As we celebrate the 50th anniversary of the Fair Housing Act, it’s interesting that ‘The American Dream (In Flames)’ was the title of a presentation to Directors of the California Association of Realtors® delivered by CAR CEO Joel Singer last week during our Legislative meetings in Sacramento. That was during a week that saw additional reports concluding “The dream of homeownership continues to fade away for the average prospective buyer” from Frank Martell, President and CEO of CoreLogic. Or the recent study out from the National Association of Realtors® citing “Housing affordability is down from a year ago and fewer households can afford the active inventory of homes currently available for sale”.
Against this backdrop of declining affordability, consider these other recent headlines. “California to make homebuilding $25,000 to $30,000 more expensive with new solar mandate” based on a current proposal from the California Energy Commission. Or how about “Rent-control initiative could obliterate state housing markets” regarding a ballot initiative to repeal the Costa-Hawking Act that will be placed on our November ballot.
In spite of the lip service rendered by our Sacramento legislators to the worsening housing crisis in the state, the only proposals that seem to make it through the labyrinth of our legislative and regulatory processes only serve to exacerbate the problems. Recent bills that would have ever-so-slightly reduced the CEQA stranglehold on development like AB 3027 (Chavez), or AB 2856 (Melendez) have failed in committee. And while AB 1506 (Bloom), the legislative attempt to repeal the Costa Hawkins Act failed, a more pungent version has apparently qualified for the November ballot.
Among the few bright spots on the housing horizon, AB 1758 (Steinorth), establishing a tax-free savings account for 1st time homebuyers, failed. But Assembly member Steinorth brought a Democratic lead author on-board so there’s a better chance of this bill making it through in AB 1979 (Bonta/Steinorth). And AB 3001 (Bonta), a measure seeking to make California homes and businesses all-electric starting in 2020, has also perished for this session. Good for now – but it will be back.
On to what matters most – how are we doing in Southwest California? In a word – FINE!!
Sales across much of the region saw an uptick over March with a 3% increase m-o-m (926 / 955). Murrieta led the pace with a 16% increase to 207 SFR sales. Double digit increases were also posted in Menifee and Lake Elsinore. The market is still off last year’s pace, but pending sales are up 5% going into May, and June and July are historically our hottest months – for housing as well as temperature.
We’re also going into that period with increased inventory. Inventory is up 12% from March (1,753 / 1,992) and up 18% over last April (1,629). Last time we had that many choices was October 2016. Temecula and Murrieta continue to have reduced effective inventory in that, while they enjoyed 5 and 6 sales respectively of $1 million + homes last month, they show 71 and 83 homes listed in that price range. By the math that means 20% of that active inventory is reserved for just 3% of the buyer pool. While the regional median inventory rose to 2.3 months in April, homes in that $million+ price range represent a 14-month supply.
By one measure, regional prices advanced by 2% over March ($370,277 / $376,833), and the region showed a 9% increase over March 2017. ($342,600). However, Canyon Lake benefitted from a plethora of higher end sales and posted a 21% m-o-m increase ($410,000 / $517,000). That had an outsize impact on the remaining regional median which, at $359,950, actually shows a 3% drop from March levels. It’s still a healthy 5% increase over last April, and that’s not bad. Temecula’s median declined 6% last month ($487,500 / $460,000), Murrieta held even at $430,000, and most other cities experience slight decreases or managed to just hold even. Don’t read too much into that for a single month’s results.
In spite of rising interest rates, increased fuel costs, and paranoia about the Trump tax plan, our local housing market appears to be on a sustainable incline right now. But the legislature is still in session!!
SUPPLY = SOLUTION.
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/.