Home Prices: The Difference 5 Years Makes

CoreLogic recently released their Home Price Index ReportOne of the key indicators used in the report to determine the health of the housing market was home price appreciation. CoreLogic focused on appreciation from July 2013 to July 2018 to show how prices over the last five years have fared.

The graph below was created to show the 5-year change in price from July 2013 to July 2018 by price range.

Home Prices: The Difference 5 Years Makes | Keeping Current Matters

As you can see in the graph, the highest price appreciation occurred in the lowest price range with 48% growth, while the highest priced homes appreciated by 25%. This has been greatly fueled by the lack of inventory of homes available at the lower price ranges and high demand from first-time buyers looking to enter the market.

Where were prices expected to go?

Every quarter, Pulsenomics surveys a nationwide panel of over 100 economists, real estate experts, and investment and market strategists and asks them to project how residential home prices will appreciate over the next five years for their Home Price Expectation Survey (HPES).

According to the Q3 2014 survey results, national homes prices were projected to increase cumulatively by 19.5% by December 2018. The bulls of the group predicted home prices to rise by 27.8%, while the more cautious bears predicted an appreciation of 11.2%.

Where are prices headed in the next 5 years?

Data from the most recent HPES shows that home prices are expected to increase by 20.0% over the next 5 years. The bulls of the group predict home prices to rise by 31.2%, while the more cautious bears predict an appreciation of 9.3%.

Bottom Line

Every day, thousands of homeowners regain positive equity in their homes. Some homeowners are now experiencing values even greater than those before the Great Recession. If you’re wondering if you have enough equity to sell your house and move on to your dream home, contact the Stovall Team today at 714.343.9294! We can help.

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Micah Stovall

We understand that everyone one of us has a unique situation to themselves as we tread forward on our own race in life. At Stovall Team we know that understanding others needs and requirements are paramount to our culture. Together we promise that our vision, core values, and mission statement will align with your own future real estate goals. Regardless of your situation or future plans, let us provide the experienced guidance and expertise in making your real estate plans. At Stovall Team no detail is overlooked. In addition to providing interior design consultation- staging, we leverage a network of trusted professionals to bring out the best in any property and ensure our sellers receive the highest possible return on their Investment. We will educate you on what needs to be done to have a successful sale of your home. There are many components to a successful real estate transaction; you can count on us to be there every step of the process and make sure no detail is overlooked. Call us today at 714.343.9294 and visit stovallteam.com

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Are Homebuyers Starting To Hit The ‘Pause’ Button?

For the last several years, buyer demand has far exceeded the housing supply available for sale. This low supply and high demand have led to home prices appreciating by an average of 6.2% annually since 2012.

With this being said, three of the four major reports used to measure buyer activity have revealed that purchasing demand may be softening. Here are the four indices, how they measure demand (methodology), what their latest reports said, and a quick synopsis of the report.

The Foot Traffic Report
by the National Association of Realtors

Methodology: Every month SentriLock, LLC provides NAR Research with data on the number of properties shown by a REALTOR®. Lockboxes made by SentriLock, LLC are used in roughly a third of home showings across the nation. Foot traffic has a strong correlation with future contracts and home sales, so it can be viewed as a peek ahead at sales trends two to three months into the future.

Latest Report“Foot Traffic climbed 3.2 points to 55.8 mid-summer in July. Additionally, the diffusion index is higher than last year by 13.5 points. Despite a healthy economy and labor market, supply and new construction remains unable to keep up with buyer demand.”

Synopsis: Buyer demand remains strong.

The Showing Index
by ShowingTime

Methodology: The ShowingTime Showing Index® tracks the average number of buyer showings on active residential properties on a monthly basis, a highly reliable leading indicator of current and future demand trends.

Latest Report“Showing activity throughout the country increased by 0.3 percent year over year in July, the third consecutive month that the U.S. ShowingTime Showing Index recorded buyer interest deceleration compared to the previous year. The June 2018 figures revealed a 0.0 percent change in showing traffic from 2017, while May showed a 1.2 percent year-over-year increase. The 12-month average year-over-year increase was 4.6 percent.”

Synopsis: Buyer demand is softening

Realtors Confidence Index
by the National Association of Realtors

Methodology: The REALTORS Confidence Index is a key indicator of housing market strength based on a monthly survey sent to over 50,000 real estate practitioners. Practitioners are asked about their expectations for home sales, prices and market conditions.

