What a summer! I know the heat is still here and summer doesn’t officially end until September 23rd, but with kids back in school and the NFL on tap, I declare fall is here! Oh, back to my wonderful and glorious routine. Geez, when I hear it out loud I feel old, pedestrian, and boring. Thank goodness I have the exciting and every-changing world of real estate to kick a little pep in my step.
While I have been blessed with great clients and an extremely busy summer, I know that local real estate sales are actually down 4% this year and getting slower. However, the average sales price of local homes is up 5.3%. So we have declining sales but rising prices through June. If we follow the footsteps from the last couple of years, we will see local home prices decline between 4-8% until February or March 2020.
The wildcard (outside of politics) is that we currently have the lowest interest rates in almost four years. That is keeping home prices higher even amid diminishing sales. If interest rates were still in the 4.5%-5% range, I think home prices would have slid already. I do not anticipate an increase in rates due to economic fears (see below) and trade war tensions, so hopefully prices slide less than in previous years.
On top of slow home sales, economic forecasts have pounded a steady drum that 2020 will be a recessionary year. Just type that in Google and you will be overwhelmed by the amount of articles, analysis, opinion, and trepidation. When enough people are convinced that something will happen, it usually does, but to what extent is unknown. The lone exception to this theory seems to be the zombie apocalypse people swear is coming. Ideally, people should ease up on debt and sock away more savings.
While Southern California is down 9.1% in declining sales, our area only went down only 4%. Our community remains in higher demand than LA, Orange County, and San Diego. Who wouldn’t love to live at the beach? However, people are priced out and we offer a great value alternative. Home builders are feeling the pinch as they want top dollar AND have super high special assessments. If you are home shopping go for a lower tax, older home with upgrades that you don’t pay for out of pocket. If you must have a new home, go with an agent from the beginning and negotiate, negotiate, negotiate!
If you have an interest rate that is over 4.25% on a VA or FHA loan, you should consider a super easy streamline refinance. Outside of that, now is a good time to enjoy your home, watch some football and maximize savings. Our market remains among the strongest in SoCal, so you are in the right place!
Stefan West, aka Mr. Murrieta