2019 Real Estate Forecast and Year to Date Review

Emerging Trends

In reflecting on the first and second quarter of 2019, a couple of revealing trends are emerging that we can use as a real estate forecast. There are new aspects to the 2019 real estate market that indicate a shift in real estate momentum in favor of buyers. Moreover, at least one of these trends points to this momentum enduring well into the foreseeable future.

One obvious real estate trend suggesting a buyer’s market is the notable drop in new title orders across the State of California. A drop in new title orders translates into a drop in the number of closed escrows. In short, the volume of buyers has decreased by approximately 10% in each of the three major metropolitan cities in California.

Compounding the real estate forecast of lower buyer volume is the continuing rise in housing prices. Sellers seem to be ignoring the fact that the real estate market in general is experiencing a slowdown in the face of rising prices.  While buyer volume has decreased by +/- 10%, prices have risen by approximately the same amount, resulting in a +/- 20% spread between buyers and sellers. This is the recipe for a period of time when prices will most certainly decline until buyers can once again realize the value of real estate ownership.

California home sales retreat in June, but 2019 housing market outlook revised upward. Source: California Association of Realtors

Another important trend exacerbating the decrease in buyer volume is the diminishing inventory level of quality properties. Inventory levels are as low as they have ever been during the past 15 years in our core tracking area, down by more than 35% from the pre-2008 recession levels. It is this technical aspect of the market which is forecasting an extended period of lower transaction volume, simply because there is not enough inventory to support an increase in buyer volume.

At some point, however, buyer demand and low inventory leads to rising prices. As buyer demand builds while inventory levels recede, buyers will compete for the available quality inventory and, although the buyer volume is limited due to lack of inventory, prices are destined to rise. Consequently, timing with respect to specific properties will become a much more important factor than general market conditions.

Red Hawk Realty Brokerage News

Red Hawk Realty was established and built on brokering the purchase and sale of local properties, primarily consisting of unimproved land, agricultural properties, and single family residential properties. In recent years, our brokerage has developed other market niches, such as local rural commercial properties, investment properties, and farm and ranch properties throughout California.

During the past three years, Donn Bree and Meriah Druliner have been involved in the highest recorded sales transactions of ranch property in the backcountry core tracking area of San Diego County. Included in this emerging niche of real estate are similar-type properties, such as recreational, mitigation, and development tracts of land. What makes this an “emerging’ niche is the buyer profile; the number of high net worth buyers appears to have grown significantly over the past decade. The accrued experience and knowledge from handling these types of properties has resulted in the Bree-Druliner team being recognized as a regional force in the listing, selling, and consulting of farm and ranch properties.

Investment Property Popularity

There has been a rise in popularity for investment properties for sale in the San Diego Backcountry area. What once was considered the entry level residential market has been recently dominated by investors rehabilitating properties for the purpose of generating income from short- and long-term rentals. Stable income from rents, and the potential for appreciation while holding these types of properties offers investors a safe haven from the volatility of unsecured investment vehicles, such as the stock market.

San Diego Backcountry Spring and Summer

Locally, the recent rains and snow have brought much needed moisture to the San Diego Backcountry region. The significant rainfall brings the promise of an extended spring and a memorable wildflower season. The backcountry and desert wildflower displays attract people from all around Southern California, exposing the natural beauty, tranquil lifestyle, and manageable pace of backcountry living. In terms of real estate, this spring and early summer offers the best opportunity for residents who are considering selling property to attract the highest number of potential buyers.

If you are considering selling or purchasing property during 2019, now is the time to act. If you would like a free real estate valuation or consultation, please contact Meriah Druliner (760-420-5131; Meriah@Donn.com) or Donn Bree (760-518-6669; Donn@Donn.com).