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Slow and Steady?

Not sure if our housing market really is slow and steady, or just slowing steadily. The jury’s still out on that, but the consensus is that we’re not headed for the great recession quite yet. Maybe next year, or even 2021, but the more we slow right now, the gentler the fall when it comes. If it comes. There’s always a few who will tell you the market won’t tank again, but those of us who have been there, done that, know that what goes up, generally comes back down at some point. Over the long-haul real estate is a pretty consistently appreciating asset, but over the short haul there are definitely some bumps and drops.

With half of 2019 behind us, what can we derive from the year so far and what does it portend for the remainder of the year? Well, sales continue at a slow pace. June sales fell 6% month-over-month (1,131/1,059) and 4% behind last June (1,087). Prices were virtually flat from May ($388,974/$388,642) but retained a 4% lead over June 2018 ($374,606).

Year-to-date numbers show the same trend with the first six months running about 3% off last year’s pace for the region (5,404/5,230) and down some13% from the first half of 2017 (5,986). Median prices continue their upward trajectory but at a much slower rate. Over the past 5 years our median price has averaged 6.5% appreciation year-over-year with 2018 showing a 7% bump over 2017 ($343,478/$370,727). This year we’re still ahead of last year but at the mid-point we’re only up 2% ($379,744). That’s still a 25% boost in median price over the past 5 years so nothing to complain about, but the trend both locally, across the state and across the country points to continued slowing of prices even while hoping for some pick-up in sales.

Hoping is probably the key to the market right now.

We hope it doesn’t tank. Hope Millenials will get out of Mom’s basement or their apartments and start buying homes in greater numbers. Hope interest rates don’t bump up again Hope the trade wars and/or rumors of same don’t scare people away from the market. And in California we hope (and pray) that Sacramento will actually starts giving more than token lip service to the housing crisis. Even modest CEQA reform bills designed to assist wildfire rebuilding efforts are meeting some headwind this session while more robust reform needed to boost construction and development is dead on arrival. Bills aimed at easing restrictions on higher density development around transportation hubs and job center or designed to aid development of accessory dwelling units and similar housing ‘fixes’, have mostly succumbed to committee squabbles, environmental lobbying and local control concerns. It’s not easy.

Our inventory numbers are holding pretty steady. In June there were 2,431 single family homes for sale across the region, 9 units less than May and 24 units less than June 2018. In 2018 inventory started climbing in July hitting nearly 2,900 units by September so we’ll see if this year is a repeat. June/July are typically our peak months for buying but this year June was down from May, and July pending sales indicate that July numbers will be down from June. So, IF inventory starts to climb (as it has in the past), and if sales decline (as they historically do through year-end), we’ll see even more pressure on prices with more softening going forward. A boon for buyers, not the greatest news for sellers. But hey, it’s been a pretty good run so far and it’s not quite run down yet, so hang in there.

And please, don’t decide this is the time to refi all the equity out of your home. This isn’t the time for that even though you probably have some equity built up. Your home is NOT your bank. It’s your home. Remember what happened last time. Don’t be that guy!!

Written by Gene Wunderlich, Sr. Staff Writer

Prior to his retirement in 2021, Wunderlich served on a number of local non-profits and boards. He spent the past decade as a legislative advocate for the housing and real estate industries as well as a coalition of local Chambers of Commerce advocating on behalf of small and local businesses.

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