Is the Iron Still Hot?
It’s the middle of summer, and things look like they’re cooling down.
You thought I was talking about the temperature, didn’t you? I wish I was, especially with just how hot it’s gotten around here lately (on the bright side, at least we haven’t come close to Laguna Beach’s record high of 108°F in 1963!). I’m talking about the housing market itself. Up until last week, the market had been carrying its fiery momentum: first-time buyers fought tooth and nail for new listings on the market, and real estate speculators were still musing on the idea of a never-ending hot market. But like all fires, the market can’t blaze forever. This week in real estate news has been filled with postulations on looming ‘chilling effect,’ and if we know one thing, it’s that media outlets tend to reinforce how we want the market to behave. In this case, it’s a more lax housing market.
So what are the analysts saying? Both Realtor and Redfin note that homebuyers may simply be taking a break from the bidding war fiesta. Competition is still fierce, and this means that buyers with more resources will more easily push out, say, most millennial homelookers. After all, median home prices are still hovering at around 12%. This buyer fatigue is compounding with the downturn of the coronavirus pandemic, with many considering the possibility of returning to their previous jobs (with others saying that they don’t plan to at all). It’s especially true in California, where low mortgage rates, high prices, and low supply have kept houses under the $1 million mark at a relative standstill. Above that, though, luxury houses are still doing quite fine.
But it would likely be a mistake to dismiss this quiet as an ice age. In fact, it might be a calm before another housing storm. An article from Business Insider cites housing analysts of all stripes projecting their vision of the market at end of 2021 into 2022. Some believe that millennial homebuyers might continue to get pushed out, while others think they might surge back into California after moving out of state. More optimistic experts also have a shred of hope for new house construction laws. While Mayor Eric Garcetti’s recent $1 billion bid to fight homelessness in Los Angeles may not be bearing fruit yet, but the move alone indicates that authorities are willing to spend the money needed to bolster affordable housing in Southern California.
That last reason alone is cause to be optimistic for the future. As always, keep an eye on both housing news and economic trends that might seem to have little to do with housing, such as the ongoing lumber shortage and local legislation. There’s another topic that analysts aren’t bringing up: the Delta Variant of COVID-19. Is a resurgent pandemic overblown? Perhaps, but it’s something else to look out for as we move into the latter half of the year.
If you need someone to talk to about the upcoming California housing market, get in touch with Cary Glenn at Main Beach Realty in Laguna Beach, CA. With 20 years of experience in beachside and luxury home real estate, Cary Glenn is committed to working closely with his clients to find solutions that work best for you.
