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Category Archive: ‘Forecasts’

C.A.R. Forecast 2017

car

They speak about the future as if they have the crystal ball, and can state what will happen next year. Of course, things only get better:

http://www.car.org/marketdata/marketforecast/

Following a dip in home sales in 2016, California’s housing market will post a nominal increase in 2017, as supply shortages and affordability constraints hamper market activity, according to the “2017 California Housing Market Forecast,” released today by the C.A.R.

The C.A.R. forecast sees a modest increase in existing home sales of 1.4 percent next year to reach 413,000 units, up slightly from the projected 2016 sales figure of 407,300 homes sold. Sales in 2016 also will be virtually flat at 407,300 existing, single-family home sales, compared with the 408,800 pace of homes sold in 2015.

“Next year, California’s housing market will be driven by tight housing supplies and the lowest housing affordability in six years,” said C.A.R. President Pat “Ziggy” Zicarelli. “The market will experience regional differences, with more affordable areas, such as the Inland Empire and Central Valley, outperforming the urban coastal centers, where high home prices and a limited availability of homes on the market will hamper sales. As a result, the Southern California and Central Valley regions will see moderate sales increases, while the San Francisco Bay Area will experience a decline as home buyers migrate to peripheral cities with more affordable options.”

C.A.R.’s forecast projects growth in the U.S. Gross Domestic Product of 2.2 percent in 2017, after a projected gain of 1.5 percent in 2016. With California’s nonfarm job growth at 1.6 percent, down from a projected 2.3 percent in 2016, the state’s unemployment rate will reach 5.3 percent in 2017, compared with 5.5 percent in 2016 and 6.2 percent in 2015.

The average for 30-year, fixed mortgage interest rates will rise only slightly to 4.0 percent in 2017, up from 3.6 percent in 2016, but will still remain at historically low levels.

The California median home price is forecast to increase 4.3 percent to $525,600 in 2017, following a projected 6.2 percent increase in 2016 to $503,900, representing the slowest rate of price appreciation in six years.

“With the California economy continuing to outperform the nation, the demand for housing will remain robust even with supply and affordability constraints still very much in evidence. The net result will be California’s housing market posting a modest increase in 2017,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. “The underlying fundamentals continue to support overall home sales growth, but headwinds, such as global economic uncertainty and deteriorating housing affordability, will temper stronger sales activity.”

Their guesses a year ago weren’t that close:

car-guessing

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Posted by on Dec 2, 2016 in Forecasts, Jim's Take on the Market | 1 comment

Zillow Predictions for 2017

z

It’s that time again – experts making predictions for next year!

We might as well start with the big kahuna, whose predictions are a tad vague:

Here is Zillow’s look ahead at the 2017 housing market:

Zillow’s 2017 Predictions

  1. Cities will focus on denser development of smaller homes close to public transit and urban centers.
  2. More millennials will become homeowners, driving up the homeownership rate. Millennials are also more racially diverse, so more homeowners will be people of color, reflecting the changing demographics of the United States.
  3. Rental affordability will improve as incomes rise and growth in rents slows.
  4. Buyers of new homes will have to spend more as builders cover the cost of rising construction wages, driven even higher in 2017 by continued labor shortages, which could be worsened by tougher immigration policies under President-elect Trump.
  5. The percentage of people who drive to work will rise for the first time in a decade as homeowners move further into the suburbs seeking affordable housing – putting them further from adequate public transit options.
  6. Home values will grow 3.6 percent in 2017, according to more than 100 economic and housing experts surveyed in the latest Zillow Home Price Expectations Survey. National home values have risen 4.8 percent so far in 2016.

Statement from Zillow Chief Economist Dr. Svenja Gudell:

“There are pros and cons to both existing homes and new construction, and the choice for home buyers can often be difficult. For those considering new construction in 2017, it’s worth considering the added cost that may come amidst ongoing construction labor shortages that could get worse if President-elect Trump follows through on his hard-line stances on immigration and immigrant labor. A shortage of construction workers as a result may force builders to pay higher wages, costs which are likely to get passed on to buyers in the form of higher new home prices.

“Those looking for more affordable housing options will be pushed to areas farther away from good transit options, in turn leading more Americans to drive to work.

