It’s time once again to see how I did on my early 2018 Costa Mesa Real Estate predictions!! I always bite down nervously when I look back at my January post….. and I just did again! I’m always nervous to see how it shakes out. I put a lot of time into that early year post and try to really figure out how things will go over the year.
Here we go! Here is a quick answer to each of the ten points I made for the year:
1. Prediction: Lack of Inventory- I think inventory more than doubles by October of this year. How did it turn out: I got this one right. The inventory doubled, but we did start the year with another lack of inventory. This might just be the new reality.
2. Prediction: Rising Rates –The Fed says they will raise rates three times this year; I think we get all three, if not more. How did it turn out: The Fed did in fact raise rates 3 times as predicted.
3. Inventory is UP, UP, UP – I think housing will remain strong the first half of the year, and prices will rise with it. How did it turn out:Well, I would say I got this one wrong, at least locally in Costa Mesa real estate. There was a decent inventory increase in spring/early summer, but there were enough buyers to absorb the inventory so increased inventory never really happened locally. Other areas in Orange County did see significant inventory changes.
4. Prediction: Feel Good Economy – there should be strong demand for existing and new housing so long as our local economy continues chugging forward. How did it turn out: Nailed it. Orange County continues to be a leading job center in the US with about 4% unemployment.
5. Prediction: New Housing – Expect to see even more new housing in Costa Mesa this year. How did it turn out: New projects abounded, with the majority of them selling out relatively quickly. Even in challenged locations like Aura on the corner of Merrimac and Harbor, new housing did well.
6. Prediction: Stock Market – I think we will see a very, very healthy and robust stock market for the better part of the year. How did it turn out: The market raised to a new high this past year, before an end of year swoon. Got the healthy part right, but perhaps I didn’t see the end of year correction coming.
7. Prediction: Sky High Rents – Rents continue to skyrocket, which should help sales along. How did it turn out: As predicted, rents did not give back a dime and continue to rise. I am shocked more renters are not getting into the housing market as buyers, especially with continued 4% interest rates.
8. Prediction:Creative Financing – With prices continuing to push their way up, lenders will be forced to “get creative” and offer new/better programs for buyers to help ease the sticker shock of higher payments. How did it turn out: Lenders are starting to go back to the ways that got them in trouble. “Stated Income” products made a return to the market, and lenders started pushing adjustable rates once the fed raised rates in the fall. New mortgages are the bread and butter for most big banks, and buying volume will keep them in business. But as prices rise, banks will have to continue to get more and more creative with new loan products.
9. Prediction: Flopped – Investors won’t make the sky-high profits and might get stuck with a home that they will lose money on. How did it turn out: I wouldn’t say I nailed this one – some investors still profited, but I did hear lots of stories where they had extremely skinny returns and never would have done the deal if they had known what they would have sold for at the end of the project.
10. Prediction: Summer Swoon Becomes A Fall Flop – I think it will be closer to 3% as we have a correcting market in the tail end of the year. How did it turn out: The median sales figures showed home prices up approximately 8% year to date, and inventory slightly down. The fall started early, in late July/early August after the Fed raised rates and the market stalled significantly. I was surprised more inventory did not come on at that point. The fall was certainly a slow point, and it took the Fed noting they were done raising rates to put confidence back in the banking and buyer market.
Not bad!! I would say I got it about 80% correct for those predictions!! How will it go in 2019? Watch for our 2019 predictions post later this week.
Original content, CostaMesaRealEstate.com and Colin Delaney