Menu
TwitterRssFacebook
More Links

Are you looking for an experienced agent to help you buy or sell a home? Contact Jim the Realtor!

Carlsbad
(760) 434-5000

Carmel Valley
(858) 560-7700
jim@jimklinge.com


Category Archive: ‘Forecasts’

Home Appreciation & Supply

John has an in-depth article out on home-price appreciation, and he’s no ivory-tower guy – his staff is on the street daily:

https://www.linkedin.com/pulse/article/20140917105113-3073844-behind-the-scenes-the-never-ending-puzzle-of-projecting-home-price-appreciation

An excerpt:

Rolling it all up, we are projecting 4% price appreciation for the country next year, with wild variations by market, huge vulnerability to changing mortgage rates, and a wide variety in risk levels (San Francisco looks to be in a mini bubble, but bubbles can go on for quite some time, while Atlanta looks to be very underpriced).

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

He mentioned that the best measure of pricing trends is the “number of months of supply of homes”.  He didn’t say what he considers ‘normal’, and not sure we’ll ever have that again anyway!  But it used to be that six months of supply was considered balanced.

Here are the current active listings of detached homes, divided by August closed sales:

NSDCC: 1,100/244 = 4.51 months.

SD County: 5,814/1,885 = 3.08 months.

I’m not sure how much you can read into this statistic though, because 867 (79%) of the NSDCC homes for sale are priced over $1,000,000, and only 1,086 sales have closed over $1,000,000 this year.  If we divide the 1,086 by 8.5 = 128 per month, which means there is an approximate 6.8-month supply of million-dollar homes for sale currently.

But following this stat over time would identify the trend.  I’ve added a new category so we can track it from now on!

Posted by on Sep 25, 2014 in Forecasts, Jim's Take on the Market, Month's Supply | 0 comments

Not Too Overvalued

SD overvalued again

From an article at wsj.com: 

http://online.wsj.com/articles/how-to-play-the-real-estate-market-before-it-s-too-late-1411333001

An excerpt:

Now is also a good time to buy a home, many analysts argue. The slowing growth in prices makes homes more affordable, even as rental costs inflate for single-family homes and multifamily apartments. Meanwhile, interest rates remain slim. The average rate for conforming 30-year fixed-rate mortgages recently was 4.19%, close to the lowest levels of the year, says HSH.com, which collects mortgage data.  Keith Gumbinger, vice president of HSH.com, says, “Price gains have cooled in many areas, and mortgage rates are lower than they were expected to be this year. The combination is a favorable one, and if it holds, it should provide a solid foundation for home sales this fall.”

Ivy Zelman, founder of Zelman Associates, says the current gloom is overstated and housing prices will continue to slowly appreciate. “People still believe in the American dream,” says Ms. Zelman, who was early in predicting the housing downturn and anticipated the rebound. “The housing market is lukewarm and will get warmer.”

Posted by on Sep 23, 2014 in Forecasts | 4 comments

More Guessing

Hat tip to Richard for sending in this article:

http://realestate.msn.com/blogs/post–report-20-percent-of-homes-to-lose-value#scpshrjmd

The housing market has bounced back dramatically since the 2008 recession, but conditions have started to slow, a new survey says.

Veros reports 20 percent of homes are expected to lose value, while 80 percent are set to gain value.

Still, the housing market is yearning for a boost, instead of simply pent up demand from an unusually cold winter, which hampered economic growth and caused slightly stronger housing numbers toward the end of first quarter and the beginning of second quarter.

SD market

A slowdown in the pace of buying isn’t necessarily something to worry about when it comes to the health of the housing market, as this could bring price stabilization.

“We’ve been seeing major price swings over the last seven years and stabilization will be positive and will provide predictability to the market,” says Dani Babb, Broker/President of The Babb Group Real Estate Inc. “Some appraisers can’t even figure out how to value homes because of the swings.”

Unpredictable prices make conditions difficult for sellers who are trying to score the best price and buyers who may delay purchases if the market is telling them a significant price drop is on the horizon.

Posted by on Aug 7, 2014 in Forecasts, Market Conditions | 1 comment

Effect of Higher Mortgage Rates

From Fannie Mae:

http://www.fanniemae.com/portal/about-us/media/commentary/062314-palim.html

In July 2013, we wrote an FM Commentary about the impact of rising mortgage rates on the housing recovery.  At that point, rates had risen to 4.51 percent.

