Whats up in California

Source: Board of Realtors/Inland Valleys Association of Realtors/ December 2018

Source: CNBC

“After several years of rich home price gains, the market appears to have found a limit to what people can afford.


Sellers are finally responding by lowering prices more often. Approximately 14 percent of all listing in June saw price cut, that’s up from a recent low of 11.7 percent at the end of 2016, according to a new report from Zillow. In addition, home price growth is slowing in nearly half of the 35 largest U.S. metropolitan markets.


Rising mortgage rates and affordability are behind the change. As the housing market recovered from its epic crash in the last decade, home prices began to gain slowly. And then suddenly took off in the last few years.


The simple reason was Supply and Demand. As millennials aged into their home buying ears, homebuilders did not and are still not meeting the rising demand. In addition, millions of single-family homes lost to foreclosure were purchased by investors and turned into single-family rentals. Housing tipping back to a Buyer’s Market as sellers cut prices…”


Source: Craig Thomson/Craigmortgage@gmail.com/ Issue 12/18/18

“The Federal Reserve Board releases their economic projections soon and the Fed Chair Powell will conduct a press conference. The markets have been predicting another 0.25% rate hike all along, though the probabilities have been lowered slightly due to volatility in the financial markets.  If we assume that the markets are correct in their predictions, the real intrigue will be concerning what the Fed says about the future…”


“There is no doubt that next year will be a harder year for predictions. At the beginning of this year we had a strong stock market and a tax cut providing fuel to the recovery. Though we may still have a Santa Clause rally this year, the markets are much more in flux. The economic recovery will become one decade old in mid-2019. That is very old in “recovery” years. Some believe a recession is inevitable, but not necessarily a sharp recession. We still believe that a slight slowdown could be a good news as lower rates could become a possibly. We have already seen rates come off their highs….”


“Real Estate News-The housing market is showing several signs of slowing, providing a much-needed break for potential buyers who have been waiting to jump into the market. Existing-home sales were 2.4 percent lower in the third quarter than a year ago, and the drop comes at a time when many areas are starting to see an uptick in new listings. Home prices in many markets are no longer rising by double digits – or even single digits – annually. But a strong economy and low unemployment, the housing dip is more of a rebalancing of the market than a sign of a downturn, per housing analysis. Sellers are realizing there is a slowdown and are starting to cut their prices to better compete….”


“Consumers should expect home sales to flatten and home prices to continue to increase, though at a slower pace, according to a residential housing and economic forecast by Lawrence Yun, chief economist at the National Association of Realtors. “Ninety percent of markets are experiencing price gains while very few are experiencing consistent price declines” said Yun. “2017 was the best year for home sales in ten years, and 2018 is only down 1.5 percent year to date. Statistically, it is a mild twinge in the data and a very mild adjustment compared to the long-term growth we’ve been experiencing over the past few years.”


Source: Inland Valley’s Association of Realtors/December 2018 Issue

“The 2018 Inland Empire housing market data reflected mixed signals”. When compared to 2017, year- over-year data has New Listings up 4.6%, while Sold Listings for the year were down 8.8%. Median Sales Price was up 6.3%, but total Sales Volume was down 8.1%. When you factor in the demand decline in the last few months of 2018, including December which saw an 18.1% month-over-month drop in Sold Listings, the housing marketing is flipping to a buyer’s market.


Although Median Sales Price is up 6.3% year-over-year, the last seven months of 2018 saw that price hover consistently around $390.000. Reflecting a slowing, a buyer’s market, Days on Market over the last quarter of 2018 saw an increase ranging from 35% to 54%.” “Said Mark Dowling, Chief Executive Officer.”



Source: Real Estate Report: Craig Thomas/Craig Mortgage/Issue January 22, 2019

“Regardless of the fact that the government could not stay shut forever, many analysts are asking whether the shutdown might have significant negative influence on the economy in the short-run and even some repercussions going forward. Even though back pay will be taken care of, the fact that almost a million workers went without pay for a significant period of time, not only has had a deleterious effect upon individuals, there is a cumulative affect that will reach beyond the workers themselves.


