2017 Local Market in Review
The 2017 housing market was very similar to 2016 in the Conejo Valley (Westlake Village, Agoura Hills, Oak Park, Thousand Oaks, and Newbury Park). Prices continued up as demand exceeded our supply often leading to multiple offers.
However not every home flew off the shelf, especially homes over $1 million.
Low inventory continued to be an ongoing issue for buyers often leading to multiple offers and bidding wars. The downward trend of available homes continued through the year leading to modest price gains. The median price of a single-family home ended the year at $730,000 up 7% from $684,500 in 2016. Interest rates ended the year on an upward trend that is expected to continue in 2018.
Moving on to 2018
The California Association of Realtors (C.A.R.) released its 2018 housing forecast.
Median home prices are expected to increase 4.2% in 2018 after about a 7.2% increase in 2017 and interest rates are expected to rise to 4.3%.
Last year, C.A.R. forecast an increase in median prices of 4.3% versus 7.2% (projected) and interest rates were expected to climb to 4.5% but are currently closer to 4%.
California Housing Market Outlook
Strong Economy Going into 2018: Consumer confidence is up, unemployment is down, and overall, the economy is healthy.
The C.A.R. forecast was made prior to passing the final tax bill. The biggest concern of the new tax laws was the mortgage interest deduction (MID). The MID limit was reduced to $750k from $1 million. Earlier versions of the bill had the MID reduced to $500k or eliminated entirely. Fortunately, a strong push by the real estate lobby paid off and resulted in a higher limit that won’t likely have a large impact on the real estate market.
However, the big unknown is what affect the doubling of the standard deduction and the $10k cap on the state and local tax write off will have on real estate prices. Will it temper people’s desire to own homes? Will it make home ownership even less affordable? Will high-income earners leave the state and their expensive homes behind? We’ll have to wait and see.
Most local real estate agents, industry expert, and local economists believe that Conejo Valley home prices will continue to increase in the foreseeable future. The high demand for our excellent schools and relaxed lifestyle will only lead to more inventory issues going forward. And as expensive as some may view our local home prices, we’re still much more affordable than other luxury areas in Southern California.
(See: Current Local home prices)
Why Are There So Few Homes For Sale?
There are several reasons:
- We’re not building any new large tracts of homes. Yes, we have little developments that pop up here and there, but no large developments that would have a significant impact.
- The Conejo Valley is in high demand and few who live here move away unless they have to.
- Many homeowners who would like to move up to another Conejo Valley home decide to stay because they are concerned they will have a difficult time finding a suitable house once their current home sells.
- Others stay because – A) They have a lower interest rate on their current home than they could get today. B) They don’t want their property taxes to go up. C) They couldn’t qualify for a new mortgage today. D) All of the above.
As a result, many homeowners have decided to remodel and stay where they are which is keeping our inventory down.
The Bottom Line
C.A.R. put it this way:
“This year’s housing market can be told as a tale of two markets – the ‘inventory constrained lower end’ and the ‘upper end that’s non-inventory constrained’. This trend is likely to continue into 2018 as active listings have declined across all price ranges for the past two years, but is most obvious at the lower end.”
“With tight inventory being the new ‘norm’ for the past few years and at least the upcoming year, we’ll continue to see fierce competition driving up prices, leading to lower affordability and weaker sales growth.”
Expect the same in the Conejo Valley. Our lower end is $700k and below. Our higher end is over $1 million. There’s definitely a divide in terms of both supply and time to sell. Homes under $700k often sell quickly and with multiple offers. Homes above $1 million may take a few months to sell or not sell at all.
2018 Home Buyers
Prepare yourself. At the lower end of the price spectrum, you may have to be patient and/or willing to compromise. But if something does come up that you love, be ready to act. It may be your best chance to find a home you really want (Read: How to Win When Competing with Other Offers). And if you’re looking above $1 million, you may be able to be more strategic and negotiate more favorable terms in today’s market (Read: What Should You Offer on the House? It Depends).
Conforming Loan Limits 2018: L.A. County $679,650, Ventura County $672,750
If you are looking for a home, here’s a great place to start: Conejo Valley Neighborhood Video Tours.
2018 Home Sellers
It’s a good time to be a seller, but don’t assume your home will sell quickly and for any price you ask. I have seen many homes that were priced too high sit on the market and become “stale” only to watch them either not sell at all or make drastic price cuts in order to sell. It’s just as important today to price your home correctly and advertise it with high-quality marketing using various media across multiple platforms. Buyers are still plentiful, but they’re a little more cautious these days.
Read my blogs for sellers to help you prepare: Tips for Selling a Home