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Friday, November 9, 2018

November 2018 Market Update


Click Here to watch Josh's video blog for the month of November.

From The Desk Of Josh Barker @ RE/MAX

First and foremost, we want to take a moment and send our thoughts and prayers to all of those that have been impacted by the Camp Fire in the Paradise area south of Shasta County. With all the fires the North State has experienced this year, families will need all of our support more than ever this holiday season. 


Monthly Sales Report

The month of October revealed some promising numbers compared to September. Sales for the month of October finished with just over 300 homes sold compared to 284 sales in October of last year. The increase in sales compared to last year can be largely contributed to the increase of homebuyers shopping in the local market due to the CARR fire. A large number of those who lost a home to the fire have elected to purchase another home. As these home buyers solve their immediate housing needs we expect home sales will likely return to normal levels by the end of this year.



Interest Rates
Interest rates play a major role in overall affordability in real estate markets like ours in Shasta County. Rates have a large impact in areas like ours because the vast majority of local home buyers purchase homes with financing. As the rate goes up, the loan amount a buyer qualifies for goes down. A simple way to explain the relationship is like this...For every 1% that the interest rate increases, the loan amount a buyer qualifies for goes down by an average of 10%. Due to a strong economy including job and wage growth, the federal reserve is expected to continue to raise the interest rates in the short term.

Home Prices
Home prices are up over last year with an estimated 5% growth in home values over the past year. Due to the lack of major wage or job growth, the local market has not appreciated as high as other markets throughout the state. Both the number of jobs and wages paid for jobs has an impact on how quickly home values can raise in a market like Shasta County. The forecast of home appreciation in the Shasta County market for the next 12 months is 4% according to several of the largest housing economists. Interest rates could have an impact on home appreciation and will likely be the number one factor on the accuracy of this projection. You can check the approximate value of your home instantly by clicking here.


Home Rebuilds / CARR fire
With over 1,000 residences lost in the car fire, many locals know someone impacted by the fire. One of the frequent questions we receive is "How many people are going to rebuild". Although we are a ways off from being able to determine the exact number, there are some trends that are emerging. For example:

  • Those who lost a home in locations where the cost of rebuilding is challenging due to topography--which is a large number due to the mountainous topography the fire burned through--may decide not to rebuild.
  • Those who lost a home on acreage property where the land and trees around them have been devastated may decide not to rebuild.
  • Those who were considering a move prior to the fire may decide not to rebuild.
  • Those who do not want to wait the estimated time it will take to rebuild will likely not rebuild.
  • Those who do not desire to go through the process of rebuilding will likely sell their vacant home sites.
  • Many of the vacant home sites will be purchased by local contractors, developed and resold over the next several years adding additional housing to the market.  
Although the number of people that decide not to rebuild may reach as high as 50%, this will likely not have a major impact on the housing market in the long term.

Bottom Line
Home prices have increased an average of 5% over the past 12 months. The majority of this home appreciation is focused on the $500k and below price range. Home sales for the month of October were recorded at just over 300, which is up from 284 one year ago. The next 12-month home value appreciation projection is estimated at 4%, but this number could be impacted if mortgage interest rates rise faster than wages or job growth can account for.



As always, if you have any questions, please feel free to respond to this email or contact me at 530-222-3800.

Have a great November!
Josh Barker




Tuesday, October 2, 2018

October 2018 Market Update


Click Here to watch Josh's video blog for the month of October.

From The Desk Of Josh Barker @ RE/MAX

Home Sales
Homes sales for the month of September totaled approximately 261 properties sold, down from 292 properties sold in August 2018 and 289 sold in September of 2017. This reduction in property closings comes as a surprise after many expected to see an increase in sales due to the CAR fire and the additional buyer demand that was expected. Perhaps the market slowdown that much of the state is currently experiencing is beginning to have an impact in our local market as well. 


Listings for sale
The total number of listings available for purchase is currently averaging 1,085. The number of properties available is very similar to October of 2017 when there were approximately 1,079 properties for sale.


