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Category Archive: ‘Forecasts’

C.A.R. Economist is Positive

Leslie Appleton-Young, vice president and chief economist, California Association of REALTORS® (C.A.R.), recently delivered her annual “2017 Housing Market Perspectives” presentation to a group of local REALTOR® members.

“It may be a bumpy ride, but I believe there will be enough sales in San Diego County in 2017 for everyone to have a great year,” she said. “San Diego is outperforming the state and California is outperforming the nation. Although 2017 started with a bang with higher consumer confidence, there is still uncertainty and wildcards in such areas as trade, healthcare, immigration, federal funding and interest rates. An economic boost is good for housing in the short run, but some federal policies could exacerbate affordability problems.”

Under President Trump, proposals include an economic stimulus package and tax reform. Appleton-Young said the $550 billion planned in infrastructure investments over 10 years to rebuild highways, bridges, tunnels, airports, schools and hospitals will boost economic growth and create more jobs.

“At full employment, wages will start to rise and wage growth will typically be passed on to consumers, which means the potential for higher inflation,” she said. “Unemployment rates are near an eight-year low. More jobs will mean more housing demand and upward pressure on home prices. Affordability will remain an issue and we shouldn’t expect much in terms of new supply.”

Appleton-Young also said overhauling the current tax code will create more demand for housing at a time when supply already is tight. She said Mr. Trump has proposed reducing the top tax rates for individuals from 39.5 percent to 33 percent and for corporations from 35 percent to 15 percent, as well as eliminating tax brackets from seven to three. Additional planned tax reform measures include a child care deduction, eliminate federal estate and gift taxes and tax breaks to manufacturers for plant and equipment expansion.

“The mortgage interest deduction (MID) will remain intact, although a smaller MID incentive could threaten ownership,” Appleton-Young said. “The MID is good for people’s pocket books. Historically, people don’t save unless they have a home.”

In addition, reforms to Fannie Mae and Freddie Mac are likely under a Trump administration, said Appleton-Young. “Banks will loosen lending standards, increase mortgage options and lower the credit score requirements,” she said.

The Federal Reserve raised interest rates only once in 2016, Appleton-Young said, but rates could increase three or four times in 2017, pushing mortgage interest rates as high as 4.5 percent or 5 percent for a typical home loan. Historically, when mortgage rates increased, the percentage of California households able to afford to buy a home dropped from 34 percent in 2010 to 21 percent by the end of 2016, and monthly mortgage payments increased from $1,740 to $2,609 in the same time period.

Appleton-Young also offered a caution to REALTORS® about posting political statements on social media because some potential clients might reject a REALTOR® based on their political leanings. Good questions to ask before political-related posting: Do I have the correct facts? Does this need to be said? Why do I need to be the person to say this? Could I be misunderstood? What are my motives for saying this? Can this wait until tomorrow when I might be thinking in a clearer manner?

Prior to her group presentation, Appleton-Young met privately with a group of brokers who noted an ongoing trend in higher monthly rents for apartment living. A recent report shows San Diego has the fifth highest apartment rental rate in the state, with a typical one-bedroom unit going for $1,530 a month. The report by Apartment List, an online rental marketplace, found that local rents grew 0.1 percent in January, which is 1.9 percent higher than a year ago. San Diego is still lower than other rents in the state. Rents are highest in San Francisco, where a one-bedroom runs $3,420 a month, followed by San Jose at $2,110, Oakland at $2,000 and Los Angeles at $1,870. The U.S. renter population is about 44 million households or 37 percent of all households in the nation. Apartment List’s data is drawn monthly from millions of listings nationwide on its site.

Also in the brokers meeting, it was noted that U.S. News & World Report recently revealed its “Best Places to Live in the U.S. in 2017” list of top 25 metro areas that offer the best combination of jobs, desirability, cost of living, quality of life and more. San Diego is ranked #22. “What San Diego lacks in affordability, as one of the most expensive metro areas on the list, it makes up for desirability,” the magazine said. “San Diego’s beautiful beaches and laid-back vibe make many Americans wish they lived there.” The top 5 places were: Fayetteville, Ark. (#5); Washington, D.C. (#4); San Jose, Calif. (#3); Denver (#2); Austin, Tex. (#1).

