Happy New Year and Welcome Back. I’m Jeb Smith, your local Real Estate Broker with Coldwell Banker In Huntington Beach back to discuss your southern California Real Estate Market Report for January 2018! In order to see where we’re going we need to know where we’ve been. Last year, the Orange County market had another solid year of appreciation while inventory remained low and Buyer demand continued to surge. We ended the year with dismal inventory levels so the big question is what will 2018 bring for our local market and how will it affect you as a Buyer or Seller?
I’m personally expecting a market very similar to last year with regards to inventory levels which means that Sellers are going to stay in control of our local market when pricing their homes according to market value.
Buyer Demand should continue to outpace any increase in inventory levels which likely won’t really pick up until we start the Spring Selling season. Over the last few weeks, we have seen interest rates rise to the highest levels in quite some time but with a lack of inventory coming to the market, well priced homes are continuing to move to pending sales within a short period of time. I do expect rates will be higher than last year but I don’t expect this to impact the market too much as there are still a ton of buyers waiting on the sidelines for that perfect home. The lack of inventory coupled with new tax laws could further limit available inventory in certain price levels causing further strain on available property.
While we are on the subject, let’s take a minute and discuss a few of the key items that were passed with the recent tax overhaul. The mortgage interest deduction has been reduced to allow the deduction of interest on only the first $750K owed. Previously interest on loans up to $1 milliow was deductible. Most borrowers won’t be affected but buyers above $1M will have smaller tax deductions than under the previous tax code. This could cause potential sellers in this price range to stay put further reducing the number of homes for sale. State and local Taxes are now capped at $10K including property taxes. Keep in mind that a $500K home has around $6k in property taxes. That same borrower likely pays more than $4K in state taxes. With that deduction reduced, high income, high purchase price borrowers will be hit harder. Also HELOC’s are no longer tax deductible unless they are purchase money and under the $750K total. Of course there are other changes like moving expenses no longer being tax deductible but I’m trying to discuss the ones that will have the greatest impact on local buyers and sellers. If you have tax questions or wonder how these changes will affect you, I would advise you to speak with your CPA or tax advisor. Let me know if you need a referral and I can point you in the right direction.
As you know, all Real Estate is local, so if have any real estate related plans for 2018, I would love the opportunity to help guide you in the right direction. If you would like more information about me, please go to my website www.jebsmith.net or check out my other videos here on Facebook and YouTube. As always, I appreciate you taking the time to watch and I look forward to seeing you again next month. Make 2018 your best year yet.