need to have better Job Growth numbers. The gains that we have seen in the stock market this year with the Dow (as of last Friday) being up by almost 25%, this means that both the consumer and the public companies are and will be feeling much better about finally starting to spend some of the cash and value they have been accumulating over the last few years as they have been hoarding cash. The declines we have seen in interest rates have helped millions of homeowners get into a more comfortable position from a disposable income standpoint, but the reductions in rates are also another reason why the number of sales has been so low. If you are sitting on a house with a 3.5% 15 or 30 year mortgage rate, to move to a bigger house, to a house that is worth more with a house that will have a higher mortgage rate, you will have to be making significantly more money or have a much larger down payment. And, if you are thinking about downsizing, that higher values combined with higher rates might stop you from making that change. In order to see continued gains on the housing front, we will have to continue to see a healthy stock market and a healthier job market in order to offset the increases they are projecting in mortgage rates. It just might take a year for everyone to adjust to the new levels of rates before the market finds its new pattern of stable growth again.

If you own real estate today, I think the chances are pretty good, given our still low levels of inventory, that you will see increases in your house value. I also think that given the low levels of inventory that it will also remain a good time to sell real estate. When inventory levels are low and demand is healthy, it puts Sellers in more control.

If you don't own real estate today and you need to or want to buy a home, my advice to you would be to act sooner rather than later. Hire a Realtor…like me…who is going to work hard on your behalf to find a home that fits your needs.

Call me today if you are thinking about selling or buying this coming year so we can sit down and review a strategy for all your real estate needs.

Merry Christmas and Happy Holidays!

John Wise
818-391-4131
jwise@2cidirect.com

Real Estate Inventory Levels Up - Volume Down

For those of you who thought we might be experiencing another Real Estate Bubble like what we saw 7-8 years ago, at the moment, you thought wrong. Values in Camarillo peaked in August with an average at $592,000. Since that time values have come back down to around $520,000 for homes sold during October. We did see inventory levels jump to about twice the levels we saw just 6 months ago, but that has not translated to more volume. See the Inventory Chart below from Trendgraphix. It shows inventory levels of Residential Real Estate from August 2012 to October 2013.

We thought that people who had been waiting to sell would see the increases and get their house on the market to take advantage of the higher prices. That has happened. As you can see from the chart below, another datasource, Clarus MarketMetrics, shows the Median For Sale Price vs. the Median Sold price in Camarillo. And you can see that the gap between what properties are selling for and what properties are listed for is growing. This is bad for existing sellers. It means that many people thought they could overprice their property and let the market keep coming up to them. We haven't seen that prove out in the last 3 months. There either aren't enough buyers or the buyers simply won't pay the higher prices.

Also, we have seen a dramatic rise in the Expired Listings since the beginning of the year. In January, almost no listings were expiring because everything was getting sold. Now, the level has more than doubled as you can see from the chart below.

I expect the next few months to be fairly slow, but then to pick up again in January. If you are thinking about buying a home, these are all good signs for you as we begin to see values softening. More inventory means more choices which, generally speaking, means more affordable real estate. If you have been thinking about selling, this is not great news, but keep in mind that values are still up from last year by 14% in this particular area. In some areas, values are up even higher.

As you probably know…all real estate is local. The information I have shared here is based on the Camarillo Real Estate market. If you would like a more detailed analysis of your particular home, just let me know. I would be happy to provide you with that information.

Happy Thanksgiving!

Ventura County Real Estate Update Fall 2013

Values in Ventura County Real Estate are flat to down over the last 3 months. Good news is values are still up by over 21% from a year ago today based on the current MLS figures.

As you can see from above, the chart shows that Ventura County has had some nice increases but there is question over the last few months as to whether that was just a short-term bubble or a sustainable increase. Most would predict that the increases were short-term and that the direction from here on out is the same story everyone has been talking about for years...JOBS! But, before I get there, the other thing that is also beginning to happen is that we are seeing Sellers more optimistic than they have been before. Below you will see a second chart that shows the same information as above (Median Sales Price) but it is compared against Median For Sale. As you will see, at the end of this chart as you move to September, there is a gap that is widening. This shows you that Seller optimism that their house will sell at a higher price is strong.

So that's good news. A healthy real estate market has Seller's optimistic in addition to Buyer's being optimistic. The problem we are having is that that optimism has still not translated into more inventory. The chart below shows Homes For Sale and, as you can see, it has had a similar drop off in the last few months just as values have dropped. Then, directly below that is a chart that shows inventory levels of Active Single-Family Homes for sale in Ventura County as of 10/14/2013. You can see that the numbers here should continue to push values higher. A normal inventory of Active homes should be closer to 3 to 4 months. We are below 1.5 months of Active inventory.

Last week I had an opportunity to hear the Chief Economist from the California Association of Realtors, Leslie Appleton-Young, speak on her projections for California Real Estate in 2014. It was mostly good news. They are projecting that the increases in value that we have seen during the last 12 months will cause a more normalized market to evolve from where we are today. The are projecting that more homes will be sold (3% increase) and values will continue to improve (just over 6%). But she was hedging these bets because we still have so many outside influences. Obviously, if the Federal Budget crisis is not resolved in the next few weeks, it will certainly cause the growth pattern to cease. But, most think that this will get resolved. So, the biggest threat to the real estate markets in California is JOBS! She is still projecting a California unemployment rate of 8.3% at the end of 2014. That is still too high to have any real chance at larger real estate gains. She also believes that inventory levels will begin to rise as we see fewer and fewer investors coming into the market to buy and hold. Depending on how that all plays out, a lowering of demand and increasing inventories are good for buyers but usually not so good for Sellers. Needless to say, there are a lot of moving parts to what is happening these days and I continue to keep my nose to the grindstone helping my clients where they need help.

