gmhTODAY 12 gmhToday Jan Feb 2017 - Page 22

What Shaped Housing in 2016 C.A.R. Magazine, Cathie Ericson California Inventories Remain Tight Inventory shortages across California are nothing new, of course. One of the problems, said Than Merrill, CEO of San Diego’s FortuneBuilders and CT Homes LLC, is that many California homeowners are too nervous to subject themselves to the very competitive and expensive real estate market. “While many are convinced that now is, in fact, a great time to sell, they are cautious of what they might face when they become buyers themselves,” he told California Real Estate. Hopefully, the tide will soon turn. About 52 percent of homeowners believe that now is a smart time to sell, up from 34 percent last year, according to a Redfin survey. “The recovery may have reached a point in which sellers can no longer afford to hold on to their properties; there is simply too much incentive to sell in the face of today’s high demand and prices,” Merrill continued. He believes that homeowners who have been waiting patiently are now more inclined to actively participate in the housing market and contrib- ute to today’s inventory levels. Fewer People Are Owning Homes Homeownership hit a 50-year low, with California’s rate hovering at 54 percent, compared to 63.5 percent for the country as a whole, according to the Mortgage Bankers Association (MBA). It’s easy to blame the housing slowdown on the millennials, a demographic that is notoriously slow to buy their first homes for a number of reasons, ranging from crushing student loan debt to a delay in starting their families. But it’s impossible to overlook housing affordability as a cause. In fact, the top three priciest markets nationwide are in California: San Jose, with a median home price of more than $1 million, followed by San Francisco and Anaheim/Santa Ana, according to data from the CALIFORNIA ASSOCIATION OF REALTORS®. Just 31 percent of California households could afford to purchase the $516,220 median-priced home in the second quarter, down from 34 percent in first quarter 2016—though up from 30 percent in second-quarter 2015, finds C.A.R. research. Mortgage Rates Continue To Sink Despite a predicted rise, mortgage rates continued to go down, down, down, to a near- historic low. The fall was aided by a number of news events, most striking of which was Britain’s vote to exit the European Union, commonly known as “Brexit.” And the numbers showed it: California refinance volume increased in the first half of the year, according to the MBA. The low rates not only spurred a tsunami of refinancing among existing home- owners, but aided home buyers who could seek more house for the same or less money. With the cost of borrowing so low, former renters realized that buying could actually bring a lower monthly payment, in addition to the tax benefits of owning a home. That’s why these low mortgage rates expanded the spectrum of buyers who could participate in the market, including many served by the California Housing Finance Agency (CalHFA). “There are areas where owning is less expensive than renting, and our ability to marry down payment assistance with an attractive lending product helped contribute to more homeownership among those groups,” said Tia Boatman Patterson, executive director of CalHFA. Top Producers Gilroy Office, 2015 Marta Dinsmore, Realtor GRI Intero Real Estate Services 408.840.7420 DRE #01352339 Sean Dinsmore, Realtor Intero Real Estate Services 408.840.7327 DRE #01966405 22 Prices Force People To Leave Are people fleeing California for cheaper pastures? This year’s outmigration was the largest since 2011, said the Californian Department of Finance, which found that 61,100 more people left than moved in for the 12 months ending June 2016. “Lack of affordability is facilitating the exodus,” said Habibi, adding that it creates issues not only for families, but for companies that are finding they have to pay increased wages to keep workers. Of course, points out Merrill, there is a silver lining in the form of more inventory. “The more homeowners who decide to leave California, the more homes that will be placed on the market, eventually making room for those who want to live in desirable areas like San Diego and San Francisco. When those houses go up for sale, the demand will be there.” And that could help the whole cycle, Habibi said. “Prices would fall to more realistic levels if we had more inventory.” GILROY • MORGAN HILL • SAN MARTIN JANUARY/FEBRUARY 2017