What’s in store for the year ahead in the housing market?

The California Association of REALTORS® (C.A.R.) reports that a combination of high home prices and eroding affordability is expected to cut into housing demand and contribute to a weaker housing market in 2019.

C.A.R. is projecting a 3.3 percent decline in existing single-family home sales in 2019, down from a projected 410,460 in 2018 to 396,800 in 2019. The 2018 figure is 3.2 percent lower compared to the 424,100 homes sold in 2017.

“While home prices are predicted to temper next year, interest rates will likely rise and compound housing affordability issues,” said C.A.R. 2018 president Steve White. “Would-be buyers who are concerned that home prices may have peaked will wait on the sidelines until they have more clarity on where the housing market is headed. This could hold back housing demand and hamper home sales in 2019.”

C.A.R. also is forecasting growth in the U.S. gross domestic product of 2.4 percent in 2019, after a projected gain of 3.0 percent in 2018. With California’s nonfarm job growth at 1.4 percent, down from a projected 2.0 percent in 2018, the state’s unemployment rate will remain at 4.3 percent in 2019, unchanged from 2018’s figure but down from and 4.8 percent in 2017.

C.A.R. also predicts the average for 30-year, fixed mortgage interest rates will rise to 5.2 percent in 2019, up from 4.7 percent in 2018 and 4.0 percent in 2017, but will still remain low by historical standards.

Rising mortgage interest rates coupled with higher home prices in California is expected to mean that only 25 percent of households statewide will be able to afford a median-priced home in 2019, said C.A.R. If the past is any indication, the percentage of households that will be able to afford a single-family home in San Diego County next year will be even fewer.

The median home price statewide is forecast to increase 3.1 percent to $593,450 in 2019, following a projected 7.0 percent increase in 2018 to $575,800, according to C.A.R.

“The surge in home prices over the past few years due to the housing supply shortage has finally taken a toll on the market,” said C.A.R. Senior Vice President and Chief Economist Leslie Appleton-Young. “Despite an improvement in supply conditions, there is a high level of uncertainty about the direction of the market that is affecting homebuying decisions. This psychological effect is creating a mismatch in price expectations between buyers and sellers and will limit price growth in the upcoming year.”

Outmigration, resulting from the state’s housing affordability issue, will also be a primary concern for the California housing market in 2019 as interest rates are expected to rise further next year. The high housing cost is driving Californians to leave their current county or even the state.

According to C.A.R.’s 2018 State of the Housing Market/Study of Housing: Insight, Forecast, Trends (SHIFT) report, 28 percent of homebuyers moved out of the county in which they previously resided in 2018, up from 21 percent in 2017.

The outmigration trend was even worse in the Bay Area, where housing was the least affordable, with 35 percent of homebuyers moving out because of affordability constraints. Southern California did not fare any better as 35 percent of homebuyers moved out of their county for the same reason, a significant jump from 21 percent in 2017. The substantial surge in homebuyers fleeing the state is reflected by the home sales decline in Southern California, which was down on a year-over-year basis for the first eight months of 2018.

Outmigration will not abate as long as home prices are out of reach and interest rates rise in the upcoming year, said C.A.R.

California home sales continued their downward trajectory trend across the state for the seventh consecutive month in November as prospective buyers continued to wait out on the sidelines, according to the latest housing market report for home sales and prices from the California Association of REALTORS® (C.A.R).

November’s sales figure was down 3.9 percent from October and 13.4 percent from November 2017. Homes were selling at a seasonally adjusted annual rate of 381,400 units in November, compared to 440,340 a year ago. November marked the fourth month in a row that sales were below 400,000.

Sales in San Diego were down 8.4 percent in November 2018 from October 2018 and 11.0 percent compared to November 2017.

“While many home buyers continue to sit on the sidelines, serious buyers who are in a position to purchase should take advantage of this window of opportunity,” said C.A.R. President Jared Martin. “Now that interest rates have pulled back, home prices have tapered, and inventory has improved, home buyers’ prospects of getting into a home are more positive.”

C.A.R. said November’s statewide median home price declined to $554,760, down 3.0 percent from $572,000 in October but up 1.5 percent from a revised $546,820 in November 2017.

Prices are falling in San Diego as well. The median price in November 2018 was $626,000, down 1.5 percent from $635,500 in October 2018, but still 1.0 percent above last November’s $619,900.

Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 381,400 units in November, according to information collected by C.A.R. from more than 90 local REALTOR® associations and MLSs statewide. The statewide annualized sales figure represents what would be the total number of homes sold during 2018 if sales maintained the November pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

“The slowdown in price growth is occurring throughout the state, including regions that have strong economic fundamentals such as the San Francisco Bay Area,” said C.A.R. Senior Vice President and Chief Economist Leslie Appleton-Young. “The deceleration in home price appreciation should be a welcome sign for potential buyers who have struggled in recent years against low inventory and rapidly rising home prices.”

Other key points from C.A.R.’s November 2018 resale housing report included:

• Statewide active listings rose for the eighth consecutive month after nearly three straight years of declines, increasing 31 percent from the previous year. November’s listings increase was the largest since April 2014.
• The median number of days it took to sell a California single-family home edged up from 22 days in November 2017 to 28 days in November 2018. Meanwhile, in San Diego County, the median number of days a home remained unsold on the market was 22 days in November 2018, compared to 24 days in October 2018 and 17 days in November 2017.
• The unsold inventory index, which is a ratio of inventory over sales, increased year-to-year from 2.9 months in November 2017 to 3.7 months in November 2018. The index measures the number of months it would take to sell the supply of homes on the market at the current sales rate.
• On a region-wide, non-seasonally adjusted basis, sales dropped double-digits on a year-over-year basis in the San Francisco Bay Area, the Central Coast, and the Southern California regions, while the Central Valley region experienced a relatively small sales dip of 3.9 percent.
• Forty-one of the 51 counties reported by C.A.R. posted a sales decline in November with an average year-over-year sales decline of 16.8 percent. Twenty-six counties recorded double-digit sales drops on an annual basis.
• The 30-year, fixed-mortgage interest rate averaged 4.87 percent in November, up from 3.92 percent in November 2017, according to Freddie Mac. The five-year, adjustable mortgage interest rate also increased in November to an average of 4.11 percent from 3.24 from November 2017.

