The New Year always seems to usher in a sense of optimism and opportunity, along with an array of predictions from real estate experts and economists. As Regional Vice President of Coldwell Banker Residential Brokerage in Orange County and Desert Region, I am in a unique position to help guide our real estate agents and clients with up-to-date market information. While it is impossible to predict the future, I have been keeping watch on several positive market indicators for 2011.
1. Household Wealth Growth
Despite the slow pace of recovery, we continue to see gains in net worth. Net worth for households and individuals increased 2 percent in third quarter 2010. The average U.S. personal savings rate also climbed from 0.4 percent in 2005 to 4.3 percent in 2009, and hit 5.5 percent in third quarter 2010. Improvements in consumer spending and consumer confidence, coupled with increased demand for goods and services plus falling unemployment claims are cause for a brighter outlook in 2011, according to the December 2010 Economic Outlook by Fannie Mae’s Economics & Mortgage Market Analysis Group. All of these factors hold promise, since many consumers may be in a stronger position to purchase a home in 2011.
2. American Dream Still Alive
Americans still perceive real estate as a better investment than the stock market. Last month, Fannie Mae released a study that found most Americans—both those who currently own homes and those who rent—still strongly aspire to own a home and to maintain homeownership. In October 2010, the National Association of REALTORS® also found that nearly eight out of 10 respondents to their 2010 National Housing Pulse Survey believed buying a home is a good financial decision.
3. Upward Trends in Some Local Markets
According to the California Association of REALTORS®, the median home price in California will increase 2 percent from $306,500 in 2010 to $312,500 in 2011. Some local markets have already begun to see movement. In Orange County, the median home price of an existing single-family home was up slightly in November 2010 from the previous year. Luxury markets such as Newport Coast saw a whopping 46.58 percent increase in the median home price in November 2010 from the same time a year ago; the median home price in Laguna Beach rose 11.84 percent. While Chapman University’s 2011 economic forecast foresees the O.C. median home price (currently at $432,000) rising 3 to 4 percent in 2011, the UCLA Anderson Forecast predicts that prices will climb above $500,000 in 2012—for the first time since April 2008.
“While the growth path is modest, it is nonetheless positive,” said Mark Schniepp, Associate, UCLA Anderson Forecast. “Private sector job creation has been larger than expected, and positive in 7 of the first 8 months of the year. New residential construction has turned around and a better than expected tourist summer season created thousands of jobs in the visitor serving sector.”
4. Strong Fundamentals
Lawrence Yun, Chief Economist at the National Association of REALTORS®, recently noted: “The relationship recently between mortgage interest rates, home prices and family income has been the most favorable on record for buying a home since we started measuring in 1970. Therefore, the market is recovering and we should trend up to a healthy, sustainable level in 2011.” Leslie Appleton-Young, Chief Economist at the California Association of REALTORS®, agrees that housing fundamentals in 2011 will remain strong. Interest rates are low, the first-time buyer affordability index is high, and buyers are finding tremendous value opportunities throughout the O.C.
Five or six years from now, “many people will look back to 2010 and say ‘I should have bought a home back then,’” said Yun. For residents in Orange County, my hope is that you do not look back to 2011 and say the same thing.
Listing Inventory Sees Record Highs
Saturday, June 19th, 2010What is next for the real estate market considering some of the pressure we are seeing in the stock market and world economies? In every market, good and downturn, we can find the opportunity for a safe investment. That could be interest income preservation or equity long term and short term placement. It appears that the consumer is fleeing to real estate as a safe house position.
Listing inventory has climbed to record highs in recent months. As a result, we have seen a run on pent up demand where buyers have been patiently waiting for the right opportunity. Listing inventory was up 44 percent over January 2009 and, in response, new pending sales increased almost 304 percent over month-to-month statistics from March 2010 to April 2010 in Orange County. In fact, this takes the inventory of remaining unsold in April to an almost negative number.
Meanwhile, the high-end markets have rebounded. Our thermometer is the secondary market or second/vacation home index. Sales of second or vacation home resorts or areas have seen modest adjustments in the high-end, where 12 months ago there were little to no sales to mention. Twenty percent of the local desert market has been in upper tier real estate with a single home selling for as high as $10 million, sold by the Coldwell Banker Indian Wells office.
Contact your local Coldwell Banker sales associate to gather more information about the areas you are researching by visiting www.CaMoves.com and www.OCViewOnline.com.
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