The Monthly Market Minute – January 2020

January, 2020 Market Report

 

This report aims to answer some of these questions.

“Are we creating another bubble?”

“What is going on with the interest rates & the Federal Reserve?”

“Is it a good time to buy?”

“Have values peaked? And where are they headed?”

“What’s different about this year’s market?”

“Is a recession imminent?”

“Where are interest rates headed?”

We are focused on what the market looks like today, not last year. Already starting 2020 we are seeing a much better market than the start of 2019, which when inventory was drastically higher and expired listings went up 64%.

What does this mean? With lower interest rates, buyers are buying, therefore we have a shortage of inventory. When we have high demand and short inventory, a recipe for more competition for homes for sale. Which is great for sellers. The time to sell is now.

 

“Are we creating another bubble?”, “Is a recession imminent?”

If you were on the fence waiting all of last year or two for the right time to buy based on the notion that the housing market is going to crash, you may be waiting on the wrong side of the fence. With low inventory, and high demand, appreciation continues its march upwards.

The best way to approach purchase price is to decide on a monthly payment (mortgage) that will work for you. Your goal should be to purchase a monthly payment, not the price of the home. If you wished you had bought a home 2-3 years ago, you’re going to wish you bought a home this year. The earlier the better. Why? Because you don’t want to be priced out of the home you want as the price of the home continues appreciate going forward

Why do we think there’s no bubble? We look at current numbers

First, employment is strong. Take note of the red line below which is the average. We are way above that right now. Have a look at this chart below indicating median household income actually outpace appreciation of homes for the first time.

On top of that The National Delinquency rate of first lien mortgages are at a 20 year low of 3.45%. This means home owners are making their payments and have good income to back up their loans.

 

Low Mortgage Rates is a gift! Take a look at your monthly savings compared to just a little over a year ago! Just look at the savings chart below!

Now I know what you’re thinking, what about trade war with China, immigration issues, war with Iran, impeachment? All these negative headlines are just that, negative headlines. According to the numbers which we’ve previously stated, they don’t show any kind of housing problems.

I showed a similar chart on my last report, here’s the updated one. Rates are holding low, which means you have some of the best buying power in history.

Below you can see demand by how many days homes are on the market. It’s easy to see we have nearly 1/2 the time on the market compared to last year.

I get asked regularly what kind of home can they purchase and for how much. It’s a big decision for buyers to evaluate what they can afford. Here’s the current numbers on what median home prices are. But also an indication of appreciation of homes in Orange County.

With the shortage in inventory, where do we find additional inventory? I’m so glad you asked! We have a strategy to find sellers who have tried to sell but failed to do so in 2019, as well as home owners who just don’t want the disruption and hassle of a traditional sale in the open market. If you’d like access to this secret inventory just sign up for my email updates at http://leosvip.com . This is how we show that we employ the best strategy for your situation.

Now as if conditions couldn’t get any better, home price reductions just this last week, have a look at this below for the latter part of 2019.

Caution…

There are some uncertainty as this seems to be the norm now. Interest rates could move up as we did in 2018-19. If buyers don’t get off the fence, it could also slow down the market. There are a lot of concerns of this being an election year, but historically it does not affect the market. Trade war concerns and international slow down could be possible concerns.

Bottom line…

is this, current conditions are VERY good. If you were looking for a good time to get into the market, since we did not have a great 2019, 2020 is predicted to better than 2018 and 2019 based on all the number we’re seeing.

 

Leo Chen Real Estate Group

DRE 01958853, 01922671

Leo@LeoChenRE.com

949.338.4827

IMPACT Properties, Inc.

 

 

 

All data above are from Reports on Housing by Steven Thomas (https://reportsonhousing.com/)

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