Subtle Changes, Steady Pace
As we are in the middle of the summer season, the listings on the market have increased and the prices in some areas have adjusted down a bit. The Sonoma County market is still steadily moving along. Homes that are priced right and in desirable areas are still getting multiple offers. At this time there are 1168 active listings in Sonoma County with 497 in escrow with the average price of $908,000. The fact is that prices are still at their heights and rates are their lowest, making this a great time to both BUY and SELL.
2 Year Mark Approaching
As we approach the 2 year mark of the 2017 fires here in Santa Rosa, the real estate market had slowed a bit in July. With August started and kids returning to school, the market has once again picked up. Much of the fuel are many of the fire victims who have rents coming to an end and now are deciding to purchase a home or possibly build. I recently hosted an open house on my listing in Larkfield where I had the chance to talk to many people that lost their homes in the October fires. For many, it has been a long process dealing with insurance companies and trying to find a new direction for their families. To hear the conversations gives way to a completely different perspective of what they have been through.
With that said, there are still many people looking for a home instead of building, which will further drive our real estate market here in Sonoma County, especially with new construction. Even if we have seen prices come down in some areas just due to market adjustments, the big component is the fact that there are still many buyers looking for that perfect home. So if you are thinking of selling, the time to do so will continue through the rest of 2019...
Interest Rates Declining
The recent lowering of the rates is still attracting buyers to make their home purchases. The rates are now in the high 3’s, not far from where they were in 2012 when the rate reductions were initially introduced to stimulate the sagging housing market. At this point, these rate reductions are spurring on refinances along with home purchases. Even with the overall economic status both nationally and globally, we should hopefully see the lower interest rates throughout 2019.
Good Time To Buy
When someone is thinking of purchasing a home, many times it will be property they keep for several years. For those buyers, whether buying home to live in or an investment property, the best thing to pay attention to ARE the interest rates, the cost of borrowing money. The rates at this time are once again at historic levels, ensuring you a great rate and a low payment. Bottom line, your loan rate is more important than price in many cases.
In reports on Wednesday, August 14th, both the US and the UK government bond yields inverted today, spooking the stock market as the Dow took a 800 point tumble. Typically an inverted yield curve has preceded a recession in the US. With this taking place in both the US and the UK along with the impending Brexit situation, people are getting nervous.
But with varying reports about an “inverted yield curve” and the actual affects….the truth remains to be seen. The 30 year bond is one to pay attention to, which if it joins, will really dictate an impending recession.
The trade wars are stirring up trouble globally and reports that Germany’s economy is slipping, due to tensions in the trade wars is adding to the already heated mix. Globally, there are tensions mounting and heated discussions taking place. How this actually affects the U.S. economy has yet to be seen. At this point, all we have are predictions. Worries of an impending recession have been in the news for some time. The key with the government is that they have to carefully monitor and gauge the economy and not be too quick to adjust rates, throwing the economy in a tailspin. The other thing to keep in mind is that we are in very different territory than where we were in 2008. Things are just not leveraged to the point they were back then.
Though the Wall Street Journal reported that the U.S. mortgage debt was higher than it was in the 3rd quarter of 2008, they also report that incomes have risen as well. Disputing the report, Kevin Drum of Mother Jones, rebukes their findings in his article where he explains where inflation isn’t taken into the equation. By their information, the overall mortgage service debt is almost half of what it was in 2008, making the mortgage debt situation much brighter than reported in the WSJ. This is where you have to be careful of what you listen to. The overall debt service is in a much better position than initially reported.
Foretelling the Future
I think one of the hardest things to do in this industry is really to foretell the future. There are so many opinions and variables that come into play. Being in this industry for over 30 years, I have seen my share of market shifts and heavy downturns. All the indicators of the economy, such as the stock market, the bond rate, a potential “inverted yield curve” and consumer debt, added to the “trade wars”, bring us to a point of some reactionary shifting. You also have to consider the global economy….for example, Germany’s impending recession and the fallout from Brexit, especially if the U.K. decides on a “hard” exit.
When taking all this into consideration and since the news is out there for everyone to read, the reality is that at this present moment, the housing market is steady and moving and interest rates are really low. Together, that is a great combination for buying and selling in 2019. Who knows what 2020 has in store…..
By: Holly Young – Vanguard Properties (707) 477-9885
Holly Young Properties