May 03, 2019 – REsimpli’s Real Estate News and Market Update
Can you Guess What’s Happening to Bay Area Home Prices?
For the first time in seven years, homes in San Francisco have finally fallen in price year on year. Not only that, they fell by a whopping 15 percent in the last month. San Francisco is a hot tech area with some of the greatest price increases in the last decade. Strong markets like the Bay Area are often a front-runner in terms of price, to the secondary and other housing markets in the United States.
What is Happening to Luxury Home Sales?
Data from Redfin shows some stunning news about homes listed at $2 million and above. They fell by 16% in the first quarter which is the sharpest annual decline since 2010! Furthermore, the supply of luxury homes above $2 million rose by $14 which is four straight quarters of annual increases in inventory. This shows that the tax changes are making a huge difference in the sale of high priced homes. The average price of a luxury home, which is defined as the top 5% in terms of price, fell by 1.6% to $1.55 million for the 1000 cities that Redfin tracks. However, the price of nonluxury homes still saw an average price increase of 2.7% annually to $300,000
Mortgage Applications are Behaving Strangely
Mortgage applications usually increase when interest rates fall, but this has not been the case last week. According to data from the Mortgage Bankers Association, application volume fell 4.3% last week despite the lower interest rates. Applications to refinance home loans were also 5% lower last week, although they are still 11% higher compared to a year ago because interest rates were 38 basis points higher a year ago. Mortgage applications to purchase a home fell 4% for the week and were 1% higher than a year ago. Spring is here but the numbers are soft.
Federal Reserve Key Information:
The Federal Reserve policy affects all asset prices – from housing to stocks. Thus knowing the outlook gives investors insight and better predictability of the future.
Interest Rate: On January 30, 2019 the Federal Reserve said that it would keep its target range for its benchmark interest rate at 2.25% to 2.5%; they’ve kept this policy unchanged. The last release was on March 20th and they’ve decided to maintain the same rate.
Federal Reserve Outlook: The last meeting was a marked change with the Federal Reserve again changing course and saying they could “judge it appropriate to raise the target range for the federal funds rate modestly later this year” according to the Federal Reserve’s’ March 19-20 meeting. However, they did caveat that “A majority of participants expected that the evolution of the economic outlook and risks to the outlook would likely warrant leaving the target range unchanged for the remainder of the year.”
Other Key Data:
Data is backward looking and takes time to compile. That’s why the March data just came out for home sales even though it’s April. Home sales data from the National Association of Realtors:
Unemployment Rate: 3.8% through February 2019, a decrease from 4.0% in January
REsimpli is founded by Sharad Mehta, a very active real estate investor. Sharad has done over 400 deals in last 6 years since he became a full-time real estate investor and over the years he has developed systems to automate many parts of his real estate investing. Sharad is a very active investor i See more >>
REsimpli is founded by Sharad Mehta, a very active real estate investor. Sharad has done over 400 deals in last 6 years since he became a full-time real estate investor and over the years he has developed systems to automate many parts of his real estate investing. Sharad is a very active investor in Lake County, Indiana market and he manages his entire business from Carlsbad, California, where he lives. Using the systems that Sharad has developed, he is able to manage 3-4 rehabs a month from a distance.
At reSimpli, our mission is to ‘Simplify Real Estate Investing Through Technology.’ Our team is passionate about using technology to reduce the time and energy required to build and manage a successful real estate business. reSimpli is a cloud-based system that makes real estate investing more efficient by automating tasks and helping the investor manage their business more efficiently.
We are constantly building and improving features that aid in: creating accurate and detailed scope of work for rehab projects, creating contracts with digital signature support, deal analysis tools, etc. We are a team of very active real estate investors so everything we are developing is something we find useful in our day to day investing.
Our passion is to create the best software for your real estate investing business and aim to be the only software program that a real estate investor needs to run a successful, scalable business. See less >>