2017 Housing Market Predictions

2road2017

Recently Zillow jumped in with six predictions for next year’s housing market, touching on some of the more nuanced factors that influence who will be buying and selling homes next year, where they’ll be focused and what challenges they stand to face.  Speculation also brought up the potential effect of Trump’s hard-line immigration plans on construction industry labor — and its expectations for America’s historically low homeownership rate.  The 2017 predictions:

1.      “Cities will focus on denser development of smaller homes close to public transit and urban centers.”

2.      “More millennials will become homeowners, driving up the homeownership rate. Millennials are also more racially diverse, so more homeowners will be people of color, reflecting the changing demographics of the United States.”

3.      “Rental affordability will improve as incomes rise and growth in rents slows.”

4.      “Buyers of new homes will have to spend more as builders cover the cost of rising construction wages, driven even higher in 2017 by continued labor shortages, which could be worsened by tougher immigration policies under President-elect Trump.”

5.      “The percentage of people who drive to work will rise for the first time in a decade as homeowners move further into the suburbs seeking affordable housing — putting them further from adequate public transit options.”

6.      “Home values will grow 3.6 percent in 2017, according to more than 100 economic and housing experts surveyed in the latest Zillow Home Price Expectations Survey. National home values have risen 4.8 percent so far in 2016.”

Jeff Bridges Reduces Asking Price of Montecito Home

2jbridgesview2016

Oscar winner Jeff Bridges recently cut $5 million more off the asking price of his estate in Montecito. It’s now available for $18.5 million. It was originally listed for $29.5 million.

The Tuscan-style property is drop-dead gorgeous with mountain and ocean views. The main house is 9,500 square feet with lavish hallways, soaring and exposed wood-beam ceilings, and a private tower/study that opens to a rooftop terrace. There’s a master suite, three en suite bedrooms, an eat-in kitchen, and a four-car garage.

The estate also includes a one-bedroom guest cottage, a two-bedroom caretaker’s cottage, and a swimming pool. The19.5-acre property also boasts a sculpted fountain, walking path, fruit orchard, and Italian cypress trees. A stately, iron gate rests between two pillars at the property’s entrance. (Image from Realtor.com)

California Real Estate still a Hot Commodity!

2MiramarPureChrisPotter2015

Miramar Beach in Montecito by local artist Chris Potter

Demand for U.S. real estate remains strong this holiday season and appears poised to carry over into 2017, with California and Bay Area cities again ruling the list of the nation’s most sought-after housing markets.

That’s according to Realtor.com’s latest monthly analysis of the nation’s 20 hottest housing markets based on the number of listing views on its website and the fewest average days on market. Nationwide, the median list price held steady at $250,000 for the fourth consecutive month and marks a new high for November. Prices are up 9 percent from one year ago while inventory is down by 11 percent. Realtor.com projects that the average U.S. home will spend 82 days on the market in November.

As in the previous two months, the San Francisco metro area ranks as the hottest American housing market in November, with homes selling in an average of 40 days. The median list price in the region is $825,000, nearly unchanged from October and up 6.6 percent from Realtor.com’s November 2015 hot-markets report.

Golden State cities again account for 11 of 20 markets on the list, rounded out by San Diego (No. 6), Stockton (No. 7), Sacramento (No. 11), Santa Rosa (No. 13), Fresno (No. 14), Modesto (No. 15), Los Angeles (No. 18), and Oxnard (No. 19). The latter two cities returned to the list after dropping off in October, replacing Eureka and Santa Cruz.

Realtor. com’s Manager of Economic Research Javier Vivas said that though he expects this fall’s busy activity to carry over into 2017, the interest-rate increases that have followed in the wake of the U.S. presidential election could pose a challenge. According to Freddie Mac, 30-year, fixed-rate mortgages rose to 4.03 percent for the week ended Nov 23., up on both a weekly and annual basis and marking the first time this year that interest rates have climbed above 4 percent.

Is Zillow Good or Bad for the Real Estate Industry

Some of the good things: 

  • Provides greater listing exposure to millions of consumers.
  • The addition of tax records, school ratings and other information to listings is good for consumers and makes the agents’ job easier.
  • Levels the playing field for newer agents and agents without many listings.
  • Gives consumer access to FSBOs, foreclosures and other non agent represented properties, painting a fuller picture of the available market.
  • Creates a new, broadly reaching, advertising platform for agents to advertise their skills.

