Make today…A great day!
Homes sales are dropping nationally
We need to look at distressed sales versus conventional sales. The foreclosure market previously drug home prices down in the Redding area. As distressed sales have declined, home values have increased. Simply stated, fewer sales means fewer distressed property sales. This is a good thing! Don’t buy into headlines…they are designed to get your attention.
The best headline I can find to support my position is the following…
The real estate market is stronger today than at any time since the bottom of the market in 2009.
Americans still aspire to buy second homes and have contributed to the growth of the market consistently since its bottom in 2009. As the population continues to age, we expect people to continue to use their savings to buy second homes in the Redding area.
Real estate is still a great investment
Against every large investment available, real estate has still proven to be the #1 long term investment. The barrier for entry into real estate is low and the long term benefits are high. In every age segment real estate has proven to be the best long term investment. In addition, home ownership is a great hedge against rent inflation. Think about it…you need to live somewhere, why not build equity in your own home and protect your monthly overhead.
Over the past 3 years as the market appreciated quickly, appraisals were an issue. Now that home appreciation is slowing down, appraisal issues are not as common. Appraisals still play a factor whenever you sell a home to a buyer requiring financing. In fact, most of the time there are 2 sales that take place when selling your home. The first sale is to the buyer. The second sale is to the bank in order to get the financing. It is critical to make sure that you are prepared to justify the price.
Distressed properties are representing a very small percentage of all homes for sale in the Redding area. California estimates that 1% of ALL homes are distressed properties. In addition, 12% of all homes with mortgages in California are under water and in a negative equity situation. This is much smaller number than in the worst part of recession in 2009. In 2009 nearly 50% of all sales in Shasta County were distressed property sales. In 2014 distressed properties are projected to be below 20% of all sales. As homes continue to appreciate slowly over the next several years, distressed properties are projected to reach normal levels. To view foreclosure properties for sale visit www.reddinghomes.com/foreclosures/
Interest Rate Projections
As I have stated nearly every month, interest rates are going up. The government is continuing to taper the amount of mortgages that they purchase. Tapering will lead to higher interest rates over time. The most recent expectations state that interest rates will be well over 5% by this time next year. For every 1% that the interest rate increases, the buyers purchasing power is effected by up to 10%.
In conclusion, we are entering a normal real estate market. This year home appreciation is likely going to slow to a modest 3-5% and the Redding real estate economy is going to feel more stabilized. Home inventory will continue to increase slowly and fewer and fewer distressed properties will be on the market. The cost of purchasing real estate will likely increase slowly as interest rates increase, and the average days it takes to get a home sold will also likely increase. Well priced homes and “quality properties” will continue to sell quickly with the right marketing strategy in place.