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: ‘Market Conditions’

Housing Jitters

The economists like the housing market, but they are known to play it safe.

How about the consumers?

I’d prefer to survey the active home buyers and sellers in our area to get the best reading on our future.  But here are the sentiments of 1,079 American adults over the age of 18 who were surveyed last month:

Fifty-eight percent of homeowners say that they expect there will be a “housing bubble and a price correction” in the next two years – up 12 percentage points since April.

Looking across the country, residents in hot housing states are particularly jittery. The top five states where residents believe the market is approaching a “housing bubble” include:

  1. Washington (71 percent)
  2. New York (68 percent)
  3. Florida (63 percent)
  4. California (59 percent)
  5. Texas (58 percent)

While experts have long suggested living in a home for more than seven years could lower a homebuyer’s exposure to market fluctuations, only 37 percent of millennials in the survey plan to live in next home they buy for more than six years, making the so-called “rule of seven” less relevant to the next generation of serial homebuyers.

“Beyond the jitters, I see in our survey an increasingly informed nation of homebuyers, who understand the risk of the market,” said Melendez. “To those concerned about a price correction, or waiting to time the market, I recommend a proactive approach. Have an exit plan, then anytime you find a home you love is a good time to buy.”

Read full article here:

LINK

How do you feel?  Leave your thoughts in the comment section!

Save

Posted by on Aug 17, 2017 in Forecasts, Jim's Take on the Market, Market Buzz, Market Conditions, Thinking of Buying?, Thinking of Selling? | 7 comments

‘Basement Generation’

Hat tip to Carlsbad Mark for sending in this article!

LINK

More Americans are renting their homes than at any point since 1965, according to a new study by the Pew Research Center.

The total number of households in the U.S. grew by 7.6 million between 2006 and 2016.  But over the same decade, the number of American households living in a home they own remained essentially unchanged.

Meanwhile, the percentage of Americans renting their homes increased dramatically. It jumped from 31.2% in 2006 to 36.6% in 2016.

And that figure continues to rise …

The latest percentage of renters now stands higher than the 36.2% of 1986 and 1988. It’s now within a whisper of the all-time high of 37.0%, set in 1965.

I believe the root of the rising rental rates is economic hardship.

Only a small percentage of people who rent do so voluntarily. Most get pushed into renting because of financial circumstances.

When Pew surveyors asked renters why they rent, a whopping 65% cited financial circumstances. Only 32% said they rented as a matter of choice.

The three largest groups of traditional renters — young adults, blacks and Hispanics — are still the most likely to rent.

But the rental rates also increased for older adults, whites and college- educated households.

Worse yet, there is a large contingent of Millennials who aren’t even renting.

They choose to live in Mommy and Daddy’s basement. In 2016, an alarming 34.1% of 18- to 34-year-olds lived with a parent.

The “Basement Generation” makes a sad testament about the state of our economy.

But I place most of the blame at the feet of Mr. Magoo (Ben Bernanke) and Mrs. Magoo (Janet Yellen).

Their ridiculously nearsighted, low-interest-rate policies have made it impossible for millions of Americans to afford a home.

Read more here:

LINK

Posted by on Aug 9, 2017 in Jim's Take on the Market, Market Conditions | 1 comment

Low Inventory = Low Sales?

Our head cheerleader keeps saying that the lower inventory is the main reason why there have been fewer home sales nationwide:

Lawrence Yun, chief economist at the National Association of Realtors, says “Closings were down in most of the country last month because interested buyers are being tripped up by supply that remains stuck at a meager level and price growth that’s straining their budget.”

Is that the case between La Jolla and Carlsbad?

Here is the history, with a bubble-look-back to the 2007 stats too:

NSDCC Total Listings and Sales, Jan 1 to July 31:

Year
Total Listings
Total Sales
TL/TS Ratio
Median Days on Market
2007
3,582
1,642
2.18
87
2012
2,950
1,735
1.70
68
2013
3,268
1,967
1.66
40
2014
3,181
1,701
1.87
49
2015
3,387
1,876
1.81
41
2016
3,485
1,793
1.94
45
2017
3,107
1,837
1.69
28

We have had 11% fewer listings this year, but 2% more sales than in 2016!

The higher prices don’t seem to be getting in the way either!

Why does Yunnie keep babbling on with his nonsense?  It’s because the realtor industry never wants to mention how critical the price is to the equation.

Price will fix anything!

All we really know is that more sellers and buyers have been willing to come together on price this year – and in a frenzy-like fashion, similar to 2013!

Posted by on Aug 7, 2017 in Inventory, Jim's Take on the Market, Market Conditions, Sales and Price Check | 0 comments

Renters On The Rise

My takeaways:

  1. Rents should be under intense pressure over the next few years.
  2. Growth of U.S. households since this blog began = about 8 million!
  3. The affluent are winning.

Hat tip to Kerry for sending this in!

