For 62 straight months, Southern California home prices have increased. Five years ago, a median-priced condo in Orange County was around $280,000, about 76% less than today’s prices.
A report from Jim Doti and economists at Chapman University think Orange Country housing is in bubble territory, but is not in immediate danger of bursting. A report from Mark Schniepp of the California Forecast also sees no bubble yet. The critical lack of supply still ensures a quick sale of existing inventory.
There is still record low unemployment, which in turn fuels wage increases. The current housing market is not overheated, with speculative real estate purchases and easy mortgage credit, as was prevalent a decade ago.
Are we in a bubble? Economic analysts and real estate professionals are trying to determine the answer to this question.
Some economists and industry analysts were asked about future home prices in the region. Among their answers:
– Southern California home prices are not about to drop. They believe that prices will continue to rise for 2 more years, and possibly longer.
– The market is not in a bubble yet – though speculation is increasing on the subject.
– If you are thinking of buying a home, now is still the time to act, provided you are not overextended and plan to own for a while. Interest rates are still low. Though it is more expensive to buy today then a few years ago, home prices are still projected to go up, and possible increases in interest rates will increase the cost of owning later. “You ‘re most likely seeing an increase of 10% or 12% in your mortgage payment” if you wait, stated Oscar Wei, a senior economist for C.A.R.
Factors that Determine Your Property’s Value
~ Condition of Home
~ Market Condition
Though Federal Reserve policymakers, worried that global financial market volatility could dampen the U.S. economy, did not raise the interest rates last week, they have begun laying the groundwork for a possible interest rate increase in October.
Two voting members of the Federal Open Market Committee, which sets monetary policy, said they were close to approving a rate hike on Thursday but wanted to take more time to assess the effects of the market turmoil and China’s slowing economy. Both said they expected a hike this year.
“It’s too early to know whether this episode amounts to a bona fide shock to the economy or just a nervous spasm in the markets,” Dennis Lockhart, president of the Federal Reserve Bank of Atlanta, said Monday.
Lockhart, a centrist, is one of the 10 voting members of the policy-setting Federal Open Market Committee. It voted 9-1 on Thursday to hold the central bank’s benchmark short-term rate at near zero percent after a much-anticipated two-day meeting last week.
Lockhart said Monday that he was confident the Fed would do so by the end of the year. The rate has been near zero since late 2008 in an attempt to stimulate the economy. The Fed meets again Oct. 27-28, then Dec. 15-16.
The labor market has healed enough for an interest rate hike, he said, but he remains concerned about inflation continuing to run well below the Fed’s 2% annual target.
“As things settle down, I will be ready for the first policy move on the path to a more normal interest-rate environment,” Lockhart said.
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Home prices grew again in May, but not at last spring’s frenzied pace…there are fewer foreclosures to buy. More home sellers are testing the market, and bidding wars are less frequent.
All of it signals a housing market that’s settling to a more stable, even healthy, pattern, which analysts say is a notable change from the big ups and downs of the last few years.
The market’s not bad. The urgency’s gone. I think that’s a positive thing. – Leslie Appleton-Young, chief economist for the California Assn. of Realtors
The slowdown has been underway for months, but it showed up in home sales numbers out for May, a big month for the key spring real estate season.
The number of sales fell 15.1%, as investors continued to trickle out of the market and the supply of bargain-rate foreclosures dried up.
“We’re bumping along a ceiling. I really can’t see values going up much more,” said Steven Thomas, of ReportsOnHousing.com, which analyzes Southern California housing markets. “Buyers are homing in on trying to pay a fair value. A year ago, everyone was willing to pay extra. Now that bidding up is not happening.”
This year, instead of competing with 20 other offers, Buyers are competing with 4 or 5 others.The inventory of homes for sale has grown, with more traditional sellers joining the market this spring. That’s giving buyers more to choose from, but it means homes that feel overpriced are starting to sit on the market a little longer.
That’s an unpleasant surprise for some sellers, especially those who valued their homes based on the 2013 market where one puts their home on the market and have 15 offers. Agents more often have to play the bad guy with sellers who think their home is worth more than the market will bear. Buyers have become a lot more savvy.
We’re starting to see more price reductions as sellers lower their sights to compete.
No one is expecting home prices to go down overall. There’s still more demand than supply, and well-priced homes are still selling quickly.
Interpreted from 6/11/14 article by firstname.lastname@example.org
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