Real Talk # 322: The Crystal Ball (Part 1)

The use of a sea green magnetically charged material (Beryl) that had been polished into a reflective ball by the Celtic Druids circa 2000 BC – 600 AD is believed to be the first recorded use of this divination device.  The “seer” would stare into the stone and fall into a meditate trance from which they claimed to be able to see the past, present or future. Sceptics may note that the Druids were wiped out by invading forces that they did not see coming or having seen where still powerless to avert their own destruction. 

Well, as Solomon said in Ecclesiastes 1:9 “What has been will be again … “, today perhaps the high definition monitor has taken the place of the Beryl stone , as we slip into a trance focused on the Internet or Cable News to feed us their take on our futures.  We still seek out ‘seers’ to tell us what is coming our way. 

I believe that data is a form of magic that also requires meditation on its meaning and its relationship to our current affairs in order to be interpreted in such a way as to be useful to our plans, hopes and dreams in a tangible way.  I to want to “see” the future by diligently studying the past and present for trends that affect my investments , however I will leave the divining to God for only He knows for sure what the future holds for any of us.

The Data (my version of the Crystal Ball) says that Builders added 5.6 Million housing units from 2009 to today, meanwhile 1.7 Million Units were declared obsolete or destroyed leaving a net gain of 3.9 Million single family homes , condos and apartments. During that same time period the Census Bureau tells us that the population grew by 17,300,000 people, whom at an average of 2.5 persons per housing units would equate to a need for 6.9 Million new places for those people to live.

This is why rents are going thru the roof and prices are continuing to rise here in California and in many other desirable parts of the country. We simply are experiencing the effects of the present shortfall of 3 Million housing units. The question is how long will these conditions last and is the real estate that we are concerned with (local markets) on the forward or trailing edge of the ever moving wave. 

While all ships are rising with the recent high tides, there are signs of rocks ahead. 

  • New Home Sales are essentially flat with inventory up 10% 
  • Existing Home Inventory is also up 22% from its recent cycle low point in 2012 
  • Both categories show a nominal increase in Months’ Supply of Homes which measures the amount of time it would take to sell out of existing inventory if no new homes came to market.

22% up in the case of Existing Homes and 5.1% for New Homes from their Jan 2013 low points.

  • The number of renting households is increasing while home ownership falls to its lowest levels
  • The number of adults 20-39 with Student Loan debt soared to 39% in recent years and the amount of that debt rose from 17K to nearly double at $30K 
  • The increase in minorities (lower homeownership) and the delay in both marriage and having kids indicate a delay in first time home buying that is increasing. 
  • Households living in neighborhoods with poverty rates of at least 40% have doubled. 
  • US Companies are not investing in people (new hires) or capital equipment 
  • The Fed is “rethinking” its plans to raise interest rates based on weakness in Jobs and Wages. 

So what does the future hold for you? 

We will discuss the RIGHT move for YOU during Part 2!

I would love to know your thoughts and hear your predictions for the future in Real Estate. Pay us a visit and leave your comments on The Mathis Team Facebook page!

About Barry Mathis

Barry Mathis "Broker Barry" has over a decade of experience in the local Real Estate Market. As an active Broker who is personlly involved in the current market , he brings a unique perspective to his advice and his actions. He has ridden the wave of Real Estate from the lows to the highs and back to the lows and now is perfectly position to guide you in this new rising market. His experience as a senior member of a high volume sales team and later as the Broker/Owner of an Intero Franchise has given him a view into thousands of transactions. Most recently he launched and operated one of the fastest growing Property Management companies in northern California , untll its sell aat the end of 2012 The lessons learned in over 1200 + real estate transactions have provided him with a depth of knowledge that simply cannot be learned any other way.Barry knows what it takes to get it done in Real Estate. He has invested in both commercial and residential Real Estate, sometimes for a quick flip and but more often for longer term buy and hold positions. He is a Certified Distressed Property Expert.
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