Timely Real Estate News……………………………………1 December 2016
Economy much better than expected….good news
It is like being dragged to a movie because you heard it wasn’t going to be good. You didn’t want to go and expectations were low. The two previous movies (1st and 2nd quarter performances) were dismal, but somehow, the movie turned out OK! Better than expected. Buoyed by strong consumer spending and a surge in soybean exports and notching its best performance in two years, the U.S. economy grew faster than initially thought in the third quarter.
The economy grew more rapidly than many economists believed in the third quarter as stronger consumer spending increased activity and more than offset weaker business investment. The nation’s gross domestic product increased at a seasonally adjusted annual rate of 3.2%, up from the 2.9% first estimated, the Commerce Department said last Tuesday. That’s the largest gain in two years. Economists surveyed by Bloomberg had forecast a revision to 3% growth.
The Federal Reserve is expected to scrutinize the report as it weighs tentative plans to raise interest rates in December for the first time this year. But with the “Trump” market getting a sizable bump, it’s no longer a sure thing that the Fed will want to raise rates now.
Consumer spending — which accounts for about 70% of economic activity — increased 2.8%, more than the 2.1% previously estimated. Consumers are benefiting from steady job and income growth, inexpensive gasoline, and reduced debt.
Housing construction, meanwhile, was not as big a negative as first estimated, falling 4.4%. And exports surged 10.1% on a spike in soybean shipments following a poor harvest in South America, while imports grew just 2.1%, narrowing the nation’s trade gap. Until a recent rally, a strong dollar stabilized, making U.S. exports slightly less expensive for foreign buyers.
After what appeared to be a disastrous drop in world markets election night, the next day, it all turned around, with the Dow Jones breaking the 19,000 barrier for the first time. There still are a number of cautionary caveats out there, so we will have to wait and see how the movie turns out. Perhaps, the blockbuster 2017 movie will be a winner. We hope so for all concerned.
There’s more good news — consumer confidence soars
The political version of Hamlet didn’t happen and consumers were more confident than expected after the election. As the closely watched index of Americans’ outlook reached a new nine-year high, increasing to 107.1 from an upwardly revised 100.8 in October. And consumers’ views of both current conditions and the next six months improved significantly, the Conference Board said last week. That’s the highest level since July 2007, five months before the Great Recession began.
Most consumers were surveyed before the election. “It appears from the small sample of post-election responses that consumers’ optimism was not impacted by the outcome,” said Lynn Franco, the Conference Board’s Director of Economic Indicators. “With the holiday season upon us, a more confident consumer should be welcome news for retailers.” According to the Conference Board it is still too early to tell how a Trump administration will perform, but the markets rallied strong on the belief that massive government infrastructure spending and tax cuts would serve as underpinnings for a robust 2017 start. Consumers showed up online, setting a record for Cyber Monday as well as on Black Friday with more than $3.45 billion in retailer’s pockets.
It’s called “rain” ….it came, went, but we want more
We had our first real touch (and smell) of rain in Southern California last weekend, and while these rather insignificant amounts (less than 1”) were such a welcomed sight, we want more. Our Northern California neighbors, however, are getting it and then some.
Rainy weather over the last two months has been raising hopes of a turnaround to California’s drought. The National Weather Service said the Northern Sierra had the wettest October and November in 30 years. For measurement purposes, climatologists define the start of the “water year” as October 1. Since then, nearly 18 inches of precipitation have fallen in the Northern Sierra, where snowpack acts as a vital reservoir for the state’s water supply. That’s more than double the historical average.
Rain came again in torrents to the Sierra, and in the Central Valley, rainfall totals were also above average in cities including Stockton, Modesto, and Fresno.
But Southern California results have so far been less encouraging. Optimistic meteorologists (aren’t they always) were encouraged by early signs of wet weather, but they caution, again, that the season is young. California is heading into a predicted sixth year of drought. Meteorologists say it would take five years of normal to heavy rains to revive reservoirs and groundwater supplies.
Taking an even longer view, a new analysis from UCLA. warned about what greenhouse gas emissions will mean for the Sierra snowpack. If the pollutants aren’t curbed, it said, the snowpack could be cut in half by the end of the century. There is no sure answer when it comes to the weather, especially in Southern California.
Existing U.S. home sales rose in October….
According to the National Association of Realtors, for the second straight month, existing home sales rose in October and eclipsed June’s cyclical sales peak to become the highest annualized pace in nearly a decade. All major regions saw monthly and annual sales increases in October.
Total existing home sales, which are completed transactions that include single-family homes, townhomes, condominiums, and co-ops, grew 2.0% to a seasonally adjusted annual rate of 5.60 million in October from an upwardly revised 5.49 million in September. October’s sales pace is 5.9% above a year ago, (5.29 million) and surpasses June’s pace (5.57 million) as the highest since February 2007 (5.79 million).
Pending home sales grew modestly….
Pending home sales are always a sign of things to come, and it was good to learn that the Southern California region led the state in pending home sales, which grew modestly in October from the previous year and were down from September as the market began its seasonal cooldown.