LINK

Ten years after the U.S. housing market crashed, some things have gotten worse instead of better.

More U.S. households are headed by renters than at any point since at least 1965, according to new analysis of Census Bureau data by the Pew Research Center, a nonprofit think tank in Washington, D.C. “The total number of households in the United States grew by 7.6 million between 2006 and 2016,” it found. “But over the same period, the number of households headed by owners remained relatively flat, in part because of the lingering effects of the housing crisis.” And the rise in renters is significant, even accounting for the growth in the population over the last half-century.

The number of households owning their home has fallen since the peak of the U.S. property bubble in 2006, Pew found, while the percentage of households renting rose to nearly 37% last year from just over 31% in 2006. The 2016 rate is slightly less than the 37% in 1965. “Certain demographic groups ­— such as young adults, nonwhites and the lesser educated — have historically been more likely to rent than others,” Pew found. “However, rental rates have also increased among some groups that have traditionally been less likely to rent, including whites and middle-aged adults.”

Adults younger than 35 continue to be the most likely of all age groups to rent. In 2016, 65% of all households headed by people younger than 35 were renting, up from 57% a decade earlier. Last year, 41% of households headed by someone aged 35 to 44 were renting, up from 31% of all households in 2006. Rental households headed by someone aged 45 to 64 rose to 22% of all households in 2006 from 28% in 2016. But among baby boomers and the oldest Americans — those 65 or older — the rental rate remained steady at around 20%.

One reason so many people are renting: Only 45% of renters on average can afford the payments on a median-priced home in their area, according to a report on the state of housing from Harvard University’s Joint Center for Housing Studies released last June. Buying a house is even more out of reach for renters in expensive markets such as the West Coast, the Northeast and Florida. In these parts of the country, as few as 10% of renters could afford the mortgage payments if they bought a home, the report found. Economists recommend spending no more than 30% of gross income on housing.

LINK

Posted by on Jul 20, 2017 in Jim's Take on the Market, Market Conditions, Real Estate Investing | 3 comments

Bubble Talk

This survey of ivory-tower guys indicates that the threat of a bubble-bursting is low. The last bubble was full of people who couldn’t afford to hang on; this one has been built by the affluent.

Historically, Thornberg has been the most rational analyst:

LINK

Will prices keep rising? Are prices close to the top?

We asked a half-dozen economists and industry analysts what the future holds for home prices in the region. Among their answers:

Southern California home prices aren’t about to drop. In fact, they believe prices will keep rising for two more years, at least, and possibly longer.

The market isn’t in a bubble — yet — although bubble talk is starting to “raise its ugly head” at cocktail parties, one economist said. Some analysts are saying Southern California home prices are showing signs of being overvalued.

If you’re thinking about buying a home, now just might be the time to act — provided you don’t overextend yourself and you plan to live there awhile.

Here are five key questions about where Southern California home prices are heading in the future:

ARE WE AT THE PEAK?

Not one of the economists we interviewed thinks we are, at least not for entry-level homes.

Luxury homes, priced at $2 million and up, may have reached a price peak and are facing an oversupply of listings, analysts said.

Nominal home prices have surpassed prerecession highs in Orange and Los Angeles counties. Riverside and San Bernardino counties are about 18 percent below their price peaks. But none of those counties has reached prerecession peaks in inflation-adjusted dollars.

Another fact to consider: During the last market run-up, Southern California home prices increased year over year for 126 consecutive months, or 10½ years. That’s twice as long as the current streak in home price gains.

Lastly, analysts say home prices aren’t rising that much. Price increases averaged 6.3 percent in Southern California in the past year.

HOW MUCH LONGER WILL PRICES GO UP?

Two years at least, most economists interviewed said. Possibly longer.

How much longer prices rise depends on what happens to the overall economy.

“At some point, there’s going to be a correction, but I don’t see it on the horizon,” said Pat Veling, president of Brea-based Real Data Strategies. “Sellers want more than sellers got six months ago.”

Projections by the California Association of Realtors show a gradual decrease in home price appreciation over the next few years, said Oscar Wei, a senior economist for the group. For example, CAR projects prices will go up 5 percent statewide in 2017, 4 percent in 2018, and 2.5 percent in 2019.

Assuming the gross domestic product continues to grow at 2.5 percent and mortgage interest rates stay below 4.5 percent, Southern California home prices could be going up at 6 percent a year for the next six to seven years, said Christopher Thornberg, a founding partner of Beacon Economics and a former UCLA economics professor.

At 6 percent a year, the median home price could reach $800,000 in Los Angeles County by 2023.

“Given the supply shortage and the strength of the California economy, (that’s) perfectly reasonable,” Thornberg said. He added: “Reasonable here means it’s not a bubble and they won’t collapse.”

Read full article here:

LINK

Save

Posted by on Jul 19, 2017 in Bubble-Era Pricing, Jim's Take on the Market, Market Conditions | 0 comments

Home Sales to Foreigners Rise

Foreign purchases of U.S. residential real estate surged to the highest level ever in terms of number of homes sold and dollar volume.