In other recent real estate and economic news, according to news reports:

• San Diego leads the nation with the most home price reductions this year. The share of home listings with a price cut grew to its highest level in at least eight years, says a recent analysis from Trulia. San Diego had the most reductions, 20.5 percent, of the 100 biggest metro areas in the United States so far this year. San Diego was tied with Tampa, which also saw 20.5 percent of homes with a price cut.
• The San Diego metropolitan area has been ranked as the fifth least popular home buying market for millennials in the United States, according to the latest LendingTree report. The company found that San Diego-area millennials only accounted for about 35 percent of the home loan purchase requests for the first 11 months of the year. Tampa was ranked as the least popular market for millennial homebuyer loan requests, followed by Las Vegas, Miami and Orlando. Salt Lake City topped the list for the most millennial home loan requests at 51 percent. It was followed by Minneapolis and Pittsburgh, where nearly half of the requested loans were from millennials.
• Few millennial renters can afford down payment on a home. According to Apartment List’s 2018 Millennial Homeownership Report, 88 percent of millennial renters in San Diego say that they plan to purchase a home at some point in the future, but just 3 percent expect to do so within the next year, while 37 percent say that they won't buy for at least five years. The survey of 6,400 millennial renters found that while the overwhelming majority of those surveyed would like to purchase a home at some point in the future, far fewer are financially prepared to do so in the near term. Of the millennial renters in San Diego who plan to purchase a home, 59 percent have zero down payment savings, while just 14 percent have saved $10,000 or more, according to the survey.
• With average rents nearing $2,000 a month, San Diego may be one of the pricier places for millennial renters in the U.S. Despite the cost, however, a survey by the rental platform company Zumper said that only 2 percent of millennials are getting help from their parents for rent. San Diego appears to be the most independent city with only 2 percent of respondents who had their parents help with rent, compared to 24 percent in Detroit. Austin had the second largest proportion of millennials in need at 23 percent.
• San Diego had the second lowest unemployment rate among California’s most populous metro areas this year between July and September, according to a report released Wednesday by the San Diego Regional Economic Development Corp. San Diego’s third-quarter unemployment rate sat at 3.2 percent, bested only by San Francisco at 2.5 percent. The rates in both cities fell 0.5 percent between the second and third quarters. Compared to the other most populous metro areas in the country, San Diego ranked 10th in the third-quarter unemployment rate.

The California Association of REALTORS® (C.A.R.) recently conducted a consumer survey of California homebuyers. The survey examined the attitudes and behaviors of real estate consumers. According to its 2018 State of the California Consumer Survey, California’s competitive housing market and low housing affordability are forcing homebuyers to make compromises in their home purchases including price, size, location, and school quality.

The survey revealed that 44 percent of buyers bought a more expensive home than they wanted, 33 percent purchased a smaller home than desired, 36 percent purchased a home further from school or work than wished, and 30 percent purchased in an area where schools were of lesser quality.

“Well-qualified homebuyers understand that buying a home can be challenging in a competitive housing market environment and they may not be able to buy the ideal home they want,” said 2019 C.A.R. President Jared Martin. “Instead of finding a home that’s a perfect fit, they are finding a home that’s a good enough fit.”

Buying Experience

Buyers were not deterred by higher home prices and tight housing supply conditions but waited until their financial situations improved or to save for a down payment. Buyers typically saved for five years, and nearly a quarter of those who purchased a home priced $1 million or higher saved more than 10 years.

The source of down payment for the majority of home buyers was their personal savings. Boomers were more likely to use the proceeds from the sale of a previous home since many were repeat buyers. Millennials were significantly more likely than Gen Xers or boomers to use funds received from parents or family or a gift.

California’s costly home prices gave nearly one in three home buyers cause to consider purchasing in another state, but buyers ultimately stayed because they liked the city or state they currently lived in or because of their job, family, or friends. Younger buyers and first-time buyers were more likely to consider leaving the state. With the state’s housing prices at 161 percent above the national average, California’s high housing costs are the biggest factor hurting young, middle-class, often minority families.

Buyers typically spent eight weeks on their home search, and nearly one in three spent 13 weeks or more. Reflecting the extremely tight housing market in the San Francisco Bay area, buyers in the Bay Area spent a median of 10 weeks in their home search. Buyers who bought homes $1 million or higher spent a median of seven weeks searching for a home, while those whose homes cost less than a $1 million spent a median of eight weeks. Generally, the more competitive the housing market is, the longer it takes to find a home.

Buyers made a median of three offers on other homes before having an offer accepted, but nearly one-fourth made more than 10 offers. Those who purchased a home for more than $1 million made five offers on other homes. The hyper-competitive, supply-constrained Bay Area had the highest incidence of multiple offers.

Buyers Preferences

Homebuyers’ preferences varied by age/generation, income, and home buyer status (first-time, repeat, investment buyer, etc.).

