Not that we need external validation that the “housing recovery” is alive and well in our world of Lafayette,CA real estate, and the broader Lamorinda real estate market — but, even the national “experts” seem to be lining up in unison that they are surprised by the surge in the market. According to an article this week in the Wall St. Journal, a non-profit think tank called the Urban Land Institute employed the expertise of 38 economists in arriving at a prediction that national housing starts would almost double by 2014 from the 2011 level. Furthermore, they predict that housing prices on a national level could start to turn back up at the rate of about 3.5% annually by 2013.
Some of you may remember Dr. Kenneth Rosen, former Professor at UC Berkeley, and one of the people who was calling for the imminent demise of the housing market back in 2004-2005. He now has his own consulting group and believes that the URI forecast is much too optimistic. He is concerned that possible changes in capital gains treatment could negatively impact the real estate recovery.
Another random indicator that we are well on our way to “recovery” is the very significant number of real estate transactions occurring with investors and second home buyers. According to another article in the WSJ, real estate investor transactions rose a staggering 65% in 2011, and accounted for 27% of all home sales nationally! When the “smart” money jumps into a market, it usually means that the downturn is over. Also of considerable note is the jump in second home sales which accounted for 11% of all residential real estate sales in 2011. These homes were the ones that were the first to dive in value as we entered the recession, and now they are reinforcing the foundation of a national recovery. It’s all very good news!
In case anyone is doubting a “recovery” in Lafayette, CA real estate or the overall Lamorinda market, all they need to do is take a look at our stats. As of today, March 31, there are 115 homes “active” on the market in Lamorinda, BUT there are 125 “pending” in escrow. Based upon the market’s leading edge “pending” sales, we now have less than one month’s inventory available in the market!!! This means continued challenging times for buyers who are suddenly finding themselves competing for scarce inventory, particularly at the lower price points. I would be the first to admit that I didn’t see this aggressive resurgence coming at this pace. After 4 years of uncertainty and encountering a multitude of clients facing challenging times, it’s nice to see much more positive economic times, both in the present moment, as well as ahead.