The local housing market as we begin 2019
What is the local housing market going to do in 2019?
With a team consisting of more than 100 years of combined real estate knowledge, we put our heads together, scanned over countless amounts of data from our local market, and came up with our own real estate predictions for 2019. As your agent, each of us wants to reach out to everyone we know to keep them informed on what we are seeing in the local real estate market and what we predict to happen in the coming year.
Watching national news may give the impression that the real estate market as a whole is softening. However, we all live in California, a state that just beat out the UK as one of the top 5 economies globally. And more specifically, the Northern California market just finished off another year of strong growth. We are one month into this new year and we are seeing no slow to the buying frenzy here locally. We have packed open houses, Realtors waiting in line to show homes, and a large amount of homes this month going over asking price. We believe this is the direct cause-and-effect of multiple things (see below) and we do not see the local housing market slowing any time in the near future.
What’s affecting our local market…
- The Fires. The 2018 wildfire season was the deadliest and most destructive wildfire season on record in California, with a total of 8,527 fires burning an area of 1,893,913 acres, the largest amount of burned acreage recorded in a fire season. So how has this affected the market? We lost close to 20,000 homes in Northern California, which reduced the overall supply of homes.
- Relocations. Bay Area Buyers continue to flock to the area. This is a trend with no end in sight. You can’t really blame them for coming. Take the Bay Area Buyer who purchased a 4 bedroom home in San Francisco in 2014 for $1,315,000 (the median price at the time)… today the median price for that same home is now $2,083,000. That Buyer can pay 100% cash for a 4 bedroom home in El Dorado Hills (the current median price is $685,000), have no mortgage, and be left with cash in the bank. You can’t really blame them for taking advantage of the equity advantage up here.
- Seller’s Market. The large number of buyers indicates it is a seller’s market. Normally a declining market is a buyer’s market, and ours is not declining. Additionally, the months of inventory was below 3 months for all of last year (shortage of supply). According to Trendvision:
Buyer’s market: more than 6 months of inventory based on closed sales
Seller’s market: less than 3 months of inventory based on closed sales
Neutral market: 3 – 6 months of inventory based on closed sales
This sign of a market decline is when the market changes to a buyer’s market. Unless something drastic happens in the market, it should hold steady as a seller’s market for 2019.
In El Dorado Hills the market is strong, of the 14 homes that went to “pending” on MLS, half had multiple offers. Another sign of a strong seller’s market.
Corner on the Market
*Rate per Wellsfargo.com