The “Feeling” of the Market Has Shifted…
The data is showing that both median price and housing inventory levels remain flat compared to last month at $495,000 and 2.5 months respectively. These numbers, as in the case with all my monthly updates, reflect ALL housing types (detached, attached, manufactured home) across San Diego County as a whole. I usually segment some of this down in my personal research but try to keep it general in these updates for simplicity. This month, I will dive into more into these segments below as it relates to our investment strategy – hopefully it can help you too.
What the data doesn’t show is the “feeling” of the market which I believe won’t be reflected in data for another month or two. About 3 weeks ago it felt like a light was switched, and suddenly we found ourselves in a quasi-buyer’s market, despite still ridiculously low inventory….it was really odd. One week we were getting multiple offers on all our properties. The next week we had a few fall-outs and showings went dead. Suddenly all the calls that I was getting from our real estate partners and other investors were referencing the slowdown of the market. A good buddy of mine pointed out the correlation to this slowdown and the Republican National Convention. Coincidence? Probably…but funny to think about.
Anyway, it was odd enough to warrant being a part of this update, but I don’t feel it’s anything major. This is the time we usually get a slowdown and I feel the unrest in the world and at home most likely just exaggerated that a bit. Going forward through the Holidays it is likely that we will see a lengthening of the market time data (currently at 29 days) and a slow decline in median price across the board.
The slowdown sparked something in me to share some more segmented market data in case it helps you make better decisions, or someone you know. It’s also just interesting stuff. This is the data we dig into to help us make better buying and selling decisions.
- Homes valued at under $750k are UP 5.4% year over year, while homes valued between $750k-1.25million are FLAT, $1.25-2million are DOWN 0.2%, and homes value over $2million are DOWN 6.7%.
- Factoring in just the properties valued under $750,000, detached single family home values are UP 3.6% year over year, whereas attached homes (condos/townhomes/twinhomes) are UP a whopping 11.5% year over year. We equate this dichotomy to rising rents pushing new buyers to the lower purchase prices of these attached homes, which are allowing buyers to still own a home for less monthly payment than renting.
- Here are some highlights by region. I am using a 3 month rolling average of the monthly median house number which takes out some of the random monthly swings that are more prevalent at the regional level (number include all property types and price ranges):
- Oceanside is up 5.9% year over year with a current median price of $450,000 – rising trend line
- Santee is up 7.6%, currently sitting at a $425,000 median price – rising trend line
- Chula Vista is up 4.4% with a $445,000 median price – falling trend line
- Ramona is up 6.3% with a $458,000 median price – flat trend line
- San Diego CITY is up 9.4% with a $432,000 median price – rising trend line
- La Jolla is DOWN 7.9% with a $1,036 median price – falling trend line
- Vista is the SAME compared to last year at $446,000 median price – trend line still flat
Hopefully this extra info provided a little insight for you and wasn’t a complete bore. Interest rates still are a major factor as they are keeping buyers in the game with affordability even with all the increasing prices. I will let Paul Johnson of Cross Country Mortgage close us out with his interest rate wrap up.
Interest Rate Corner
The last month we have been on a roller coaster with rates due to conflicting economic data reports and a resilient stock market that isn’t ready to correct. After the dust has settled the 30-year fixed-rate mortgage national average was 3.45 percent with an average 0.5 point for the week ending August 11, 2016, up from last week when it averaged 3.43 percent. Our expectation is that rates will remain low and close to the all-time record levels through the end of the year but expect volatility of a ¼% movements over the next few months so we would advise locking in rates when you go into contract to protect against any unpleasant surprises. Job creation exceeded expectations in July (255k created vs 180k expected) so it will be interesting to see the FED’s take on the mixed bag of data reflecting anemic revised growth in GDP (1.2 vs 2.6% expected) but stronger than expected job creation. If you want to stay in the loop on the market with our weekly updates please subscribe by emailing us at TeamJohnson@myccmortgage.com – Paul Johnson, Cross Country Mortgage