Home price expectations
Real Estate prices are clearly a local market issue. The driving factors for home prices typically focus around "supply and demand". When home sales remain consistent, and the number of listings for sale remains consistent, home prices typically remain consistent as well. When home prices shift up or down, it typically relates to a shift in either supply or demand. The most recent numbers illustrate a slight reduction in buyer demand. If this trend continues, we could expect to see home prices level off. This shift is typically normal and considered to be part of our normal seasonal transition.
When viewing real estate at the state level, many markets are reporting similar changes as well. The "hot markets" that many cities had been experiencing are now reporting growing inventories, longer marketing periods, and an increase in price reductions. Again, many markets have normal seasonal transitions, but after a long run of higher than normal buyer demand, any change is considered big news. 


Interest rates
Interest rates have been on the rise for nearly two years now. After experiencing the lowest mortgage rates in history, averaging in the mid to high 3% range by the end of 2016, the low 4% range in 2017 and now the high 4% range in 2018, everyone has become accustomed to low mortgage rates. The federal reserve, which typically impacts mortgage rates, has announced their intention to increase rates two more times over the next 6 months. This anticipated increase in rates is expected to cause mortgage rates to increase to the low 5% range by March of 2019. 

Statistics 
Below we have provided some interesting statistics that relate to home buyers, home sellers, and homeowners in general. The information provided is a collection of data from Zillow, Realtor.com and various other economic reports that collect information relating to home ownership.
Buyers
  • Nearly half (46 percent) of buyers are purchasing their first home.
  • Today’s buyer spends nearly four and a half months, on average, looking for a home they will purchase.
  • Just over half (58 percent) of all buyers who are successful in making an offer close on their first one. A quarter (25 percent) of buyers make two offers, and 17 percent make three or more.
  • Only 13 percent of home buyers include the contingency of the sale of their current home.
  • Just over half (52 percent) of buyers put down less than 20 percent on their home.
Sellers
  • Homeowners are in no hurry to uproot. They’re typically sticking with their homes for 16 years, though some stay much longer, contributing to the low home inventory.
  • More than half (53 percent) of sellers are selling a home for the first time.
  • The majority (over 50%) of sellers are also trying to buy a new home at the same time they are selling.
  • Forty-one percent of sellers say they had an offer fall through before their home sold.
  • Eighty-three percent of sellers make concessions to finalize an offer. The top concessions: Credit towards buyers closing costs, including appliances in sale, and price.
  • Most sellers (61 percent) make at least one change to their original list price; 31 percent of those sellers change the price twice, and 29 percent make three or more changes before their home sells.
Homeowners
  • Home equity remains the biggest financial asset for the typical American homeowner, who has 52 percent of their wealth tied up their home.
  • 6 in 10 homeowners (59 percent) are still paying off their mortgage, and the typical mortgaged homeowner owes 62 percent of their home’s value.
  • Only five percent of homeowners plan to sell their home in the next year, and 63 percent have no plans to sell.


Bottom Line

Nationally, and statewide many markets are reporting an increase in listings for sale. Currently, the local Shasta County market is reporting nearly the same number of listings for sale as one year ago. Home sales nationally and throughout the state of California are reporting a reduction in home sales, longer market times, and price reductions. Currently, in Shasta County, home sales are down compared to one year ago.
As always, if you have any questions, please feel free to respond to this email or contact me at 530-222-3800.
Have a great October!
Josh Barker

Wednesday, September 5, 2018

September 2018 Market Update

Click here to watch Josh's video blog for the month of September.

From The Desk Of Josh Barker @ RE/MAX

First and foremost, I want to extend our sincere condolences to all of those that have been impacted by the Carr Fire. We also want to take a moment and say a heartfelt thank you to the Fire, Police, and countless additional organizations that have helped our community. It takes community to bring us all together, reflect on what has been lost, and carry forward.

Carr Fire Update

As of the date of this publication, an estimated 1000+ homes have been destroyed as a result of the Carr Fire. Many of these homeowners have been undergoing the tedious process of dealing with insurance companies and determining the best path for cleaning up their existing home sites. Many of these home owners are going through the emotional and calculated process of deciding whether to rebuild or consider other options.