Some of the bad things : 

  • A high percentage of their “available” listings are actually sold or off the market. This confuses and upsets consumers and makes agents look bad.
  • The sites’ property valuations are often way off, making agents’ jobs harder.
  • Promotes non-listing agents alongside listings that aren’t theirs, tricking consumers into believing they know the property.
  • Sells to any agent, regardless of experience, the title of “Premier” or “Pro”.
  • The “leads” generated for subscribing agents are low quality, non-responsive and a waste of time.
  • The cost of being a subscribing agent is too high for what you get.
2Aerial1709Overlook2016

Fiesta! “Old Spanish Days” in Santa Barbara

“Old Spanish Days” is Santa Barbara’s largest celebration and one of the top regional festivals in the United States. It is expected to attract more than 100,000 people this year, making it one of the biggest to date.

This year “Fiesta!” will take place in various locations around the city August 3rd through the 7th.

This celebration of community fondly looks back to a period when Santa Barbara was a remote rural area under the influences of Spanish, Mexican, and local Native American cultures. Fiesta celebrates a period of romance and hospitality through pageantry, dance, music, custom, and cusine. (photo below is of the brochure for the Santa Barbara Fiesta 2016)

Santa Barbara Fiesta 2016 2FiestaBrochure2016

Good Fences Make Good Neighbors

2LadyLookingOverFence

“Somewhere in Santa Barbara?”

Forbes magazine reported that in 2010 Oracle’s Larry Ellison sued his neighbors, whose trees were blocking his view of San Francisco Bay. The neighbors tried to obtain landmark status for the trees. Ellison hired a Tree Attorney and reportedly offered to buy their house. They settled out of court.

David Geffen is under fire from his neighbors for renovations to his 5th Avenue penthouse. 18 neighbors have filed complaints against Geffen some of which he’s settled.

Hedge funder Larry Robbins turned three lots behinds his New Jersey mansion into a 10,000 square foot hockey rink adding a small apartment thinking that would make it a legal residence. The neighbors challenges were dismissed and the arena still stands.

Investor Ira Rennert built a 29 bedroom 100,000 square foot house in the Hamptons and continues to stoke tensions with the neighbors by landing his helicopter on the property.

George Lucas neighbors have been battling him for decades over any expansions to his film studio. As a result he now plans to build 224 low income housing units in one of the more expensive areas of the country. Neighbors say he’s vindictive, he claims altruism. Forbes magazine suggests that un-neighborly behavior is surprisingly common among the ten figure set.

The most notable use of the quote in English Literature belongs to Robert Frost who used the line in his poem “Mending Wall.”This quote seems to be contradictory in nature. How can neighbors come together if they are divided by fences? Benjamin Franklin is known to have said, “Love thy neighbor, yet don’t pull down your hedge.” Given how many different cultures have versions of this proverb, it represents a very common sentiment among neighbors everywhere.

Santa Barbara Real Estate Market Trends

2FidelityMay2016

Follow the purple line for 2016. Data reflects “Sold Homes” for that month in Southern Santa Barbara. This includes the communities from Carpinteria to Goleta. Data provided by Fidelity Title Company in Santa Barbara.

2MedianSalesPrice2015to2016

Median Sales Price for Southern Santa Barbara July 2015 to June 2016 (Trulia)

Brexit and the Real Estate Market

2Brexit

  • The United Kingdom’s unexpected vote to leave the European Union, otherwise known as “Brexit,” was not accounted for in global financial markets prior to the vote. Thus, stock market volatility is sorting out the anticipated effects going forward.
  • While the financial market volatility will persist, the direct impact on the U.S. is minimal.
  • U.S. economic fundamentals remain strong, as they are based on domestic activity.
  • Indirect impacts may actually bode well for U.S. housing markets, as investors seek safe, stable investments.
  • However, more volatility may be in store in the weeks to come.
  • Brexit’s indirect effects on the U.S., however, may not be so gloomy. First, the Federal Reserve’s decision to raise interest rates will most likely be further delayed due to this development. Also, with global financial uncertainty seemingly everlasting, U.S. Treasuries are continuing to look very attractive and will probably woo many investors. Both factors are going to keep interest rates low — particularly mortgage interest rates.
  • Also, U.S. economic fundamentals are essentially unchanged, and the country should continue to post solid job and wage growth. U.S. housing markets may further benefit from global uncertainty, as they are still perceived as safe, relatively stable, and to some extent underpriced, especially when compared to London’s exorbitant