We examined the impact of rising rates on home prices and home sales during the two periods since 1990 when the market had experienced a sharp rise in mortgage rates.

The first instance was a 14-month period from October 1993 to December 1994, when mortgage rates increased by 237 basis points (from 6.83 percent to 9.20 percent).

The second instance of a meaningful rise in rates was longer and the rate rise was smaller – a 19-month period from October 1998 to May 2000, when mortgage rates increased by 180 basis points (from 6.71 percent to 8.51 percent).

Based on these past experiences, we suggested that rising rates were more likely to lead to a slowdown in home purchases rather than a decline in prices.

Read More

Posted by on Jun 23, 2014 in Forecasts, Interest Rates/Loan Limits, Market Conditions | 4 comments

SD Appreciation Predictions

With more homes not selling – otherwise known as growing inventory - buyers can finally exert some influence on pricing (they’ve had virtually none over the last 18 months).  This should cause the pricing trend to stay fairly flat, with sellers being reluctant to lower their price enough, causing only the better deals to sell.  During the frenzy it was different – everything was getting gobbled up, right price or not.

The San Diego ZHVI in April was up 12.6% YoY:

SD snapshot

They predict it will increase 4.1% between February 2014 and February 2015, which is a logical guess in a cooling market - though the statistical comparison to post-frenzy numbers will just confirm that pricing has been flat for a while.

But because the month-over-month San Diego ZHVI makes an unusual correction in their prediction below, rates are unlikely to drop further, and sellers’ pricing reluctance, I’m taking the under on their 4.1% appreciation by February, 2015:

ZHV

Posted by on May 22, 2014 in Forecasts, Jim's Take on the Market | 11 comments

No Joke

Happy April 1st – Trulia got in the April Fools’ spirit with this today:

http://www.truluvia.com/

But let’s keep it real here.  C-L expects price increases to continue.

From MND:

http://www.mortgagenewsdaily.com/04012014_corelogic_hpi.asp

Home prices continue to increase by double-digit percentages on a year-over-year basis CoreLogic said today.  The company’s Home Price Index (HPI) for February, an index that includes distressed sales, was up 12.2 percent compared to February 2013.  Thus February becomes the 24thconsecutive month in which there have been annual price increases.

HPI

Including distressed sales, the five states with the highest home price appreciation were California (+19.8 percent), Nevada (+18.5 percent), Georgia (+14.2 percent), Oregon (+13.8 percent) and Michigan (+13.5 percent).  There were no states with negative annual appreciation.

“February marks two straight years of year-over-year gains in national prices across the United States,” said Anand Nallathambi, president and CEO of CoreLogic. “The consistent upward movement in home prices should ultimately prove to be an important stimulant for higher levels of sustained market activity and growth in the housing economy.”

CoreLogic said today’s report introduces a new forecast metric that provides advanced indication of home price trends.  The current forecast is that home prices are projected to increase 0.5 percent month over month from February 2014 to March 2014 and that home prices, including distressed sales, are expected to rise 10.5 percent year over year from March 2013 to March 2014.

“As the spring home-buying season kicks off, house price appreciation continues to be strong,” said Dr. Mark Fleming, chief economist for CoreLogic. “Although prices should remain strong in the near term due to a short supply of homes on the market, price increases should moderate over the next year as home equity releases pent-up supply.”

Posted by on Apr 1, 2014 in Forecasts, Sales and Price Check | 0 comments

Whopper

rocketing pricesI’ve wanted to log the expert guesses so we can look back a year from now and see who was close, but most of them say they expect moderate growth in pricing – in the 3% to 5% range.  But then the president of the local association of realtors launched this rocket:

While it’s difficult for any expert to predict market prices, I believe the median price will be higher at the end of 2014 than it currently is now. San Diego will always be a desirable destination because of its warm weather, and with the job market steadying, demand for housing increasing and low vacancy rates in the rental market, home prices will continue to stabilize and move up. I also believe San Diego will see increased demand from international buyers. Given these factors, I estimate the median home price in San Diego County will be approximately 21 percent higher at the end of 2014.

It is possible - if inventory really dries up and trading is so thin that sellers get whatever price they want.  Her year-long presidency concludes next week – maybe she just wants to make sure we don’t forget her!

