An Economic Slowdown and Real Estate

By Micah Stovall | Published: March 15, 2019

Two weeks ago, the National Association for Business Economics released their February 2019 Economic Policy Survey. The survey revealed that a majority of the panel believe an economic slowdown is in the near future:

“While only 10% of panelists expect a recession in 2019, 42% say a recession will happen in 2020, and 25% expect one in 2021.”

Their findings coincide with three previous surveys calling for a slowdown sometime in the next two years:

  1. The Pulsenomics Survey of Market Analysts
  2. The Wall Street Journal Survey of Economists
  3. The Duke University Survey of American CFOs

That raises the question: Will the real estate market be impacted like it was during the last recession? A recession does not equal a housing crisis. According to the dictionary definition, a recession is:

“A period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.”

During the last recession, prices fell dramatically because the housing collapse caused the recession. However, if we look at the previous four recessions, we can see that home values weren’t negatively impacted:

  • January 1980 to July 1980: Home values rose 4.5%
  • July 1981 to November 1982: Home values rose 1.9%
  • July 1990 to March 1991: Home values fell less than 1%
  • March 2001 to November 2001: Home values rose 4.8%

Most experts agree with Ralph McLaughlin, CoreLogic’s Deputy Chief Economist, who recently explained:

“There’s no reason to panic right now, even if we may be headed for a recession. We’re seeing a cooling of the housing market, but nothing that indicates a crash.”

The housing market is just “normalizing”. Inventory is starting to increase and home prices are finally stabilizing. This is a good thing for both buyers and sellers as we move forward.

If there is an economic slowdown in our near future, there is no need for fear to set in. As renowned financial analyst, Morgan Housel, recently tweeted:

“An interesting thing is the widespread assumption that the next recession will be as bad as 2008. Natural to think that way, but, statistically, highly unlikely. Could be over before you realized it began.”

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Happiest cities in the US revealed in new Wallethub report

By Tarah Stovall | Published: March 14, 2019

Two Orange County cities cracked a top 10 list of happiest cities in America, with Huntington Beach at #5 and Irvine at #2.   Plano, Texas, is the happiest city in the U.S., according to the WalletHub survey.

The personal finance website ranked 182 cities by “emotional & physical well-being,” “income & employment” and “community & environment.”

Irvine came in 14th for emotional & physical well-being, 11th for income & employment and fifth in community & environment for a total score of 71.86, which is five-tenths higher than the No. 3 city, Madison, Wisconsin. Last year, Irvine was ranked the eighth happiest city, just ahead of Huntington Beach at No. 9.

Huntington Beach Pier (surfcityusa.com)

Huntington Beach this year came in sixth  for emotional & physical well-being, 46th for income & employment and 28th in community & environment for a total score of 69.74 and sandwiched between No. 4 Fremont, California, which was last year’s No. 1, and No. 6 Fargo, North Dakota.  Surf City takes over the No. 5 spot that Plano occupied last year.

Anaheim includes Disneyland, which as everyone with a marketing degree knows is the Happiest Place on Earth, but the city came in 22nd in the 2019 WalletHub rankings.

Garden Grove is No. 40, Santa Ana is No. 57 and Long Beach is No. 71.

Pulling up last is Detroit, Michigan, at No. 182.

Among individual categories, Irvine is No. 2 and Huntington Beach is No. 4 in “sports participation,” where Seattle is No. 1. And Irvine is also No. 2 in “lowest separation & divorce rate,” which has Plano at No. 4 and, at No. 1, Fremont.

 

Interested in making the move? Call Micah today 714.343.9294.

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4 Reasons To Buy A Home In The Spring

By Micah Stovall | Published: March 13, 2019
4 Reasons to Buy a Home in the Spring

Spring has sprung, and it’s a great time to buy a home! Here are four reasons to consider buying today instead of waiting.

1. Prices Will Continue to Rise

CoreLogic’s latest U.S. Home Price Insights reports that home prices have appreciated by 4.4% over the last 12 months. The same report predicts that prices will continue to increase at a rate of 4.6% over the next year. Home values will continue to appreciate for years. Waiting no longer makes sense.