SEE THE MAP OF HOMES IMPACTED BY THE CARR FIRE HERE


Home Sales Prior To The Carr Fire

In the months of June and July, most of the west coast was beginning to experience a real estate market shift. From Seattle all the way down to San Diego, many communities where reporting a shift in their local markets. Listing inventory was growing, days on market before a home was sold was extending, and home listing prices were beginning to reduce. These market indicators still exist in communities outside of Shasta County and have been labeled a "real estate slowdown". Our local community would likely have been discussing this as well had it not been for the devastating fire that roared through Shasta County’s west side. The month of August closed sales report reflects this shift with 297 homes that closed escrow compared to 320 homes sold one year ago. That number is sure to go up after the Carr Fire.




Home Sales After the Carr Fire

Real Estate is local, and the law of supply and demand rings true when it comes to home prices. The month of August proved to be a major shift in home demand. In the early weeks after the fire, home buyers that had the financial means and desire to purchase immediately after losing a home, did so. This increase in demand caused pending home sales to increase from 288 in August of 2017 to 412 in August of 2018. These numbers represent a 43% increase in home sales compared to last year. Fortunately, the number of new listings coming to the market increased from 417 in August of 2017 to 451 in August of 2018. The increase in new listings is an important factor to maintaining a balanced market.




The Future of Home Sales

As more and more local residents make the important decision whether to rebuild or not, we can expect to see a continued increase in home sales compared to last year. If many of these local residents make the decision between now and the end of the year to purchase instead of rebuilding, we can expect to see home sales remain higher than normal. Once immediate housing needs are met, we can expect to see home sales volume return to a new normal. The key to maintaining a balanced market with small bumps in home prices will be the number of homes available for purchase and the number of new listings that come to the market between now and the end of the year. The higher the number of listings available for purchase, the less likely we will see a major bump in sales prices.




Bottom Line

The Carr Fire has disrupted the local housing market. What could have been a normal real estate market slowdown in the fall months has instead remained consistent. It is expected that many home buyers that lost a home during the Carr Fire will likely purchase a different home between now and the end of the year. Once the majority of these buyers purchase, we can expect home sales return to a new normal. For home sellers considering a move, now may be the right time. The fall and winter months this year will be unlike years past. There will be an increase in buyer demand that will keep the market strong through the balance of the year.

As always, if you have any questions, please feel free to email me at josh@reddinghomes.com or contact me at 530-222-3800.

Have a great September!

Josh Barker

Tuesday, July 31, 2018

Carr Fire and Real Estate in Shasta County



Click Here to watch Josh's video blog.

From The Desk Of Josh Barker @ RE/MAX
Western Shasta County has burned. It's been a horrific week for local residents. As we are writing this update on Tuesday, July 31st, nearly 900 homes have burned to the ground as a result of the Carr Fire. 
Due to the amount of questions we have received regarding the fire and impact on housing, we wanted to offer some insight into how this disaster is going to impact Real Estate here in Shasta County.
The link provided will provide a map showing the homes affected by the Carr Fire.

As always, if you have any questions, please feel free to email me at josh@reddinghomes.com or contact me at 530-222-3800.
Our thoughts and prayers and with all those affected by these fires.
Sincerely,
Josh Barker

Friday, July 13, 2018

July 2018 Market Update


Click here to watch Josh's video blog for the month of June.From The Desk Of Josh Barker @ RE/MAX


Welcome to our mid-year review for the year of 2018.

Sales in Shasta County for the month of June were down by almost 2% compared to June of 2017. Our pending home sales have begun to show signs of leveling off as well compared to last month. This indicates that the month of July will likely have fewer homes close escrow than in the month of June.  As home sales begin to slow down, we will start to see the volume of inventory level off as well. This could translate into fewer transactions in the later part of summer. We should be prepared for some media outlets to talk about sales being down for the month of July.





Home Inventory levels are up by over 9% when compared to June of 2017. This is definitely having an impact on the market.  From May to June, there was a large jump in the average number of days a house spent on the market. This spring,  home sellers had attempted to push the price of their homes up, at an even greater rate than before, and that resulted in more inventory on the market. However, a lot of those homes ended up selling below their asking price. When home buyers push the prices up in this manner, their homes tend to sit on the market for a longer period of time. This can encourage buyers to make lower offers.