“Renters should have an easier time in 2017. Income growth and slowing rent appreciation will combine to make renting more affordable than it has been for the past two years.”

http://zillow.mediaroom.com/2016-11-22-Trump-Policies-Could-Affect-New-Housing-Costs-as-New-Buyers-Enter-the-Market-in-2017

Here are their 2016 predictions from a year ago (+3.5% was the guess by the 100+ experts, and the actual was +4.8% according to the above):

http://www.bubbleinfo.com/2015/12/23/zillow-2016-predictions/

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Posted by on Nov 28, 2016 in Forecasts, Jim's Take on the Market, Zillow | 3 comments

San Diego #6

rankings

In spite of record pricing, our NSDCC new-listing count this month is going to come in under last November’s count. Remember when greed was good? Apparently, staying put is better!

http://www.realtor.com/news/trends/20-hottest-markets-real-estate-u-s-november-2016/

While the nation is getting ready to digest massive amounts of turkey, the economic team at realtor.com® has digested a ton of data from our site for November. And though we’re a few days from the end of the month, we can go out on a limb and say it’ll be yet another month of record-low levels of housing supply, strong demand, and (not coincidentally) record-high prices.

The median list price looks to remain at $250,000 for a fourth straight month. That’s 9% higher than last year at this time, and sets a new record for November.

“After an eventful election, demand for real estate appears to be carrying momentum going into the holiday season,” says Javier Vivas, manager of economic research for realtor.com. “We  expect that to be put to the test, as mortgage rates sky rocket to new highs. But the economic foundations remain strong and most forecasts expect growth as we enter the new year, which should keep waves of buyers intent on entering the market.”

Viewing activity on our site shows that there’s still plenty of demand from buyers on the prowl for a home. But inventory of homes for sale is down 5% from October, and 11% compared with November 2015. It’s that combo of low supply and high demand that’s keeping prices high. And with only 363,000 new listings entering the market in November, the pickings will be even slimmer next month.

Although homes are selling a wee bit slower these days, as is typical in fall, they’re still moving 1% faster than last November. We’re projecting that homes for sale will have spent a median 82 days on market for November, three days slower than last month.

Posted by on Nov 23, 2016 in Forecasts, Jim's Take on the Market, Market Buzz, North County Coastal | 0 comments

Zillow 2017 Forecasts

2017-la-jolla

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It’s that time of the year – the 2017 forecasts are starting to roll out!

Zillow has been conservative about our local markets.  For the most part, the actual appreciation of the Zillow Home Value Index has been higher than their forecasts over the last two years.

Their local forecasts for 2017 are all lower than their 2016 guesses, and what they are predicting could also be described as ‘Flatsville’.  If their local forecasts of +0.9% to +2.2% come true, it would mean that several sellers would end up selling for less than they could have gotten in 2016.

Are we ready for that yet?

Local ZHVI-Appreciation Forecasts

Town
2015 Forecast/Actual
2016 Forecast/Actual
2017 Forecast
Carlsbad
+2.7%/+4.8%
+1.9%/+3.8%
+1.3%
Carmel Valley
+0.3%/+5.4%
+1.4%/+1.9%
+0.9%
Del Mar
+5.5%/+1.1%
+1.4%/+2.6%
+1.1%
Encinitas
+0.6%/+8.3%
+2.4%/+6.3%
+2.2%
La Jolla
+2.7%/+6.6%
+2.3%/+6.1%
+2.1%
RSF
+0.4%/+11.1%
+3.7%/-0.5%
+1.9%
San Diego
+1.7%/+6.4%
+2.1%/+4.0%
+1.7%
Solana Beach
+2.7%/+6.4%
+2.2%/+2.6%
+1.4%

The Zillow data changes slightly, depending on where you look on their website, and whether you use town names or zip codes. Here is the LINK to find others.

encinitas-2017

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Posted by on Oct 17, 2016 in Carlsbad, Carmel Valley, Del Mar, Encinitas, Forecasts, Jim's Take on the Market, La Jolla, Rancho Santa Fe, Solana Beach, Zillow | 0 comments

2017 Forecasts

guesses

http://realtormag.realtor.org/daily-news/2016/10/03/predictions-roll-in-2017-housing-forecasts#sf37742278

We can expect a hot year for home sales in 2017, according to recent forecasts from the National Association of REALTORS®, the Mortgage Bankers’ Association, Freddie Mac and Fannie Mae, and more.

NAR is predicting existing-home sales to reach 6 million in 2017, higher than its 5.8 million forecast for this year. But other entities are even more bullish. MBA is predicting home sales to eclipse 6.5 million next year, while Fannie Mae and Freddie Mac are both predicting 6.2 million.

A huge wave of Generation Yers, who have delayed home buying, are emerging into their key buying years. They are predicted to keep home sales and condo sales strong well into 2020, according to economists.

The top markets for price appreciation likely will be in Seattle, Wash.; Portland, Ore.; Denver, Colo.; and Boston, predicts Eric Fox, vice president of statistical and economic modeling at VeroForecast. These markets’ robust economies have growing populations but a tight supply of homes for sale on the market that will likely lead to some of the largest price increases across the country.

