Share, , Google Plus, Pinterest,

Print

Posted in:

What’s Next?

Remember the good old days when the only thing we had to worry about was a deadly pandemic? Seems like only yesterday. Oh wait…

Yet with exceptions made for protesters and looters, our households are still on modified lockdown due to CV-19 that is continuing to wreak havoc with our economy, with our local business community and with our municipal budgets. As one columnist recently noted, ‘we’re participating willingly and, with some, quite enthusiastically, in burning down our economic house.’

But it could be that some areas of the economy are starting to rebound. Stock market and jobs data released recently point to a potential rally on Wall Street and suggest the economy could be on a quicker than expected path to recovery than initially estimated. We may see that V shaped recovery instead of the more prolonged swoosh after all, although we’re certainly not out of the woods yet.

However, there are some brighter lights in housing and both our state and national Chief Economists, as well as other local prognosticators, point to housing as one economic element that will lead the charge out of the morass. While consumer confidence has plummeted to its lowest level since 1973, the record 10 year recovery and jobs streak has ended, and GDP has taken a shot across the bow, interest rates are again at record lows with the possibility of dropping further, and mortgage applications hit their low point the week of April 10 and have been climbing ever since.

Locally we did see a further decline in sales of 9% month-over-month (760 / 695) and a 39% drop year-over-year (1131), Year-to-date we’re only off 9% (4,171 / 3,815) which puts us back to 2014 sales level. And while I will make the argument that given what we’re going through, that’s not that bad, I will also point to the fact that pending sales are up 28% heading into June (857 / 1,183). While that won’t put us on track to win any prizes, it’s certainly a good omen and precursor of a decent month. As the market loosens up, as consumer confidence returns, as the economy rebounds, buyers moved by low interest rates may come into the market in droves.

Further, shifts in attitudes may drive more buyers to our inland communities signaling an end to the decade-long California myth perpetuated by Sacramento that ‘everybody wants to live in highly dense urban areas convenient to shopping and transportation hubs.’ Until, that is, a pandemic comes along and those high density areas prove to be the most deadly. And until the wave of Millenials discover the joys of family life with 2 kids and a pet and their own backyard. Reality trumps Agenda 21 driven ‘smart growth’ planning.

More good news, median prices across the region rose 2% month-over-month ($405,667 / $414,150) and maintained a 6% lead year-over-year ($388,974). Year-to-date we’re also up by 6% (377,964 / $403,972) with our regional median price crossing the $400,000 barrier for the first time in over a decade. The pro’s suggest prices statewide may only appreciate 0% – 2% this year and rise just 1% – 3% next year. In one recent forecast CoreLogic opined we may actually see a drop in median price in 2021. Barring a broader market retraction (always possible), I’m just not seeing that. Then again, they get paid for their opinions so what do I know. I guess time will tell.
Here’s why. You’d have to go back to July of 2013 to find a lower inventory, 1,193 units on the market providing just 1.9 months of backup. 1.3 in Lake Elsinore, 1.5 in Murrieta and Menifee, 1.6 in Temecula and Perris. And properties continue to fly off the market. While average days on market was up to 22.9 days in May from 16 days in April, it’s still just 12 days in Wildomar, 13 in Murrieta and 17 in Temecula. Let’s see – inventory down, interest rates dropping, demand rising, the economy improving – sounds like a recipe for market resurgence to me.

But we also can’t take a single month and extrapolate too far down the road. There’s still time to drive this bus off the trackand given some of the bills that Sacramento is trying to foist on us, could happen. In the meanwhile, stay safe, practice your distancing, and support your local businesses trying to reopen.

Gene Wunderlich is Vice President, Government Affairs for Southwest Riverside County Association of Realtors. If you have questions on the market, please contact me at GAD@srcar.org.

Written by Gene Wunderlich, Sr. Staff Writer

Gene Wunderlich is the Government Affairs Director for Southwest Riverside County Association of Realtors. If you have questions on the market please contact me at GAD@srcar.org or to keep up with the latest legislative and real estate trends go to http://gadblog.srcar.org/.

88 posts