This Week in Real Estate 1-15-2016 - 2015 Recap

2015 Recap

Nationally we saw existing-home sales were up 7 percent in 2015, buoyed by strong household formation (at about 1.4 million households formed in the past four quarters ending in September) and strong job growth. Distressed sales fell in 2015, as did sales to investors, international buyers, and second-home buyers.

Home prices: Home prices edged up 5 percent to 7 percent nationwide in 2015. But the level of price appreciation is still above a normal rate, mostly due to an imbalance in the number of homes for-sale and high demand.

New-home sales were up 13 percent in 2015. Most of the growth in new-home construction in 2015, however, was centered in apartment building rather than single-family homes

Locally:

	Napa 2014	Napa 2015	% Change	Sonoma 2014	Sonoma 2015	% Change	Solano 2014	Solano 2015	% Change
# Listings	1701	1826	7.3%	6122	6347	3.7%	5875	6488	10.4%
# Units sold	1292	1425	10.3%	5335	5497	3.0%	4670	5467	17.1%
Month of Inventory	3.5	3.0	-14.1%	1.8	1.7	-4.2%	1.7	1.5	-7.5%
Median Price	522	571	9.4%	456	500	9.7%	306	339	10.7%

In our area, we saw similar results to the Nation. Our home sales are up, but inventory is still very tight. And our appreciation in the area is still above the national averages.

-Kris

This Week in Real Estate 1-8-2016 - Volatility in China

Volatility in China

China’s Stock market crash over the past week has resulted in our market being down from 17425 (Dec 31 2015 close) to 16514 (January 7 2016 close) as well. A drop of almost 5%.

Just last year this same event happened in August of 2015. The China Market dropped 11% in one week. Our stock market followed suit, but we rebounded to erase those losses by the end of the year.

The stock market in our global economy will have much more volatility as the global economies face hurdles. Last year we had the Greek and European debt crises. For the first time in history a country missed a payment to the IMF. There was the previously mentioned Chinese crash.

All of the turmoil in 2015 was able to keep interest rates in the mid 3% to low 4% range for the entire year. These events will likely keep the pressure on the Federal Reserve to have a more cautioned outlook for 2016.

-Kris

This Week in Real Estate - 1-1-2016 - 2016 Predictions/Trends

What will 2016 bring?

2016 will see the continuation of many trends that began in 2015

Home prices will rise more slowly. The growth in prices for 2015 slowed in our area (6-7%) year over year, but we are still higher than the 50 year average of 4.5%. With increasing interest rates there are additional pressure for the decrease in price growth.

Interest rates will likely creep higher slowly. For the first time in 9 years, the Federal Reserve raised the short term borrowing rate this December. They cautioned that future increases would be happening, but slowly. 

Inventory will improve as we return to a more stable market. In 2016 we will see very little change in government rules as we are in an election year. The market likes stability and inaction in the government. 

-Kris

This Week in Real Estate 12-25-2015

Merry Christmas.

Santa brought Lucy drums.  He brought us ear plugs.

Hope you and your family have a safe and wonderful holiday.

-Kris

This Week in Real Estate 12-18-2015 - Fed Reserve raised rates

The Fed raised rates.

For the first time in 9 years the Federal Reserve raised the short term borrowing rate. It went from 0.00% to 0.25%. This increase has been talked about for 2 years. The increase had been delayed many times as well. Initially the thought was that rates would increase in February 2015.

But it happened. And guess what? The financial markets reacted by going UP more than 200 points on Wednesday.

"I feel confident about the fundamentals driving the U.S. economy, the health of U.S. households, and domestic spending," Fed chief Janet Yellen said during a press conference. "There are pressures on some sectors of the economy, particularly manufacturing, and the energy sector...but the underlying health of the U.S. economy I consider to be quite sound."

The Fed telegraphed it will be patient with future rate increases so as not to kill the economic recovery. The central bank's statement said the economy will only merit "gradual increases" in rates, which are likely to remain low "for some time." Yellen repeatedly said during the press conference that future rate hikes will be "gradual."

CNN wrote a great article talking about the impact of these moves.

http://money.cnn.com/2015/12/14/news/economy/what-a-fed-rate-hike-means-for-you/index.html?iid=surge-stack-dom

The Federal Reserve’s official press release

http://www.federalreserve.gov/newsevents/press/monetary/20151216a.htm

-Kris

This Week in Real Estate 12-11-2015 - Rental Market Crisis

Rental Market Crisis

The alarms of increasing rents have been ringing for nearly 3 years. Now a report from Harvard really is shocking. http://www.jchs.harvard.edu/americas-rental-housing

·         On average renters are spending 30% of their income on rent up from a historical average of 21%

o   50% are rent burdened spending more than 33% on rent

o   25% are severely rent burdened spending more than 50% rent

·         There are 9 Million more rental households today than 10 years ago

·         Homeownership is at the low for the past century (63%)

·         The household starts, mostly young people and millennials, are in a rental situation

·         Rental prices are way beyond the previous peak

It still might be the best bet to lock in your “rent” with a 30 year fixed mortgage on a home you own that will build equity with every monthly payment.

-Kris

This Week in Real Estate 12-4-2015 Negative Equity still a Problem

Property Tax bills

If you don’t want to pay a 10% penalty on your property tax bill make sure you have your payment to the county by December 10^th. PLEASE DO NOT MAIL it is not the post mark date. It needs to be received by the county by December 10, 2015.

Negative Equity still a problem.

I read this great article from CNBC regarding the negative equity effects still in our marketplace.

As a nation nearly two thirds of all homes have a mortgage. In California the figure is slightly higher with a little over 70%.

On average 10% of homes with mortgages (7% overall) in the bay area are underwater or have negative equity. The problem with the negative equity is that it creates a shortage of homes for sale. If you can’t sell at a profit, as a homeowner, you are stuck.

The recent study found that the majority of homes with negative equity are the less expensive homes that are below the median price for the area. Often these homes are the entry-level or starter homes.

Also the number of repeat buyers has dropped dramatically in the last decade, owing to negative equity, but when combined with tighter underwriting standards, the options for these buyers is even worse. Lenders today require higher levels of income compared to debt, and Americans in mid-tier FICO credit ranges have had increasing difficulty qualifying for loans.

While the market is much stronger and a key part of the growth of the overall economy, the prediction is that it may be 3-4 years before the “negative equity” effect is behind us.

-Kris

Toys for Tots Client appreciation party recap

I wanted to thank everyone who came out last night. We had a blast and were able to give over 200 toys to Toys for Tots.

THANK YOU.