The typical first-time buyer purchased a three-bedroom, 1,500-square-foot, single-family home. Nearly half purchased a home in the suburbs, and two-thirds purchased a one-story home. Buying a home within their price range and with the desired number of bedrooms were the top requirements for first-time buyers. They selected their neighborhood primarily based on their budget (53 percent), safety (51 percent), and proximity to jobs/school (38 percent). First-time buyers were likely to purchase a home close to where they previously lived, with only 20 percent choosing to leave the county or state.

Being in a better financial situation, repeat buyers typically purchased a larger home with three bedrooms and a median square footage of 1,700. Three in four purchased a single-family home, and more than half purchased a one-story home. Nearly half bought a home in the suburbs, 26 percent bought a home in the city outside of downtown, 18 percent bought homes downtown, and 11 percent bought in a rural area.

With lower income and less equity under their belts, millennials tended to buy smaller, more affordable homes than older generations with a median of 1,500 square feet and a median price of $350,000. Millennials were more likely to purchase a condominium or townhome in a suburb (43 percent), followed by a home in the city outside of downtown (26 percent). They selected the neighborhood they wanted to live in based on their budget (52 percent), safety (49 percent), proximity to jobs/schools (40 percent) and family/friends (33 percent).

Similar to millennials, the Gen X group most commonly selected a home in the suburbs, trading up to a home a median of 300 square feet greater than that of their previous home. More than half of them selected a home with at least one bedroom larger than their previous residence. Most purchased a single-family home, and townhouses/condos accounted for nearly 20 percent of those purchased. The majority of Gen Xers chose to buy within the same county as they previously lived, presumably to minimize disruption from the relocation and maintain the same lifestyle.

Boomers were most likely to have purchased a single-family home in the suburbs without stairs and were also the most likely to buy a home in a rural area since many of them are approaching retirement age and planning to age in their home and seek a quieter lifestyle. They were less likely to purchase in the same county they previously resided in with 24 percent buying in another county perhaps to be closer to children/grandchildren or healthcare facilities.

C.A.R.’s 2018 State of the California Consumer Survey , conducted online between May 9 and July 9, 2018, was designed to understand the process of home buying and selling, as well as the motivation behind renting and owning from the perspective of the California consumer. Surveys were sent to 470,803 consumers ages 18 and older in the state of California, resulting in 6,144 participants, a 1.3 percent response rate. The margin of error was plus-or-minus 1.2 percent at a 95 percent confidence interval. For the buyers section, 1,441 buyers purchased a home in California within 18 months preceding survey participation.

This article is the latest in a series highlighting former PSAR presidents.

It was 1973. As a teenager growing up in Chula Vista, Wayne Ansley had long hair, a ponytail and played guitar and keyboard in a rock band. But, then, he realized he had to get a real job. His father Bill, a retired U.S. Army lieutenant colonel, was a real estate broker at the time and encouraged his son to get his real estate sales license.

“After I graduated from Anthony’s Real Estate School and received my sales license, my dad gave me $500 to go buy some business suits,” said Wayne. “Then, I joined what was then called the South San Diego Bay Cities Association of Realtors, which later became PSAR (in 1992). I was 19 years old, and I think I was the youngest member ever to have joined the Association, until someone who was 18 years old joined later.

“My first real estate deal in 1973 was selling a home on Agua Tibia Street in Chula Vista for $22,000. The sellers, an elderly couple, the Papes, took pity on me and trusted a young, new agent. On those days, the sales contract was a one-page, legal-size form and copies were made with carbon paper. Cell phones weren’t invented yet. If you had a pager, you were a hot-shot like a doctor.”

After his father Bill passed away at age 61 in 1983, and Wayne got his broker’s license and took over the family business. In 1991, he joined the PSAR board of directors. He also became a California Association of REALTORS® (C.A.R.) Director in 1992, and attended many C.A.R. state conventions on behalf of PSAR. In the 1990s, Wayne served on many PSAR committees, including Community Relations, Grievance, Professional Standards, Government and Political Affairs and Building Operations. For two years, in 1994 and 1995, Wayne served as board VP. In 1996, he was elected as president-elect. In 1997, he served as president of PSAR.

As a member of the PSAR Building Committee in 1992, Wayne played a role in the relocation of the PSAR offices in Chula Vista from “L” Street to PSAR’s current headquarters, a 16,467-square-foot building at 880 Canarios Court.

Wayne estimates he has sold more than $100 million of property over his 45-year career. He remains today an active full-time broker. His diversified background in real estate has included residential sales, investment properties (including commercial, apartment and industrial sales and leasing), foreclosure short sales and full-service property management. He also has developed and built several apartment buildings, houses and a condo project.

“While previewing or showing properties, I have set-off alarms, broken keys in locksets, accidentally let out dogs and cats and, one time, walked into a master bedroom where a naked lady was in the shower. She screamed at the top of her lungs,” said Wayne.

“As a young agent, I had a string of bad luck with several unreliable cars. I had a Mercury Capri sports car with a broken passenger seat that was propped up with a piece of wood. I picked up a buyer from Japan who had a camera hung around his neck. I hit a bump in the road and the piece of wood came loose and the buyer went flat on his back and got hit in the head by his camera.

“Then, I bought a Ford Pinto for $300. I was showing property to a Naval officer wearing his dress whites uniform. On the freeway, the front end started shaking at 40 miles per hour and then rusty water from the heater leaked on his white pants. He actually bought the house I showed him and later he told me, `Wayne, the first thing I want you to do with your commission check is to go buy a new car.’”

Over the years, Wayne said his other cars have included an Oldsmobile Delta 88 and a Cadillac Sedan Deville. He then purchased his dream car, a BMW 740 I-L.