Meanwhile, new-home construction starts likely will tick up to about 1.5 million per year to 2024, predicts Forisk Research.

Home builders likely will continue to be more subdued, despite calls for more inventory.

“Home builders behavior likely is a continuing echo of their experience during the crash,” Pantheon Macro Chief Economist Ian Shepherdson told MarketWatch. “No one wants to be caught with excess inventory during a sudden downshift in demand. In this cycle, the pursuit of market share and volumes is less important than profitability and balance sheet resistance.”

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

Nothing but blue sky ahead, according to the big kahunas of real estate sales. In spite of tight credit and affordability issues, they all believe that we will sell over 6 million homes in 2017?  How often has that happened?  Only during the rah-rah days of exotic financing in 2005-2006:

xhs

The highest reading this year was 5.57 million, and today’s current pace is around 5.33 million sales, and stumbling.  And they think Generation Yers will save the day, and cause home sales to rise at least 10% next year?

Note how wrong they were with their 2016 forecasts in top chart!

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Posted by on Oct 5, 2016 in Forecasts, Jim's Take on the Market | 0 comments

Buy/Sell Now or Later?

median cost per sf

What now?

Summer is over, and the so-called spring selling season is six months away.

Is it worth waiting?

Sellers want to believe that springtime is when all the young families with 2.2 kids will be looking to pay retail-plus.  But that belief ignores the trend – prices been fairly flat around higher-end areas.  Look at the graph above.  The only area that is a good bit higher today than in January is Rancho Santa Fe, which has been on a roller-coaster the last couple of years.

Predictions for next year?  From Zillow:

Zillow SD prediction 2017

Zillow was more pessimistic about 2016 too, so the +1.7% may end up being conservative.  But prices are already setting all-time records, so it is hard to imagine another big pop next year.

We as an industry aren’t used to flat pricing – the drama of violent price swings is much more exciting!  But flat pricing does make it easier, because it eliminates one of the major variables about moving.

If you are going to sell or buy at roughly the same price now or next spring, then which is better?

THE BEST TIME TO BUY OR SELL IS WHEN NOBODY ELSE IS!

If you are buying and come across the right home at the right price, you sure don’t want any competition to screw it up for you!  There will be less competition during the next 4-5 months!

If you are selling in a flat market and have other active listings around you, what if one of them needs to sell worse than you do?  They could undercut your spring-selling-season-2.2-kids-retail-plus program, and leave you hanging.

Remember our Glendale realtor with the line out front?

glendale

There weren’t any good comps nearby all year – a great time to sell when nobody else is!  They ended up with 18 offers (6 were cash) and they had two cash buyers who wanted it so bad that they were willing to pay more than $100,000 over list price!

Thankfully there weren’t any good comps nearby to screw that up!

 

Posted by on Sep 6, 2016 in Bidding Wars, Forecasts, Jim's Take on the Market, North County Coastal, Sales and Price Check | 0 comments

Moving Inland

heartland

As money and affluence continue to invade the coasts, those not so fortunate will be making choices.  Warning to all who are thinking about leaving California – it is virtually impossible to move back.  But you can always visit!

http://zillow.mediaroom.com/2016-08-10-Experts-New-Jobs-in-the-Midwest-to-Drive-Migration-Back-to-the-Heartland

As businesses look for cheaper places to expand, job growth in the middle of the country will begin attracting more residents, according to experts surveyed in the latest Zillow® Home Price Expectations (ZHPE) Survey.

That would reverse a trend over the last decade that drew many to the coasts following strong job markets, with more employment and income growth. Over half of experts surveyed said they don’t expect migration to the coasts to continue indefinitely. Of those, 56 percent pointed to jobs and 24 percent said high housing costs on the coasts will drive residents inland.

Recovery from the housing boom and bust has looked very different for Middle America and coastal America. While markets on the East and West coasts experience rapidly rising home values and strong job markets, markets in the Rust Belt and Midwest are moving more slowly; negative equity is still prevalent and job growth is minimal.

The quarterly ZHPE survey, sponsored by Zillow and conducted by Pulsenomics LLC, asked more than 100 housing experts about their expectations for the housing market.

The experts were also asked if they thought the distinct split between Middle America and the two coasts would reverse. Over half of the respondents said this trend has already begun to reverse, or expect it to in the future. A quarter of respondents believe this trend is a permanent shift, and 11 percent believe the migration to the coasts is an illusion.

Of the reasons experts predicted people would move back to the middle of the country, job growth was most popular. Just over 20 percent said people would migrate inland in search of more affordable housing, and 13 percent said Americans will start to seek the traditional lifestyle that the middle of the country has to offer. Only 2 percent said climate change will force residents away from the coasts.

