What To Expect This Coming Year In Real Estate…

This is not the newsletter that will tell you to expect another year of the same old, same old.  In fact, changes are a-brewing.  We already saw last year start to taper off in sales, some of the slow down mistaken for the holiday doldrums.  But sales have been off, basically the last 6 months of 2018.  According to the California Association Of Realtors website, sales were down significantly from the statewide total of 5.51 million sales of 2017, although the exact number for 2018 is not yet available.  We saw the 3 quick rises in the 30 year mortgage add to the slow down, as buyers purchasing power was eroded, and sellers not yet ready to lower their prices, watched their property sit.  If it’s a standoff the seller wants, that is what they will get…the buyers of 2019 are not amply supplied with cash reserves to go over list prices, or be flexible about the amount of money they can or will spend on a home.  The buyers of 2019 are going to be carefully qualified, probably not your A+ buyer, but a growing family who needs more space, but can only afford what they can afford, period.  Be prepared to see price reductions this first quarter of 2019 as sellers try to wrap their heads around the new reality.  Although alternative financing such as variable rate mortgages and buy downs will make their way back to the financing world, it will not be enough to carry the buyer all the way to an overpriced listing.  As of November there were 6,820 listings available, and get this…that’s up 2,497 from November 2017, inventory being up 58%.

 What does this mean?…It means that Mr. and Mrs. Seller have a lot more competition.  Look for price adjustments for existing listings, and an overall price adjustment for new listings coming on the market.  Are we in for a correction?  Yes.  Is that a bad thing?  No.  It is absolutely a normal part of the real estate cycle.  Affordability must be a reasonable percentage to the population.  If not, the market has to return to the critical mass for purchase ability.