How long can the hot market continue? It’s up to the sellers. If they are willing to sell for what the market will bear, we’ll keep rolling because there are lots of people who want to buy a house – it’s just a matter of price.
If the auction format gets more popular, it would solve everything.
The price surge has locked many first time buyers out of the market. But it has been a boon to owners, many of whom regained equity after being underwater on their mortgages following the Great Recession crash.
The gains have been seen across Southern California, though inland areas remain further behind. In October, the median price — the point where half of homes sold for more and half for less — rose in all six counties compared to a year earlier, CoreLogic said.
In Los Angeles County, the median jumped 7.4% to $525,000; in Orange, 9% to $655,000; in Ventura, 7% to $535,000; in San Bernardino, 9.6% to $285,000; in Riverside, 8.1% to $335,000; and in San Diego,11.1% to $507,500.
The sustained price gains have real estate agents, buyers and sellers wondering how long the hot market can continue.
Most economists say price increases should be smaller next year as families struggle to make larger offers on homes. Wage growth simply isn’t keeping up with the rising cost of housing, they say.
We have already closed 202 NSDCC sales this month, which is the most November sales since 2012 – and we still have 349 sales pending!
Pending home sales eked out a 0.1 percent gain in October. The National Association of Realtors® said its Pending Home Sales Index (PHSI) barely managed a second straight month of gains, rising to 110.0 from a downwardly revised 109.9 in September (the previous reading was 110.0, which would have made today’s reading “unchanged,” officially). Even though NAR’s chief economist Lawrence Yun called the increase “minuscule,” it still pushed the index to its highest level since last July. The index was also 1.8 percent higher than In October 2015 when it stood at 108.1.
The PHSI is a forward-looking indicator based on contracts for home purchases. Those signed contracts are generally expected to become closed transactions within two months.
Yun said, “Most of the country last month saw at least a small increase in contract signings and more notably, activity in all four major regions is up from a year ago. Despite limited listings and steadfast price growth that’s now carried into the fall, buyer demand has remained strong because of the consistently reliable job creation in a majority of metro areas.”
Regarding the continuing limited housing supply, Yun explained that the unwelcome but expected seasonal retreat in new listings is arriving at a time when price growth remains around triple the pace of wages and properties continue to sell at a much faster pace than a year ago. As an indication of the imbalance between supply and demand, 40 percent of sales in October sold at or above list price, an increase from 33 percent a year earlier.
“Many of the successful shoppers in October likely had to move fast and outbid others for the few listings available in the affordable price range,” explained Yun. “Those obtaining a mortgage last month were likely the last group of buyers to lock in a rate near historically low levels now that rates have marched to around 4 percent since the election.”
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.
The NSDCC new pendings rebounded nicely this week, with 52 houses opening escrow, which is about the weekly average for the last couple of Novembers.
It’s not too late to buy an expensive home this year, and there are still plenty to consider. There have been 452 houses sold that have closed over $2,000,000 this year between La Jolla and Carlsbad, and there are 489 currently for sale – about a year’s supply!
Click on the ‘Read More’ link below for the NSDCC active-inventory data:
What is the consensus on the Trump impact on our local real estate market?
After speaking to agents on broker preview the last couple of days, I think we can divide the buyer pool into two camps:
There have never been more reasons to wait-and-see.
But some buyers will want to hurry it up, before anything else happens.
Yellen made it sound like the next Fed move is imminent, which hopefully means next month. There is 1/4% (or more) already baked into the market, so if they do bump the Fed Funds rate, it should have a calming effect on mortgage rates – it did last time. If we can stay around the current 4%, it should motivate people to buy before it goes higher.
But there is also the anxiety that comes with buying or selling that gets aggravated by uncertainty. Have you ever felt more desire to hunker down?? The motivated buyers and sellers want to get it done.
I think we will see a very active selling season – and it already is!
NSDCC October Sales and Pricing
# of Detached-Home Sales
Median Sales Price
Our current momentum should carry us well into 2017. But look at the stumble in 2014 – I’m more worried about 2018.
Maybe – and only if they mess with the buyers’ psychology.
We have been spoiled with rates in the mid-3s for the last six months – including jumbos – and our local market has been cooking. Buyers have been hoping for any break, but if they find the right house at a decent price, will an extra 1/2% on rate stop them?
Probably not – we are lucky to live in a very affluent area, where the majority of houses sell for more than $1,000,000:
NSDCC Detached-Home Sales, Jan-Oct
Total # of Sales
Sales Over $1M
% of Total
Some buyers will dig in just on principle – if they have to pay a higher rate, logically the seller should be more flexible on price. But if the right house is found, and wifey kicks you in the shins and says ‘buy the house’, the extra half-point isn’t going to matter.
Especially in these areas:
Percentage of Detached-Home Sales Over $1M, Jan-Oct, 2016:
Without a flood of inventory, our market conditions should stay the same – the demand for buying houses far out-stripping the supply, with the only thing in the way of sellers selling is their own price reluctance.
The demand could get stronger too. We had hundreds of open-house visitors to the listing on Bluff Ct., and 16 offers – the weekend before the election! There had to be a segment of buyers who have been on hold until the election concluded. If they get back in, the demand could grow further.
If Trump gets the same chance that Obama got to prove himself, and Trump gets off to a decent start, we could see the housing frenzy fire up again early next year around North San Diego County’s coastal region.
Yikes!!! Mortgage Rates Surge Above 2-Year Highs-Rates spiked abruptly today, bringing them to the highest level.. mndne.ws/2fQQHhY
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