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Category Archive: ‘Forecasts’

Zillow 2017 Forecasts



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

2015 Forecast/Actual
2016 Forecast/Actual
2017 Forecast
Carmel Valley
Del Mar
La Jolla
San Diego
Solana Beach

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.






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


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:


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!


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?


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?


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


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!

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?”


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!


From Zillow:

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:


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:


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

Prices Should Be Rising Faster?


The folks at CE are talking about the housing market in the UK, but the principles are similar – if there were more homes selling, it could provide more pricing momentum.

Just keep an eye on sales – demand would have to subside for prices to alter their current trajectory.  From HW:

Home prices have consistently increased around 5% year-over-year for the majority of the last two years, but this percentage could be severely off according to a new report from Capital Economics.

A new housing market update report from Capital Economics shows that given the current housing conditions, past experience suggests that house prices should be rising at double their current rate of around 5%.

Due to the lack of housing inventory, there are more buyers than homes available, which would typical lead to an much higher acceleration in house price growth than where it sits now.

Currently, there is less than five months’ supply in the market, which looking at past data would normally be associated with house price growth of around 10% year-over-year.

So what’s causing this abnormality?

Read full article here:


Posted by on Jun 20, 2016 in Forecasts, Jim's Take on the Market, Market Conditions | 0 comments

Bubble to Pop Again?


We are happy to cover all sides of the bubble beat.  This is the second release this month from our perma-bear, Mark Hanson.  He has been saying the same thing for 3-4 years, and it’s all based on theory and previous history.  Around here, our market is almost completely driven by owner-occupiers who are buying homes for the long-term:

An excerpt:

If 2006 was a known bubble with housing prices at “X”, affordability never better, easy availability of credit, unemployment in the 4%’s, total workforce at record highs, and growing wages, then what do you call today with house prices at X+ 5% to 20%, worse affordability and credit, higher unemployment, weakening total workforce, and shrinking wages? Whatever you call it, it’s a greater thing than “X”.

6-14 Hanson…Bubble 1.0 vs Bubble 2.0; “Green Shoots” and “Shadow Demand”

Posted by on Jun 15, 2016 in Bottom Talk, Forecasts, Jim's Take on the Market | 3 comments

Pending-Home-Sale Index Surges


A title rep came by the open house yesterday.  She said it has been so quiet over the last couple of weeks that she has had people call her cell phone just to make sure it was working!

Pending home sales overcame industry hurdles and increased for the third consecutive month in April, surging to the highest level in over a decade, according to the National Association of Realtors.

The Pending Home Sales Index, a forward-looking indicator based on contract signings, hiked up 5.1% to 116.3 in April from an upwardly revised 110.7 in March and is now 4.6% above April 2015 (111.2).

After last month’s gain, the index has now increased year-over-year for 20 consecutive months.

Lawrence Yun, NAR chief economist, says vast gains in the South and West propelled pending sales in April to their highest level since February 2006 (117.4).

“The ability to sign a contract on a home is slightly exceeding expectations this spring even with the affordability stresses and inventory squeezes affecting buyers in a number of markets,” he said. “The building momentum from the over 14 million jobs created since 2010 and the prospect of facing higher rents and mortgage rates down the road appear to be bringing more interested buyers into the market.”

Pending home sales in the South jumped 6.8% to an index of 133.9 in April and is 5.1% higher than last April, while the index in the West climbed 11.4% in April to 106.2, and is now 2.8% above a year ago.

Although the future of mortgage rates lies in question, Yun said, “Even if rates rise soon, sales have legs for further expansion this summer if housing supply increases enough to give buyers an adequate number of affordable choices during their search.”

As it stands, mortgage rates have remained below 4% in 16 of the past 17 months, and Yun predicts that they will continue to hover around 4% in coming months.

Looking ahead, Yun expects sales this year to surge higher than earlier estimates, coming in around 5.41 million instead, a 3% boost from 2015. After accelerating to 6.8% a year ago, national median existing-home price growth is forecast to slightly moderate to between 4% and 5%.

From CAR:

April REALTOR® Market Pulse Survey**:

In a separate report, California REALTORS® responding to C.A.R.’s April Market Pulse Survey saw a decrease in floor calls, open house traffic, and listing appointments/client presentations, likely due to the tight inventory and low affordability conditions constraining the California housing market. Floor calls and listing appointments both reversed three months’ growth in April. Open house traffic declined also but has been in positive territory since the beginning of the year.

• The share of homes selling above asking price in April shrank for the first time since December 2015, slipping to 32 percent from 34 percent in March and 36 percent in April 2015. Conversely, the share of properties selling below asking price rose for the first time in four months to 40 percent. The remainder (28 percent) sold at asking price.

• For the homes that sold above asking price, the premium paid over asking price declined for the second straight month to an average of 9.6 percent, down from March’s 9.8 percent and 10 percent in April 2015.

• The 40 percent of homes that sold below asking price sold for an average of 12 percent below asking price in April, down from 9.6 percent in March and 11 percent a year ago.

• Nearly seven of 10 properties for sale received multiple offers in April, indicating the market remains competitive. Seventy-two percent of properties received multiple offers in April 2015.

• The average number of offers per property decreased for the first time in three months to 2.9 in April, down from 3.3 in March and 3.6 in April 2015.

• With home prices leveling off in recent months, more sellers are adjusting their listing price to become more in line with buyers’ expectations. About one in four (23 percent) of properties had price reductions in April, down from 28 percent a year ago.

• Low housing inventory continued to be REALTORS®’ biggest concerns, cited by one in three (33 percent), while 16 percent indicated declining housing affordability, and 14 percent stated overinflated home prices.

• REALTORS® remained somewhat optimistic about market conditions over the next year, with the index increasing slightly from 60 in March to 61 in April. However, optimism is waning as the index is down from 73 a year ago, indicating fewer REALTOR® respondents are positive about the market.

Posted by on May 26, 2016 in Forecasts, Jim's Take on the Market | 0 comments