Wayne is especially proud of his contributions as a member of the Pilgrim Lutheran Church. As a volunteer, he donated more than 3,000 hours over the past year-and-a-half and helped the church sell its previous three-acre property at 497 “E” St. for $5.5 million (escrow closed in August). The church has since merged with their sister church located on a larger 8.5-acre site at 810 Buena Vista Way to become the Victory Lutheran Church and Christian Academy. “It was the most difficult transaction I ever had, but also the most gratifying because I was able to give back to the Lord in gratitude of 45 years of success,” he said. Construction recently began on their new church project.

PSAR is proud to announce that a new Service Center in San Diego’s Clairemont community.

The new centrally located PSAR facility, easily accessible throughout central San Diego, at the Liberty Park Plaza, 4340 Genesee Ave., Suite 203, San Diego.  We are right next door Curves on the Second floor.

Clairemont is a vibrant, culturally and ethnically diverse suburb conveniently located for commuters between three freeways, including Interstate 5 and 805 and State Route 52. Its perch atop the mesas of San Clemente Canyon and Tecolote Canyon affords enviable views of Mission Bay and the Pacific Ocean.

The community’s early developers, Lou Burgener and Carlos Tavares, changed the community’s name from Morena Mesa to Clairemont in honor of Tavares’ wife, Claire. In the early 1950s, Clairemont became San Diego’s largest post-war subdivision. Burgener once boasted that between 1952 and 1954 an average of seven tract homes were constructed per day. Clairemont was known at the time as the largest development of its kind in the country. Considered innovative at the time, homebuilders abandoned a more traditional gridded blocks and streets in favor of cul-de-sacs and meandering streets. 

Today, Clairemont offers perhaps the most multicultural dining options in San Diego County. Here you can find international markets, as well as Thai, Italian, South African, Mexican and Lebanese restaurants all within the same block.

The housing markets for Clairemont (92117), Pacific Beach (92109), University City (92122) and Linda Vista (92111) vary greatly for both detached and attached homes. According to recent housing market statistics from industry source HomeDex:

-- The median sales price for a detached single-family home in Clairemont was $729,000 in October 2018, which was 10.3 percent higher than the $660,750 price in October 2017. The October 2018 monthly figure for detached homes in Clairemont was 8.7 percent higher than the year-to-date median sales price of $690,000.

-- In Pacific Beach, the median sales price for a detached single-family home was $1.295 million in October 2018, which was 5.6 percent higher than the $1.226 million in October 2017. The October 2018 monthly figure for detached homes in Pacific Beach was 8.6 percent higher than the year-to-date median sales price of $1.250 million.

-- In University City, the median sales price for a detached single-family home was $922,500 in October 2018, which was 2.7 percent higher than the $898,000 price in October 2017. The October 2018 monthly figure for detached homes in University City was 5.9 percent higher than the year-to-date median sales price of $900,000.

-- In Linda Vista, the median sales price for a detached single-family home was $610,000 in October 2018, which was 3.3 percent lower than the $630,500 price in October 2017. The October 2018 monthly figure for detached homes in Linda Vista was 9.1 percent higher than the year-to-date median sales price of $635,000.

For attached homes, the market also varies greatly among the four communities.

-- For attached homes in Clairemont, the median price was $441,250 in October 2018, which was 6.5 percent higher compared to the $414,500 price the same month a year ago. The October 2018 monthly figure for attached homes in Clairemont was 10.8 percent higher than the year-to-date median sales price of $399,000.

-- For attached homes in Pacific Beach, the median price was $615,000 in October 2018, which was 2.3 percent lower compared to the $629,500 price the same month a year ago. The October 2018 monthly figure for attached homes in Pacific Beach was 0.8 percent higher than the year-to-date median sales price of $620,000.

-- For attached homes in University City, the median price was $485,000 in October 2018, which was 10.7 percent higher compared to the $438,000 price the same month a year ago. The October 2018 monthly figure for attached homes in University City was 8 percent higher than the year-to-date median sales price of $464,250.

-- For attached homes in Linda Vista, the median price was $420,500 in October 2018, which was 7.6 percent lower compared to the $455,000 price the same month a year ago. The October 2018 monthly figure for attached homes in Linda Vista was 4.1 percent higher than the year-to-date median sales price of $433,750.

California’s housing market declined for the sixth straight month in October, according to the latest housing market report from the California Association of REALTORS® (C.A.R). C.A.R. also found that existing home sales in the state dropped below the 400,000 level for a third consecutive month. The last time there were three straight months when the sales dipped below 400,000 was February 2015.

Summarizing the overall housing market, mortgage rates remain affordable while demand for existing homes is slowing, home prices are falling slightly, price growth is moderating, price reductions are becoming more common and a tight supply of available homes, still low, is increasing, while many potential buyers are putting their homeownership plans on hold.

In October, C.A.R. said the month’s sales figures was up 3.8 percent from the revised 382,550 level in September and down 7.9 percent compared with home sales in October 2017 of 431,070.

C.A.R. said October’s statewide median home price was $572,000, down 1.2 percent from September ($578,850) and up 4.7 percent from October 2017 ($546,430).

In San Diego County, the median price of a single-family home was $635,500 in October 2018, a slight decrease from the $640,000 price reported for September 2018 and a 13.2 percent decline from October 2017 when the median price was $603,000. San Diego’s year-over-year comparison between October 2018 and October 2017 was the largest decrease among any Southern California market, said C.A.R. Orange, San Bernardino, and San Diego counties all experienced year-over-year, double-digit declines of 11.3 percent, 11.4 percent, and 13.2 percent, respectively. Sales in Los Angeles County declined 5.9 percent and were down 2.9 percent in Riverside County.

Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 397,060 units in October, according to information collected by C.A.R. from more than 90 local REALTOR® associations and MLSs statewide. The statewide annualized sales figure represents what would be the total number of homes sold during 2018 if sales maintained the October pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

“Homebuyers continued to put their homeownership plans on hold in October and wait out the market,” said 2019 C.A.R. President Jared Martin. “With mortgage rates at seven-year highs making homeownership more expensive and home prices beginning to flatten, this phenomenon will likely continue for the near term as buyers wait for further price adjustments and for interest rates to stabilize.”

“October’s sales decline was not as severe as the double-digit drop experienced in September, but the continued pullback in sales suggests the market will continue to slow and likely soften further into 2019,” said C.A.R. Senior Vice President and Chief Economist Leslie Appleton-Young. “Likewise, as home sales continue to soften, the median price, which was the lowest since March 2018, will also ease up,” said Appleton-Young.

Other key points from C.A.R.’s October 2018 resale housing report included:

• Homes are taking longer to sell than they did just a few months ago. The median number of days it took to sell a California single-family home rose from 21 days in October 2017 to 26 days in October 2018.
• Meanwhile, in San Diego County, the median number of days a home remained unsold on the market was 24 days in October 2018, compared to 19 days in both September 2018 and October 2017.
• Statewide active listings rose for the seventh consecutive month after nearly three straight years of declines, increasing 28 percent from the previous year. October’s listings increase was the largest in four years.
• Active listings in the $500,000-$750,000 price range experienced the largest year-over-year gain (43.9 percent), followed by homes priced $750,000-$999,999 (40.1 percent). The sub-$200,000 market was the only price segment with a decline of 6.2 percent from last year.
  
  The unsold inventory index, which is a ratio of inventory over sales, increased year-to-year for the seventh consecutive month in October from 3.0 months in October 2017 to 3.6 months in October 2018. The index measures the number of months it would take to sell the supply of homes on the market at the current sales rate.

• The 30-year, fixed-mortgage interest rate averaged 4.83 percent in October, up from 3.90 percent in October 2017, according to Freddie Mac. The five-year, adjustable mortgage interest rate also increased in October to an average of 4.08 percent from 3.18 from October 2017.

In other recent real estate and economic news, according to news reports:

• According to real estate tracker CoreLogic, a chill is settling over the once white-hot Southern California housing market. San Diego home sales decreased 17.5 percent in September 2018. A total of 2,942 homes were sold in the county, down 17.5 percent from 3,568 during the same month the previous year. It was the lowest number of sales for a September in 11 years, compared to September 2007 just before the Great Recession when 2,152 units were sold.
• CoreLogic also said in September 2018, the median price of a San Diego County home was $575,000, up 7.5 percent from $535,000 in September 2017, but it was the first decrease since January 2018 after hitting an all-time high of $583,000 in August. Most experts are attributing the slowdown to a rise in mortgage interest rates as potential buyers balk at higher monthly payments.
• The number of seriously underwater homes in San Diego County continued to decline in the third quarter as home equity maintained an upward trajectory, according to Attom Data Solutions. The real estate analytics company’s latest report found that only 6.5 percent of San Diego homes surveyed had mortgages that were at least 25 percent higher than the property's estimated market value.
• Discounts, gift cards, and free streaming services for new renters are on the rise across the nation, but San Diego County seems to be bucking that trend, according to a HotPads report. The online real estate company found that rental listings advertising a concession have increased by 15.8 percent since the fall of last year, but San Diego County has seen a 27.1 percent decrease in rental concessions year-over year. HotPads pegged the median San Diego County rent at $2,680 a month, representing a 4.8 percent year-over-year increase.
• San Diego County’s unemployment rate rose slightly in October, although total nonfarm employment increased by more than 10,000 jobs, according to the California Employment Development Dept. The county unemployment rate ticked up from an adjusted 3.2 percent in September to 3.3 percent in October, but is down from 3.6 percent in October 2017. A year ago, the rate stood at 3.6 percent.
• Wages and salaries jumped by 3.1 percent in October, the highest level in a decade. Also in October, U.S. consumer confidence rose to an 18-year high amid optimism about jobs and the economy, according to the Conference Board.

PSAR’s Government Affairs Committee endorsed a number of local candidates who were winners in this week’s November 6th general election. Also, PSAR was victorious in positions regarding a local proposition and statewide propositions.

 PSAR endorsed Brian W. Jones who won the seat to represent the State Senate 38th District. With 100 percent of the precincts reporting, Jones drew 56 percent of the vote. Jones, a three-term Republican Assemblyman and current Santee city councilman, succeeded Joel Anderson (R-Alpine), who was termed-out. The massive 38th District, with nearly 1 million residents and covering about 30 percent of San Diego County, stretches from Lemon Grove to Fallbrook, from Borrego Springs to Alpine and includes most of eastern and northern San Diego County. It encompasses eight municipal cities, including Lemon Grove, Santee, La Mesa, El Cajon, Poway, Escondido, San Marcos and San Diego’s Scripps Ranch community, as well as the communities of Lakeside, Ramona and Julian. As an assemblyman, Jones has always been a reliable vote for policies that protect homeownership and private property rights.

PSAR also supported the successful reelection of three city mayors, including Mary Casillas Salas in Chula Vista, Bill Wells in El Cajon and Mark Arapostathis in La Mesa.

Salas won with 70.1 percent of the vote. She has been an elected official since 1996, beginning with the Chula Vista City Council followed by the State Assembly. She became mayor in 2014.

Wells, also an incumbent, won handily with 66 percent of the vote. Elected to the City Council in 2008, Wells has been the city’s mayor since 2013. 

