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‘End of Forbearance To Be A Non-Event’

Health, unemployment, stairs, taxes, finances, politics…….selling your home is becoming the answer for everything!

More than 2.5 million American homeowners have stopped paying their mortgages, taking advantage of penalty-free forbearance periods offered by lenders.

What happens when the free pass fades away next year?

Not much, and certainly nothing approaching the flood of foreclosures that defined the Great Recession, according to the emerging consensus among economists. While some homeowners are sure to feel the pain of forced sales, housing experts increasingly expect the end of forbearance to be a non-event for the gravity-defying housing market.

That’s largely because home prices have risen sharply during the coronavirus pandemic. As a result, homeowners who find themselves unable to pay their mortgages when their forbearance periods end likely will be able to sell for a profit, rather than going into foreclosure.

“If they have equity, they can always sell off the house and pay the mortgage,” says Ralph DeFranco, global chief economist at mortgage insurance company Arch Capital Services. “It’s not a great outcome, but it’s less terrible than letting the bank take it and sell it.”

Link to Article

Zillow Raises Appreciation Forecast

I showed three houses over the weekend, and other buyer groups were looking before and after. For every hot buy, it seems like there are 5-10 buyers!

This enthusiastic demand coming in November can only mean that the 2021 market is going to go ballistic. We will get the latest Case-Shiller Index tomorrow, and the month-over-month gain is going to be close to 2% for the San Diego metro area.

Even Zillow is getting more fired up – they raised their forecast of annual appreciation for Del Mar.

+6.9% forecast last month

+8.5% forecast this month!

 

If the high-end goes up 8.5% in the next year, then the low- and mid-range markets should be even hotter!

Here were their forecasts for our local NSDCC areas from last month:

https://www.bubbleinfo.com/2020/11/01/zillow-2021-forecasts/

If we have an uptick in boomer inventory that cools off the market slightly (and the right surge could increase sales) then we should survive quite nicely at 3/4 speed of where we’ve been the last few months!

Hat tip to Booty Juice for sending!

Who Is Moving Where?

Ryan was nice enough to provide the latest data (2019) from the U.S. Census Bureau on where Californians are moving, and where our new residents are coming from – at least before the pandemic.

The big winners on a net basis:

More Californians moved there:

Texas:  +45,172

Arizona: +31,486

Nevada: +20,889

Oregon: +20,662

Washington: +14,909

Colorado: +14,265

Florida: +5,936

N. Carolina: +4,160

More People Moved Here

New York: +13,235

Illinois: +9,085

Virginia: +7,512

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Will Prop 19 Increase Inventory?

The U-T asked their twelve real estate experts about the effects of Prop 19:

Q: Will Prop. 19 substantially increase home inventory in California?

Of the local experts, 11 out of 12 said NO, and the justification for the one YES answer could have been just as easily been reasons to say NO.  Gary’s answer above was the best and most-accurate. See the rest here:

Link to Article

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HMI Record

For the third straight month the level of builder confidence in the new home market set a record high. The National Association of Home Builders (NAHB) said the Housing Market Index (HMI) it co-sponsors with Wells Fargo soared 5 points in November to 90. This is the highest level in the 35-year history of the HMI which set records of 83 in September and 85 in October. These are the only times in its history that the Index surpassed the 80-point level and is triple its level in April when the pandemic caused it to plunge.

NAHB cautioned, however, that 69 percent of the survey responses were received before the results of the presidential election were called on Nov. 7. The election results and their future impacts on housing market conditions, will be more fully reflected in December’s HMI report.

Robert Dietz, NAHB chief economist, said that builder confidence has soared because historically low mortgage rates, favorable demographics, and an ongoing buyer preference for the suburbs have spurred demand and raised new home sales by nearly 17 percent year-over-year. He added, “Though builders continue to sign sales contracts at a solid pace, lot and material availability is holding back some building activity. Looking ahead to next year, regulatory policy risk will be a key concern given these supply-side constraints.

