There’s a great quote from Martin Luther that more folks should heed. “Even if I knew that tomorrow the world would go to pieces, I would still plant my apple tree.” This nation has survived for 240 years through a progression of leaders, some great, others not so much. A look back at our history shows us many times that have been as tumultuous as these, some even more so, truly challenging times even within reaches of my memory. Yet to hear the hue and cry of some citizens, especially many of the younger ones, it’s apparent we do not have many students of history among us today.
OK. That’s my rant on politics – let’s talk about housing. Last week we had the opportunity to sit down with National Association of Realtors Chief Economist Dr. Lawrence Yun and Fed Atlanta President Dennis Lockhart in Orlando to talk housing. The good news is – there’s no recession on the horizon! Some prognosticators are positing that we are due for another cyclical recession in the next year or two. Lockhart made light of the cyclical nature of recessions pointing out that there have to be underlying root causes to a recession, they don’t just happen for the hell of it every X number of years. And there are no underlying issues currently, no alarm bells. He sees continued moderate growth, somewhere in the 2% range, for the foreseeable future with modestly increasing interest rates combined with wider credit availability.
Dr. Yun pointed out that the recovery has been so slow that there is still much room to grow without reaching a peak, and enough pent-up demand to fuel that growth. Demographic trends portend well for the long term. True, homeownership is at a 50 year low, mortgage applications are down, there is weaker buyer traffic than 6, 12, 18 months ago, and the volatility of health care costs has had an impact on some buyers, but his forecast is also for continued slow growth both in sales and median prices across the country thanks to ongoing job growth fueling pent-up demand.
Our own market is echoing what other markets across the country are doing. While sales were down month-to-month, they remain 4% ahead of last year and we should finish the year up about that amount to around 11,400 units.
After hitting a peak month with 206 sales in June, Temecula dropped another 30 homes from September to 143, their worst month since February. Murrieta sold nearly 30 more homes in October than September, but they too were well off their peak month of 243 sales in June. Menifee, Hemet and most other cities have experienced similar declines from a mid-year peak but should hold on to show a moderate increase over previous year sales.
Median prices continue to ratchet upward but at a slower pace than mid-year. Median prices are up 4% year-to-date ($314,518 – $326,164) and should also end the year about that far ahead of last year. Temecula posted a slight drop in median price to $425,000 but thanks to a few well priced sales, their average price jumped to $499,368, their highest reach since December 2007 ($521,013). Median prices deviate from average prices by a small amount either positive or negative in most cities but drop a few $million+ homes into the mix and the average shoots right off the chart.
In what is shaping up to be a major issue across the country, our inventory of homes continues to decline dropping 5% month-to-month and 10% year-over-year. And even though sales are slow, listings are even slower as absorption rates in most cities consumed 1.25 to 1.5 homes for every new one listed.
Oh well, let’s see what affect a Trump presidency has on the market.