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Spring Home Sales

The coming months will be a true test of the housing market. Rising mortgage rates, the new tax bill, and weariness of first-time buyers are all expected to reduce demand. Spring home sales could be the weakest we’ve seen in years. 

The economy is on the rise, pay rates are increasing, and millennials are creating families. Despite these home-purchasing factors, some real estate agents feel this could be one of the weakest spring seasons in years. The potential reasons for this are: mortgage rates are on the rise, the new tax law reduces homeownership incentives, and first-time buyers are increasingly nervous about being excluded from the competitive market. The outcome of this is expected to be reduced demand for homes this year. The next few months will be a crucial test of the market. Approximately 40% of the years’ sales occur between March and June, according to the National Association of Realtors, because buyers are eager to close the deal before summer vacation and the start of the upcoming school year.

It is possible that the outrageous price increases of the past years will level off due to sales volumes that are expected to be underwhelming. This situation provides an opportunity for savvy buyers willing to brave the market and higher interest rates, but also challenges sellers in upscale markets. Daren Blomquist, a senior vice president at the housing-research firm of Attom Data Solutions states “It’s still going to be a tight market, but we’re moving from an extremely tight market to one that has some wiggle room around the edges for buyers”.

Chief Economist of the National Association of Realtors, Lawrence Yun, said that he expects sales to be flat this spring compared to a year earlier. Almost 2.1 million homes were sold between the months of March and June in 2017, an increase from approximately 2 million from the same quarter in the previous year, according to the National Association of Realtors. Yun has also predicted that sales will remain stagnant throughout 2018 due to a lack of inventory and unaffordability with prices and mortgage rates escalating.

Nationally, pending home sales, an indicator of upcoming activity, dropped 4.7% in January to the lowest it has been in over 3 years. According to the National Association of Realtors, existing home sales decreased in this same period of time by 4.8%. Meanwhile, the median price rose 5.8% from the prior year, making it the 71st straight month of annual gains. Fannie Mae released statistics that indicated consumer confidence in the housing market had fallen by 5% due to concerns regarding stock market instability and increasing mortgage rates.   

The top end of the market is slowing across the country, partly due to the tax overhaul, which capped both mortgage-interest deduction and state & local tax deductions, disproportionately affecting higher-priced homes. On the opposite end of the market, rising interest rates are essentially pricing buyers out. California is also experiencing a decrease, January sales dropped 7.6% since December and were 2.9% lower than the same month a year ago, according to the California Assocation of Realtors.

Some realtors have reported heightened activity in the past weeks, signaling an understanding of and adjustment for the new tax law. Buyers are making larger down payments in order to bring their mortgages below the new $750,000 cap. In addition, older buyers are considering selling their homes and utilizing those earnings for out of state retirement. Both of these elements are expected to increase inventory in the coming months.

Mark Your Calendars 

April 4th - Altadena Farmers' Market - Loma Alta Park @ 3:00pm-7:00pm (every Wednesday)

April 7th - 10th Annual Pasadena PinotFaire "Grand Pinot Noir Tasting" - Altadena Town & Country Club @ 11:00am - 3:30pm

April 7th & 8th - Foodie Con 2018 - Magic Box @ the Reef @ 11:00am - 4:00pm 

April 8th - Pasadena 5Mi/10Mi Trail Running Challenge - Hahamonga Watershed Park @ 7:30am - 11:30am 

April 8th - Tomatomatia Plant Sale - Descanso Gardens @ 9:00am - 5:00pm

April 8th - Plant Walk - Eaton Canyon Natural Area Park & Nature Center @ 9:00am

April 8th - Second Sunday Match Tea Ceremonies - Storrier Stearns Japanese Garden @ 10:00am - 4:00pm (performed at 1:00pm & 2:00pm)

April 9th - Japanese Tea House Tours - The Huntington Library, Art Collections, and Botanical Gardens @ 11:30am - 3:30pm 

April 10th - Wellness Walk at Descanso Gardens @ 8:30am 

April 13th - Former LA Laker and LA Clippers General Manager Elgin Baylor Signs Hang Time My Life in Basketball - Vroman's Bookstore @ 7:00pm 

April 14th - Pasadena Festival of Women Author's - Pasadena Hilton Hotel @ 9:00am - 2:30pm 

