by Gene Wunderlich
Amidst depressing national and state news revolving around the economy and water, Southwest California housing posted another decent month in April, giving hope to at least a minor recovery from 2014’s slow pace.
The nation’s economy faltered during the 1st quarter nearly coming to a halt with just a .2% growth, instead of the anticipated 1% and well off the 3.5% rate of a robust economy. The impact of this news on housing is mixed. Consumer confidence remains low and job growth is anemic (if you look at the employment rate as opposed to the unemployment rate). The uncertainty that has plagued us for the past few years is still very much in evidence and means fewer people are taking that big leap into homeownership nationwide. Existing homeowners are staying put in their current home instead of moving up. Most Millenials are apparently still living in your basement while you cook and clean for them.
What is the silver lining to that cloud? A weak economy provides neither incentive nor reason to increase rates so it also means that the Fed is most likely not going to start bumping interest rates as had been anticipated to start as early as June. That’s good news for housing, good for buyers and especially good for folks who have not yet taken advantage of record low rates to refi. If you haven’t done it yet, you might want to start thinking seriously about it.
At the state level we’re still going through a drought and a water shortage. The drought is the result of 3 – 4 years of below-average precipitation – rainfall on us and snowfall in the Sierra’s. The water shortage is the result of misplaced priorities and a lack of proper planning in a state held hostage by environmental extremists. Neither shows any sign of abating soon so we get to deal with it, primarily in the form of punitive water bills and brown lawns. Meanwhile the Sacramento River carries millions of gallons of fresh water daily to the sea, presumably laden with the detritus of the Delta Smelt, and environmentalists continue their efforts to block the Carlsbad Poseidon Project and other projects aimed at expanding the state’s water resources.
On a brighter note, our regional housing market looked pretty good in April. On top of last month’s 30% bump in sales, this month added another 10%, giving us our best sales month since July of 2013. After lagging previous year sales for most of 2014, year-to-date we’re running 6% ahead of last year’s pace. That’s good news. Better news if we can keep it going. Pending sales are also up which means May should be strong as well. Inventory of available homes has dropped in each of the last four months, down 9% since the first of the year (2,451/2,225). Meanwhile sales are up 41% from January’s dismal low (614/1,035).
Regionally prices have continued their climb in the right direction, slowly but surely. Median price for our area is up 7% since January ($293,977/$317,119), up 7% over last April ($294,120/$317,119) and cumulatively year to date 4% ahead of 2014 (290,931/$303,742).
Well, we’ll make the best of it while we can and hope our state and federal officials quit trying to put us out of business.
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/