No Housing Bubble in Ventura County

by Oct 1, 2013Uncategorized0 comments

With the Ventura County Real Estate market experiencing some terrific gains over the past 2 years and appreciation rates up over 25% in some price points – some naysayers will try to convince you that we’re near the end of our price adjusted housing rope.  But’s I believe there is no housing bubble in Ventura County.

Picture of Housing Bubble in Ventura County

No Housing Bubble in Ventura County

Here’s why;

When real estate markets recover they go through a fast rebound in the first phase of that recovery. The analogy I like to give is to consider the real estate market to be like a rubber ball. If you throw this rubber ball on the ground it’s going to hit the floor and rebound very quickly. As it rises it loses its momentum but never-the-less continues it’s accent upward at a slower pace. My experience is that we’ve been through that quick reversal and now we are still ascending albeit at this slower pace.

So what’s causing the slowing of Ventura County price appreciation and why aren’t we going to have the double-digit gains in the immediate years ahead? It’s the economy, stupid. Not meaning to offend anyone, it’s just that in an over-regulated financial market with looming inflationary pressures we will see interest rates continue to rise and this slows down the buying incentives to purchase. Interest rates jumped up a full 100 basis points (1%) over a recent 60 day period.  Some will argue that they have gone down a bit in the past few weeks but I feel that they are still on an upward trend.  Not that I’m expecting a big jump in rates – just a small steady increase of 1% – 2% over the next year.  Before you complain too much remember that these are still excellent rates for 30 year mortgages.  I started my career with rates at 18% and THAT was a tough market! So no crying or screaming about high rates, please.

Another reason that there is no housing bubble in Ventura County, what drove the incredible gains since 2010 was the huge investor pools that were buying homes in lots of 10’s and 100’s at a time. One financial group I know of owns upwards of 1000 homes now in Ventura County and over 1,700 homes in Riverside County!  These groups unfortunately thinned our inventory at a time when we most needed homes to sell.  Many first time buyers lost out to these large investors.  You might be one of them.  That has gone away for the most part leaving just the “real” buyers (owner-occupied) to continue to bolster the real estate market.

Don’t misunderstand me, we will still see some appreciation going forward but probably not the double-digit appreciation we’ve gotten used too.

Also there’s the threat from the government to lower conforming loan limits which would clearly hurt the Ventura County housing market because the average price range in most of Ventura County is a lot lower than our neighboring counties just north and south of us.

Driving the market will be the pent-up demand of current homeowners that have already weathered the storm of the past 10 years and now want to use their newfound appreciation & equity to make a move up to a bigger house. Selling their current properties releases more inventory and this increase in activity is what moves markets.

Back to the question… Are we in a housing bubble in Ventura County? Not even close.

Going forward I predict that the price gains will be in the 5% -10% range per year for the next few years. No promises, just my opinion.

To find your next home contact Jeff Haring, Real Estate Broker with over 30 years experience.

 

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