ARE HOUSING PRICES IN A NEW BUBBLE?
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Last month, we spoke about the fed lowering interest rates, and how recent economic trends have made it more affordable to buy a home. Clients broach the subjects: Is there a house price bubble? Will there be a recession in 2020?
So we attended the 2020 Economic Forecast by the Newport Beach Chamber of Commerce, presented by the UCI Merage School of Business to find out more. It was a sold out event with positive predictions.
Christopher Schwarz, UCI Faculty Director, Center for Investment and Wealth Management spoke to the general economic trends and prediction of no recession in the coming year. The economic growth will be at a modest growth 1.5 percent in 2020.
Bill McBride, a Housing and Economic Analyst and creator of the Calculated Risk Blog, spoke specifically to the housing and economic trends. He coined himself as typically on the negative side, whereas for 2020 he is predicting positively, no recession.
He noted there are two characteristics of a bubble: 1. Prices have to be out of line. 2. Excessive speculation. He said there is very little evidence of speculation. During the last bubble, for loans they only checked credit. Now the three C's are checked: Credit, capacity and collateral. Over the past 10 years he termed there have been the best performing loans we have ever seen. Serious loan defaults are at historically low levels. The loan starts are also at a low for defaults. Current lending rules and regulations are giving way to a much healthier housing economy than was present during the previous recession. McBride commented that there isn't a frenzy in real estate activity like there was during the last bubble. During the bubble there were 7 million sales. Now there are an average of 5.3-5.4 million sales which is a healthy range. Housing starts and new homes sales are up, a trend historically during a healthy market. If housing starts and new home sales dip, then there could be a recession in the next year or two, McBride stated. He also commented on the millennials, who form a large population that are moving from renting to owning. They will continue to drive up demand and the lack of homes currently for sale could make the coming year a busy one. A few notable slide images are provided here. If you would like McBride's full presentation, just message us we are happy to forward.
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COMING SOON
in Laguna Beach
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959 Quivera St, Laguna Beach
List Price: $1,289,000
3bd, 2.5ba, 1,648 sqft
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RECENTLY SOLD
in Laguna Beach
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12 N. Portola, Laguna Beach
Represented Seller
Sale Price: $3,300,000
3bd, 3ba, 2441 sqft
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336 Canyon Acres, Laguna Beach
Represented Buyer
Sale Price: $765,000
2bd, 1ba, 725 sqft
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895 La Mirada St, Laguna Beach
Representing Seller
List Price: $1,299,000
2bd, 1ba, 1,188 sqft
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CURRENT LISTINGS
Laguna Beach
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1576 Del Mar Ave - For Rent
3 bd, 2 ba, 1,476 sqft
$4,200 / mo |
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MARKET STATISTICS
Laguna Beach
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Active - 249 (Down 5% vs. Oct.)
Pending - 39 (Down 14% vs. Oct.)
Sold in October - 42 (No change vs Sep.)
Under $1,000,000 - 5
$1,000,000 - $2,000,000 - 22
$2,000,000 - $3,000,000 - 3
$3,000,000 - $5,000,000 - 8
$5,000,000 - $7,500,000 - 2
$8,416,500 - 1
$10,000,000 - 1
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