Appleton-Young directs the activities of C.A.R.’s Member Information team. She oversees the analysis of housing market and brokerage industry trends, broker relations and membership development activities. She also is closely involved in the Association’s strategic planning efforts and is a well-known speaker in California’s real estate community. She earned a bachelor’s degree in economics from the University of California Berkeley and a master’s degree from the University of Pennsylvania. C.A.R. is a statewide trade organization with more than 180,000 members dedicated to the advancement of professionalism in real estate.

Posted by on Feb 12, 2017 in Forecasts, Jim's Take on the Market, Market Conditions | 2 comments

Trump and Local Real Estate

The inauguration is almost here – Trump will be your president on Friday!

How will he affect our local real estate market?

His detractors are aghast over his tweets, but Trump keeps them coming.  In spite of their bombastic nature, I think we are already numb to his tweets, or at least getting used to them being part of the landscape.

At this point, I don’t think the Trump Effect will have much, if any, impact on us – positive or negative.  If rates stay under 5% (today’s 30Y is 4.12%), buyers should shrug it off and keep buying.

I also think sellers and agents are getting smarter about price, which will help tremendously.  As you saw in the previous post, they might screw it up a bit once they hit the market, but eventually buyers and sellers should both be happy with a modest appreciation rate of 2% to 4% this year.

The #1 thing that should keep our market stable is the buyers’ focus on getting the right house for the long-term.  Before the 2007 downturn, buyers thought they could always sell for a gain, and, as a result, any house would work for the short-term.  But after our so-called ‘crisis’, we recognize prices can go down – but it only hurts if you sell.

Sales and prices may bounce around, but with the focus on the long-term as a foundation, our market should keep cooking.

Posted by on Jan 17, 2017 in Forecasts, Jim's Take on the Market, Market Buzz, Market Conditions, North County Coastal, Sales and Price Check | 6 comments

Renting vs. Buying

They may be using an algorithm or math formula to calculate the above, but there is more to the discussion.  The attractiveness of renting is different for everyone, regardless of income.

P.S. Rates have settled down nicely, and are at 4.10% today.

Read full article here:

Posted by on Jan 5, 2017 in Forecasts, Interest Rates/Loan Limits, Jim's Take on the Market | 0 comments

More Topics for 2017

Happy New Year!  Other topics:

Pre-Listing Inspections – If you are buying and selling around the coast, chances are that you’re dealing with an older house.  Not many have been updated and remodeled enough to deserve today’s record-high prices – and at this point, buyers are going to be very demanding.  As an industry, we need to insist on sellers getting a pre-listing inspection so they know what’s coming, for two reasons;  1) It gives them a chance to fix stuff in advance, and 2) buyers aren’t penalized for being the messenger.

It happens regularly that the first glimpse of the true condition of a home is from the buyer’s home inspection.  The long-time owners can’t help but be offended that their pride and joy has been so verbally abused, and they want revenge – they want to stick it to the buyers instead. But these might be the only buyers that will pay this price – let’s not kick them to the curb!

Auctions – I think we are a long way from auctions being the home-selling technique of choice. The current version of inputting an ultra-low opening bid onto the MLS as the list price is misleading – one buyer told me it was a worse teaser than the value-range pricing.  Plus, they might sell it before the auction, which isn’t an auction.

Are you going to auction the house, or not?

I want a yes or no answer – and so do the buyers.

The option to sell early is a way to soft-sell the package to a homeowner, and assure them that they won’t be giving the house away.  But it is a turnoff for buyers, because all they know is that they can’t buy it for the listed price (the opening-bid price) – so what is the real price?  We’ve seen three houses in Rancho Santa Fe be auctioned off with no reserve that closed for more than $10,000,000.  Surely we can have the guts to conduct a no-reserve auction on a more modest home – a pure auction is what’s best for sellers and buyers.