April 14th - Family Day at PMCA - Pasadena Museum of California Art @ 12:00pm - 5:00pm

April 14th - Tour: Slow Art A Closer Look at Manet - Norton Simon Museum @ 1:00pm - 2:00pm 

April 15th - Bird Walk - Eaton Canyon Natural Area Park & Nature Center @ 8:00am

April 15th - Friends of the Gamble House Presents a Classical Concert - The Gamble House @ 6:00pm - 7:30 pm

April 17th - A Taste of South Pasadena - Eats on the Streets - Fair Oaks Avenue and Mission @ 6:00pm - 9:00pm 

April 19th - Earth Day L.A. - Grand Park Downtown @ 11:00am - 3:00pm 
April 19th - 22nd - Mt. Sac Plant Sale - Descanso Gardens @ 9:00am - 4:00pm

April 21st - Taste of Art at Home with the Huntingtons - The Huntington Library, Art Collections, and Botanical Gardens @ 9:00am - 12:30pm 

April 21st - Tour Impressions of Nature - Norton Simon Museum @ 1:00pm - 2:00pm 

April 22nd - Earth Day Community Service Day - Descanso Gardens @ 8:00am - 2:00pm

April 22nd - May 20th - 2018 Pasadena Showcase House of Design @ 10:00am - 4:00pm

April 28th - Community Service Day - Descanso Gardens @ 8:00am - 10:30am

April 28th& 29th - 2018 Annual Spring Plant Sale - The Huntington Library, Art Collections, and Botanical Gardens @ 1:00pm - 5:00pm

April 28th - Old Pasadena Guided Pub Crawl - Old Town Pasadena @ 2:00pm - 4:00pm

April 29th - Bungalow Heaven Home Tour - McDonald Park 1000 E. Mountain St. @ 10:00am - 4:00pm

April 29th - Spring Bloom Walks - Descanso Gardens @ 11:00am & 1:00pm 

April 30th - 19th Annual Pasadena Humane Society & SPCADoglegs Birdies and Eagles Gold Tournament - Annandale Golf Club @ 9:00am - 5:00pm

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Contract Corner 

Natural Hazard Disclosure Statement 

Since the 1990’s sellers and their agents have been required to disclose to a prospective buyer that the subject property is located in certain types of natural hazard zones on a statutory form known as the Natural Hazard Disclosure Statement, referred to as the NHD. The law also allows for this form to be done on a local option disclosure statement, referred to as a local option form. The law states that the NHD or local option form has to be provided to the buyer in all transactions in which the property is located in a minimum of 1 of 6 natural hazard zones described in the NHD unless deemed exempt. The six zones are:

  1. A flood hazard zone as designated by the Federal Emergency Management Agency (FEMA)
  2. An area of potential flooding after a dam failure (also known as a dam failure inundation area)
  3. A high fire hazard severity zone
  4. A wildland fire area (also known as a state fire responsibility area or SRA)
  5. An earthquake fault zone
  6. A seismic hazard zone 

Navigating through the labyrinth of details and information of a transaction is exactly why you, savvy buyers and sellers, need an experienced team. The SARKISSIAN + PERERA GROUP is here to help guide you through this process and ensure that you achieve all of your real estate goals! 

© 2018 Berkshire Hathaway HomeServices California Properties (BHHSCP) is a member of the franchise system of BHH Affiliates LLC. Any unauthorized reproduction or use of this material is prohibited. This information is believed to be accurate as of April 1, 2018. It is not intended as a substitute for legal advice in individual situations, and is not intended to nor does it create a standard of care for real estate professionals. BHH Affiliates LLC and BHHSCP do not guarantee accuracy of all data. Information has been obtained from various sources and will not be verified by broker or MLS. *Source: WallStreetJournal.com, Car.org 

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©2018 BHH Affiliates, LLC. Real Estate Brokerage Services are offered through the network member franchisees of BHH Affiliates, LLC. Most franchisees are independently owned and operated. Berkshire Hathaway HomeServices and the Berkshire Hathaway HomeServices symbol are registered service marks of HomeServices of America, Inc.® Information not verified or guaranteed. If your property is currently listed with a Broker, this is not intended as a solicitation. Equal Housing Opportunity.