Ah...The Crystal Ball

By
Real Estate Agent with Karen Parsons-Fiddler, Broker 949-510-2395 BRE# 01494165

 

Ah...The Crystal Ball

 

How many times a day am I asked to predict the future of real estate in my area. Family, friends...the lady in line at Starbucks behind me....it seems everyone asks me what real estate is going to do in the coming week, month, year. Now even Active Rain is asking me via Praful Thakkar's "Crystal Ball Contest." 

The good news? They see us as experts in our field. The bad news...it really does take a Crystal Ball. Maybe not a Crystal Ball, but at least the ability to read the tea leaves.

So much depends upon the reaction of the stock market and economy after the policies of President Trump start becoming reality. We've seen a strong reaction to his election, but that is mostly optimism and anticipation of new policies. Once they become reality, we'll see. 

I want to emphasize that this is NOT a political post and I will delete inflammatory comments.

The real estate market is primarily affected by interest rates. The Fed has already started to inch rates higher and has indicated that we can expect more hikes in 2017. If the economy heats up faster than sustainable, then we will see interest rates move more quickly to head off inflation. 

Why does this matter to real estate? Don't people still want to buy homes?

Of course they do, but interest rates paid on their mortgage have a direct effect on how much they can qualify for in a loan...how much they can spend on a home.

Some areas are less affected by this than others. Frankly, in high end communities like Laguna Beach and Newport, it seems that home prices don't matter at all; the buyers seem to have all the money they need to get what they want.

But in most of the country, it does matter. Home prices cannot rise higher than the area's income can sustain. If a larger portion of the monthly payment must be used for interest, the buyer can afford to spend less on the purchase price...and prices must drop. 

So....this is my explanation....but not a prediction, right?

I live and work in a small bubble. Southern California seems less affected by the small increases or decreases in interest rates, but that could change. Even the job loss that much of my state is seeing due to our anti-business state government doesn't seem to affect my real estate market. 

So..what's my prediction? I think we could be affected emotionally by what happens nationally. So let's see what happens January 20th...and the weeks that follow and I'll be back with more tea leaves. 

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Real Estate Market Trends
Location:
California Orange County Mission Viejo
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Rainmaker
1,161,227
Raymond E. Camp
Howard Hanna Real Estate Services - Ontario, NY
Licensed Real Estate Salesperson Greater Rochester

Good afternoon Karen,

You are correct there are so many "experts" that make a statement then have to eat the words later. We Take each day as it comes and hopefully the graph ticks upward.

Make yourself an astonishing New Year.

Jan 02, 2017 09:21 AM #1
Rainmaker
2,598,362
Kathleen Daniels
KD Realty - 408.972.1822 - San Jose, CA
San Jose Homes for Sale-Probate & Trust Specialist

Karen, reading tea leaves is easier than reading some snarky political comments. Like you, San Jose seems to be home to folks with money and home affordability is less impacted by higher interest rates. 

Jan 02, 2017 09:35 AM #2
Rainmaker
1,619,307
Lottie Kendall
Pacific Union International - San Francisco, CA
Serving San Francisco and the Silicon Valley

Hi Karen, I live in another bubble, the San Francisco-Silicon Valley. We have jobs, lots of them, and good paying ones hence demand for housing outstrips inventory.

 

Jan 02, 2017 11:39 AM #3
Ambassador
2,722,045
Tammy Lankford,
Lane Realty Eatonton, GA Lake Sinclair, Milledgeville, 706-485-9668 - Eatonton, GA
Broker GA Lake Sinclair/Eatonton/Milledgeville

I'm going to have to check out Praful's post.  I don't predict, but I do point out when we're in a trend in one direction or another in my market reports.

Jan 02, 2017 02:12 PM #4
Rainmaker
3,236,179
Lou Ludwig
Ludwig & Associates - Boca Raton, FL
Designations Earned CRB, CRS, CIPS, GRI, SRES, TRC

Karen

So much what happens in 2017 will be measured in new job formation.

Good luck and success.

Lou Ludwig

Jan 02, 2017 03:23 PM #5
Ambassador
4,071,390
Praful Thakkar
LAER Realty Partners - Andover, MA
Andover, MA: Andover Luxury Homes For Sale

Karen Fiddler, Broker/Owner - you are right, There is going to be some effect on what's going on nationally in your market.

However, I strongly believe that some market like yours will have the least of an impact. Especially when people bring in money from.... wherever!

Wishing you all the success in  2017 and the years to come

Jan 02, 2017 07:00 PM #6
Rainmaker
1,099,346
Curtis Van Carter
Better Homes & Gardens Wine Country Group - Yountville, CA
Your Napa Valley Broker Extraordinaire

Karen

I like your post. Just in case anyone here needs one, I have one for sale with stand. Doesn't include any guarantees it will work but does have a book on how to skry. cheers cvc

Jan 03, 2017 02:06 PM #7
Rainmaker
522,693
Kathryn Acciari
Cameron Real Estate Group - Shrewsbury, MA
RSPS, SRS, REALTOR(R) Sturbridge-Shrewsbury MA

Yours is an interesting take on the economy, Karen. And I believe you are right on. Ours is an emotional country, isn't it? Let's hope the mood stays positive.

Jan 04, 2017 04:18 AM #8
Rainmaker
887,549
Sheri Sperry - MCNE®
Coldwell Banker Residential Brokerage - Sedona, AZ
(928) 274-7355 ~ YOUR Solutions REALTOR®

I had to laugh after reading the first 2 paragraphs.  It happens all the time. People expect us to foretell the future!  Great post!

Jan 05, 2017 09:31 AM #9
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Gayle Rich-Boxman Fishhawk Lake Real Estate
John L Scott Market Center - Birkenfeld, OR
"Your Local Expert!" 503-755-2905

Karen, well, this one STUCK hopefully! Good for you for getting back in the AR saddle and buckling down to even enter a contest, thanks to Praful Thakkar. I enjoyed your viewpoint and hopefully your small bubble will remain so. Mine, too!

Jan 05, 2017 09:36 AM #10
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Anna Banana Kruchten CRB, CRS 602-380-4886
Phoenix Property Shoppe - Phoenix, AZ
Arizona's Top Banana!

Karen it's fortunate that you live in a bubble and your real estate business isn't affected by interest rates etc. And I agree - so much going on in the country and a lot of emotions running high.  I am just hoping things calm down this next year.

Jan 06, 2017 04:21 PM #11
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Karen Fiddler, Broker/Owner

Orange County & Lake Arrowhead, CA (949)510-2395
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