Blog - Stovall Team, Fountain Valley, CA, Real Estate

How A Lack Of Inventory Impacts The Housing Market

By Micah Stovall | Published: June 18, 2018

Home values are up, home sales are up, and distressed sales (foreclosures and short sales) have fallen to their lowest points in years. The market will continue to strengthen in 2018.

However, there is one thing that may cause the industry to tap the brakes: a lack of housing inventory. Buyer demand naturally increases during the summer months, but supply is not keeping up.

Here are the thoughts of a few industry experts on the subject:

Lawrence Yun, Chief Economist at National Association of Realtors

“The worsening inventory crunch through the first three months of the year inflicted even more upward pressure on home prices in a majority of markets. Following the same trend over the last couple of years, a strengthening job market and income gains are not being met by meaningful sales gains because of unrelenting supply and affordability headwinds.”

Sam Khater, Chief Economist for Freddie Mac

“As we head into late spring, the demand for purchase credit remains rock solid, which should set us up for another robust summer home sales season. While this year’s high rates – up 50 basic points from a year ago – have put pressure on the budgets of some home shoppers, weak inventory levels are what’s keeping the housing market from a stronger sales pace.”

Javier Vivas, Director of Economic Research for Realtor.com

“The dynamics of increased competition and buyer frustration are unlikely to change…In fact, the direction of the trend is pointing to a growing mismatch between the pool of prospective buyers and existing inventory.”

If you are thinking of selling, now may be the time. Demand for your house will be strong at a time when there is very little competition. That could lead to a quick sale for a really good price. The best time to sell anything is when demand is high, and supply is low. If you are currently in a starter or trade-up house that no longer fits your needs and you are looking to step into a luxury home or downsize, now’s the time to list your house for sale and make your dreams come true. Call me today 714.343.9294 and visit stovallteam.com

Tax Reform

By Micah Stovall | Published: June 11, 2018

Starting late last year, some predicted that the 2018 tax changes would cripple the housing market. Headlines warned of depreciation and suggested that buyer demand could drop like a rock. Now that the first quarter numbers are in, we can begin to decipher the actual that impact tax reform has had on the real estate market.

Has tax reform killed off home buyer demand? The answer is “NO.”

According to the Showing Time Index which “tracks the average number of buyer showings on active residential properties on a monthly basis” and is a “highly reliable leading indicator of current and future demand trends,” buyer demand has increased each month over the last three months and is HIGHER than it was for the same months last year. Buyer demand is not down. It is up.

Have the tax changes affected America’s belief in real estate as a long-term investment? Has the homeownership rate been negatively impacted by the tax changes? The answer is “NO.” Not only did the homeownership rate not crash, it increased when compared to the first quarter of last year according to data releasedby the Census Bureau.

Has the upper-end market been crushed by newState and Local Taxes(SALT) limitations? The answer is “NO.” In the National Association of Realtors latest Existing Home Sales Report it was revealed that:

Sales between $500,000 and $750,000 were up 4.5% year-over-year

Sales between $750,000 and $1M were up 15.1% year-over-year

Sales over $1M were up 17.3% year-over-year

Will the reforms in the tax code cause home prices to tumble over the next twelve months? The answer is “NO.”

According to CoreLogic’s latest Home Price Insights Report, home prices will appreciate in each of the 50 states over the next twelve months. Appreciation is projected to be anywhere from 1.9% to 10.3% with the national average being 4.7%. The doomsday scenarios that some predicted based on tax reform fears seem to have already blown over based on the early housing industry numbers being reported.

Sources: National Association of Realtors, CoreLogic, US Census Bureau

Ask the Experts: Will Home Prices Fall as Mortgage Rates Rise?

By Micah Stovall | Published: June 8, 2018

Q. Will home prices fall as mortgage rates rise?

A. All indicators suggest that home prices will not fall as mortgage rates climb through the end of this year, it’s the law of supply and demand that is driving increasing home prices. The best time to sell anything is when demand is high, and supply is low. As the number of homes for sale increases and home value appreciation slows, we expect the market to meaningfully swing in favor of buyers within the next two to three years Real Estate is a cyclical market– it’s interesting to watch the dynamics of the market. What we see is prices rise, home sales slow down, prices weaken and home sales pick back up. It’s the way a housing market is supposed to behave in a normal environment. But it’s been so long since we’ve seen a normal environment that we forget how it’s supposed to work. Mortgage interest rates have increased by more than half of a point since the beginning of the year. They are projected to increase by an additional half of a point by year’s end. Because of this increase in rates, you are guessing that home prices will depreciate. Let’s take a look at the data.

