It is interesting that there is a two percentage uptick of the inventory for properties under a million dollars compared to last quarter. The only other range that is noticeably different is the $4M – $8M which is down more than two percentage points. This may be partially due to sellers taking their properties off market, removing from the Multiple Listing Service after they have been exposed to the market for an extended period of time.
The Feds have yet to raise the Fed Funds rate. There is a strong feeling that they will do so in December, as they did last year. As for now, mortgage rates still remain very low and affordable. It should be noted that if and when the Feds raise the Fed Funds rate, it does not guarantee an automatic raise in mortgage rates.
Leslie Appleton-Young, the Chief Economist for the California Association of REALTORS, had an interesting perspective: The market is being affected by many of the Baby Boomers. They are not moving as often as they may have done in the past. They like their low rate on their current mortgages and are enjoying lower property taxes. They do not want to have to deal with the capital gains tax if they consider selling. If retired, they may not qualify for a mortgage today, so they tend to choose to remodel and stay where they are. A survey she conducted indicated that over 64% of Boomers do not plan to sell their homes when they retire.
She also determined the percentage of the affordability index; i.e., what percentage of people could purchase a median-priced home. For all of California, the affordable percentage is 31%. Kings and San Bernardino counties have the highest at 56%. San Francisco has the lowest at 13%. Santa Barbara county is at 20%.
Another trend that she noted is that there are fewer and fewer international buyers across the United States. This became most evident with China’s impending recession. In 2013, 8% of the buyers were international. In 2016, only about 3% are international buyers.
With the challenges facing us in the real estate market, there are still people who either need or want to buy and sell real estate in our desirable area. If you or someone you know is thinking of selling real estate or buyers anxious to see what the market has to offer, be sure to contact your Village Properties agent who can guide you through the process. Robert Watt www.sbreal-estate.com