Arapostathis ran unopposed for his mayor’s seat in La Mesa. He was elected as mayor in 2014.

Other PSAR candidates who were successful in their city council races included: John McCann, Chula Vista; Ron Morrison, National City; Gary Kendrick, El Cajon; Bill Baber, La Mesa; Ronn Hall, Laura Koval, Rob McNelis, Santee; Jerry Jones, Lemon Grove.

In a special district race that drew a PSAR endorsement, Dan McMillan was reelected to the Helix Water District board of directors.

PSAR organized a massive campaign to defeat of Measure “W,” a rent control initiative in National City that drew 54 percent of “no” votes. In the city of more than 60,000 residents, about 70 percent of residents are renters. 

National City voters said they did not favor the city government creating new costly bureaucracy  which would limit how property owners manage their rental units . Most econommists agree that the measure would have eliminated incentives for property owners to fix up their units and discourage new housing construction.

PSAR believes rent control reduces the quality and quantity of housing. Typically, rent control leads to reducing available rentals and landlords skimping on repairs. Rent control eliminates incentives for landlords and property owners to fix up, or invest in, their units, as well as discourages new housing construction and decreases the number of available rental units.

In statewide propositions, PSAR agreed with the California Association of REALTORS® (C.A.R.) in its positions on Propositions 1, 5 and 10.

Prop. 1, the Housing Programs and Veterans’ Loans Bond that was supported by C.A.R., passed by a 54.2 percent margin. As a result, the state will borrow up to $4 billion in general obligation bonds for housing-related programs benefiting veterans. The vast majority of the bonds, about $3 billion, will be set aside for various types of housing programs. The biggest share, or $1.5 billion, will go toward the construction and rehabilitation of permanent and transitional rental housing and apartments for California households who earn of up to 60 percent of the area median income. The second biggest portion of the $3 billion, about $150 million, will be earmarked for cities, counties, transit agencies, and developers to build higher density housing near transit stations.

Prop. 5, the Property Tax Transfer Fairness Initiative that was supported by C.A.R., was defeated (42 percent voted “yes,” 58 percent voted “no”). Voters said no to expanding property tax savings for older homeowners. If approved, Prop. 5 would have allowed homeowners over ages 55 to transfer their lower property tax rates with them when moving to a newly bought home anywhere in the state. Prop. 5 was initiated by C.A.R. The measure qualified for the ballot after C.A.R. submitted nearly 1 million voter signatures to the Secretary of State’s office.

Prop. 10, the Local Rent Control Initiative that was opposed by C.A.R., was defeated resoundingly (62 percent voted “no,” 38 percent voted “yes”). C.A.R. opposed Prop. 10 because it would have allowed for the expansion of rent control across California. The initiative would have repealed a 1995 law, the Costa-Hawkins Rental Housing Act, that limits county and city governments’ ability to slow rent hikes. It would have overturned an existing state law blocking cities from imposing rent control on rental units built after 1995 and on all single-family homes and condominiums. Repealing the longstanding Costa-Hawkins Rental Housing Act would have exacerbated the housing crisis, eventually allowing local governments to impose draconian rent control measures. If approved, unelected bureaucrats would have overseen rent control ordinances and determine how much landlords could charge tenants for renting apartments and houses. The election result means those prohibitions remain in place.

The PSAR Government Affairs Committee recommended the endorsements to the PSAR board of directors, which then ratified the recommendation. The Government Affairs Committee is involved in political advocacy and public policy and its impact on homeownership and private property rights.

The Pacific Southwest Association of REALTORS® (PSAR) has announced its endorsement of candidates for the Nov. 6th general election. Endorsed candidates include:

Brian Jones for California State Senate 38th District

Mary Casillas Salas, Chula Vista Mayor

John McCann, Chula Vista City Council, District 1

Ditas Yamane, National City Mayor

Ron Morrison, National City City Council

Bill Wells, El Cajon Mayor

Gary Kendrick, El Cajon City Council

Mark Arapostathis, La Mesa Mayor

Guy McWhirter and Bill Baber, La Mesa City Council

Ronn Hall, Laura Rose Koval, Rob McNelis, Santee City Council

Jerry Jones, Lemon Grove City Council

Dan McMillan, Helix Water District, District 1

John Olsen, Grossmont-Cuyamaca Community College District Board of Trustees, Area 1

 

PSAR’s Government Affairs Committee recommended the endorsements to the board of directors, which then ratified the recommendation. The Government Affairs Committee is involved in political advocacy and public policy and its impact on homeownership and private property rights.

In addition, PSAR is recommending the following:

• “No” on Measure “W,” Rent Control in National City. If approved, Measure W would put a 5 percent limit on annual rent increases and ban certain types of evictions, making it tougher to evict problematic renters.

PSAR believes rent control reduces the quality and quantity of housing. Typically, rent control leads to reducing available rentals and landlords skimping on repairs. Rent control eliminates incentives for landlords and property owners to fix up, or invest in, their units, as well as discourages new housing construction and decreases the number of available rental units. Vote “No” on “W.”

• “Yes” on California Proposition 5, Property Tax Transfer Fairness Initiative. If approved, Prop. 5 would allow homeowners over ages 55 to transfer their lower property tax rates to a newly bought home anywhere in the state. A couple, for example, could sell a home assessed at $250,000 for $750,000 then buy another property for $750,000 and continue to pay property taxes at the $250,000 valuation. If the new home cost more or less, property tax would be adjusted based on simple formulas that continued the property tax breaks that residents enjoyed with their previous homes.