“Since the Recession, employment has boomed in relatively expensive coastal areas, often attributed to a shift in preferences among workers – especially millennials – but also facilitated by soft labor markets that have resulted in a plentiful supply of available workers,” said Zillow Chief Economist Dr. Svenja Gudell. “Now, as labor markets tighten and the country approaches full employment, employers will have to look elsewhere to keep costs in check. For some businesses, this will mean relocating away from expensive coastal areas to more affordable interior communities. Sooner or later workers will follow the jobs, providing an impulse to local housing markets.”

Overall, the experts surveyed predict home price appreciation across the country will be up over 4 percent year-over-year by the end of 2016. They expect home prices to slow down over the next four years and by the end of 2020, they predict home prices will grow at an annual pace of just 2.9 percent.

Posted by on Aug 27, 2016 in Forecasts, Jim's Take on the Market, Market Conditions | 2 comments

Zillow: “Is The Party Over?”

zzzz

Zillow is the latest to suggest that the ‘market’ might be slowing.

But looking at their own graph, it looks like the monthly percent change begins to decline every year at the end of summer. The second graph also shows that sales are at a new peak – if it fell off a bit we should still be fine.

But all that matters is what readers glean from the headlines and a quick scan.

Maybe it’s just a seasonal thing. This guy was spewing doomer talk in 2014!

http://www.marketwatch.com/story/this-house-market-is-falling-apart-2014-08-26

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From Zillow:

http://www.zillow.com/research/2016-july-home-sales-forecast-13087/

z july 2016

  • Zillow expects existing home sales to fall 1.9 percent in July from June, to 5.46 million units at a seasonally adjusted annual rate (SAAR), ending a string of four consecutive monthly gains.
  • New home sales should fall 6.65 percent to 553,000 units (SAAR) after a stronger than expected June.
  • Given the recent string of home sales beating forecasts, we view risks to the upside and would not be surprised if results are slightly stronger than we expect.

Thus far, it has been a pretty sweet ‘16 for home sales. But according to our July home sales forecast, the party looks like it could be coming to an end, at least temporarily and especially for sales of existing homes that must eventually face the harsh reality of tight inventory and rising prices.

Despite tight inventory, existing home sales have been surprisingly buoyant lately, beating or meeting expectations in each of the four months from March to June. We expect that streak to end in July. If nothing else, the odds that home sales continue to rise are increasingly dim. Since the series began in February 1999, runs of five months or more of consecutive monthly gains have only occurred five times – and only one of those streaks lasted six consecutive months or more.[1]

Shifting seasonal patterns may be behind some of this apparent resiliency. By some reports, the height of the home shopping season – historically most concentrated during the summer months – shifted earlier this year as buyers sought to get ahead of the competition. But sooner or later, tight supply and rising prices should take their toll.

Our forecast for existing home sales points to a 1.9 percent decline from June to 5.46 million units at a seasonally adjusted annual rate (SAAR) (figure 1). This would place existing home sales down 0.3 percent compared to a year earlier.

Read full report here:

http://www.zillow.com/research/2016-july-home-sales-forecast-13087/

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Posted by on Aug 22, 2016 in Forecasts, Jim's Take on the Market, Market Buzz, Market Conditions, Zillow | 2 comments

NSDCC 2016 Sales Predictions

NSDCC Quarterly Sales

The rest of the year is shaping up quite nicely – if all that matters are stats.

After a slow start in 1Q16, we closed 909 sales in the second quarter!  After a strong 2015, there was some expectation for a pullback this year, but not yet – we exceeded the 2Q15 total of 901 sales!

Can we predict the rest of 2016?

We had similar second-quarter counts in both 2012 and 2015 as we did this year, and in both years the 3Q counts dropped off about the same (845 and 832).  With the attractive mortgage rates we should at least equal, and hopefully do a little better?  Let’s predict 850 NSDCC sales for the third quarter of 2016.

The last 3 fourth quarters have been almost identical – sales counts in the 660s.

We had 556 + 909 = 1,465 sales in first half of 2016.

Today we have 416 pendings.

Predicting 850 + 660 = 1,510 sales in second half of 2016.

Here are the NSDCC quarterly sales numbers:

Quarter
2012
2013
2014
2015
2016
1Q
577
672
581
629
556
2Q
900
998
849
901
909
3Q
845
884
753
832
850?
4Q
832
664
666
662
660?
Total
3,154
3,218
2,849
3,024
2,975?

What needs to happen to ensure a vibrant second half of 2016?

Buyers need to make offers.

Sellers aren’t going to go first.

Even if they did lower the price, it won’t be by much.  Mid-summer is here, and buyers have more permission. It’s not April any more!

Posted by on Jul 12, 2016 in Forecasts, Jim's Take on the Market, North County Coastal | 0 comments