By Ray “The Realtor” Kutylo
Signal Contributing Writer
This past year, we had a slowdown in the real estate market in the Santa Clarita Valley, especially in the higher home price range.
While early in the year we had solid home price appreciation at around a 6 percent gain from the year earlier, home prices leveled off towards the end of the year. There continues to be an increased frequency of price reductions from original list price, and homes are taking longer to sell. While some of these price adjustments downward and slowing activity are normal in the seasonal cycle of home sales, these changes are also indicating that we are in a period of market shift toward a more balanced market.
Looking ahead, and with the disclaimer that no one really knows the future, I don’t see a huge change from where we are today in the local housing market. I don’t expect big drops in home valuations, nor do I see big price appreciation. Market demand will be moderate, with neither a huge boost in buyer interest nor a big movement of sellers wanting to move.
Interest rate changes have a significant impact on housing market activity. In an environment of increasing interest rates, buyers who are on the fence act sooner than later (or they should). That stimulates home-buying activity. Interest rate rises also indicate better economic health, generally speaking, with job creation, income advances and increased production at all levels of the economy. At least, that’s conventional economic theory.
However, this past week’s stock market volatility and December’s stock market losses have negatively affected many people’s outlook on the economy and most analysts think that is due to an expectation of rising interest rates. This market correction if it continues down will tend to put a damper on housing market activity. However, most analysts believe the stock market reaction will dampen any rise in interest rates, at least for now.
Locally, we are in a low inventory housing market. Usually that pushes prices up, and while inventory numbers will rise somewhat as we move into spring, right now there’s only moderate buyer interest or activity. That is part of the normal seasonal flow. If buyer demand exceeds supply, and we again find ourselves in a market where multiple offers within days of a home being listed on the market, that will change. But right now, buyers are cautious and price sensitive.
There are some positive developments and opportunities to watch for this year. In-fill development in the Golden Valley/Plum Canyon area will appeal to higher-income buyers, as will some hoped-for construction in the west SCV with FivePoint’s Newhall Ranch development in the Highway 126 and Potrero Valley areas. This year, we may also see activity in the nearly 1,000-acre ‘hole’ in the middle of the cty of Santa Clarita that was the Whittaker-Bermite property — development there will likely be restricted to mainly light manufacturing/industrial. Increased job opportunities will be a magnet for home buyers.
The Santa Clarita Valley continues to enjoy favorable positioning in the region for buyers with our growing economic and employment base, comparatively good schools, proximity to a major city, low crime rate, good local government, more recreational and entertainment choices, and a generally clean environment. I am cautiously optimistic for the local housing market for 2019.
Ray “the Realtor” Kutylo is the team leader of the SCV Home Team at Keller Williams VIP Properties. The Team brings experienced and professional service, commitment and value to every transaction, whether you are a home buyer or seller. Ray can be reached at (661) 312-9461 or by email at [email protected]. The views expressed are his own and not necessarily those of The Signal. CA DRE 00918855