PSAR believes this measure would create new homeownership opportunities by generating more sales of single-family homes in existing neighborhoods. This will benefit young families at a time when California faces a severe shortage of homes for sale. Prop. 5 is actually a smart idea that will both give older people more flexibility with their lives and introduce liquidity to a housing market that could badly use it. The revenue it would cost local government is relatively small. Also, Prop. 5 is a common sense way to expand the benefits of Proposition 13 protections while providing more affordable housing.

Prop. 5 was initiated by the California Association of REALTORS® (C.A.R.). C.A.R. qualified the measure for the ballot after it submitted nearly 1 million voter signatures to the Secretary of State’s office, indicating strong voter support. Vote “Yes” on Prop. 5.

• “No” on California Proposition 10, Local Rent Control Initiative. If approved, Prop. 10 would overturn an existing state law blocking cities from imposing rent control on rental units built after 1995 and on all single-family homes and condominiums. Repealing the longstanding Costa-Hawkins Rental Housing Act would exacerbate the housing crisis, eventually allowing local governments to impose draconian rent control measures. If approved, unelected bureaucrats would oversee rent control ordinances and determine how much landlords could charge tenants for renting apartments and houses.

PSAR believes Prop. 10 is a flawed rent control initiative that would make housing more expensive, not less, and worsen the housing crisis. Vote “No” on Prop. 10.

In addition to positions on Prop. 5 and Prop. 10, C.A.R. is supporting Proposition 1, the Housing Programs and Veterans' Loans Bond. A “yes” vote on this measure would authorize the state to borrow up to $4 billion in general obligation bonds for housing-related programs benefiting veterans. If approved, additional affordable housing would be provided for veterans. The vast majority of the bonds, about $3 billion, would be set aside for various types of housing programs. The biggest share, or $1.5 billion, would go toward the construction and rehabilitation of permanent and transitional rental housing and apartments for California households who earn of up to 60 percent of the area median income. The second biggest portion of the $3 billion, about $150 million, would be earmarked for cities, counties, transit agencies, and developers to build higher density housing near transit stations. The remaining $1 billion would be earmarked for veterans participating in a home loan program. In addition to C.A.R., Prop. 1 has support from major California newspapers, including the San Francisco Chronicle, Los Angeles Times, and Sacramento Bee, as well as the League of Women Voters and Democratic state lawmakers.

The Pacific Southwest Association of REALTORS® (PSAR), a 2,600-member trade group for San Diego-area REALTORS®, offers educational training, advocacy and other services and resources to its REALTOR® members. Founded in 1928, PSAR has played a significant role in shaping the history, growth and development of greater San Diego County. The Association maintains a leadership role in the industry, empowering REALTORS® by leveraging our collective strength so they may serve homebuyers and sellers and the greater community. For more information, visit www.PSAR.org.

California’s housing market “continued to deteriorate” in September, according to the latest housing market report from the California Association of REALTORS® (C.A.R). Mortgage rates remain affordable while demand for existing homes is slowing, home prices are rising at a slower rate and a tight supply of available homes, still low, is increasing.

In September, C.A.R. said the state’s housing market posted its largest year-over-year sales decline since March 2014. In addition, home sales remained below the 400,000-level sales benchmark for the second consecutive month, indicating that the market is slowing as many potential buyers put their homeownership plans on hold.

C.A.R. said September’s statewide median home price dropped to $578,850 in September. The September 2018 statewide median price was down 2.9 percent from $596,410 in August 2018 but up 4.2 percent from a revised $555,400 in September 2017.

In San Diego County, the median price of a single-family home in San Diego County was $640,000 in September 2018, up from $605,000 during the same month a year ago, according to CAR. The median price in September 2018 was down 3 percent from $660,000 in August 2018.

Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 382,550 units in September, according to information collected by C.A.R. from more than 90 local REALTOR® associations and MLSs statewide. The statewide annualized sales figure represents what would be the total number of homes sold during 2018 if sales maintained the September pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

“The housing market continued to deteriorate and the decline in sales worsened as interest rates remained on an upward trend,” said C.A.R. President Steve White. “More would-be buyers are self-sidelining as they believe home prices will start to come down soon, making housing more affordable despite rising interest rates. Tax reform, which increases the cost of homeownership, also is contributing to the decline, especially in high-cost areas such as the San Francisco Bay Area and Orange County.”
“Price appreciations have slowed in the last few months and inventory has risen considerably since June when the statewide median price hit a new peak,” said C.A.R. Senior Vice President and Chief Economist Leslie Appleton-Young. “Buyers are becoming increasingly concerned about market developments and are reluctant to purchase at the prevailing market price. As such, the deceleration in price growth will likely continue in coming months.”

Other key points from C.A.R.’s September 2018 resale housing report included:

• -- Homes are taking longer to sell than they did just a few months ago. The median number of days it took to sell a California single-family home ticked up from 20 days in September 2017 to 23 days in September 2018, a sign that market competitiveness is not as heated as it was in 2017. The statewide number of days for August 2018 was 21 days. Meanwhile, in San Diego County, the median number of days a home remained unsold on the market was 19 days in September 2018, compared to 18 days in August 2018 and 16 days in September 2017.
• -- Statewide active listings rose for the sixth consecutive month following 33 straight months of declines, increasing 20.4 percent from the previous year. September’s listings increase was the biggest in nearly four years.
• -- The Unsold Inventory Index, which is a ratio of inventory over sales, rose again to 4.2 months in September 2018 from 3.3 months in September 2017. It was the highest level in 31 months. The index measures the number of months it would take to sell the supply of homes on the market at the current sales rate.
• -- The 30-year, fixed-mortgage interest rates averaged 4.63 percent in September, up from 3.81 percent in September 2017, according to Freddie Mac. The five-year, adjustable mortgage interest rate also increased in September to an average of 3.94 percent from 3.16 percent from September 2017.

