Can the Strong 2015 Real Estate Market Continue into Fall?

03 Sep Can the Strong 2015 Real Estate Market Continue into Fall?

The real estate markets this spring and summer have been strong and robust to say the least! As an appraiser, it’s easy recognize an upward trend and pressure on prices when I’m seeing many purchase contracts addressing concerns over the contract price not appraising. I’ve been asked repeatedly lately, what are my thoughts on the market? Can the increasing values continue? As summer winds down, can the strong 2015 real estate market continue into fall? Here are a few components to watch:

1) Interest rates – Interest rates inevitably are the driving force directing trends in my opinion. While generally moving up compared to earlier this year, they are seemingly attractive to buyers. While the fed has threatened to raise rates (federal funds rate), it’s my opinion that any rise would be minimal at best due to continued global economic concerns. I wouldn’t be surprised given recent global news if rates stay put and do not move upward at all. Time will tell.

2) Inventory- While fluctuating, there continues to be a general shortage of homes in many neighborhoods in Sacramento, Nevada and Placer counties. If inventory isn’t technically a shortage, there is still enough demand and downward pressure on inventory to generally have upward pressure on prices. With summer ending, there has been data suggesting a slight slow down in some market areas with higher days on market and increased active listings vs. pending sales. If this trend continues through fall, prices may begin to soften.

3) Consumer Confidence- While more intangible, one can’t displace how important this component is. For some time, both the stock and real estate markets have increased. Even if gains haven’t been realized (sold) and are more paper gains, this does create confidence and what many refer to as “wealth effect.”  If there is an event or circumstance that  shifts this confidence, such as a shift to a bearish stock market or a slow down in the real estate market, potential buyers may become apprehensive to enter the market due to outlying concerns regarding the economy and/or buying a home at the top of the market. After all, 2008 isn’t that far in the rear view mirror that had both the real estate and stock market going down at the same time. Given the very recent sharp downturn in the stock market and with recent concerns about China’s economy, this will be a situation to watch and further demonstrates how quickly the markets can turn.

Appraisal Talk

Q&A- One question asked often is, “My house is all electric, do I still need a carbon monoxide detector?” Answer: Typically yes, if your home has an attached garage and/or a woodstove, this would qualify your home to require a carbon monoxide detector.

Tax Appeals-

Have you received your 2015-2016 tax bill for placer county? In some cases, there has been a huge jump in assessment value. In some cases, it may be over market value. If you need an appraisal to challenge, contact me for details.

FHA changes-

This September, there will be FHA requirement changes as far as appraisal inspections. I will give an update on this in my next blog highlighting some of the major changes and how they may impact both the appraisal and loan processes.

Disclaimer: All information deemed reliable but not guaranteed. The information is meant entirely for educational purposes and casual reading only and is NOT intended for any other use.  This information is NOT intended to support an opinion of value for your appraisal needs or any sort of value conclusion for a loan, litigation, tax appeal or other potential real estate or non real estate purpose. This appraiser is NOT a qualified home inspector and any tips are for informative purposes only. If you’d like to obtain and order an appraisal for your specific needs, please contact Bryan at 530-878-1688 for more information.