Archive for February, 2016

Market Update | Whither the Market?

posted on February 18th, 2016 | filed under: Buying Strategies, Market Update, NoCo SD Market Conditions, Uncategorized

Trenda at a glance 2.18.16After four years of rapid price appreciation, there have been whispers of a market correction, fueled by a wildly oscillating stock market and steep appreciation in the U.S. dollar, which has pretty much dried up foreign buying.

Let’s take a look at some things effecting the real estate market.

To get a grip on the local market, let’s look at some of the underlying dynamics.

First, there is a very limited supply of properties for sale. New home building has been moribund for the past eight years. Since the early part of the century, when there were over 2,000 homes being built each year, the past eight years has seen home building between 500 and 800 units a year.

Inventory of single-family homes in San Diego County has been lower than the year before for the past seventeen months. Low inventory points to a sellers’ market.

We expect, nay, hope, that the baby boomers will start cashing out and move to lower cost locales, thus freeing up inventory. But, we’re not holding our breath.

Baby boomers may start selling when they see the market start to flatten. The market will probably start flattening when mortgage rates go over 5%. We don’t see that happening this year.

Second, demand is still very strong. Pending sales, which are an indicator of future closed sales, have been higher than the year before for the past fifteen months.

Lest we slight them anymore than the mainstream media does, let’s look at the much-maligned millennials. Reports from my compatriots indicate that marriage and family are starting to become a topic. That always translates in purchasing property, thereby increasing demand.

So, the market MAY slow down a bit, but a full-blown correction? Not unless some cataclysmic event occurs, and let’s all hope that does not happen.

P.S. The antics in the stock market have prompted some people to pull their money out. Where are they putting it? Real estate.

 

posted by Jeff DeChamplain // Leave A Comment

Jeff DeChamplain