As reflected in California October Market Pulse Survey conducted by the California Association of Realtors, California’s housing market showed signs of cooling competition with fewer price reductions and properties receiving multiple offers dropping for the seventh straight month,
Pending home sales data were 1) Based on signed contracts, statewide pending home sales increased in October on a seasonally adjusted basis, with the Pending Home Sales Index (PHSI) rising 1.5 % from 117.3 in October 2015 to 119.1 in October 2016 – the seventh consecutive year-to-year increase. On a monthly basis, California pending home sales were down 6.7 % from the September index of 127.7.
At the regional level, for Southern California pending sales rose 2.4 % monthly, reversing a three-month decline. On an annual basis, pending sales were up 6.8 % in the region. Los Angeles, Orange, and San Bernardino counties posted healthy year-over-year increases of 5.2 %, 19.1 %, and 6.7%, respectively.
Interview with noted national real estate consultant Tom Ferry and California Association of Realtors Vice President and Chief Economist, Leslie Appleton Young
Tom Ferry: How would you describe the real estate market today in California?
Leslie Young: We have a bi-furcated market today. We have homeowners who tend to have different points of view as to what they believe their home is worth. They see a home in Bel-Air listed for $250 million and one town over, the owners are thinking that their home is worth much more now. But that’s not reality. You should really be careful about how you price your home and your expectations.
Tom: Should homeowners be nervous out there?
Leslie: No, they just have to be very realistic. We have had great acceleration in prices since 2010, but that is trending to level off now. Just don’t get carried away.
Tom: What’s going on with the “boomers”?
Leslie: We survey boomers constantly and we found that two-thirds of them are not going to sell their home. They’re staying put. We have Prop 13 in California and many boomers are in love with their mortgage, but they know if they sell, they have to make a decision on where they’re going to land. They know there is limited inventory near where they live now, so if they don’t want to move far away from where they are, they’re going to stay put. One of the things we found is that if they’re not in the “dream home”, they’re going to remodel it so it does become their dream home. Boomers have 90% equity left in their homes, so they’re motivated to stay put and stay next to their grandchildren.
Tom: What do we say to buyers these days?
Leslie: Look at this way…if you’re shopping and you find your dream home, then there is no reason why you shouldn’t be going after that. Sure, you’re going to run into multiple offers — there’s a lot of competition out there today, especially in good neighborhoods. The election or other events that may occur in the future should not inhibit your decision to purchase the home if it’s what you really want. So, go for it
Zillow makes some predictions for 2017
As a national leader in online real estate tracking and data collection, Zillow has made predictions for next year — here are a few:
1) Cities will focus on denser development of small homes close to public transit and urban centers;
2) Millennials will become homeowners, driving up the homeownership rate. Millennials are a more diverse generation and will have a big impact on ethnic patterns;
3) Rental affordability will improve as incomes rise and growth in rents slows;
4) New home buyers will have to spend more on construction as builders will have to cover rising wages, driven even higher in 2017 by the continued labor shortages.
5) The percentage of people who drive to work will rise for the first time in a decade as homeowners move further into the suburbs seeking affordable housing;
6) Home values will grow 3.6% in 2017 according to more than 100 economic and housing experts.
In looking at these figures, it is very important to remember that Zillow is not the most reliable source on the planet for values and information. For example, I am sure you all remember that they even had the value of the President of the company’s home value off when he sold his Seattle home in January of this year. When he sold his home the Zestimate was wrong by a whopping 40%! That is why it is very important that you do not rely on their numbers and values of your property from an organization like Zillow, but use the services of a professional real estate agent such as myself for a better, more realistic evaluation.
How was your Thanksgiving?
Mine was quiet and lovely and I got some very much needed rest. I had planned on taking my Mom to our home in Coronado, but at 94 she felt she was not up to it. So, we spent it here in Los Angeles, and it was Wonderful! I spent two glorious days just doing nothing, and then cooked our turkey dinner (I am still finishing my half of the bird) and chilled…. something I don’t do very often. It will be a different story when the “clan” invades Coronado for the Christmas holidays. There will be eight of us, and it will be crazy and busy and lots of fun.
Business as usual?
As is generally the case, it was very quiet last week, but as soon as we all got back to work on the 28th , it appeared that taking the week off or at least a portion of it gave everyone, clients’, and agents alike, an opportunity to take a deep breath before heading for the races. I know I am very busy with showings of my listings, dealing with potential offers, and buyers, and I can hear from the buzz from my associates we are for the most part all in the same boat. It seems that with the prospect of increased interest rates, every potential buyer wants to take advantage of what is on the table now. Of the 14 mentees I have presently, about half of them are all working with “real” clients, mostly buyers.
I look forward to hearing from you – especially your stories — and assisting you with all your real estate needs. Please give me a call, and let me know how I can help you, and please do not forget to check out my Facebook page, http://www.facebook.com/CaroleSchifferRealtor and my Instagram page…@caroleschifferrealtor on your phone or. https://www.instagram.com/caroleschifferrealtor on your computer.
COUNT ON CAROLE
Integrity Counts #1
I rank ‘integrity’ Number One on the list of assets I bring to your table – as a buyer or seller. Without integrity, all of my other attributes are meaningless…it’s a lesson I learned early in life. Treating client properties as if they were my own is the hallmark of my success. Being professional from start to finish.
Carole Schiffer. The Westside Expert