Archive for October, 2022
The 2023 CA Housing Market Forecast: What You Need to Know
The California housing market is always changing, and it’s important to stay ahead of the trends if you want to be successful on your real estate journey. That’s why we were so excited to have Jordan Levine, Chief Economist at C.A.R., give a can’t-miss forecast of the housing market for 2023 at the ReImagine conference last week.
This valuable data will provide insight into today’s pressing housing issues that may impact your equity and your largest investment in the future. It’s essential information for anyone who wants to stay ahead of the curve in California real estate!
Forecast: Chance of Rain in seller’s paradise
Our economy is getting hit with a lot right now, so it’s important to keep an eye out for the clouds! We just finished years of sunny skies in terms of equity and appreciation, but the buyers running after starved inventory have been a bit burnt out.. and now loan rates have hit them with a huge gust of wind on top of it.
Low low interest rates the last 10 years had allowed buyers to continually increase purchase prices, and still have an affordable payment. It looks like that trend is now dissolving, which brings cloudy skies to our CA real estate market.
If you’re looking at the big picture, our 2022 Jan-June market was white hot, and 2021 had the highest volume of California home sales in an entire decade, over 450,000 homes were sold. 3 out of 4 homes sold over the asking price in 2021. The average days on the market was 7, when it’s historically 30-90 days. This type of supply & demand is not healthy, and it had to ‘simmer down’ eventually. Welp… here we are. We are catching our breath; including agents and lenders who have been pelted the last 2 years.
What Does This Mean for CA Buyers and Sellers?
If sellers are confused why buyers are now offering less than the asking price, the interest rate boost adds an additional $1600-1700 per month for the EXACT SAME HOME.
If buyers can’t qualify for the same amount as they could previously, that will affect our property prices. We are now at less than 20% of individuals in California who can afford a home. It’s not as bad as we have been, but it would still be nice if more people had homeownership as an option.
Warning: Rate pressure is building. Mortgage Rates might get worse.
Because rates may go even higher, its critical to price your homes right and maintain realistic expectations. Because every local market is different, what you see on national news is not necessary YOUR reality. And what you see in the newspapers… remember gloom & doom headlines sell, and the news needs subscriptions. Don’t get caught thinking Southern California prices are on a cliff, when we are just panting on the side of the road from exhaustion. Properly priced homes will always sell.
Fact: The sky is not falling
It’s not projected we are heading into a foreclosure market. Homeowners still have over 122K average in wealth, and renters are no better than they were 40 years ago, with a 6K average net worth. The total net worth of consumers is down right now, so we should expect some pushback. Now is NOT the market for Brother in law effect…’my BIL said xyz’. Now is the market to look to the true professionals and experts to guide you. The news outlets are also not experts. Active real estate agents and mortgage lenders are.
Forecast: What does the future for Orange County real estate look like?
Historically, our new rates are still low, and we should be looking at them as the new normal. According to multiple experts, we shouldn’t expect rates to go back down again in the near future. It’s still a great time to buy a home if you’re renting, and the renters were some of the most ignored in our previous market, so you will see them come back into the fray. Buyers who were at the cusp of affordability may unfortunately be priced out of the market, or they will be offering lower than asking price because they are literally chasing the property that was affordable with 6 month ago rates.
Sellers who listed 30-100K over the previous summer comps will likely have to reduce price or face their listing expiring. It’s a good idea to research sales in the community (comps) the last 90 days, and see what the median comp range is. Listing at the top of your comp range with the current market temperature could cause the home to sit frozen on the market. Not to worry though, properly priced homes in Southern California will always sell. Make sure you work with a seasoned professional and list at the right price from day 1, or you could suffer. Discount and ibuying brokerages don’t do well in this type of market – beware!
Many investors, seeing the writing on the wall with interest rates, are putting 1031 exchanges in motion, and adjusting portfolios accordingly. Some are tiring of strict Los Angeles rent control and housing regulations, and are opting to relocate investments to neighboring counties or even other states that don’t impress as many regulations or red tape.
If you’re curious about the range of your home’s worth, including short term and long term rental rate averages, click here: https://hmbt.co/TTNcDG – If you would like to receive monthly Orange County and Los Angeles real estate reports simply sign in to the link above for a free account – it’s that easy! Angie is only a call or text away if you would like a full broker price opinion on your home or investment property 949-338-7408.
Orange County Real Estate Success 