Things have been looking very good for the Irvine housing market in recent years. As one of the best cities for families, single professionals, and retirees in Southern California, Irvine is blessed with careful suburban planning, great weather, cultural diversity, economic stability, and a high quality of life. These factors continue to make Irvine an attractive housing market, but it would be unreasonable to think the city would forever remain impervious to economic shifts and financial trends.
The highest home value appreciation of 2018 for Irvine on a year-over-year basis took place in April. The market has cooled down a little since that milestone, but a forecast issued earlier this year by real estate analytics firm CoreLogic estimates prices for Irvine homes for sale could rise by another five percent over the next eight months.
As long as property values keep rising in a market, prospective homebuyers will show some level of interest. However, there are certain signs that suggest the market could be taking a different direction.
Reliable Expert Opinions
Ever since the American housing market crash of 2008 crippled the global economy, financial regulators have implemented various measures to ensure a perfect storm of speculation, greed, and fraud never happens again. One of these measures involves holding certain individuals accountable for their statements, which means economists from the Federal Reserve, the National Association of Realtors, and major investment banking firms that were bailed out by the U.S. Treasury in 2009. When these economists say the time isn’t right to buy a home, you can trust their opinions.
Rising Inventory of Properties
Home builders are being very careful with their development plans, which explains why low housing inventories have become the new normal despite high demand. When housing markets cool down, one of the first signs is a higher number of properties sitting on the market, particularly if they’re located in a cluster that has gone unsold for more than three weeks.
Local Price-to-Income Ratios
This sign will require doing a bit of microeconomics research, which is something a mortgage broker or real estate agent in Irvine can help you with. This ratio looks at the median home price compared to the average household income. We live in slightly inflationary times, so in 2018 this ratio should be around 5:1. At the height of the last housing bubble, the ratio had skyrocketed past 10:1.
Rapidly Falling Prices
Let’s say two families in Irvine decide to move to another city around the same time, thus lowering their respective sales prices drastically because they’re in rush. Other homeowners may misinterpret these circumstances as a sure sign the sellers’ market has come to an end, thus causing a chain reaction of price drops in various neighborhoods. The problem when this happens is that it’s difficult to determine when the market will self-correct, thereby causing uncertainty and changing conditions.
From Westpark to Quail Hill, Irvine homes for sale are available to view. Make sure you work with a reliable agent to find the right property for your needs. Call Irvine Residential Living today at 714-454-6304.