My 2019 Real Estate Predictions for Los Angeles

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Read, skim or skip to the end for forecast & predictions…

    1. My 2018 Real Estate Forecast was spot on.

Read here to review:

https://www.maschiorealestate.com/2018/01/02/2018-the-state-of-housing/

Excerpt:

I predict the pace of Home Price appreciation will slow (from the recent trend of 7 -10% annually) and revert to the Historic mean (3-5%). 

The reduction of Homeownership Deductions might slow but certainly NOT REVERSE what is happening with Home Prices on the West side. There are too many other factors involved (see above).  And with a finite amount of inventory, the closer to the Ocean you are, the more insulated you will be from short-term fluctuations and corrections.”

*Year over year price appreciation released by Case-Shiller Index for Los Angeles for November showed a 5.5% increase. (latest available numbers)

2. My Summer Prediction for the November Correction was also accurate:

https://www.maschiorealestate.com/2018/07/25/current-los-angeles-real-estate-market-conditions-summer-2018/

Due to the mounting uncertainty from the November elections, the increase in mortgage rates, Prop10 (the now failed rent control change on the local ballot), Trade Tariffs talks etc., we, in fact, had a correction in both the housing & the stock market. 

My Takeaway:

*That was it folks, that was the correction. This isn’t 2007, home prices will not fall off a cliff…from here, after a few shaky steps & volatility in the 1stquarter, things will grind higher.

3. Factors to Consider for the 2019 Housing Market:

Interests Rates

-Inventory

-GDP

-Unemployment rate

-The Stock Market

-Tariffs

-Impeachment

-Gov’t Stalemate

-International/Political Unrest

-Perception

4. Here’s my summary of what to expect in the Broader Economy for 2019:

The Economy –  (GDP) will grow 2.4 – 2.9%.

(The slower pace from the previous year will alarm some people & affect perception, but a growing economy is a growing economy). 

Unemployment will stay between 3.6 – 4.1%

(This is a historically low rate).

The Stock Market will go up 7 -10%. 

(The market will climb the wall of worry this year – It will also grind higher).

*5. Here’s my summary of what to expect in the Housing Market (Los Angeles – West side – Beach Communities) for 2019:

Real Estate Price Appreciation:

The pace of Home price appreciation will continue to perform close to the historical average of 5%. (This is not sexy or provocative but it what will happen – mock me 12 months from now if I’m wrong).

Policy Changes Deductions:

There will be attempts to restore the previous levels of the Property Tax & Mortgage Interest deductions. This will not happen until 2020 with a new (D) Presidential Administration. (Yes, that’s a prediction too). You still get to deduct the first $10,000 of your property taxes & the interest on the first $750,000 of your Mortgage Loan. (That’s approximately a $40,000 -$45,000 tax deduction depending on the interest rate of your loan).

Interest Rates:

If the economy (GDP) slows from the 4.2 to sub 2.5%, the Fed will not raise interest rates (1 more interest rate at most in the next 12 months). meaning mortgage rates will bounce between 4.25 – 5.25% & head to the lower level of that range, if considerably slower growth occurs. 

6. Last Takeaways, Perspective & Advice – 

For Buyers: If you are gainfully employed and have some savings, but you are trying to time the market, forget it. Bite the bullet & get in. Buy a great home that fits your needs and one that will make you happy, realize the tax deductions from home ownership and stop paying rent to someone else. Have a 7-10 year time horizon and don’t look back…if you are someone trying to trade up & buy a bigger, (more expensive home), realize that if you get 5% less than you had hoped, for example, on the sale of your current home, chances are you will buy your new home for 5% less as well. (When the market accelerates, you will be realizing gains on a more expensively priced home, meaning you will show more $ gains).

For Sellers: How old are you? Is most of your wealth in your home? Will you need that money to live for the next 20 years? I see people “cash out & down size” all the time as they get older, whether they are Empty Nesters, Over 65 or they just don’t need the house they once did. Others simply sell and transfer their tax basis to a more appropriately suited home for their needs.

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Life changes – death, debt, divorce, down sizing, there will always be a market to buy & sell…Real estate has been my best investment over the years. I have helped many others, I am happy to share what I know with you. 

I represent both Buyers & Sellers here in the Beach Communities of Los Angeles.

Good Luck in the New Year…! 

See you in the neighborhood. 

Robert Maschio

Bulldog Realtors

2909 Main Street

Santa Monica, CA 90405

(310) 460 -8324

robmaschio@yahoo.com

BRE # 02010887

Residential & Income Properties

Beach Communities of Santa Monica, Venice, Marina Del Rey

and the surrounding neighborhoods of Mar Vista & the Pacific Palisades.