In other recent real estate and economic news, according to news reports:

• U.S. home sales fell for the sixth straight month in September 2018, a sign that housing is remaining a weak spot for the economy. The National Association of REALTORS® said that sales declined 3.4 percent in September, the biggest drop in 2 ½ years, to a seasonally adjusted annual rate of 5.15 million. That’s the lowest sales pace since November 2015.
• Rising mortgage rates, paired with already high home prices, are giving pause to homebuyers and are partly to blame for the slowdown in sales, according to CoreLogic. With some rates running at around 5 percent for 30-year fixed-rate loans, CoreLogic reported that mortgage rates this summer reached the highest level in seven years, making it harder for some buyers to enter the market.
• Mortgage payments are rising faster than home values. A new Zillow analysis report found that monthly mortgage payments are rising at significantly higher levels than home values. For example, in San Diego County, the median home value rose just 4.9 percent year-over-year while the monthly mortgage payments jumped by 13.6 percent from a year ago, according to Zillow.
• According to Redfin, San Diego County’s housing inventory level climbed 30.7 percent year-over-year in September, trailing only San Jose (82.7 percent) and Seattle (54.5 percent). Inventory levels may have climbed, but Redfin’s recent overall assessment for San Diego County still gives us an 84 out of 100 ranking on a competitive scale with 100 being the most competitive.
• Rents have stabilized recently, which means many would-be buyers may not feel as much pressure to buy a home right now. However, looking ahead, San Diego County's average rent is projected to soar to $2,187 by 2020, according to a forecast by the USC Lusk Center for Real Estate in partnership with Beacon Economics. The USC forecast estimates that in two years average monthly rents in San Diego County will increase by $209 over their current levels. It also predicts rents will rise by $91 in Los Angeles County, by $52 in Orange County, by $107 in Ventura County and by $78 in the Inland Empire. The forecast also said while San Diego County's vacancy rate was unchanged at 3.94 percent in 2018, it is projected to drop to 3.75 percent in 2020 despite several thousand units that are either under construction or will be in development soon.
• Analysts remain mostly optimistic about the broader economy. Most forecast growth will top 3 percent for an annual rate in the July-September quarter, after a robust expansion of 4.2 percent in the second quarter.
• San Diego County created 700 jobs in September 2018 and added 27,000 jobs in the past year, according to a recent jobs report from the California Economic Development Department. The largest month-over-month increases occurred in the government sector, which added 5,100 jobs. With the creation of 14,700 jobs, the professional and business services sector reported the largest year-over gains. San Diego County's unemployment rate fell from a revised 3.4 percent in August to 3.2 percent in September. By comparison, the unadjusted unemployment rate was 3.9 percent for California and 3.6 percent for the nation during the same time frame, according to the report.

Here is the latest in a series of occasional articles on “Best Practices” from PSAR members.

By PSAR Broker & REALTOR® Joe Garzanelli

Brokers are wired for achievement. But, it’s not easy being a broker. We get busy. We get overwhelmed. And we can need to constantly remember to keep the main thing the main thing.

No broker wants to be seen as a “flash-in-the-pan,” short-timer with lots of fanfare that soon fizzles. However, only over time, the true value of a broker as a leader can be made clear.

I’ve been a broker for more than 40 years, and I’ve been in real estate for 50 years. So, what would I consider as important leadership traits for successful brokers and all other real estate professionals? Here are a few traits I’ve learned along the way:

• Brokers are continual learners.
  The world is always evolving. Because of technology, things are changing fast. And, what makes a successful broker today will not keep him or her as a successful broker tomorrow. So, the most successful brokers are consistent learners. Learning is the lifestyle of leadership. They never rest on their laurels; rather, they are continually getting smarter and updating their skills. The moment you stop learning is when you stop leading. The moment you think you know it all you’re dead in the water. The cliché is true that you either make dust or you’ll eat dust.

• A broker’s work ethic is on display.
  Everyone in the brokerage can clearly see a successful broker’s strong work ethic. They are willing to do whatever is necessary to get the job done. While others live to avoid pain, a successful broker will do the things others are unwilling to do. And, hard work is the foundation of their success. They are never satisfied because there’s always something they can do better. Plus, they learn the entire business, not just their position.

• Resilience and persistence is a broker’s middle names.
  The most successful brokers are leaders who have persisted in their profession long after others would have given up. Resilience is the ability to bounce back and recover from loss, failure, stress or disappointment. It’s the ability to keep going. The best brokers understand that success is sometimes three steps forward and two steps backwards. Nobody goes through life with an unbroken chain of successes. Everybody has failures and mistakes. We all embarrass ourselves. We all have pain. We all have problems. We all have pressures. But, the people who make it in life have endurance, resilience and persistence.

• The best brokers surround themselves with excellence.
  The best brokers are transparent and willing to be open about their strengths and weaknesses. They know how to prioritize their activities and play to their own strengths to achieve maximum results. Plus, they’re not afraid to seek assistance because everyone has something to contribute. They’re smart enough to realize that you can’t become the best version of yourself without a little help along the way. They never claim to have it all together in every area. So, they recruit to their team both talented younger people and veteran professionals who add different perspectives and help the overall organization. The perspective of those who see the world differently can add something indispensable to your brokerage.

• The best brokers are humble leaders.
  Successful brokers experience trials, endure failures and know what it’s like to be last and hungry. In those times, they learn humility and accept the fact that earning respect is a process. So, when their moment of breakout leadership eventually arrives, they accept the rewards of recognition with humility and gratitude, not pride. They enjoy sharing the credit.