Dual Agency – We dodged a bullet with the Malibu case this year that went to the California Supreme Court, but it won’t be the end of the discussion.  The worst offenders are the listing agents who lowball their own seller – they should lower the price first, to see if there are any other buyers out there.

For-Sale Signs – This is supposed to be the year that realtor signs have the name of their brokerage be at least the same size as the agent’s name.  It probably doesn’t mean more transparency ahead, but I like the intent. Agents who want to appear as their own entity should go get their broker’s license and run a brokerage like everyone else – or make it clear that you haven’t, which is the point of this new regulation.

Mulch is the new Booties – The craze over wearing booties hasn’t waned, but is being supplemented by the desire to throw mulch everywhere. Recently, an agent didn’t want to show her listing because her mulch hadn’t gone in yet.  I don’t mind mulch or booties, but they don’t sell houses – people sell houses – so let’s not get too transfixed on the mulch or booties. P.S. I do mind the red mulch.

Sandicor – Hopefully the judge will decide to sell the San Diego MLS company, Sandicor, to the only realtor association that wants it – GSDAR.  Then agents can join either GSDAR or CRMLS or both. But CRMLS makes it easier for out-of-county agents to bring buyers here so our sellers can take advantage of them.




Posted by on Jan 1, 2017 in Forecasts, Jim's Take on the Market | 2 comments

More 2017 Predictions – Disrupters

It is assumed that the real estate industry is ripe for disruption.  We see a new whiz-bang website just about every week that was developed by two guys in a garage who think they have the answer – but then are never heard from again.

The reason is advertising.

Zillow got to the top because they were spending $100 million per year to advertise. Anybody who is willing to spend that type of money can dance their way into the hearts of consumers.

Bigger players will be looming in 2017.

1. We talked about Opendoor, the flipping company who buys your house for cash in 3-7 days at a below-market price based on algorithms.  Their fees range from 6% to 12%, which would only appeal to desperate sellers – which have been few and far between in San Diego.  Opendoor is only operating in Dallas and Phoenix, so expanding to the tony coastal regions might take a while.  But they just received $210 million in venture capital, and have 200 employees closing $60 million per month in transactions currently.  They are expanding to 10 unnamed cities, and hope their fast money can attract a homeowner’s first phone call.  But once sellers hear their (low) bottom-line, only a great salesman could convince them to not shop around.

2. Another big-money contender is Quicken Loans, the second-largest retail mortgage lender in the country.  They just announced that they are acquiring a ‘technology platform’ to appeal to more home buyers directly.  LINK

“Finding a reputable agent and a great home go hand-in-hand,” said Ron Frankel, OpenHouse Realty CEO. “I am confident that the work John Kvasnic, OpenHouse Realty’s Chief Product Officer, and his team have done in both arenas will help In-House Realty become the premier destination for those looking to work with the best agents in their community, while also helping them find the home of their dreams. It’s the perfect fit.”

They don’t mention that their recommended agents are paying Agent Ace a referral fee of 35% of their commission.  There is a big difference between the ‘best agents in their community’, and ‘best agents in their community who are willing to pay a 35% referral fee’.  The second group is much smaller, and typically they are the realtors who are getting outworked by the ‘best agents in the community’.  But consumers won’t figure that out until it is too late.

Quicken Loans spent $21.1 million on Google advertising alone in 2014, more than any other mortgage lender.  They could become a major player if they spend enough on advertising – they already spent it in the mortgage space, and are up to the #2 mortgage-lender nationwide (look for their Super Bowl ad).

3. The founder of Uber is another potential disrupter, but only because of their previous smashing success.  Their real estate package follows the course of most outside disrupters who think transparency is something the sellers want – but they don’t.

An excerpt:

When a seller receives a few good offers on a home, the sellers agent will ask for best and last offer by noon tomorrow, for example. If buyers were able to see the terms of all the other offers, as they would when using Haus, then this could drive the price of the home up as buyers enter into a bidding war. Not to mention, unethical sellers or agents could artificially inflate the price of a home through shill bidding, as an offer is not legally binding.

