Local realtor Tanya Starcevich of Keller Williams, Palisades/Malibu/Topanga is looking ahead to changes in the real estate market and shares some insight into what to expect in 2019.
Technology is changing the way we do business and Keller Williams is at the forefront of what is the fourth industrial revolution.
The unemployment rate is the lowest in history and Los Angeles is at 3.7 percent. Our market is expected to stay strong through the first quarter of 2019. While we are seeing signs of a weakening housing market, there’s still time to take advantage.
Opportunity Zones are happening locally, and while tax ramifications and rising interest rates are causing buyers to remain cautious, there’s still time to take advantage of the high sales prices and low interest rates.
In the coming year we are expecting a three-to-five percent rise in housing prices while inventory remains low. Many people are moving into areas where they can purchase land at really low rates and find neighbors who welcome new housing and construction.
The saturation of the city is causing areas once thought of as undesirable to be great investment opportunities. Areas such as DTLA (down town Los Angeles) are now a hub of business and live/work-style lofts. Parts of the San Fernando Valley are developing and we are seeing multiple-offer situations and prices rising like never before. Los Angeles is booming!
Private citizens are throwing 1031 money into a specific holding asset for 10 years to avoid taxes and take advantage of the statute of limitations. At the same time, new tax laws allow investors to avoid the two-year waiting period and we are seeing flip opportunities right and left.
The luxury market, however, has slowed considerably across the board and sellers will need to adjust their price point in order to generate interest and move their properties, or choose to price accordingly. They must plan on pricing to sell, not pricing to sit. The alternative is a long-term plan to hold on to their asset for up to 10 years. Leasing your property may make economic sense as the rental rates are at an all-time high.
Realistically we are not expecting the shoe to drop, as many are predicting, based on the fact that the fundamentals aren’t there, but we will see a correction.
While the market may remain steady, we are experiencing a “shift” of sorts and we are long overdue for the anticipated seven-year correction. We have been on a steady upward climb but the reality is that we didn’t feel the dip until the spring of 2018, and there was a huge drop in September. Fundamentals are great due to the Trump Tax trickle-down effect and, therefore, we can expect a correction but nothing like we saw in 2015.
We expect to see changes this coming spring and will see things propel but we’ll continue to see the market wobble, just as the stock market has in the past few weeks. We have seen a slight price appreciation and expect only minimal increases in the next 12 months.
Looking at the European market, they don’t want to have inflationary growth, so there’s a new global norm aiming towards an annual percentage of 2.5 percent.
Canada has seen this growth continually and they were virtually immune to the global dip because of their lending practices. Canada does not offer homeowners interest credit, preferring to keep rates low to encourage home ownership for all. The equity builds in this scenario and citizens are less likely to overextend themselves and lose their homes to rising interest rates as they did in the mortgage crisis when the market bottomed out about a decade ago.
There is something to be learned from this but, for now, our country continues to offer low rates, which has fueled our housing market for the past decade. Take advantage while you still can; we are expecting Los Angeles to tip the scale in 2019 with more renters than home owners, so it might be time to consider an investment for your portfolio.
That being said, rates need a revision and the Feds are holding back and testing the market with incremental increases. The Mortgage industry is in a free-fall. We may even expect to see a correction in rates if sales don’t pick up in 2019.
Tanya Starcevich is a realtor with Keller Williams, Pacific Palisades/Malibu/Topanga. She began her career in Real Estate in 2009. Her personal skills and expertise, along with her training and background, have led her to being one of the top producing agents for several years in a row,and receiving numerous awards. She volunteers in her spare time and donates a portion of all proceeds from her sales to a non-profit of the seller’s choice. (tanyashouses.com)
By Tanya Starcevich