HAPPY NEW YEAR! I hope you have made your New Year’s resolution AND will stick with it longer than most people. I just read that the average American only keeps there New Year’s resolution for 15 days! I hope that I can keep mine longer than that this year!
The BIG question I am asked frequently, is where do you think the Real Estate market is going in 2019? Everyone has been reading the doom and gloom articles that are posted by “experts” daily. I am not a conspiracy theorist, however, reading some of these articles it makes it feel like the world is ending soon. This Armageddon approach helps sell magazines and newspapers, However the truth is, the market has slowed down, BUT as I write this letter, mortgage rates for a 30 year fixed jumbo loan(over $726,525 in Santa Clara County) are at 4.0%, unemployment in the Bay Area is at the lowest recorded levels(4.1%) since they started keeping track in 1976 and inventory is still relatively low compared to 5 year averages. What many of us feel in the industry is that 2018 was an outlier year, with most homes receiving multiple offers with no contingencies, and crazy 10%-20% list price to sale price ratios in certain areas. This obviously was not sustainable, so now we are seeing a “leveling out” so to speak that is a healthy correction for the market. Stats don’t lie, In November of this year in Santa Clara County, Homes were still selling within 32 days at 100% of the list price. ANYWHERE else in the country this would be considered a wonderful market, however, we have been spoiled here in the Bay Area.
I HAVE MY CRYSTAL BALL READY! In 2019 I believe we will continue to see a slow leveling off in the residential markets, with homes selling quickly if they are priced correctly and those priced to high sitting for long periods of time. Rates will also play a part in what direction the market goes in 2019. The Federal Reserve has signaled it will have at least one if not two rate hikes in the coming year. Although mortgage rates are not directly connected to Federal Reserve(See 10 year treasury), they do tend to flow in that direction. If rates stay relatively flat, I believe this will help motivate potential buyers to move before rates rise, and push values up modestly in 2019