The Valley Business Journal April 18

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THE VALLEY BUSINESS JOURNAL 26 www.TheValleyBusinessJournal.com April 2018 There’s A Strong Probability REAL ESTATE by by Gene Steve Wunderlich Fillingim For some reason people frequently ask me what comes next for our overheated housing market. To this I honestly reply that I am nearly as clueless as they are. But there are some probabilities and even some strong possibilities about what could happen. Like everyone else, I rely on a cadre of prognosticators to inform my opinions and my circle of advisors is pretty good. Given that basis, I am rarely wrong in my market forecasts. Why is that? Because I rarely forecast specific events and/or timeframes and when I do I couch them in phrases long recognized as ‘weasel words’ by pundits nationwide – ‘there’s a strong possibility something will happen’. For example, there’s a 40% chance you’ll read every page of this report. If you make it to the end, that forecast will look smart and you’ll be part of the success statistic. If you don’t, well, I said it was a long shot anyway. Having explained that ringing endorsement for my work, people appear more concerned than I’ve seen them in nearly a decade over the future of the housing market. Friends who work with banks on REO properties indicate they’re seeing more activity on the foreclosure front. Similarly, there has been a small, though as yet statistically insignificant, uptick in the number of short sales on the market. Homeowners in distress often try to short sell their home before the bank takes it back so as a market predictor it’s pretty accurate. But no cause for alarm. Yet. Overall the market appears to still be strong as we head into the 7th year of home price appreciation and there’s every indication that will continue at least through 2018 and extend into 2019. Very few people are shining the light out further than that because the old crystal ball tends to get a bit cloudy. But most of us are in agreement that in 2018: • Home sales/prices will continue to rise, although at a slower pace than past years. • Lack of inventory will continue to be an issue pushing prices higher. • Rents will continue to rise and vacancies will remain near all-time lows. • The economy will keep growing and increased employment will fuel household formation. • Millenials are starting to come out of Mom’s basement and renting and/or buying homes. • In spite of headwinds from rising mortgage interest rates and the new tax plan, there are equally strong tailwinds pushing the market as supply struggles to meet demand. Our own market is a case study of those conflicts. While 2017 was the strongest sales year since 2007 by inches, if you look at the sales chart graph you’ll note that sales have been virtually flat since 2015. Sales have stalled out at an average of around 900 units a month while inventories have fallen from a high of 2,600 units available across the region to as low as 1,400 units, with February expanding to just over 1,700. IF we start adding more buyers to the pool, it will only exacerbate the affordability gap. No matter how many units our local cities approve (thank you very much for that), it will not significantly impact the supply of homes for buyers to choose from in 2018. Last month I forecast that February would not be a good month. That’s a pretty safe bet based on the fact that February is a short month, there were fewer pending sales going into February, and February has historically been a slow month. How ‘not good’ was it? Well, sales were down another 5% to 648 single family homes. Not unexpected. What’s more interesting is that volume has been lower than last year for the past three months. March pending sales are up but may not rise to the level of last year. Sales also were down 7% year-overyear from 695 sales in February 2017. Median prices have also fallen month-over-month the past couple months to $359,313. As a region we’re still posting a 4% lead over last year’s $342,122. Temecula notched another month with an average price above $500,000 thanks to 3 $million+ homes sold, while their median price dropped to $460,000. Both Temecula and Murrieta inventories suffer from effective inventory available. Each city currently has 63 homes listed over $1 million with 3 sold in Temecula last month and 2 in Murrieta, according to CRMLS. Statistically those properties are not available to 98% of the buyer pool so Temecula has reduced their effective inventory by 23%, Murrieta by 18%. With mortgage interest deduction capped at $750,000 going forward, this could have an even greater impact on this market distortion. May all your consequences be intended. Gene Wunderlich is the Government Affairs Director for Southwest Riverside County Association of Realtors. If you have questions on the market, please contact me at GAD@srcar.org or to keep up with the latest legislative and real estate trends go to http://gadblog. srcar.org/.
April 2018 State of the City Theme CONTINUED FROM PAGE 1 Mayor Matt Rahn states, “The City’s highest priority every year is public safety so this year we are shining a spotlight on the high quality of life that our citizens, businesses and visitors enjoy as a result of being a safe City. Temecula’s strategy for success is to safeguard its private and public capital investments and protect its most precious resource: our people.” This includes maintaining and enhancing safe roadways, infrastructure, neighborhoods, schools, parks and amenities, which Mayor Rahn will highlight throughout his State of the City presentation. “The synergy of being a SAFE City not only fosters a prosperous socio-economic environment where residents and businesses feel certain they are investing in a City that cares, it likewise protects and maintains Temecula’s picturesque, well-manicured and beautiful physical environment. The City’s safeness and beauty fuels our local economy, and continues to attract upscale development, redevelopment projects, and new business establishments,” Rahn added, noting also, “that the City’s commitment to public safety, infrastructure, and protecting the community’s investments and natural resources have made Temecula synonymous with a magnificent lifestyle, flourishing community, and world-class tourist destination.” The State of the City Address continues the tradition as Temecula’s signature business event, which brings together the most influential leaders. The event is hosted by the Temecula Valley Chamber of Commerce and will be held in the THE VALLEY BUSINESS JOURNAL www.TheValleyBusinessJournal.com new expansion wing of Pechanga Resort Casino on May 31, 2018 at 7:00 a.m. The event includes a Nonprofit Expo where approximately 40 local nonprofit organizations will advertise their resources. The Nonprofit Expo begins at 7:00 a.m. and the Mayor’s presentation will be begin at 8:00 a.m. The event is open to the public, and tickets are purchased in advance. For ticket information, please contact the Temecula Valley Chamber of Commerce at 951-676-5090. The Temecula State of the City is scheduled for May 31, 2018 at Pechanga Resort Casino. The event itinerary is as follows: Event Itinerary: 7:00 – Non-Profit Organization Expo 7:30 – Breakfast opens 7:50 – Welcome 8:00 – Honorable Mayor Matt Rahn presentation 9:30 – Conclusion This event is hosted by the Temecula Valley Chamber of Commerce. More information is on their website: http://temecula.org/state-of-the-city-address/ 27
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The Valley Business Journal April 18

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