Market update Dec. 2015
First off, Ellen and I would like to thank everyone for a wonderful 2015. It was by far, our best year. It was a bit of an odd year as the majority of activity came in the first 8 months. Sept. on was slower.
So, what is going on in the wonderful world of real estate out here? As you recall, the housing valuations are historical; based on prior months’ sales. With softer months the last quarter, the valuations dipped a bit more than they typically do, seasonally adjusted. Not a lot, just a bit.
However, the statistics that are published aren’t an accurate reflection of reality because of new government imposed paperwork and disclosures. Simply put, TRID, a series of new requirements that were enacted Oct. 3rd, took loan processing from 30 days to 45. So, deals that would have normally closed in Oct. or early Nov. did not close until mid Nov. or, with Thanksgiving, the first of Dec.
There is a “hole” in the data for the first 2 weeks of Nov. meaning that when the numbers for Nov. came out in early Dec., that sales activity wasn’t reflected because the normal 30 day closings were pushed back. The press saw the lower numbers and announced that the housing market hit a wall.
When the Dec. numbers come out, they will announce that sales surged in Dec.
What will 2016 look like? Jan. numbers will look weak year over year due to reporting. We really won’t have an accurate idea of what went on until March.
We have 3 major football games here plus all of the other activities, the tourism is strong, so we are looking at about 1 million visitors in Jan. Many will opt to buy.
The .25% Fed. Rate increase will have no real effect on mortgage rates and is really a reflection that the Feds think that the economy is robust enough to justify a small increase.
The big worry is that it is an election year. Politicians need to proclaim problems that they have the answers for, real or imagined, and that spooks people. So, the degree that the issues become a concern for people will reflect on confidence that the issues can be solved and thus will affect their willingness to buy hard assets.
Right now, the market is strong in the under $400k homes and the over $1.5M.
Investors are still nosing around looking for deals and we are getting a large number of job transfers pushing the demand for the lower priced family homes. Transferees from CA. are “buying up” because of differences in what they sold versus what they can buy here, folks from other areas are “buying down.” There are still a vast number of downsizers who need to sell their larger homes. When those start to move, more pressure will be put on the smaller homes and those that typically are considered to be seasonal.
We have yet another shift in seasonal buyer profiles. Canadians are pretty much out right now because of the exchange rate. Folks from North Dakota as well because of dip in oil prices. There is strength in numbers from mid-westerners.
I anticipate that reality will be a normal market with typical price increases and no big surprises. The statistics, because of non-adjusted data collection, will show a bad Jan. and a rebounding in Feb. The buyers will look at the statistics and will be making low offers. Most sellers will stick to their guns and everything will settle into normalcy as it always does.
Merry Christmas, Happy Holidays and a great 2016 to all of you, our valued friends.
Please send referrals, we appreciate it!
Marty & Ellen Team