In the past, and while the housing market was recovering, the rate of appreciation hovered around the 10-11% range.  Home appreciation has recently slowed down to a more modest level between 5-6%. The slide below shows that home appreciation is leveling out. Zillow recently featured a graphic of their data and predictions for the next year in the Redding Metro area. Over the next year, Zillow anticipates just over 5% of appreciation.  The additional slide below shows data on the projected future appreciation. In 2018 it indicates around 5.8% appreciation.  The following years of 2019 and 2020 the rate is expected to slow down and eventually end up at around 3%.




Now because home appreciation has been slowing down, we have also begun to see home builders become more conservative. You can see in the slide below that the total number of permits pulled year to date is down by 10 permits from this time in 2017. Although 10 fewer permits is not a large number, it is important to note that the number of permits hasn’t grown. Builders are pulling fewer permits than last year, which is an indication that they are not confident enough in the market's ability to appreciate "fast enough" to continue investing in new construction at high levels.




Mortgage rates in the country were averaging at around 3.5% in early 2017. By the end of 2017 we watched the interest rates rise to the mid-4% range. Now in 2018, we are watching the rates go up into the high 4% range. The slide below indicates where experts believe the rates are headed in the years to come. Rates are expected to be at or above 5% next year. When mortgage rates go up, it has a significant impact on what buyers qualify for when they apply for a loan. For example, if a buyer qualifies for a home loan amount of $300,000 when the mortgage rate is at 4%, that same buyer will only qualify for a $270,000 home loan when the rate increases to 5%. Increasing mortgage rates will have an impact on the housing market.




The rental market continues to show signs of inflation. Anyone out there who is currently renting knows how difficult it is to find a great and affordable place. The slide below shows the increase in rental rates over the years. As rental rates increase, the cost of living as a renter will, unfortunately, continue to go up over the years as well. Home ownership is an excellent hedge against inflation since homeowners secure a mortgage, have locked in their housing costs, and will not be subject to the fluctuations of the rental market.




Wall Street has been waking up to the fact that the housing market is a safe place to invest. In the slide below, you can see that America thinks that Real Estate is the best choice for long-term investment. Traditionally, the stock market was thought to be the safest place to invest. However, you can see that opinions are already changing.




Home values in Shasta County are changing. Check out the value of your home instantly by using our free home valuation tool. Simply enter your property address and we will provide comparable sales to your home and project an estimated value instantly.



As always, if you have any questions, please feel free to respond to this email or contact me at 530-222-3800.

Have a great July!

Josh Barker

Wednesday, June 6, 2018

June 2018 Market Update

Click here to watch Josh's video blog for the month of June.

From The Desk Of Josh Barker @ RE/MAX

By now everyone has heard that interest rates will be increasing. For years and years, we have heard rumors of rate increases and yet, until now, they have remained relatively the same. As you can see in the graphic below, interest rates have started on an upward trajectory and are expected to continue to rise. If buyers neglect to pay close attention to the rising interest rates, they might find themselves priced out of the market. For every percentage point that the interest rate increases, purchasing power is impacted negatively by almost 10%! For example, if a buyer qualifies for a home purchase of $300,000 when interest rates are at 4%, the same buyer will only qualify for a $270,000 purchase if the rate jumps to 5%. As a result, the types of homes that are within a buyer’s budget will change. An interest rate increase will impact our local market.



As interest rates are on the rise, we are also seeing an increase in the availability of financing. The graphic below represents what the availability of financing looked like during the housing boom of 2005 and 2006. You can see how high it was then, before the market started to correct and decrease rapidly. Lenders responded quickly by tightening down on the availability of financing. But now we're beginning to see availability trend back up again. Although it is nothing like it was back then, you can see that lenders are beginning to loosen guidelines as they raise the interest rates. In part this is an effort to keep the buyer market stable, in terms of demand versus supply, as interest rates rise.















