It was another good month for the Southwest California housing market. Not a great month, but pretty decent. Sales stayed up, rising 2% over April and remaining 13% ahead of last year’s pace. In fact it was the best regional sales total since June of 2012. Pending sales are down slightly so next month’s sales figures may not be quite as strong but hopefully we can keep pushing through the summer. Year-to-date, Murrieta has sold more homes in the first 5 months of the year than they sold in the entire year in 2007 (687/765). Temecula is almost there having sold 793 homes YTD compared to 805 in all of 2007.
Prices across the region dipped slightly falling 1% from April but staying 1% ahead of last year. As always, some cities fared better than others with Temecula hitting its highest median price since December of 2007. At $457,247, it’s still 21% off the peak $575,935 reached in June 2006, but up 42% from the $263,118 trough in January 2009. The same holds true for all our cities in Southwest California. We’re still a ways off our peak pricing but have rebounded strongly from the trough.
Realtors recently returned from our annual trek to Washington DC where we had a chance to talk with our Chief Economist, Dr. Lawrence Yun and Dr. Robert Dietz from the National Association of Homebuilders, among others. Our national prognosticators are optimistic about the long term health of the market even though the current housing market is still not as strong as had been forecast.
We’re still anticipating a substantial pent-up demand from current renters converting to homeownership IF the economy continues to improve. And we still have a huge bubble of Millenials moving into what is historically the prime household formation years. When that surge will hit is the subject of much conjecture as the demographic has thus far defied most attempts to define them by previous norms. But conventional wisdom still says they will start building families and buying homes at some not-too-distant date.
In addition to some excellent discussions, a conversation with Mike Huckabee and updates on all things political and legislative, our annual visit to DC met with some successes and some failure. We are confident that at least for the foreseeable future there will be no efforts to eliminate the mortgage interest deduction or capital gains relief from the tax code. We were also successful in encouraging some 275 Senators and Representatives to sign a letter to the Consumer Financial Protection Bureau (CFPB) requesting a five month transition period on their August 1 implementation of the new Truth in Lending Act and Real Estate Settlement Procedures Act Integrated Disclosure (TRID) regulation. The TRID promises to be a major shift in the way home sales are transacted and will effectively eliminate the possibility of a 30 day close. 45 day escrows will likely become the norm based on new rules enacted by this unregulated regulatory body.
Speaking of unregulated regulatory bodies, a singular success/failure also came about with the EPA’s ruling on Water of the United States. After a five-year battle trying to mitigate their attempt to redefine ‘navigable waterways’ to include every puddle and seasonal trickle, the House passed a resolution while we were there to direct the EPA to stop their overreach. SUCCESS! Two days later, President Obama came out in support of the EPA’s overreach thus the rule will likely be implemented with great potential to impact private property rights, building, development and commercial ventures across the country, including the Temecula Valley Wine Country. FAIL!
Naturally, water is much on the minds of local builders, developers and providers as we weigh the impact the current drought will have on our nascent housing recovery. Most local cities are experiencing some increase in building permits but how many and for how long in the face of severe supply cuts? Of course the state has plenty money for a high-speed train to nowhere, to provide free phones to the underprivileged, to pay for education and healthcare for those in the country illegally and welfare cards for felons, but for infrastructure and other water supply requirements? Eh, not so much. You’ll feel even better about it when that August water bill hits you.
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/.