2017 HALFTIME REPORT
Well, here we are, 2017 is officially half over and I thought I would take some time and update you on what happened in the first half and help you understand what is happening now.
2017 has been a steady year with values increasing despite an increase in inventory. Using Rancho Cucamonga as a yardstick to measure all Inland Empire communities we can look at the inventory and value changes.
On January 1/2017 the inventory of available properties in RC was 300, today it is 372. These numbers show a very stable real estate market. The surprising numbers are the “in escrow properties” – on January 1/2017 there were 300 properties in escrow in RC and today there are 262.
One of the most asked questions today is “WHEN WILL THE NEXT REAL ESTATE RECESSION HAPPEN?” While no one can predict it with 100% accuracy, we can get very close if we pay attention to the indicators.
One of the most reliable indicators is EASE OF FUNDING: If we look at the real estate booms in the last 30 years we see that each time the top of the market was driven by ease of funding. In 1989 the term was CREATIVE FINANCING where people with little or no cash could purchase a home with a 1st, 2nd, and sometimes a 3rd mortgage opening the home ownership market to a much larger audience. In 2005 the mortgage industry reached an all-time low as far as minimum qualifications fueling one of the biggest real estate booms in history, and also leading to one of the biggest real estate recessions in history also. In 2017 the mortgage industry is now offering stated income loans, and accepting some of the lowest FICO credit scores in history, coupled with low and no down payment programs. This is fueling our current boom and will become more acute in the months to come.
Another reliable indicator is BUILDER CONFIDENCE: builders spend a lot of money on market forecasting before investing millions into projects. If we look at the 1989 boom we saw builders building at an unprecedented pace, and buyers camping out in front of the sales office hopping to get an opportunity to place a deposit on a new home sometimes without a final price. Well in the boom of 2017 everywhere you look builders are building.
We will continue to provide you with updates as we see things progress!