Stability in the Market
As the new year started off, the housing market here in Sonoma County kept up a steady pace. Once the weather subsided, a whole new upward shift of listings started to hit the market, which is fairly typical with the spring season. The best part of this housing market update is that the prices in many areas have stabilized somewhat, to more of a fair market value price. What this means is you shouldn’t see too many overpriced properties. They are easy to spot….they just sit on the market with no action.
Sonoma County Settles Down
The market in Sonoma County has been through quite a bit since the fires of 2017. Since the fires, rents had escalated and as well did the home prices. Demand was at an all time high due to the displacement of thousands of homeowners.
We are now in the middle of 2019 and there has definitely been a shift. The enormous rents are now starting to come down between 10 – 20% to a more realistic amount, now that the gouging has come to a halt. Along with that, the home prices are also starting to shift as most of the fire victims have made their decisions. They have either already bought another home, are rebuilding or have moved out of the area.
The fires of 2017 temporarily changed the housing market here in Sonoma County, inflating the prices across the board. We will now see a leveling out of prices as we continue to watch price reductions of at least 10 – 15% on overpriced homes.
Interest Rates Declining
As I had mentioned and the news stated as well, the interest rates continue to stay low, now actually dipping slightly below 4%. With that said, the interest rates have a huge effect on the housing market and the purchase prices. Understanding economically the why and how this all works requires a lengthy explanation from an economic pro. Basically said, the cost of borrowing money is just plain low, allowing buyers to qualify for more of a loan. Predictions are circulating that the interest rates could very well drop even more in the next 12 months. Barry Habib explains this in his video (worth the watch) Barry does a break down of why and how this can take place….and his predictions are usually correct.
A New Playing Field
Our culture has changed so much in the last 20 years. We have become way more technologically savvy and information is at our quick disposal. We are always expecting the typical cycles in the real estate industry…like they have always done. The saying that “history repeats itself” is one we all know. But we are now in a different era economically and we are forging a new future. I’m not saying there will never be a downturn, but I don’t think we should have that looming over our heads.
Technology has become the forefront for many industries and has had a big impact on large companies, helping them better navigate changes and still stay in the black. I remember working last year in Newport Beach, all the talk about the “bull” market, which at that point was said to be longest run of that type of market, being 9 years. Some were getting frantic, worrying there would be a financial collapse and started making decisions based on this “rumor”. The economy is a complex system that is many times misunderstood.
Flash forward to 12 months later. The interest rates are even lower and the housing market is keeping a steady and healthy pace. Overall, the economy is healthy, unemployment is low and there are many opportunities for all of us. Maybe we should just get used to the new “trend” that doesn’t include “the sky is falling” every time there is an adjustment. We could very well be establishing a healthy economic system all the way around.