Mark Fleming, First American’s Chief Economist: “Understanding the resiliency of the housing market in a rising mortgage rate environment puts the likely rise in mortgage rates into perspective – they are unlikely to materially impact the housing market… The driving force behind the increase are healthy economic conditions…The healthy economy encourages more homeownership demand and spurs household income growth, which increases consumer house-buying power. Mortgage rates are on the rise because of a stronger economy and our housing market is well positioned to adapt.” Terry Loebs, Founder of Pulsenomics: “Constrained home supply, persistent demand, very low unemployment, and steady economic growth have given a jolt to the near-term outlook for U.S. home prices. These conditions are overshadowing concerns that mortgage rate increases expected this year might quash the appetite of prospective home buyers.” Laurie Goodman, Codirector of the Housing Finance Policy Center at the Urban Institute: “Higher interest rates are generally positive for home prices, despite decreasing affordability…There were only three periods of prolonged higher rates in 1994, 2000, and the ‘taper tantrum’ in 2013. In each period, home price appreciation was robust.”

Industry reports are also calling for substantial home price appreciation this year. Here are three examples: The Home Price Expectation Survey says that prices will appreciate by 5.8% this year. The Freddie Mac Outlook Report is looking for home prices to appreciate by around 7% in 2018. The CoreLogic HPI Forecast indicates that home prices will increase by 5.2% on a year-over-year basis. As Freddie Mac reported earlier this year in their Insights Report, “Nowhere to go but up? How increasing mortgage rates could affect housing,” “As mortgage rates increase, the demand for home purchases will likely remain strong relative to the constrained supply and continue to put upward pressure on home prices.”

If you are currently in a house that no longer fits your needs and you are looking to step into a different home, now’s the time to list your house for sale and make your dreams come true. Call us today 714.343.9294 and visit stovallteam.

Sources: National Association of Realtors, First American, Housing Finance Development Policy Center at Urban Institute, Pulsenomics, CoreLogic, Freddie Mac, Micah Stovall

CONSIDERING SELLING YOUR HOME? THIS SUMMER REAL ESTATE MARKET IS HOT!

By Micah Stovall | Published: June 7, 2018

We understand that everyone one of us has a unique situation as we tread forward on our own race in life. Understanding others needs and requirements are paramount to our success as your trusted realtor at Stovall Team. 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. Let’s look at the reason you are considering selling in the first place and determine whether it is worth waiting. You have the power to take control of the situation by putting your home on the market. Perhaps the time has come for you and your family to move on and start living the life you desire. That is what is truly important. If buying a home is in your plan for this year, doing it sooner rather than later could save you thousands of dollars over the terms of your loan.

Here are four reasons listing your home for sale this summer makes sense.

Demand Is Strong The latest Buyer Traffic Report from the National Association of Realtors (NAR) shows that buyer demand remains very strong throughout the vast majority of the country. These buyers are ready, willing and able to purchase…and are in the market right now! More often than not, multiple buyers are competing with each other to buy the same home. Take advantage of the buyer activity currently in the market.
There Is Less Competition Now Housing inventory has declined year-over-year for the last 35 months and is still under the 6-month supply needed for a normal housing market. This means that, in the majority of the country, there are not enough homes for sale to satisfy the number of buyers in the market. This is good news for homeowners who have gained equity as their home values have increased. However, additional inventory could be coming to the market soon. Historically, the average number of years a homeowner stayed in his or her home was six, but that number has hovered between nine and ten years since 2011. There is a pent-up desire for many homeowners to move as they were unable to sell over the last few years because of a negative equity situation. As home values continue to appreciate, more and more homeowners will be given the freedom to move. The choices buyers have will continue to increase. Don’t wait until this other inventory comes to market before you decide to sell.
The Process Will Be Quicker Today’s competitive environment has forced buyers to do all they can to stand out from the crowd, including getting pre-approved for their mortgage financing. Working with a well-qualified and experienced lender is paramount.
There Will Never Be a Better Time to Move Up If your next move will be into a larger or premium home, now is the time to move up! The inventory of homes for sale at these higher price ranges has forced these markets into a buyer’s market. This means that if you are planning on selling a starter or trade-up home, your home will sell quickly, AND you’ll be able to find a premium home to call your own! Prices are projected to appreciate by 5.2% over the next year, according to CoreLogic. If you are moving to a higher-priced home, it will wind up costing you more in raw dollars (both in down payment and mortgage payment) if you wait.

