One of the most important passions of our hearts is to help people we know make good decisions. That’s been the core of our mission for over 16 years. One of the best ways we’ve helped people in that endeavor is to not impose our opinions or values but rather give objective data points and well-researched statistics. We’re found that this method normally gives our clients a way to see the best and clearest path for their lives. Hopefully, the research we’ve done below might give you some clues as to where the local housing market is headed and what your next best decision will be.
- Interest rates will very likely rise according to multiple federal sources, reducing the pool of buyers. For every rise of 1% in interest rates, affordability drops by 10%.
- Affordability index, which is currently at 21% will likely drop, further reducing the number of buyers. This index is the percentage of buyers with median income who can buy the median priced homes. 1 in 5 buyers can afford the median priced home in OC.
- Inventory of homes for sale is projected to go up dramatically, increasing competition from other sellers. Inventory in OC has tripled from 2017 to 2018!
- Demand for homes is projected to drop by 12%, putting downward pressure on pricing.
- Length of time to sell is projected to go up precipitously this year, again effecting pricing. The longer a home stays on the market, the more desperate sellers get.
- Tax code changes will negatively impact the desirability of home ownership, further reducing demand.
- Overseas buyers have dropped by over 42% in last two years, especially those coming from China because of restrictive policies of monetary transfers out of China.
- “Millennials” are the largest group of new buyers of real estate and they are hamstrung by the largest amount of student debt in the history of the US making them more likely to rent than buy. And if they do buy, they are looking for bargains because of lack of affordability.
- Investors are slowly abandoning the Real Estate market because the rate of appreciation has dropped so much, making their profit margins thinner. “Flipping” has decreased 12% in the last year alone, and is projected to go up.
- 81% of US economists nationwide project we will have “some sort of recession in 2020”. The old adage “Housing follows the Economy” will again be proven true over the next 2 years, since the health of the economy will always affect the prices of housing.
But in the face of these statistics, don’t let fear dictate your decisions. Your home is more than just a “financial instrument”. It’s a place to live and realize your dreams. If you’ve got long term plans at your home, stay right there. Real estate markets are cyclical and always rebound. If you have any questions, feel free to call me. We can put you at ease and help you make the best decision possible.