2. Mortgage Interest Rates Are Projected to Increase

Freddie Mac’s Primary Mortgage Market Survey shows that interest rates for a 30-year fixed rate mortgage came in at 4.41% last week. Most experts predict that rates will rise over the next 12 months. The Mortgage Bankers Association, Fannie Mae, Freddie Mac, and the National Association of Realtors are in unison, projecting rates will increase by this time next year. An increase in rates will impact YOUR monthly mortgage payment. A year from now, your housing expense will increase if a mortgage is necessary to buy your next home.

3. Either Way, You Are Paying a Mortgage

Some renters have not yet purchased a home because they are uncomfortable taking on the obligation of a mortgage. Everyone should realize that unless you are living with your parents rent-free, you are paying a mortgage– either yours or your landlord’s. As an owner, your mortgage payment is a form of ‘forced savings’ that allows you to have equity in your home that you can tap into later in life. As a renter, you guarantee your landlord is the person with that equity.  Are you ready to put your housing cost to work for you?

4. It’s Time to Move On with Your Life

The ‘cost’ of a home is determined by two major components: the price of the home and the current mortgage rate. It appears that both are on the rise. But what if they weren’t? Would you wait?  Examine the actual reason you are buying and decide if it is worth waiting. Whether you want to have a great place for your children to grow up, greater safety for your family, or you just want to have control over renovations, now could be the time to buy.

If the right thing for you and your family is to purchase a home this year, buying sooner rather than later could lead to substantial savings. Call me today at 714.343.9294 or email [email protected]

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The Housing Market Will “Spring Forward” This Year!

By Micah Stovall | Published: March 11, 2019

Just like our clocks this past weekend, in the majority of the country, the housing market will soon “spring forward!” Similar to tension in a spring, the lack of housing inventory available for sale has been holding back the market.  Many potential sellers believe that waiting until Spring is in their best interest. Traditionally, they would have been right.

Buyer demand has seasonality to it. Usually, this falls off in the winter months, especially with the rain and cold temperatures.

That hasn’t happened this year. 

Demand for housing has remained strong as  mortgage rates have remained near historic lows. Even with an increase in rates forecasted for 2019, buyers are still able to lock in an affordable monthly payment. Buyers are increasingly jumping off the fence and into the market to secure a lower rate.   The National Association of Realtors (NAR) recently reported that in 2018 the  top 10 dates sellers listed their homes all fell in April, May, or June.

Those who act quickly and list now, before a flood of increased competition, will benefit from additional exposure to buyers.  If you are planning on selling your home in 2019, meet with us today to evaluate the opportunities in your neighborhood.  Call me today at 714.343.9294 email at [email protected]

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Preparing to Spring Forward

By Micah Stovall | Published: March 9, 2019

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Millionaire To Millennials: Don’t Get Stuck Renting A Home… Buy One!

By Micah Stovall | Published: March 2, 2019

Millionaire To Millennials: Don’t Get Stuck Renting A Home… Buy One!

In a CNBC article, self-made millionaire David Bach explained that: “The biggest mistake millennials are making is not buying their first home.” He goes on to say that, “If you want to build real financial security, real wealth for your lifetime, then you need to buy a home.”

Bach went on to explain:

“Homeowners are worth 40 times more than renters. Now, that first home doesn’t need to be a dream home, it can be a very small home. You might literally have to buy a small studio apartment, but that’s how you get started.”

Then he explains the secret to buying that home!

“Don’t do a 30-year mortgage. You want to take that 30-year mortgage and instead pay it off early, do a 15-year mortgage. What happens if you do a 15-year mortgage? Well, one, you pay the mortgage off 15-years sooner, that means you’ll be able to retire in your fifties. Number two, you’ll save a fortune (on potentially hundreds of thousands of dollars in interest payments).”

What will it cost to pay your mortgage in fifteen years? He explains further:

“For fifteen years, you got to brownbag your lunch. Think about that! Brownbag your lunch literally for fifteen years. You can retire ten years sooner than your friends. You’ll have real wealth, because you bought a home – you’re not a renter. And you’ll be financially secure for life.”

Bottom Line

Whenever a well-respected millionaire gives investment advice, people usually clamor to hear it. This millionaire gave simple advice – if you don’t yet live in your own home, go buy one.

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