The best time to sell anything is when demand is high, and supply is low. If you are currently in a starter or trade-up house that no longer fits your needs and you are looking to step into a luxury home or downsize, now’s the time to list your house for sale and make your dreams come true. Call me today 714.343.9294 and visit stovallteam.com

Sources: Micah Stovall, National Association of Realtors, CoreLogic

What Buyers Want

By Micah Stovall | Published: June 5, 2018

What home sellers can expect in Summer 2018: The market is still in your favor if the price is right

By Micah Stovall | Published: June 1, 2018

Here’s the good news: Homes will continue to be a hot commodity through 2018. There aren’t enough people selling (thanks to a combination of factors, led by locking in extremely low interest rates and rising home prices). In some neighborhoods in our area you can drive an entire tract without seeing a “for sale” sign. Homeowners in our hot communities receive almost instant offers.

When it comes to pricing your home, we usually talk about the three types of sellers: Someone who is desperate and anxious and must sell as soon as possible; someone who has a “pie in the sky” view of their home value; and someone who is realistic about what the market will bear and is willing to price their home accordingly. This year, given how overheated (some economists say) the market is, some are not sure any price a seller could dream up would be too high. Some housing economists, like Nobel Prize winner Robert Shiller, say general impressions about the inherent risk of buying a home can indicate the presence of a bubble. At a conference in early December, Shiller noted the return of what he called the “buyer’s panic,” where potential buyers fear they will be priced out if they don’t purchase a home soon. “It’s not just interest rates and tax law that drive prices in speculative markets,” Shiller said.

Choosing the right price is the key to having a great selling experience. If you price your home too high, even in a hot market, it’ll sit on the market, growing stale, until you reprice it. If you price it too low, it should ignite a bidding war.

Overcome any possible objections a buyer would have. Buyers are always looking for a reason not to buy your house. Your job as a seller is to eliminate any potential objections that would stand in the way for a buyer to make an offer.
Get your home into selling shape. Cleaning your home is a must.
Be realistic about the market, even if it’s a hot one. I know the current market and what types of properties are selling in your area and how many days they’re sitting on the market. Accept the reality of your local market and make sure you price your home realistically. We will set a plan in action. Sellers who set sky-high (or even pretty high) prices could wait months or years for an offer (we all have one overpriced home in our neighborhood that has been for sale for years) and may wind up with the same price they would have had if they’d priced their home correctly the first time — or a lot less.
Read all documents thoroughly before you sign them. Why would someone sign a legal document he or she hasn’t read? I’m not sure, but home sellers do it every day. If you’re going to sell (or buy) in the coming year, promise yourself you’ll take the time to read and understand the listing contract, offer to purchase and loan documents for your next purchase. (If you’re unsure about what you are signing ask me. I am happy to sit down and explain everything.) Unless you’ve got cash to spare, a mistake in these documents and the warranties they contain could seriously affect your finances.
Don’t get greedy. One big mistake many sellers make is to get a little greedy, particularly if the first offer is above the minimum acceptable price you’ve set. Then, the negotiation becomes a game of how much you can get.

Remember, a successful sale means everyone walks away feeling happy. If you get so greedy that the buyer walks away, you’ve let the deal get the best of you. Resolve to be reasonable, and you’ll end up shaking hands with the buyer at the closing. You should also know there aren’t unlimited buyers out there, and if you lose one it might take you quite some time to find another.

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