Reasons to Be Optimistic About the Market

I was reading one of the many emails I receive daily, and I came across one from the California Association of realtors that was pretty good so I thought I’d share some of it. Basically, it talked about why there’s good reason to be optimistic about the housing market.

  1. Home values are on the rise. Prices are up about fifteen percent over last year at this time and it appears they’ll continue to rise. Increasing values give people confidence that buying a home is a good investment, and with home prices still well below their replacement costs, the housing market isn’t at high risk for the kind of “bubble” that burst a few years back and sent prices plummeting.
  2. More new households are forming. More households will require more homes. Since construction hasn’t kept pace with population growth, demand for real estate is higher than supply. More construction jobs give people confidence in the economy (especially if you’re employed by the construction business). Now, growth is a highly charged political issue in Mendocino County. In my opinion, if new houses aren’t built, the ones we have will become more expensive than they would be otherwise. On the other hand, with appropriate growth, we can create balance between supply and demand, thereby creating what people want at a reasonable price.
  3. Fewer people are losing their homes to foreclosures. We’re seeing fewer foreclosures for several reasons. First, if you were going to lose your home, it’s probably happened by now. Second, if home values are increasing, folks may no longer owe more than the value of their home. Third, with an improving economy, some people are able to make payments when they couldn’t before.
  4. Interest rates are low and it looks like they’ll stay low for awhile. Although rates have gone up recently, by historical standards they are still incredibly low. Why does this matter? Because you can buy more house with the same monthly payment.
  5. Consumer confidence is up. With high consumer confidence, it’s actually a good time to buy or sell. Consumer confidence is a funny thing. Just believing that things are better can make them better. One of the primary driving forces behind this confidence is low interest rates, along with an improving job market, stable political situation, and higher retail sales.
  6. San Francisco and Santa Rosa housing markets are improving. With markets to our immediate south trending upwards, traditionally, Mendocino County won’t be far behind.
  7. High rent payments are sending folks to the home buying market, and that’s a good thing. Because there aren’t enough houses to go around, more people are forced to rent – making the competition for rentals fierce. This increases the cost of rent payments and sends some folks who wouldn’t have considered buying a home into the market to do just that. An increase in homeowners is generally a reason for optimism. As we see an increased percentage of homeownership, we see changes in the community with people having more pride in their homes and their neighborhoods. This tends to create a nice upward trend, more people want to own their own home and that improves the market.

Next time I’ll talk about real property versus personal property, and why it matters. If there’s something you’d like me to write about or if you have questions about real estate or property management, feel free to contact me at or visit our website at Dick Selzer is a real estate broker who’s been in the business for more than 30 years.

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