This September “Realtor Report” is provided by Gene Wunderlich, director of government affairs for the Southwest Riverside County Association of Realtors. For space reasons, some of the comments and charts in the Realtor Report do not appear here. Direct questions to GeneWunderlich@srcar.org.
Into the Home Stretch
By Gene Wunderlich
SRCAR VP of Government Affairs
Unless the market completely shuts down between now and the end of the year, 2015 will go into the record books with a slight increase in sales over 2014 and maybe even a little improvement over 2013. After falling 16 percent in August, September sales ticked back up 5 percent for the region and stayed 6 percent ahead of last August.
So even if our 4th quarter is no better than our 1st quarter (which wasn’t great), we will still sell a few more than the 10,618 units sold in 2013. So far through three quarters we’re running 9 percent ahead of last year (7,626/8,356). However, pending sales, that indicator of what the future holds, is at its lowest point since January; so that doesn’t bode well for October sales volume.
Prices are holding up but softening. Our regional median prices dipped 1 percent from August to September led by Murrieta with a 6 percent month-over-month drop and Temecula falling 2 percent. We still held a 6 percent advance over last August and, looking at the cumulative three quarters of the year, we are 4 percent ahead of last year ($299,439/$312,901). For the region we should end the year ahead of last year again, marking the fifth straight year of price appreciation for the region.
Yet others will tell you that pending interest rate hikes by the Fed will have a dampening effect on sales. I think they’re both right but not necessarily for our region. It’s been less than three years since those same prognosticators were bemoaning the “fact” that the Inland Empire would be lagging the rest of the state in recovery, that our region would never again see the prices we did in 2007, that our jobs market would not rebound with the rest of the state.
Turns out the IE is leading the state in jobs creation. And while our prices have not rebounded to the levels we saw in 2008, that’s not a bad thing. The OC and San Diego have bounced back strongly, making us once again the affordable housing destination for Southern California. What sweetens that pot is that not only are we affordable, but we have established a firm reputation as a quality of life destination as well.
Now if those pesky Millenials would just start forming households and buying homes . . .
In addition to the potential for interest rate hikes, the housing industry is also facing TRID, the TILA RESPA Integrated Disclosure (TRID) rule. Making its debut on Monday, October 3, this massive rule weighed in at nearly 2,000 pages and impacts all businesses that touch a residential mortgage, as well as homebuyers.
The Consumer Financial Protection Bureau (CFPB) is ready to enforce this rule. Compliance presents a challenge, as it requires large-scale operational changes for lenders, title companies and many more.
In response to NAR and others, the CFPB has indicated that, from now through yearend, their involvement will be “advisory” rather than “punitive;” but effective 2016 the CFPB will start flexing their rather ominous (and unregulated) muscle. At the very least, TRID marks the end of the 30-day escrow with compliance issues expected to stretch the “normal” closing period to 45 days or more.
For a variety of reasons, the last three months of the year represent the best home buying opportunity we’re likely to see for the foreseeable. Do your part. Buy a home. Already got one? Buy another. Heck, buy two. Rental rates are skyrocketing but prices and interest rates won’t be this low again, so we’re counting on you to make this economy work.
See the article below from the Daily Real Estate News, dated October 6, 2015
The Next Three Months: Best Time to Buy
Low mortgage rates, declining home prices, and homes that are lingering on the market longer are three main reasons why the next three months could be the best time to buy so far this year, says Jonathan Smoke, realtor.com®’s chief economist.
“The spring and summer home-buying seasons were especially tough on potential buyers this year with increasing prices and limited supply,” Smoke says. “Buyers who are open to a fall or winter purchase should find some relief with lower prices and less competition from other buyers.”
Read more: 5 Top Motivators for Buying Now
The biggest challenge buyers will likely face buying in the next three months is the limited number of choices. There are fewer homes for sale this fall than last year, and housing inventory has already peaked for 2015, Smoke says.
In many markets, real estate is making its seasonal transition and is tilting in favor of home buyers lately.
Also, buyers are locking in low mortgage rates as the Federal Reserve continues to delay raising rates. For the past 10 weeks, the 30-year fixed-rate mortgage has averaged below 4 percent, according to Freddie Mac.
Here are some more factors pointing to a slowdown in the overall housing market:
- Median home prices dropped 1 percent month-over-month in August (however, prices are still up 6 percent year-over-year).
- Homes are staying on the market longer: The median age of home inventory is 80 days, up nearly 7 percent from August.
- Mortgage applications dropped 6.7 percent week-to-week.