While Haus helps sellers measure the demand on their property, it might also drive away potential buyers who don’t want to get in a bidding war over an already-expensive purchase. Or, on the other side, this might short a seller who would have received a much higher best and final bid from a buyer, but saw that offer drop to barely beat the next-best offer.

Once sellers figure out that disruption/transparency may not be in their favor, selling the old-fashioned way where they hold all the cards will sound like a safer choice.

We already know that the industry is in retreat.  The old-school realtors who think they deserve a five-figure paycheck for completing fill-in-the-blank contracts will think retirement sounds better than ever.  Mid-range and better agents are scrambling to build teams and be Redfin-ish in their conveyor-belt approach, even though the pitfalls are obvious.  It wouldn’t take much to tip the whole thing over at this point.

Zillow feels like an old friend by now, but who knows what they might do?  Amazon or Google could jump in too, and if they did, look out.

Whoever spends the most advertising dollars, wins!


Posted by on Dec 31, 2016 in Forecasts, Jim's Take on the Market, Listing Agent Practices, Why You Should List With Jim | 1 comment

2017 Predictions

Image result for 2017

Logically, it would make sense to expect that higher rates AND prices would raise the home-selling intensity to a whole new level.

Buyers will expect prices to re-trace somewhat, and will probably think, “Can’t we just go back to 2015 prices?” And sellers will think, “Not Me!”

First, let’s reflect on the 2016 stats – how did we do?

NSDCC Detached-Homes, Jan-Nov

Avg New Listings/Month
Avg Closed Sales/Month
Median SP

We have been striking a fine balance between listings and sales.

Because we only had a few more listings in 2017, the buyers didn’t flinch. Instead, they kept buying!

Every year we have a whole new set of buyers and sellers, yet we expect them to all behave the same as in the previous year. Will it happen again? Yes. Why?

Because that’s the other part of the fine balance. If you are a buyer, either you buck up and pay these prices, or you don’t buy. If you are a seller, you want/need to spruce up your house, get a good agent, and put an attractive price on it, or you will struggle to sell.  Buyers will be pickier than ever!

There will be a few on each side that get lucky and beat the odds, but for the most part, the market conditions are going to remain the same until we run out of rich people, or something catastrophic happens.

I’m not any better at guessing the actual stats than the next guy, but here goes.

JtR Predictions

On January 7, 2016, mortgage rates were 3.98%, and I guessed were would see 2016 sales drop 5%. For the Jan-Nov period, it has been a virtual dead heat – 2775 sales this year vs. 2771 in 2015.  But I might get lucky if our rapidly rising mortgage rates killed a bunch of deals this month, and the YoY sales dip under 2015 by a couple of points.

We have eight business days left, plus late-reporters, so I’ll say no luck for me and predict that the final total of 2016 will match the 3,011 sales from 2015.

NSDCC Annual Sales
Median Sales Price
2,893 (today)

The current momentum is so strong that I’m going to say the Trump mojo will cause sales to increase enough in the first half of the year that next year’s sales will top those in 2016.

My guess is for 3,100 sales in 2017, and median sales price of $1,200,000. A paltry 3% gain for each category, which is about as safe as it gets!

There will be winners and losers – here are examples:

Posted by on Dec 19, 2016 in Bubbleinfo TV, Forecasts, Jim's Take on the Market | 6 comments

NSDCC November Sales


Here’s the update on last month.  There were two fewer business days in 2014, and one less business day in 2013 and 2015 (same # in 2012).

With both sales AND pricing being this strong, the momentum should carry over to 2017…..and I think we’ll get off to a fast start too.  There has to be some motivated sellers scooting closer to the exits, and buyers who are anxious to lock in a rate and price before they get any worse.

We should be at full speed by March!

NSDCC November Sales

# of Sales
Sales Per B-Day
Median SP
Average $/sf

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

C.A.R. Forecast 2017


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:

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:



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

Zillow Predictions for 2017


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.”

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):



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