For example, in the real estate industry, there are lenders and landlords who will be receiving late payments. This will cause higher delinquency rates in addition to higher costs. Some buyers may have been delayed in purchasing homes during the shutdown and that means the sellers may have had to delay their plans. Retailers and other service professionals that do business with these workers may have been affected. Farmers are not receiving payments that are designed to off-set the negative effects of the trade war. Even businesses near government tourist attractions such as the National Zoo and museums have felt the pinch.


For those who are affected by the shutdown, this feels like a natural disaster. Only, instead of rebuilding homes after a flood or fire, they are actually rebuilding credit and certain parts of their lives. Will we see a TEMPORARY DROP IN ECONOMIC GROWTH DUE TO THE SHUTDOWN? That remains to be seen. However, we can be sure that we will see another drop in confidence in our leaders’ ability to come together and find solutions to the problems we face.”


Craig Thomason/Real Estate News

“After nearly four years of annual declines in inventory, the number of homes for sale has now increased year-over-year for three straight months. That’s a bit of good news for shoppers who face less competition as homes stay on the market longer. But inventory levels are still well below where they were five years ago, and small increases have yet to meaningfully reverse those deficits, according to the November Zillow Real Estate Market report. A year ago, inventory fell 9.1 percent on an annual basis. Some of the markets that were among the hottest in the country are seeing the biggest increases in available homes, but these are also the places where restricted inventory created more competition for potential buyers.”


“After years of intense inventory shortages and cutthroat competition, any gains in inventory should be embraced by home buyers. Unfortunately, the small recent gains are not nearly enough to fully erase the existing deficit, nor were they evenly distributed—as there are roughly twice as many homes available for sale in the higher reaches of the market than there are at the lower, more competitive end,” said Aaron Terrazas, senior economist at Zillow. Rather than calling this a true inventory recovery, it’s probably more accurate to say that the inventory levels are no longer in a free fall and are currently bumping along the bottom.” The typical U.S. home is worth $222,800, up 7.7 percent year-over-year. Source: Zillow


Thanks to higher rents throughout much of the year, U.S. renters paid out more in rent than they ever have before. According to a new report from HotPads, U.S., renters paid a record $504.4 billion in rent in 2018, topping 2017’s total by $12.6 billion. That increase is in spite of the fact that there were fewer rental households this year than last year.


 According to the report, there were approximately 43.2million renter households in the U.S. this year., neatly 100,000 less than there were in 2017. But despite that decrease, renters still paid out a record high total in rent in 2018, more than the entire GDP of Belgium ($494.7 billion), as rents rose throughout the year. According to the HotPads report, the current median rent is $1,475, up 3% from a year ago.


HotPads data showed that rents rose about 3% year-over-year throughout the year, continuing a gradual slowdown in rent appreciation that began in mid-2016. And with rents forecasted to continue growing in 2019 that total will likely increase next year. “After several years of a booming economy, more

Millennials became financially able to become home owners in 2018,

“ Joshua Clark, economist at HotPads, said. “ However, rent affordability continues to be a challenge, as those who still rent are paying even higher prices now than they were a year ago,” Clark continued. “If interest rates continue rising in 2019, more would-be homebuyers may decide to continue renting, which could put additional pressure on rent prices,” Clark added. Source: HousingWire.”


“Self-employed people, with a lack of pay stubs or w-2’s, may find it hard to have their income verified when it comes time to get a home loan. According to the Urban Institute, self-employed people constitute nearly 10 percent of the nation’s workforce and earn more on average than salaried workers, but these workers were hit hardest during the recession, and many are still struggling to gain homeownership.


Urban Institute looked at how policymakers such as the Bureau for Consumer Financial Protection (BCFP) may improve these potential buyer’s situations. Urban Institute notes that the January 2019 review of Dodd-Frank should focus partly on the inadequate residential loan market for self-employed households. Despite their higher income, these households were hit harder by the financial crisis and have been slower to recover, and Urban Institute notes that many have not returned to their pre-crisis income levels. “


“But part of it reflects the reality that at any income level, both home loan use and the homeownership rate for self-employed households have declined more than they have for salaried households,” Urban Institute states. However, non-QM loans are aiming to fill this gap. According to industry estimates, Non-QM loans currently represent around 3 percent of the market and are expected to double in size. Source: DS News”


Source: Craig Thomas Mortgage/February 5, 2019

The Fed and Jobs Highlight the Week

“The government shutdown dominated the news in January. Many economic reports were delayed, including the preliminary report of economic growth for the fourth quarter. But important events did occur last week, including the Federal Reserve Board announcement after their meeting and the jobs report release for January. Analysts were wondering whether the shutdown would affect the employment data – even if furloughed workers did not count as unemployed.