Latest Report“REALTORS reported slower homebuying activity in July 2018…The REALTORS® Buyer Traffic Index registered at 62, down from the same month one year ago (69). This is the fifth straight month (since March 2018) that Realtors reported a decline in buyer activity compared to conditions one year ago.”

Synopsis: Buyer demand is softening

 

Bottom Line

Numerous reliable measures of buyer activity are reporting that demand is softening. We had a strong buyers’ market directly after the housing crash which was immediately followed by a strong sellers’ market over the last six years. If demand continues to soften and supply begins to grow (as is projected to happen), we will return to a more neutral market which will favor neither buyers nor sellers. This “more normal” market will be better for real estate in the long term. Call the Stovall Team today at  714.343.9294 or email [email protected]

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Ask The Experts: STOVALL TEAM.

Q. What does the increase in the number of price reductions mean to the Real Estate Market? Is it a buyer’s market?

A. The housing market has tilted sharply in favor of sellers over the past two years, but there are very early preliminary signs that the winds may be starting to shift ever-so-slightly. In mid August, in a new report from Zillow, it was revealed that there has been a rash of price reductions across the country. According to the report: 1. There are more price cuts now than a year ago in over two-thirds of the nation’s largest metros; 2. About 14% of all listings had a price cut in June; 3. Since the beginning of the year, the share of listings with a price cut increased 1.2%; 4. This is the greatest  January-to-June increase ever reported, and more than double the January-to-June increase last year. What this DOESN’T MEAN for the real estate market… This doesn’t mean home values have depreciated or are about to depreciate. A seller may put a home worth $900,000 on the market for $925,000 hoping a bidding war will occur and an overanxious buyer will pay more than its actual value. That has happened often over the last few years, especially in areas where we continue to have low-inventory. If the seller gets no offers and reduces the price to $900,000, it doesn’t mean the home dropped in value. It is still worth $900,000. We believe that home prices will continue to appreciate over the next 12 months and it’s far too soon to call this a buyer’s market but the frenetic pace of the housing market over the past few years is starting to return toward a more normal trend and healthy market. What this DOES MEAN for the real estate market… This does mean that sellers should be more conservative when it comes to the price at which they list their homes and work with agents with proven track records of success like the Stovall Team. Sellers have been listing their homes at inflated prices hoping a super-hot market will deliver a buyer willing to pay virtually any price to ensure they don’t lose the house. That strategy has worked somewhat successfully over the last two years. However, the time that strategy would have worked may have passed. Prices are not depreciating. However, if you want to sell your house quickly and with the least amount of hassles, work with a professional Realtor like Stovall Team. Call us today at 714.343.9294 We are here to invest in your family’s future with you. At Stovall Team we are focused on helping you understand the process while helping you find your dream home.

Sources: Micah Stovall, Stovall Team

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Have a Safe and Happy Labor Day!

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5 Real Estate Reality TV Myths Explained

Have you ever been flipping through the channels, only to find yourself glued to the couch in an HGTV or Bravo TV Real Estate Reality  Show binge session? We’ve all been there, watching entire seasons of “Love it or List it,” “Million Dollar Listing,” “House Hunters,” “Property Brothers,” and so many more all in one sitting.

When you’re in the middle of your real estate themed show marathon, you might start to think that everything you see on TV must be how it works in real life, but you may need a reality check.

Reality TV Show Myths vs. Real Life:

Myth #1: Buyers look at 3 homes and decide to purchase one of them.
Truth: There may be buyers who fall in love and buy the first home they see, but according to the National Association of Realtors the average homebuyer tours 10 homes as a part of their search.  

Myth #2: The houses the buyers are touring are still for sale.
Truth: Everything is staged for TV. Many of the homes being shown are already sold and are off the market. 

Myth #3: The buyers haven’t made a purchase decision yet.
Truth: Since there is no way to show the entire buying process in a 30-minute show, TV producers often choose buyers who are further along in the process and have already chosen a home to buy. 

Myth #4: If you list your home for sale, it will ALWAYS sell at the open house.
Truth: Of course, this would be great! Open houses are important to guarantee the most exposure to buyers in your area but are only a PIECE of the overall marketing of your home. Keep in mind that many homes are sold during regular showing appointments as well. 

Myth #5: Homeowners decide to sell their homes after a 5-minute conversation.
Truth: Similar to the buyers portrayed on the shows, many of the sellers have already spent hours deliberating the decision to list their homes and move on with their lives/goals.

Working with the Stovall Team ensures you have experienced professionals on your side while navigating the real estate market and is the best way to guarantee that you make the home of your dreams a reality!  Call us today 714.343.9294.

 

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