Foreign buyers closed on $153 billion worth of U.S. residential properties between April 2016 and March 2017, a 49 percent jump from the period a year earlier, according to the National Association of Realtors. That surpasses the previous high, set in 2015.

The jump follows a year-earlier retreat and comes as a surprise, given the current strength of the U.S. dollar against most foreign currencies, which makes U.S. housing even more expensive. Apparently, the value of a financial safe-haven is outweighing the rising costs.

Foreign sales accounted for 10 percent of all existing home sales by dollar volume and 5 percent by number of properties. In total, foreign buyers purchased 284,455 homes, up 32 percent from the previous year.

Half of all foreign sales were in just three states: Florida, California and Texas.

Chinese buyers led the pack for the fourth straight year, followed by buyers from Canada, the United Kingdom, Mexico and India. Russian buyers made up barely 1 percent of the purchases.

Read full article here:

http://www.cnbc.com/2017/07/18/foreigners-snap-up-record-number-of-us-homes.html

Posted by on Jul 18, 2017 in Jim's Take on the Market, Market Conditions | 3 comments

Zillow Threatens McMansion Hell

I think Rob Dawg might have started this one – his blog is where I heard of the McMansion Hell on Friday, and now Zillow is chasing her around like a felon:

https://www.theverge.com/2017/6/26/15876602/zillow-threatens-sue-mcmansion-hell-tumblr-blog

McMansion Hell is a Tumblr blog that highlights the absurdity of giant real estate properties and the ridiculous staging and photography that are omnipresent in their sales listings. The blog, started by 23-year-old Johns Hopkins graduate student Kate Wagner, began in July 2016 as a way to poke fun at pretentious architecture. It has since gone viral, but now she’s facing potential legal charges by real estate site Zillow for allegedly violating the site’s terms of service by reproducing the images on her blog.

A typical McMansion Hell blog post will have a professional photo of a home and/or its interior, along with captions scattered throughout by Wagner. She also adds information about the history and characteristics of various architecture styles, and uses photos from the likes of Zillow and Redfin to illustrate how so many real estate listings inaccurately use the terms.

Under each post, Wagner adds a disclaimer that credits the original source of the images and cites Fair Use for the parody, which allows for use of copyrighted material for “criticism, comment, news reporting, teaching, scholarship, and research.” In a cease and desist letter to Wagner, Zillow claims Wagner’s reproduction of these images do not apply under the Copyright Act. Additionally, the company claims McMansion Hell may “[interfere] with Zillow’s business expectations and interests.”

Zillow got sued for using photos without authorization, so now they are going after the little people with a vengeance?  Where will they stop?

Save

Posted by on Jun 26, 2017 in Jim's Take on the Market, Market Conditions, Zillow | 5 comments

Will Prices Keep Going Up?

The N.A.R. Chief Economist Lawrence Yun was befuddled in his previous press release, and now this:

“Home prices keep chugging along at a pace that is not sustainable in the long run,” Yun said. “Current demand levels indicate sales should be stronger, but it’s clear some would-be buyers are having to delay or postpone their home search because low supply is leading to worsening affordability conditions.”

Yunnie is an old-fashioned guy who relies on historical norms.  But more people are probably thinking the same – this run-up in pricing isn’t sustainable.

Or is it?

We are in an environment where we are peppered with lottery ads daily.  People dream about getting rich quick, and selling your house is about the closest most people get – and it’s not enough just to sell your house for an all-time record price.  Instead, every seller wants more than the last guy got.

Unless that mentality changes, prices will keep going up.

Won’t there be a point where we run out of ready, willing, and able buyers?  Yes, but unless a seller NEEDS to move, they aren’t going to budge.  They aren’t going to lower their price until they are absolutely convinced that they must – and it’s more likely that sellers will withdraw their listing and try again later.

If sellers do need a solution, there are more alternatives than ever:

  1. Reverse mortgages.
  2. HELOCs
  3. Share with family.
  4. Share with others. (H/T daytrip)
  5. Loan mods.

Once we reach the point where the market stalls, it will stagnate for years until sellers and realtors realize they must adjust their price to sell.  Realtors themselves struggle to accept the rules of supply and demand – they just keep hanging onto their listing until the market catches up.

Rising rates, economic downturns, political drama, world calamities – none will be as influential as a seller’s ego when it comes to adjusting on price.

Watch the number of sales – they are the precursor.  If/when sales start to decline, all it means is that fewer sellers are willing to adjust enough on price.

Will their reason for moving be powerful enough to not seek an alternative, and sell for what the market will bear?  It’s doubtful, and as a result, a market that is this hot will take time to re-calibrate – if it does at all.

Save

Posted by on Jun 22, 2017 in Boomer Liquidations, Boomers, How Hot?, Jim's Take on the Market, Market Conditions | 0 comments