LAGUNA BEACH COAST
Homes in Newport Beach will continue to appreciate based on low supply and high demand. However, in the 1st quarter of 2023 home prices are projected to decrease 3 to 4 percent resulting from the Feds increase in the interest rates by the 4th quarter of 2022.
This forecast is based on the Chapman University Annual Economic Forecast provided in December, the California Association of Realtors Chief Economist, and my extrapolation based on the market activity in our neighborhoods.
According to Chapman, the Federal Funds Rate will go up from .2 to about .6 basis points in the 4th quarter of 2022. 2.5% interest rate for 10-year and 3.9% for a 30-year mortgage. As interest rates go up home; prices go down.
As one of the most desirable locations to live, Newport Beach typically lags the housing market's economic disruptors when compared to the rest of Orange County. Chapman is forecasting Orange County housing prices to decline at 3 to 3.9 percent in the 4th quarter of 2022.
Keep in mind that home prices have dramatically increased in the Newport Beach area at about 20 to 30 percent within the last year. Just this last December, a record number of homes have sold above asking price with Newport Coast at the top. Currently, there is an unprecedented number of homes from December to date that have fell out of Escrow and Back on the Market. Buyers have jumped to grab a home because of the low inventory and may not have been 100% purchasers and decided not to buy the home.
Recession in 2022? No, not until 2023. Why? We are experiencing Inflation right now. It is the rubber band affect. When prices spike; prices will drop just as fast.
Why again? According to Chapman there are 3 distinct reasons:
1) Historically, Fed’s fund rate increase during inflations and every time is has; it has led to a recession.
2) Fiscal policy matters. US government is on the books to spend $10 trillion from 2020 to 2023.
3) The real wage rate has dropped by 1.9% lowering consumer purchasing power.
HAS THE NEWPORT BEACH HOUSING MARKET SLOWED DOWN?
The housing market has stabilized.
Homes currently on the market are decreasing asking prices.This is a stabilization indicator. Don't list your home above recent sold COMPS. The big wave is over; but it will not crash; just gently rolling.
In Newport Beach, Corona del Mar and Newport Coast, only 4 homes on the market reduced the asking price in August. However, 25 homes reduced the asking price in September and already 25 homes from October 1st to October 20th.
All information is from the CRMLS
July, 2020- Newport area housing market on the rise
Below are previous market updates. Today the number of homes sold in the Newport Beach area has dramatically gone up and the days on market have been shorter. The slow down in April and May from the Corona Virus Pandemic cauzed a slow down in April and May. Now for June and July there is pent up demand from the previous slow down. There is also a lower than usual supply of homes and interest rates are still low.
Below is last years market update. Today the real estate market has come to a slow down because of the Corona Virus Pandemic. The real estate market through ingenuity and strongholds is reinventing how we can help our clients to buy, rent, sell and lease homes. There is a strain on available funds for buyers and sellers to enter transactions but this economic slow down will not last long. Why?
1) Sellers and Landlords are keeping their offer prices stable and inventory is low.
2) The government has pumped money into the economy and is working together with private businesses to combat this crisis.
3) Small businesses the back bone of our economy are coming up with ways to deliver services and adding new products to their services. Entrepreneurs are re-creating themselves.
4) History repeats itself. The American Economy has had struggles in the past and the American People prevail!
After a slow start in January 2019, the real estate market is starting to pick up. Throughout the California Coast there has been a record of new homes and newly remodeled homes for the City of Newport Beach and the surrounding coastal communities. Sellers must keep this in mind when pricing their home. If you are thinking of selling now! Historically, May is a good month and then real estate sales slow down after June and in a election year which is coming up in 2020.