The housing market has been booming in recent years — but what economic trends should people look out for in the coming year?
The News-Sentinel spoke with real estate agent Ryan Sherman of Sherman and Associates.
Sherman served as the president of the Lodi Association of Realtors in 2009 and 2015, and specializes in residential, agriculture, commercial and investment property. He works in cities throughout San Joaquin County and has a pulse for the real estate trends in Lodi.
Here’s a lightly edited version of the interview.
Q: The housing market has been booming in recent years. How long is the boom expected to last?
A: I don’t know if anyone has a definitive answer to that. Most people believe that 2020 will look a lot like 2018 and 2019. Some people are cautiously optimistic about the market heading into an election year, but Lodi has seen 2% growth in the market over the past year.
Q: Will 2020 be a seller’s market or a buyer’s market? Or are we seeing a healthy balance?
A: There has been a lack of housing inventory. Some people might think that means that we are in a seller’s market; however, prices are not escalating quickly and buyers are also becoming more selective. It is not uncommon for buyers to find a house and sit on it for a minute, especially if a house is priced too high. Then it just ends up overpriced, sitting on the market longer.
Q: Are there any trends that are making buying a house less attractive in the current economy?
A: Right now, no. There is no downward pressure, the economy is still looking strong, the Federal Reserve not recently increased interest rates for mortgages.
What it all boils down to is consumer sentiment. How people feel about the is indicative of their spending habits. When consumer confidence is high, people spend more.
Q: How are the new subdivisions selling? What are the buyer demographics? Are we seeing a lot of first-time homebuyers?
A: I am not terribly familiar with the new subdivisions or the rate that they are selling at. It is more common for first-time homebuyers to buy resale homes. The average price for a three-bedroom, two-bath, 1700-square-foot home (is) around $350,000.
However, there are a lot of retirees who want something with modern amenities and smaller backyards, with more square feet, who are willing to buy something that is priced higher. I know some of the smaller gated subdivisions get a lot of people from relocating from the Bay Area.
Q: Are more people buying newly built homes or previously owned homes?
A: Every buyer is unique. Some people are interested in the new modern features and amenities that are built on smaller lots, and there are people who like the space you get in tract housing that is built on smaller lots with closer neighbors, and there are people who want more space and want large backyards and look for resale homes in older neighborhoods.
Q: Lodi had marginal growth in houses sold from 2018 to 2019. Are real estate agents seeing more young people and young couples purchasing homes?
A: The economy is pretty darn strong, and the increase in great loan programs has helped push homeownership. That, coupled with the scarcity of rental property around town and the escalating cost to rent, (means) a lot of people see the benefit of buying versus renting because the money spent renting could go towards a mortgage.
Q: Is there a popular housing location that most homebuyers are looking at or interested in?
A: Nothing stands out. Each buyer wants something unique to his or her lifestyle, and each neighborhood has its vantage point to the person purchasing the home.
Some people might want something (in) Downtown because of the entertainment and shopping. Others might look at a new subdivision for retail shopping or schools.
Q: Are you seeing more people purchasing homes as investment properties for vacation rentals or bed and breakfasts?
A: Not a huge amount. There are some more Bay Area people from Napa and Sonoma who buy homes in Downtown or places in the country to turn into vacation rentals by owner.
Q: How is the high-end market doing?
Q: How are people financing their new homes? Are you seeing people fully financing their homes, or are people purchasing with sizable down payments?
A: Every case is different, but most people buy homes using some form type of financing option.