3rd Quarter C.A.R. Market Update 2018
There has been a shift in buyer sentiment over the last several months that have caused a slight dip in overall sales. Buyers are having financial jitters and experiencing volatility in the stock market. Interest rates just went over 5%, the highest they have been since early 2011. The Fed raised interest rates eight times since 12/2015, and they are expecting another hike in December, and at least two more in 2019. The Fed wants inflation to be low and job growth to be high, and is now normalizing monetary policy. However, even at 5%, interest rates are still historically low!
Sales in August/September are down 2.1% year to date. The forecast calls for fewer sales in 2019 due to supply problems in lower price ranges and interest rates increasing. Additionally, 39.9% of listings have had price reductions, and sellers are having to come down from list price to get a sale. However, properties under $1M are still selling fast, and often with multiple offers, while homes above $1.5M are taking a bit longer to sell compared to the last few years. According to Leslie Appleton (local economist), the median price will continue to rise in 2019 around 2-3%, rather than the 5-8% we have been used to over the last 6 years. Southern California is not quite back to peak prices. Lastly, the median peak (2006) was $589,000, and is currently $555,000 (-5.8%), signaling more room to grow.
Source: The California Association of Realtors Quarterly Conference