How did the data turn out? The Fed did not raise the rates, but this was expected. More importantly, their announcement indicated that they were flexible with regard to future rate increases. The markets have been counting on this flexibly, as long-term rates have fallen over the last several weeks. The statement was even better than expected, as the Fed removed language regarding “gradual rate increases” in favor of a wait-and-see approach.


The jobs report on Friday showed growth of 304,000 jobs. Coming during the shutdown period and after a very strong report in December (through December’s numbers were revised down by 90,000, this report was seen as stronger than expected. Unemployment ticked up to 4.0%, indicative of more Americans entering the work force—a possible effect of the shutdown. Wages grew 3.2% month-to-month, on par with previous readings. One anomaly, part-time workers looking for full-time work soared, which may have been another effect of the shutdown. All told, it was an interesting week and markets reacted positivity to the news, though rates and oil prices rose after the jobs report was released.”


Real Estate News…

In 2018, the total value of the U.S. housing market increased $1.9 trillion, propelling its value to a whopping $33.3 trillion, according to new data from Zillow. Zillow highlights that this 6.2% increase is up $10.9 billion from 2012, when the housing market crashed. In a press release, Zillow Senior Economist Aaron Terrazas said, seen from the rearview mirror, 2008 was a year of unusually strong, stable home value growth across the country, but cracks in the foundation are clearly starting to emerge. “During the second half of this year, appreciation slowed sharply in the priciest corners of the country while it picked up in affordable hotspots,” Terrazas said. “Periods of stability often precede periods of instability, and the outlook for 2019 is certainly both cloudier and blurrier than the outlook a year ago” “housing wealth may have touched new highs this year, but home values gains don’t translate into dollars in the bank account unless homeowners opt to sell or borrow against their home and, in contrast to previous housing booms, many Americans have been more reluctant in recent years to spend against their home’s worth,” Terrazas said. Source HousingWire.


The dynamics of the housing market, which had grown over the past few years fueled by high demand, limited inventory, and low interest rates, shifted gears by the end of 2018, according to a study by Trulia that looked at how last year shaped the 2019 outlook of homebuyers, sellers and renters. The study, which surveyed more than 2,000 adults across the U.S., revealed that while Americans still dream of owning a home, the dream was getting more distant for younger adults who made up the biggest chunk of first-time buyers. Home sellers were also less optimistic as home price appreciate slows.


 The study showed that 19 percent of those surveyed said they would purchase a home next year, up from 16 percent a year ago, while 60 percent said they planned to wait until after 2020 to buy a home. Among home sellers, 29 percent said they believed 2019 would be a better year to sell than 2018, compared to 21 percent who said next year would be worse than 2018. As to what would be a key factor to hold back homeowners this year, the study listed money as a key challenge for would-be homeowners. Nearly all (92%) of the U, S. renters surveyed said that while that wished to buy, they perceived barriers in homeownership related to personal finances.”


Updated rules, laws and forms in regards to the residential rental industry will be provided in a separate writing, stated ABMC.


So, there you have it my friends, predicting the 2019 year is very difficult... I am attending a large conference next month with the biggies in Real Estate, Business and the Economy, to see what they feel from their analysis...


ABMC believes all data is correct from information obtained in articles listed, however, ABMC does not guarantee this information, please verify with the appropriate agencies.



Office: 951-845-6173  |  Mobile: 951-990-5985



Feb. / 2019



The Right Choice.

ABMC is a real estate firm that has been in in business since 1984, it was originally located in Orange County, and relocated to the Inland Empire in 1999. The Founder & Director Kathie Laursen, holding a BA in Real Estate/Business, a California Real Estate Broker & Realtor, a CDPE - a Certified Distressed Property Expert, a CCRM - California Certified Resident Manager, and a retired CPM-Certified Property Manager.

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