Regional scores are presented as three-month moving averages. The Northeast increased two points to 83, the Midwest jumped six points to 80, the South and West each rose four points to 86 and 94, respectively.

http://www.mortgagenewsdaily.com/11172020_nahb_builder_confidence.asp

More Frenzy Fuel

San Diego didn’t make the NAR list of vacation-home areas (counties where 20% of the housing stock is for seasonal use), but our market should be enjoying some additional second-home purchases:

Vacation home sales are outperforming total existing-home sales. Sales of homes intended for vacation use rose to 109,100 in the past three months of July-September, a 44% gain from the level of 75,600 sales during the same period last year, according to NAR estimates based on information gathered from the monthly REATORS® Confidence Index Survey and NAR’s existing-home sales estimates. In comparison, total existing-home sales during July-September rose 13% year-over-year (1.72 million in July-Sept 2020 vs. 1.52 million in July-Sept 2019).

The pandemic and low mortgage rates have increased the desirability and affordability of owning a vacation home. Buyers may be desiring a vacation home as a weekend getaway as urban-based leisure activities are still constrained by social distancing. The ability to work from home also means buyers who can work from home can spend more time at and enjoy their vacation home. Historically low mortgage rates have also made a home purchase more affordable, while rising prices in past years have yielded larger home equity gains that can be tapped (through say a home equity loan) to use for a down payment.

Link to Full Article

Post-Election Market

The election season is over (even if the election is not), and the vaccine news today is positive – which should bring more certainty, and relief, to the real estate market.  If we just had more homes to sell!

What’s hot these days?

Yesterday, I got the last appointment to show this one-story home in Encinitas, listed for $1,600,000:

https://www.compass.com/listing/2222-silver-peak-place-encinitas-ca-92024/635047271721032977/

It must have been shown at least 20 times between Fri-Sun, and the agent said she had received multiple offers before we arrived.  All in the November rain during the week of a heavily-contested election!

Here are the NSDCC counts for the last six weeks:

New SFR listings: 408

New SFR pendings: 509

Median list price of pendings: $1,595,000

SFR closed sales: 500

Median list price of solds: $1,605,000

These numbers are staggering for ANY six-week period!

For the market to be this red-hot leading up to the election, during a raging pandemic, is truly remarkable.  These conditions should continue too, as long as new listings keep coming!

Prop 19 is Ahead

I thought that Prop 19 would get lumped together with Prop 15 and cause voters to consider them both to be a change/threat to the original Prop-13.

Though Prop 15 is losing, it appears that Prop 19 has passed:

California Proposition 19

(100% reporting)

YES: 51.5%

NO: 48.5%

If passed, the initiative goes into effect on April 1st, so we should see seniors start to list their homes for sale in March.  Look out for those tens of thousands of housing opportunities!

Covid-19 Sales Predictions

In April, I thought we would see a big cooldown in October fueled by uncertainty leading into Election Day.  Instead, we had the most NSDCC closings as we’ve had in any month this year (374 so far), and we have almost as many pending listings as active (541/470)!

The post-election relief should add to the momentum, and with Covid-19 putting a damper on holiday plans, we might see sales plow right through into 2021 – and start the selling season early!  If we just had more homes to sell!

Zillow 2021 Forecasts

Zillow’s estimates of appreciation over the next year:

Carmel Valley, 92130: +7.2%

NW Carlsbad, 92008: +7.7%

SE Carlsbad, 92009: +7.2%

Encinitas, 92024: +7.2%

Del Mar, 92014: +6.9%

La Jolla, 92037: +7.2%

Rancho Santa Fe, 92067: +6.9%

Santaluz/4S/Del Sur, 92127: +7.1%

It looks like Zillow expects 7% price appreciation for our area, which is wildly explosive for them. I looked up a an old blog post where their forecast numbers were virtually all 1s, 2s, and 3s for several years, and the actual increases usually exceeded the Zillow guesses.

Relatively-speaking, they are suggesting full-blown frenzy conditions!

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