For 62 straight months, the housing market prices have increased. With all the talk about the real estate market and the dreaded words " real estate bubble", we wanted to take a dive into the economic and housing statistics and trends.
Buying and selling your home is a BIG decision. Timing can be stressful and the unpredictable market can make it difficult to take the plunge of either buying or selling your home.
We have turned to the California Association of Realtors to get their predictions of the housing market in California and some facts on the previous pre-recession housing bubble and today's market.
The median home value in Ventura County is $562,400, that is an increase of 5% from the previous year. Economist predicts a 4% increase in 2018 and a 2.5% in 2019.
The market is seeing all-time highs for prices but the difference between now and pre-recession is that we are seeing the housing market increasing but at a much slower and "normal" pace. From a historical standpoint, this could be considered “normal” growth. When looking back 30 years or so, home prices in the United States tend to rise by about 3% to 4% annually — despite the occasional bubble or bust. This 4% and 2.5% is a drastic difference from 2013 when home prices rose 40% compared to prices in 2012.
How is this different from the pre-recession market?
According to senior economist Oscar Wei, with the California Association of Realtors, there is a drastic difference between the housing market now and the housing market in 2006.
- In California as a whole, 43 percent of borrowers had second mortgages in 2006, vs. 4.8 percent last year.
- California’s median down payment was 11.8 percent of the purchase price in 2006, vs. 18.6 percent last year.
- In 2007, Los Angeles County and Orange County had an 11 and half month supply of homes for sale in the Spring, compared to only 4 months this year. A "balanced" real estate market is estimated to have a 6 month supply, meaning it's still a buyer's market.
As a whole, the economy, low unemployment rate, and low-interest rates are keeping our housing market increasing. Lenders were more relaxed in 2006, providing home loans that customers could not pay back. With the tighter restrictions, homeowners are getting into homes that they can afford.
In California, 39,4000 homes new and resale homes closed escrow in July of 2017. This number is 4% less than home sales the previous year in July. With the housing shortage in California, we are seeing more renters now than 30 years ago. More families are looking outside of their inner city to find affordable housing, making other cities in California more desirable as they improve.
What are Boomerang Buyers?
In 2010, we saw record levels of people losing their homes due to foreclosures, short sales or other financial burdens. About 6 million people, over the next 5 years will be eligible to purchase a home again due to their delinquency falling off their credit. These buyers are called "Boomerang Buyers" because they are ready to jump back into the market. These buyers are going to keep the housing market tight and competitive.
What has this housing market done for Califonia?
According to gordcollins.com, who specializes in real estate forecasts, California is the best place to invest in real estate. The main reason is for the price to rent ratio. With the beautiful weather, abundant and growing employment, California may just be the best place to take that real estate dive and make that investment.
Unfortunately, we don't have a magic wand to foresee the future but we hope some of this valuable information can help you make decisions if you are thinking about jumping into this real estate market or cashing out.
Disclaimer: This article contains 2017 to 2018 housing market forecasts for California. This information was gathered from third-party data providers and forecasters not associated with our company. We have presented it here as an educational service to our readers.