Moreno Valley Real Estate Market 2015
Halfway trough the year in 2015 and the Real Estate Market does not seem to have a definite course. Much to affect of every City in Southern California, Moreno Valley has had it's share stability and volatility this year. Struggling along in the first quarter 2015 and picking up around mid March early April, the real estate market seems to be in a pretty stable state.. At least for now...
We must remember around November of 2014 we had Mid term elections where the republicans took
over the house and Senate. Many speculators thought that if the republicans took power it would unleasha frenzy of "new" and creative loan programs. Since then we have seen the re-introduction of 100% financing for low to moderate income earners. This is a very scary place to be, because that means all borrowers/Buyers with money have already purchased a home or are holding on to their cash and
want to avoid making moves right now.
We're Facing a very unique situation in Moreno Valley
Real Estate prices are based off a more complex situation than just supply and demand, although that is the biggest indicator of value. We also have to have the ability to access credit, and the lender must secure their money with collateral. Add to the fact that, the money borrowed is based on a monetary policy in which we have no control over and that leaves us with a very indeterminable market. For starters the FED controls the interest rate and U.S mint which prints our money. So in essence we live and die by the Feds policies. Which have been a little on relaxing side for the last couple years: Low interest rates, money printing to back government entities ( Fannie Mae, Freddie Mac)., and low down payment requirements for First time buyers. The problem with all this is that the FED has created its own demand AGAIN!
So what Happens when you run out of buyers and you have the ability to create more? Exactly! You do just that.. Create More Demand! The problem is, that it's artificial demand, and at some point it will stop. With the FED keeping interest rates low, and coming up with more creative ways for people to afford the American Debt.. I mean dream it has created a temporary rise in home values and despite its greatest efforts a slight boost in overall economy.
Now how does this affect Moreno Valley
Moreno Valley suffered some of the worst hits in the entire state, in one of the most affected states in the Country. Moreno Valley's property values dropped to as low as $30,000 in some areas. What this meant was opportunity for alot of folks. During the temporary market correction we saw the unique opportunity to buy low priced real estate at low interest rates. For the people who took advantage that means low debt with low payments. Thats a good thing right?... At least until we have another downturn worse than before. I Mean, what make people give up a good situation like that? The same thing that made people give up the last good situation, home values dropping like dead flies. Now before I go off sounding like a doom and gloomer let me first say that economic cycles do not lie the proof is in the numbers.
As mentioned before we live and die by the Fed and their policies. In 2008 the FED bailed out the Banks even the ones who did not need a bailout. but for the sake of keeping special interest out of politics all the banks were forced to take bail out money even if they did not need it. What came after was another debt drug in the form of low interest rates, you can recall the FED lowering interests to the point of insanity, where people were almost forced to borrow. Who wouldnt want a 2.5% 30 year fixed rate? We have continued to take our debt drug to keep us afloat and right now it is nearing its end as property values increased and continue to out pace wages our FED will continue come up with ways to keep the economy going. Unfortunately for everyone, the second there is a kink in the chain it will all come crashing down. As evidence of the slight interest rate hike earlier this month, which caused mortgage applications to drop almost automatically. This is almost a sure indicator that we are not recovered like the media says we are.. So tread carefully in 2015, as it could turn out to be another year to remember.
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