Dataquick’s median price for all property types in San Diego was $415,000 in November, and the Realist 2013 detached-home median is $430,000 currently (was $372,000 in 2012, which is a +16% difference).

http://www.utsandiego.com/news/2013/Dec/28/realestate-median-home-price-predictions/

Posted by on Jan 3, 2014 in Forecasts | 2 comments

2014 Predictions

Back on October 22nd, I said that I thought we’d be seeing zero appreciation in 2014, mostly due to overly optimistic sellers rushing to market with their over-priced turkeys. The resulting glut, combined with rising rates, would cause buyers to cool off, and regain some negotiating power.

I’ve been looking for supporting evidence since – but can’t find any!

Instead, there is mounting evidence pointing to the contrary – that the local real estate market in 2014 will be set ablaze again in the coming weeks.

Here are the reasons:

1. Rose Bowl Parade – There will be 70 million people watching the Rose Parade on Wednesday, so let’s consider the predicted high temperatures around the country for January 1, 2014:

DesMoines, Iowa: 14 degrees

Chicago, Illinois: 25 degrees

New York City: 33 degrees

San Diego, CA: 68 degrees

Pasadena, CA: 76 degrees

Usually it is cold for the parade, but this year’s heat wave should cause millions to jump in their car and move to California – and pay whatever it takes to stay.

sdchargers2.  The Chargers pulled off one of the all-time miracles in NFL history, which must mean fate is on their side.  Traveling to Cincinnati, Denver, and New England is nothing we can’t handle, and then boom, we’re in the Super Bowl, where it will probably be snowing.  But with Dennis Gibson cheering from the sidelines, the Bolts come through again – all while TV cameras are showing bikinis on the beaches back home – boosting homebuyer demand from more snowbirds.

3.  Higher prices aren’t bringing more sellers to market….yet.  The feared glut of inventory has yet to materialize, and what’s worse is the count of new listings for November-December is 19% lower this year than in 2012.  Even if the first two points above don’t matter much, the inventory count will determine our fate, and so far it looks like our low inventory is continuing.

4.  Higher rates aren’t mattering much.  The buyer pool has been too rich with cash to let mortgage rates get in the way.  Yellen has said that she will keep rates low, so if we top out around 5%, buyers should keep buying.

5.  Thin trading skews the numbers.  With the banks sticking with their no-foreclosure policy, there is no pressure on over-encumbered sellers to keep waiting it out. Even those who have positive-but-thin equity will be more tempted to let it ride another year, hoping to doube or triple their winnings.  Inventory, and sales, could drop further.

6.  Prices can keep going up as sales fall.  NSDCC detached-home sales should be about 7% fewer this year than in 2012, which reminds me of the 2003-2004 change.  Sales in 2004 dropped 8% from 2003, and plunged another 13% in 2005 Y-O-Y, even though prices kept going up through 2005.

7.  Buyers appear more fearful of rising prices than anything.  The last few months has seen buyers scrambling to lock up anything they can get their hands on, and it appears to trump all concerns.  For a house not to be selling, it has to have soemthing really wrong with it – looks at Richard’s La Costa listing. He has five offers, and it’s going to sell for at least full price.

Someone told me last week that any buyer who listened to me about being cautious in 2013 is now 20% behind in pricing, and is still fighting heavy competition.  With relatively-low rates virtually guaranteed for 2-3 years, it appears to be a solid bull market locally.

Push back my zero-appreciation to 2015, because I think we’re going to see another +10% in NSDCC prices in 2014.

Posted by on Dec 30, 2013 in Forecasts | 12 comments

Low Rates To Stay

santa hits brakes

The Fed’s taper announcment didn’t rile the markets, and so far it seems to be well received. How will impact home sales?

Here’s what Bill McBride said,

“Rates will be low for a long long time …”  As far as the “Appropriate  timing of policy firming”, the participants moved out a little with three  participants now seeing the first increase in 2016.

Buyers should be rejoicing at the thought of rates staying low for the next couple of years, and be very deliberate about what home they buy, and for how much.  Conditions are ideal for the wait-and-seers!!

But can buyers keep a hold of themselves?

In spite of every reason to stay patient, buyers will be tempted to jump at every decent deal they see.  The definition of ‘decent deal’ will likely be a moving target in 2014!

Posted by on Dec 18, 2013 in Forecasts, Frenzy, Interest Rates/Loan Limits, Jim's Take on the Market | 9 comments