As I have said in the past and will continue to say..."Your advocacy is my greatest form of advertising!" So, please let ME know if YOU know anyone who is thinking about buying or selling in the near future.

Inventory Levels Finally Starting to Rise

It has been quite some time that inventory levels have been at the rock bottom. Over the last 60 days, we have seen more and more homeowners decide to take advantage of the increase in value and get their home on the market. As you will see below, Ventura County Inventory levels for Single Family Homes under $1,000,000 are up by 46%. That's right...46% from 6 months ago.



At the same time, we are also seeing values begin to come down again from their peak a few months ago. For the same category of homes, see the chart below for the Median Values in Ventura County for homes under $1,000,000.



Similarly, inventory in Camarillo is up by 28% over the last 6 months and moving in the right direction.



And the same holds true for the values in Camarillo of Single Family Homes under $1,000,000. Values are still up by 10% from a year ago, but the are down from the highs we have seen over the last few months.



I share all of this with you to say that, if you have been thinking about selling your home, it is still a good time, but I would not wait long, otherwise, you might miss this window. For buyers, the price declines are a good sign that this is not a long-term bubble.

If you are thinking about buying or selling in the next 90 days, please call me to discuss your options.

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!

Ventura County Real Estate Market Update - August 2013

Is now a good time to sell your home?

For many of you, the real estate market drop since the mortgage crisis has put your home sale on hold.  With values down on average by 35%, it was hard for people to give up on the equity they had built over time and walk away with nothing or, at the best, a lot less equity than they thought they would have when it came time to sell.  As a result, if you could make it through the tough times of this cycle and hang on to your real estate, you are feeling much better today about your valuation.  If you haven't checked lately, call me for an update on what your property might be worth in this market. (Or you can go to this link http://2cidirect.com/home_values.asp and I will get you the information you need.)

The latest reports from zillow.com is that we still have 13 million homeowners (over 25% of all homeowners with a mortgage) across the country who are still not regained an equity position.  The good news is this is down 31.4% from the 1st Quarter of 2012.  Even better news is the way the report is calculated.  Zillow does a good job of tracking trends, but any time you have a quickly moving market, it doesn't take into consideration those trends.  So, when the market is jumping like it is, the trending is slow to report it.  And, with values rising over the last 6 months as quickly as it has, I guarantee these numbers will be getting better the next time Zillow reports.

So, more of you have equity and because of that we are beginning to see more move-up buyers.  Over the last 6 or 7 years since the crash, we have only seen "move-out" sellers.  The only "move-up" sellers had a good equity position to begin with or had cash to make the investment and, many, held on to their existing homes to rent them until the market turned around.

Most people in real estate say that the number factor in valuation is location, location, location.  While location is certainly important to your specific valuation, market cycles are determined by the basics of Supply and Demand.  Let's look more closely at these factors.

Supply.  This has been a key factor in rising values.  During this period of time, because so many have negative equity and because our economy has not been producing enough jobs to drive down the unemployment rate home sales have been dominated by those who have been forced to move.  Short Sale, Foreclosure, job relocation, death and divorce dominated the Sellers.  As a result, there has been very little inventory on the market.  In Ventura County, for Single Family homes under $1.0 million, we still only have apx. 1.1 months of inventory on the market.  A normal market would have 2 to 3 months of inventory.

Demand. This has also contributed to rising values.  As the economy and values have stabilized, so many first-time homebuyers that were sitting on the sidelines have finally decided it is time to jump in while times are still good and values are relatively still low.  Secondly, any time you have a cycle that appears to be at the price bottom, smart investors will be sure to jump in and that has certainly happened with regard to the real estate markets.  Investor demand has been high and that increased demand has made it very hard for normal sellers to compete with because they are usually buying with "all-cash".

So, with all that, why sell today if values appear to be on the rise?

First, interest rates over the last few months are up by over .5% and I have heard more stories than I would like to tell of buyers who did not have their loan locked, rates went up and now they don't qualify for the purchase that they were under contract for.  This increase will certainly eliminate some from the market and, for the short term, should also cause a some to jump in thinking that the low rates are over and "I need to get something done now".

Second, as values continue to increase, you will begin to see more move-up buyers and as this happens, we will begin to see inventory levels rise.  We have already seen that here in Ventura County. Month-over-Month, we have seen a 30% rise in Single-Family inventory levels just in the last 30 days for homes valued under $1.0 million.  This increase in inventory levels will cause pressure on value increases as there is more options for buyers.

Third, investor demand is beginning to wane.  With values up in Ventura County by 18% from a year ago and rents virtually stable (maybe up 2% to 3%) the returns for investing in real estate is much less attractive than it was 6 months ago.

And, lastly, there are always more buyers in the Summer months.  This trend is true in most normal markets.  While buyers don't stop during the holidays, many families that don't accomplish their purchase by the end of summer have a tendency to put it on the back-burner until the holidays are complete or until the next school year begins to wind down again.

All of these things say to me that this is a great time to sell your home.  The market needs you. If you have been thinking that it might be time...it probably is.  Now is a good time to sell, so call me today for a confidential evaluation of your home and your situation so you and your family can take advantage of this market.