Market Update with Chad Phillips
Re/Max Gold Roseville
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We're seeing the market start slow this year.
This is typical; however, what we're not used to seeing is
inventory this low. Generally I'm of the opinion for my sellers
to wait until spring time, or at least after the Superbowl to list
their house for sale. This is the first year where I'm thinking a
seller will potentially gain more on the sale of their home by listing
now and beating the usual influx of homes that tend to come up for sale
in April/May.
Interest rates are near record lows as well. With rates in the
low to high 3's, it's certainly an incentive for buyers to make the
move. Rates are also encouraging some folks to say put and
refinance. I'm currently in that boat! I'm looking to do a
cash out refi on my primary to pay off a rental property. The
numbers make sense! Another benefit of a refi could be to shave off
years on the loan. Going from a 30 year to a 20 year or even 15
year loan and your payment is roughly the same. That will save
you a lot of money over time.
As for the coming year, 2020 looks to be another year of gains in property
values. There are several factors that indicate that we're on a
solid path, notably the jobs reports, low inventory, interest rates and
overall strength of the economy. I do foresee some factors that
are posed to negatively effect us though. This rent control bill
will likely have a negative impact. The intention of the bill is
to keep rents low; however, I think the 5% a year cap is only going to
encourage landlords to adhere to this an impose the 5% a year.
Another proposition on the table is getting rid of prop 13, but
they disguise it by this title: California Tax on Commercial and
Industrial Properties for Education and Local Government Funding
Initiative. If this goes thru it will drive more businesses out
of California. If commercial property owners property taxes
skyrocket, it's going to translate to higher leases. It might
take a couple years to hit home, but when leases come up for renewal
we'll start to see more offices buildings empty. The lack of
common sense here is disturbing, and unfortunately deliberate.
For what it's worth, I'm predicting a good 2020 and then a market
correction in 2021. Regardless of who wins the presidency!
The market has rebounded from the bottom at 2012 to surpass
values of the past peak in 2005. There are no indicators of a
crash like we had before, but a price correction is what I'm preparing
for. Only time will tell! Keep your real estate investments
conservative at this point. If you need help running the numbers
on a project, feel free to contact me and let's see if it's viable and
worth doing. Have a great 2020 folks.
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