2015 Predictions for Costa Mesa

Rising rates – As I keep warning you in blog posts, the high 3% rates will be a thing of the past by the end of the year. They will likely be once in a generation kind of rates. Janet Yellen is committed to raising rates to ward off inflation, so we are going to see higher rates by late 2015. How much higher? We could creep into the low 4.25% – 4.5% range, but I would expect 4.5% to be the going rate for a while.

Spring inventory – The market always kicks into third and fourth gear after the Superbowl, and I would expect we could see a greater influx of inventory, much of it due to people who feel as if they might miss the timing to sell high.

Late Summer Balance, Prices Flatline - Inventory should increase to the point where we see a balance in Costa Mesa real estate between buyers and sellers, and prices will stop their escalation by late summer. There should be some deals to be had in fall 2015, but not as good as people might think.

Slower, and Traditional – By fall 2015, we will see a traditional market where it takes months to sell a house, rather than the minutes characterized by last spring’s Costa Mesa real estate market.

OMG, I should have sold! – Those who were trying to time the market realized they might have missed the window, panicked, and still listed their homes higher than comps. There will be a lot of that.

Nice Ones Go Fast – That always remains true- the nicely fixed-up homes in the best locations will sell very quickly this spring. I still think we will see multiple offers on these kinds of homes too.

Early Year, Committed Buyers – Redfin posted a survey from its buyers who missed out on homes in 2015 with bidding wars, and low inventory – they are committed to buying quickly, and they know what they want. Those sentiments will drop in the Costa Mesa real estate market as we hit late summer/ early fall 2015.

Return of Other Mortgage Products – We’ve already seen new introductions of adjustable-rate mortgage products in the Jumbo loan zone, which is good since our conventional mortgage cap is now at $625,000 locally for Costa Mesa real estate. We will probably see another return of subprime products. Why we don’t learn our lesson, I don’t know.

Smart Underwater Mortgages Sell – There is a considerable backlog of folks who were underwater on their Costa Mesa real estate loans as of about a year ago. The rising prices bailed them out of short sales/foreclosures, and the smart folks will try to get out from under that debt whole.

Flip City – I thought we had seen all the flipping we could take in 2014, but there seems no end in sight this year for flippers. I think we will continue to see flippers profit from inventory in Costa Mesa that needs significant improvement, and I think some of the prices they will sell at will surprise everyone.