Costa Mesa Real Estate 2014 Predictions

Let’s look at what characterized the 2013 Costa Mesa real estate market, then work our way into the 2014 predictions.

 

In my 2013 Predictions post, I hit a lot of what was about to happen. Quick recap:

 

 

1. Tight inventory – It wasn’t tight, it was downright skinny! It created a feeding frenzy in the early summer.

 

2. Low rates- Yup, they barely moved all year. Gone are the rates anywhere in the 3% zone though.

 

3. REO/Hud homes – No, they didn’t come out. Our distressed homes moved down to less than 10% of inventory.

 

4. Inflation in Check – Yes, not much changed.

 

5. New Homes- Yes, building starts were way, way up.

 

6. Flippers paradise – Yes, when the flippers could actually buy a home.

 

7. Move up/move down – Yes. the buyers who moved up/down did really well in this market. It was a large chunk of what happened last year.

 

1. Rising rates – As I already hit on, the high 3% rates are long gone. They will likely be once in a generation. Bernanke and now Yellen are committed to buying less bonds, so we are definitely going to see higher rates by late 2014. How much higher? We could creep into the low 5% range, but I would expect 4.75% to be the going rate for a while.

 

2. 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.

 

3. 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 will be considerable deals to be had in fall 2014.

 

 

4. Slower, and Traditional – By fall 2014, we will see a traditional market where it actually takes months to sell a house, rather than the minutes characterized by last spring’s Costa Mesa real estate market.

 

5. OMG, I should have sold! – Those that were trying to time the market realized they might have missed the window, panic, and still list there homes higher than comps. There will be a lot of that. In January, I’ve already seen million dollar listings in $700k price zones.

 

6. Nice Ones Go Fast – That always remains true- the nicely fixed up homes in the best locations will sell very quickly this spring.

 

7. Early Year, Committed Buyers – Redfin posted a survey from its’ buyers who missed out on homes in 2013 with bidding wars, 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 2014.

 

8. 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.

 

9. 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.

 

See it differently? What do you think?

 

Colin Delaney is a Costa Mesa real estate expert and can be reached at (714) 743-9882 or via email.