2018 Year in Review – Conejo Valley
The first 3 quarters of 2018 looked a lot like 2017. The ongoing shortage of available homes often resulted in a fairly quick sale. Sellers were able to remain somewhat firm on their asking price knowing that demand outpaced supply. However multiple offers and bidding wars were less common than years past.
Come Sep/Oct, the market started to show signs of slowing. Some of the slowing can be attributed to the typical 4th quarter slowdown, but this year was different. The double whammy of rising home prices and climbing interest rates caused buyers to be more cautious. As a result, sellers who needed to sell had to make concessions. Price reductions of existing homes began to outpace new listings hitting the market towards the end of the year.
In spite of the slowdown, home prices finished the year strong. The median price of a Conejo Valley home (Westlake Village, Agoura Hills, Oak Park, Thousand Oaks, and Newbury Park) ended the year at $750,000 up 3% from $725,000 in 2017. That’s 20 consecutive months of price increases. Interest rates ended the year on an upward trend finishing the year at about 4.5% and that is expected to continue in 2019.
What to Expect for 2019 Home Buyers
Think long term. Historically, houses are an excellent long term investment and should be viewed as such – time in the market is more important than timing the market.
At the lower end of the price spectrum (800k and below), move in ready homes in great neighborhoods will continue to sell relatively quickly. Homes that need updating and higher priced homes (over $1 mil) will likely be more negotiable facing additional competition from other homes and more cautious buyers.
Value shoppers will be able to take advantage of homes that have been sitting on the market awhile and find motivated sellers who really need to sell willing to negotiate the price, perhaps even slightly below market.
Overall, there are many good reasons why looking for a home in 2019 will be a better experience for buyers than the seller’s market we’ve experienced for the last several years. More options to choose from and negotiable sellers in an appreciating market is the type of market buyers have been longing for years. If you are looking for a home, here’s a great place to start: Conejo Valley Neighborhood Tours.
Conforming Loan Limits 2019: L.A. County $726,525, Ventura County $713,000
What to Expect for 2019 Home Sellers
Think patience. The Conejo Valley has been averaging about 45-60 days on the market to sell a home. That’s historically very low and unlikely to continue in 2019. Three to 6 months is more in line with a balanced market and will become more common than the quick sale that’s been expected over the last several years.
The importance of pricing your home properly will be more crucial than years past as sellers will face additional competition from other sellers giving buyers more options to choose. Pricing too high and missing the market will prove to be costly as the correlation between time on the market and sales price will be magnified in 2019 – the more time on the market, the lower the sales price.
It’s still a good time to sell your home as the demand for the Conejo Valley lifestyle and excellent schools remains strong and the market is expected to appreciate in value (+3.1% in 2019). The importance of experienced representation and guidance will be crucial in 2019 to help navigate the challenges ahead. The buyers are still out there, they’re a little more cautions these days and will have stronger negotiating power.
Read my blogs for sellers to help you prepare: Tips for Selling a Home
Diving Deeper | Moving into 2019
The California Association of Realtors (C.A.R.) released its 2019 housing forecast.
Median home prices are expected to increase 3.1% in 2019 after about a 7.0% increase in 2018 and interest rates are expected to rise to 5.2%.
Last year, C.A.R. forecast an increase in median prices of 4.3% versus 7.0% (projected) in 2018 and interest rates were expected to climb to 4.5% but are currently closer to 4.75%.
Strong Economy Going into 2019: Unemployment is the lowest in over 40 years, consumer confidence is the highest in 18 years, and inflation remains relatively low.
(See: Current Local home prices)
Why Are There So Few Homes For Sale?
The shortage of available homes is not just limited to the Conejo Valley. It’s a statewide problem with no end in site. The issue is magnified in the Conejo Valley due to the high demand and lack of new housing. For the most part, the Conejo Valley is built out. Home owners are staying in their homes longer only perpetuating the problem causing shortages throughout the state to the point that California has the second largest percentage of renters in the country. While the shortage should continue in 2019, it won’t be as challenging as years past since buyer demand will be lower.
Is The Market Shifting?
“Market Shift” is the new buzzword to describe the real estate market, and yes, the market is shifting. Some people are associating a “market shift” with a “market crash” and are expecting home prices to drop considerably in 2019. No one in the mainstream is forecasting a crash. Rather, the forecast is for a more “balanced market”. A balanced market simply means that demand should be fairly close to supply. The days of putting a home on the market and expecting multiple offers in a week are behind us for most home sellers.
The Bottom Line
C.A.R. put it this way:
“A combination of high home prices and eroding affordability is expected to cut into housing demand and contribute to a weaker housing market in 2019, and 2018 home sales will register lower for the first time in four years. While home prices are predicted to temper next year, interest rates will likely rise and compound housing affordability issues.”
All real estate is local. What’s happening in the state is not always reflected in the Conejo Valley. Pulling from multiple resources including industry professionals, economists and my own observations in the marketplace, I expect the Conejo Valley housing market to continue to tip slightly towards sellers as demand remains strong from local buyers and those relocating from out of state.