Unbelievably, it seems that if you live in California, 2016 may be the best year for you yet to sell your house.
Housing prices will slow
California’s housing prices are notoriously steep. The real estate media writes about an “affordability crisis” that is brewing in the Golden State. Realty reports show that the California home premium – the difference between California median house prices and U.S. house price medians – doubled in the last four years, from $126,000 in 2011 to $255,000 right now. And prices continue to climb. But in 2016, the climb may be slightly curbed.
According to the Californian Association of Realtors (CAR), California’s housing prices during the last five years showed a rocky climb with its only drop – and small at that – existing between 2010 and 2011. In 2010, the median price for an average house was $300,000. Only three years later, this plunged to $400,000 and now it has almost topped $500,000. In other words, if you want to buy a home next year you may have to spend $200,000 more dollars than you may have paid for that same home six years ago. On the other hand, if you want to sell your house, you may find more prospective sellers who are looking to jump in before prices continue their previous spike.
California is as desirable as ever and housing demand continues apace. Housing prices are high, but agents receive petitions for homes every day. More so, the housing inventory is low which makes demand for housing even stronger. Strongest of all is the search for an affordable home. If you can make the price of your home competitive enough, you will almost certainly have a ready market. Residents in certain areas of California are starving for reasonably priced homes and many may pay a bit more than they originally intended to acquire their dream property. For all you know, you may emerge with an unexpected profit…
Job growth is higher than ever
The scary years of the recession seems to be over for most Californians. Job growth was boosted by 3.1% last year, much faster than the rate of 2.3% for the nation, and, in turn, more people have sold their homes. Price has appreciated, too. Employment prospects seem to be good the coming year which means that you’re more likely to find a more ready market who may be interested in your property.
Better still, reports show that more and more baby boomers are scratching their heads to buy their first homes. Some of these are wealthy professionals who have what it takes to afford higher-priced properties. Thinking of selling your home at a profit? 2016 may be your best year yet.
Finally, 2016 could see newer housing regulations formulated under a new administration, that would create more lenient lending standards and encourage potential home buyers to get off the sidelines and jump into the market.
On the other hand…
Headwinds are blowing too. The Federal Reserve raised its key interest rate from a range of 0% to 0.25%. Sounds minimal, but to homebuyers every single bit counts and this new rate does raise the mortgage significantly. (Appleton-Young, chief economist of the California Association of Realtors, predicted that rates for the 30-year fixed mortgage will average 4.5 percent next year, or. 3.8 percent this year so far). For investors who approach alternative lenders for a loan, the interest rate is even more exorbitant. It makes many a prospective home-buyer want to reconsider…
Also, too, there is the global economic uncertainty which makes you wonder whether interest rates may not be hiked further and whether finding a buyer for your home is going to be so easy.
And then credit is hard to get for those who don’t fit into a plain white box. Credit scores remain above the long-term averages. Banks in California are hiding their wallets and becoming increasingly reluctant to fund even those who have passable credit history. Prospective borrowers who are shunned can approach alternative lenders such as hard money lenders who ignore credit rating and history. But these private or hard money loans (otherwise called bridge loans) are accompanied by exorbitant interest rates and huge repayments. A recent article in the Los Angeles Times shows that fewer home buyers have the high credit scores required to receive approval for a mortgage so potential buyers may prefer to sit it out rather than pay more money on getting a loan and risk losing their property because they are unable to meet the repayments.
Reports show, too, that multiple offers are declining; second-home purchases and all-cash deals are down; and investors prefer long-term renting to flipping. In fact, most Californians prefer to rent rather than buy – which given the epidemic of high and rising costs – is unsurprising.
Where are you going to live?
If you sell and intend to remain in California, your next concern is buying another home. That is if you don’t intend to rent. And that is why many homeowners are reluctant to sell because it’s hard to find a new home to buy in today’s market. Plus, many homeowners don’t want to give up the favorable interest rates on their current mortgage or face drastic property tax hikes. No wonder that California’s realty reports show that more homeowners than ever cling to their homes for a mean of 10 years – the longest average in statistics dating back to 1985. The norm was 6.5 years, Realtor figures show..
So if you own a home or piece of property, and intend to emigrate or rent why not consider getting a loan from a commercial private money lender and selling it this coming year? After all, 2016 may be your best year yet in a long while to come…