A "SUSTAINABLE RECOVERY", LOW FORECLOSURES, RENTS AT THEIR HIGHEST, INVENTORY STRUGGLES...A MIXED BAG FOR THE SUMMER HOUSING MARKET
Last month was "the" discussion on slumping prices. Really, what's happened is the large gains from 2013, which are always used in the month over month comparisons, are finally weakening the pricing "stew", as more months of 2014 are thrown into the mix. Simply put, 2013 saw double digit gains, and 2014 has been flat to maybe 4%. Hey, that's not necessarily a bad thing, as 2013's gains were not sustainable and in fact, another year like it would have seriously hurt the long term real estate market. The main reason for the hot market last year, lots of investor flips, willing buyers, and cheap money, have not entirely disappeared. However, buyers are being more discerning, inventory constrictions are being keenly felt, and cheap money is no longer a motivating factor. But what we all want is a sustainable recovery and we are on our way. Foreclosures are at their lowest level since 2006. There are two main reasons for this; a growing economy, more job stability, and rising home prices which are allowing distressed owners who have been under water to exit those properties either breaking even or a small portion of equity. On the other side of the "prices are too high" argument, are the quickly rising rents. In fact, the Orange County Register reported that O.C.'s biggest complexes hit $1,729 for its average asking rental price. That's barely $100 less than San Francisco. Potential buyers that have never done a "Rent vs. Own" comparison, or who think spending nearly $2,000 a month on rent, (figure $2,400 to 3,500 for a house), receiving neither a tax break or equity build is financially prudent, really should reconsider. The direction rents are traveling, purchasing may make the most sense. At least until interest rates rise considerably. Inventory has definitely grown consistently the last 2 months. Nationally, according to the National Association of Realtors, it has hit 5.5 months, the first time in 2 years. Locally, we are at about half that, but much better than the first quarter of 2014. In no way is this market a snap to figure out. The question you ask yourself should be a personal one: "What are my financial goals and my personal desire for my housing needs?" Answer that one and take action, before the market becomes even more unpredictable.