Westcoe Realtors, Riverside Ca…As we roll into a New Year, many of our clients want to know our opinion about what they can expect with regards to housing in our local Riverside area. The saying goes that all politics are local, and the same can be said for real estate as well. So…while we hesitate to venture into the world of predictions, what we can do is give you the benefit of our 32 years of selling real estate in Riverside, and answer for you the 3 most often asked questions regarding what to expect in 2017.
Interest rates have gone up a little…will this affect the real estate market? The short answer is “not really.” Don’t get us wrong, everyone wants rates as low as possible, but we need to get “real” here. Rates have risen a tick from the 3 7/8 range to about 4 1/2, but that marginal amount is not going to keep any buyer from purchasing a home. Yes, there will probably be a very small window while buyers react to a slightly higher payment, but in the end, 30 year fixed rates in the low 4’s are the kind of interest rates that we all would have begged for just 5-6 years ago. Interest rates go in cycles, but there is nothing on the horizon we can see that indicates rates are going to any level we need to worry about. Buyers may wind up purchasing a slightly lower priced home, but these rate changes will not stop anyone who wants to buy a home from doing so. Therefore, we see the number of home sales remaining steady.
As an FYI issue, please understand that the recent Fed rate hike of ¼% will have almost no effect on 30 year home loan rates. The Fed rate is what banks are charged to borrow money from each other overnight, only affects short term rates, and had already been factored into the rise noted above.
We hear a lot about “affordability.” Can buyers still afford to buy a home? Here, the answer is a profound “yes.” Don’t forget that the average home in Orange County costs approximately $330,000 more than the average home in Riverside. This is an enormous difference, and is a huge benefit to housing in our area. More and more people can now work from home (meaning no commute), and with this type of flexibility in job criteria, it only helps bring buyers to our area…an area they can afford. Sure, as we said above, no one wants higher house payments, but since our Riverside area shines so much brighter on the affordability scale than our neighbors in Orange and Los Angeles County, we have a long way to go before affordability becomes a factor in housing sales. Also, rumor has it that the 91 freeway will actually be totally open one day, so there is always that minor miracle to help us as well!
What do you see in 2017 for housing appreciation in our Riverside area? Well, we are headed into the “tea leaves” area here, but our feeling is that if you liked 2016, then you should be very comfortable with 2017. The rise in interest rates will probably have a tendency to slow appreciation rates just a little, but nothing to worry about. Remember, when you hear an appreciation number from any source, it has very little bearing on your particular property…there are just too many variables. Discrepancies in home amenities, property location, price range, home size etc. make a generalized appreciation rate almost meaningless for obtaining a value for your home.
However, if you use quoted appreciation rates as a simple barometer on how the market in general is doing, then you are fine…and given all the above, we are looking for home appreciation rates to be in the 4% range for 2017. Naturally, should the world fall apart and things run amok, then all bets are off…but if we can avoid a major catastrophe, then we should see a very solid, very steady housing market in our Riverside area in the New Year ahead.
We hope this information proves helpful to you in whatever plans you may be making for 2017, and naturally, if you need any detailed information about any real estate matter, we are only a phone call away and would be happy to help you in any way possible.
Happy New Year, and let’s all hope for a banner 2017.