VBJ June 2019

June 2019
THE VALLEY BUSINESS JOURNAL
www.TheValleyBusinessJournal.com
25
A Simmer, Not a Boil
REAL ESTATE
by by
Gene Steve Wunderlich Fillingim
As the housing market heads into
the normal heat of the summer buying
season, this year’s market could be
characterized as more of a simmer
than a boil. While the market has improved
since the January doldrums,
it has cooled considerably from past
years not just locally but across the
state and nation led by sales and price
retreats in some of our previously most
overheated markets like San Francisco
and Santa Barbara. Of course, when
your city becomes notorious for having
numerous Poop Maps, it’s bound to
impact housing values some.
Last week at our Legislative Day
meetings in Sacramento, Realtors®
heard from Governor Newsom in a
far ranging address on the positives
and negatives of this state we call
home (for now). We were encouraged
that housing is one of his priorities as
he seems to ‘get it’ that past policies
have damaged the industry, including
over-regulation, CEQA and excessive
development costs. We have been preaching
for the past two years that SUPPLY
= SOLUTION and his stated goal of
increasing housing production in the
state from 80,000 - 100,000 units a year
to 300,000 - 400,000 units appears to
address that issue. HOW he intends to
accomplish that goal is still a mystery
given that the legislature continues to
enact measures that make it increasingly
difficult and costly to develop. But, as I
summarized his glowing speech, if he
means ½ of what he says and can accomplish
¼ of that, I’ll be impressed. He’s
a great speaker, charismatic, easy on the
eyes, and didn’t wear a tie. We’re a lot
alike – I don’t wear a tie either.
So where is the market? Well, in spite
of another 5% uptick in sales over March
(874 / 920), April sales still came in 6%
below last April (920 / 987). Year-to-date
that leaves us 6% behind 2018’s pace
(3,044/3,243) and some 11% behind 2017
(3,397). Pending sales are up 16% going
into May which tells me we’ve got some
momentum behind the numbers, but is it
enough to pull us up to last year’s level?
Statewide sales have declined from
last year’s numbers for 11 consecutive
months – we’re not alone. Median prices
also show significant slowing. Statistically
month-over-month pricing was up a
scant .002% ($378,411 / $379,111) across
the region and up a meager 1% year-overyear
($376,833). Year-to-date, our median
is up 10% over 2017 ($338,803) slowing
to 2% this year ($368,690 / $375,257)
following a similar trend across much of
the state and the nation. Statewide appreciation
is at its slowest climb in the past 7
years – again, we’re not alone.
In a nod to numerical hi-jinx, yearover-year
San Jacinto posted a 6% increase
in April, Temecula, Murrieta and
Menifee all increased 5%. So why does
the total only show a 1% increase? Because
last April Canyon Lake produced
an anomalous month with a median price
of $517,500. That dropped 18% to a more
routine $425,000 this year. Factoring out
that $90,000 variance provides a more
realistic 5% year over year improvement
for the month, but that impact is diluted
in year-to-date totals.
As mentioned in previous newsletters,
some of our slowdown in sales of
existing single-family homes can be attributed
to the fact that our local cities are
actually doing what the Governor claims
to want to do – build more homes. Recent
presentation by local City Managers
show numerous projects across our
Southwest Cities bringing hundreds of
new homes to market. In that respect
our market is at odds with much of the
rest of the state where municipalities
are severely limiting growth and development
and, in some cases, even
removing existing housing stock from
the market. If you’re not familiar with
what the Coastal Commission is doing,
you should be. If their overreach as an
appointed commission is allowed to
spread to CARB, CWC or others,
we’re in even more trouble than the
Governor realizes. Of course, that’s
just my opinion, I could be wrong.
Gene Wunderlich is Vice President,
Government Affairs for Southwest
Riverside County Association of Realtors.
If you have questions on the
market, please contact me at GAD@
srcar.org.