As you can see in the graphic below, the rental market is still very tight. We have been talking about rentals frequently in our market updates. As you can see in the graphic below, the rental market is still very tight. If you were to go looking for a place to rent today, you're most likely going to find yourself competing against multiple tenants. There just aren't as many rentals available today as there have been in the past. As a result, we're seeing rent rates continue to increase and the availability of rentals decrease. This results in a tough experience for people looking to rent. If you're a homeowner who is thinking about selling your home and moving into a rental, keep this in mind as you consider your options and make sure there are properties available for you to rent throughout your relocation process. If you are considering moving from your current home, our instant property valuation tool can help at www.shastahomevalue.com.














Home sales for the month of May were up slightly compared to one year ago. In addition, the number of homes available for sale is also slightly higher compared to one year ago. In the graph below you can review the number of homes for sale and homes that have sold broken down by price range.



Home values in Shasta County are changing. Check out the value of your home instantly by using our free home valuation tool. Simply enter your property address and we will provide comparable sales to your home and project an estimated value instantly.



As always, if you have any questions, please feel free to email me at josh@reddinghomes.com or contact me at 530-222-3800.

Have a great June!

Josh Barker

Wednesday, May 2, 2018

May 2018 Market Update


Click here to watch Josh's video blog for the month of May.

From The Desk Of Josh Barker @ RE/MAX

This year represents the 6th consecutive year of appreciation in the housing market in Shasta County. However, not all price ranges are performing the same. For example, for homes under $300,000, it is still a sellers’ market. If you are a home buyer shopping in this price range, it is easy to find yourself in a situation where there are multiple offers on the property you are interested in purchasing. If you have participated in any “multiple offer” situations recently it is a frustrating feeling for sure. With very little construction taking place in this price range, this is likely to remain the case for the next several years. Check the value of your home instantly at www.shastahomevalue.com.

The upper-end market over $450,000 has not performed as well. Although there are sales taking place at a higher rate in this price range than years past, appreciation has been visibly lower. There are several contributing factors. First, with the cost of new construction on the rise, many builders have been pushed into building higher priced homes in order to realize a modest profit. These new homes can shift demand from existing resale homes towards new construction. Secondly, due to a visible ceiling on local wages, there are far fewer buyers available to purchase these higher priced homes. Out of town buyers have been the silver lining in maintaining stability in the upper-end price range.


The middle market between $300,000 and $450,000 has surely been a mixed bag. This price range has experienced some appreciation but has also been visibly picky. Not all neighborhoods have performed the same and unlike the lower price ranges, the condition of these homes has a major impact on the final selling price.


In nearly every area of the county, the cost of renting has increased and is dangerously close to being unaffordable. With very few affordable housing projects on the books and the lack of higher density housing being constructed, the crunch on rent affordability will likely continue. The affordable rent crisis that is likely coming is the primary reason I am such a strong advocate for purchasing a home when the opportunity presents itself. Locking in a fixed living expense has always been the safest way to obtain wealth, and since you are paying for housing, either way, it’s always a good idea to pay yourself.


Lending guidelines are loosening. Many buyers are much more educated than in years past when it comes to financing. Some of these buyers have already been through a short sale or foreclosure in the past and are much more conscious about purchasing homes that they can actually afford. Clearly, this is a good thing and lenders have slowly loosened guidelines to welcome these types of buyers back into the market. With this added supply of home buyers and the boost of a strong economy, the FED is raising interest rates. Experts all agree that rates will continue to rise and the Fed has continued to forecast this intention in order to reduce surprises. 

The next housing market correction for Shasta County will not likely be as dramatic as you may think.  First, home buyers in today's market are using fixed mortgages to purchase homes. It was the interest only, negative amortization, and balloon payment loans that contributed to the last housing bust. Second, the lack of abundant new home construction in our local market will keep the supply of homes in check. Finally, the next housing correction will likely be more psychological than factual. After a long run of home appreciation, it is likely that some “would be home buyers” will want to wait for prices to drop. This reduction in buyer demand may have a temporary impact on the number of home sales and home prices in turn.  Although this may occur on some small scale, once it is clear that there will not be a “housing crash” home prices will likely stabilize again quickly. For those that have been around real estate for decades, none of what I am saying is new, it is simply a real estate cycle.


As always, if you have any questions, please feel free to respond to this email or contact me at 530-222-3800.

Have a great May!

Josh Barker