That was the message from one speaker we heard from when several hundred Realtors from around the country descended on Washington D.C. a couple weeks ago to discuss housing issues with our Congressional leaders. Apparently the degree of recovery has a great deal to do with your position relative to it. If you had a fair amount of money to begin with, you’ve recovered nicely. If not, well, there’s still hope and change I guess.
Speakers including HUD Secretary Shaun Donovan, FHA Commissioner Carol Galante, CFPB Director Richard Cordray and NAR Chief Economist Dr. Lawrence Yun attempted to explain why the housing market isn’t carrying its weight in the current recovery. Four knowledgeable people, sixteen different theories.
Turns out millenials, that huge generation readying to assume the reigns of commerce and government, aren’t buying homes as expected. They’re ‘choosing’ to live at home into their 30’s. It could be they like being catered to, or they might be saddled with college debt, or that might not have anything to do with it. Of course a lot of potential move-up buyers can’t move-up because they don’t have equity in their homes yet, or not enough to prompt a move. This is preventing many baby-boomers who want to down-size from doing that since there aren’t enough buyers who can afford their big old houses. And even though 80% of people who lost their homes to foreclosure or short sale during the past few years plan to buy another home, they aren’t able to quite yet.
Overly restrictive lending regulations seem to play a big role in the problem, and rising interest rates and prices have conspired to drive many investors and first-time buyers out of the market. Consumer confidence continues to weigh down the economy as well, because even as the nation posts decent job growth statistics, participation in the labor market continues to suffer and those people, the record numbers of unemployed and under-employed can’t buy a home either.
One economist posited that the next couple months will set a tone for the year. Housing could actually fall back into another mini-recession for 2014 with both sales and prices dropping some only to recover in 2015. Nobody put too much weight on this idea but most acknowledged the possibility.
Locally our market continues to chug along. Sales were up slightly from the previous month, although pending home sales portend a drop in June. Prices were up about 6% from April and still holding 16% ahead of last year. Overall, prices for the region are back to 2004 levels, up about 40% from their trough. Statistically we’ve made back exactly half of the value we lost in 2008-2009. Our regional median is $147 higher than its lowest point but still $148 away from its highest.
According to the U.S. Census Bureau, Southwest County was home to 3 of California’s 10 fastest growing cities. Temecula grew 2.1% to 106,780, Menifee grew 2.6% to 83,447 and Lake Elsinore was the fastest growing in the state increasing 3.3% to 57,525. Quality of life and housing affordability will keep Southwest County at the forefront of the recovering market.
Now if we could just get the rest of the country to follow along.
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/.