Preface, Rates, and Inventory
Whoa, 2017 started off the year with lower-than-expected inventory in Ventura real estate and higher-than-expected mortgage interest rates. After the election of Donald Trump, mortgage interest rates shot up. Checkout this chart from a WSJ cover in mid November:
Interest rates have since settled, reducing about a quarter of a percent again, likely as the reality of a Trump Presidency set in. That said, checkout this simple chart on the inventory of houses:
Housing Inventory at Year Start
Housing inventory at the start of the year in previous years (all listings in Ventura):
-2013: 80 <<<< 25% annual gain in prices
-2014: 150 <<positive gain in prices
-2015: 150 <<positive gain in prices
-2016: 140 <<positive gain in prices
-2017: 120 <<?
There are a lot of buyers and owners thinking to themselves: Should we wait? Should we prepare for the next downturn? Sadly, these thoughts are reminiscent of thoughts people had in 1999 and 2000, when the dot-com burst was a fear and then an issue. Many held these thoughts through to 2004-2006, when they — likely out of the fear of missing out — stepped in and bought real estate again (as, of course, “Prices could never go down,” so the prevailing thought went).
Anyway, indicators today (2017) are not pointing to an imminent bust. Instead, they continue to reinforce slow, long-term growth — sustained by stringent underwriting guidelines and the lack of access to credit except for those with the most solid qualifications. This is reiterated by the lack of housing inventory here at the start of 2017. As a result, I’m extremely optimistic about 2017.
If someone is in the position to buy, and actually has an opportunity to buy something (given the lack of inventory), I believe they should do so prior to the spring. The last time inventory felt similarly tight was in 2013. Those who bought in January and February of 2013 were handsomely rewarded with near-instant appreciation in March and April, when home prices shot up 20% in TWO MONTHS!
As usual, “Don’t wait to buy real estate, buy real estate and wait.”
Post written by Realtor Kevin Paffrath at “Meet Kevin“, the amazing real estate agent and broker serving Ventura County, including Camarillo, Ventura, Oxnard, & beyond. Writing for home buyers, sellers, investors, and anyone with an interest in real estate. Kevin thanks you for reading.