The housing market has been booming in recent years, but how long will the run last? Will 2019 be a seller’s market or a buyer’s market?

The News-Sentinel spoke with developer Dale Gillespie, a partner with the San Joaquin Land Co., Farley Staniec, an associate professor and economics department chair at University of the Pacific, City of Lodi Senior Planner Craig Hoffman, and Larry Underhill, a Realtor with Statesman Team Realty, to see what economic trends people should look out for in the coming year.

We currently have five active housing developments. Are we seeing a housing shortage that requires so many new homes to be built at once?

Gillespie, Hoffman, and Underhill: Yes, Lodi is a slow-growth community and the city placed an annual 2 percent growth cap to prevent rapid expansion. Even with the growth cap at 2 percent, the city is still expanding at less than 1 percent on an annual basis. With the development projects in the works we are meeting the community demand for homes.

Hoffman: We also have not seen much population growth because we are not located between any major cities. We are too far away from the Silicon Valley and the Bay Area to see that great a number of commuters in town, and we are not that close to Sacramento that we have a considerable population commuting to Sacramento. That fact is most of the people that live in Lodi work in Lodi, which is why our population growth is not that significant.

Are we seeing a healthy housing market for buyers and sellers?

Underhill: We currently have a market that has a three-month inventory of listings. As Realtors we keep inventory of homes and monitor their time on the market. When we have inventory of a month or less, that means we have a seller’s market. We usually see it become more of a buyer’s market when housing inventory is at six months, which means that houses are sitting too long and it is a perfect buyer’s market because sellers will be more flexible with their prices. However, we currently have a three-month inventory, which is ideal because it means that we have buyers and sellers on equal footing.

I tell my sellers when the market starts to fluctuate, and we begin to see a three-month inventory to price their homes as precisely and competitively as possible, because there is not a scarcity in the market that is going to make buyers pay for value. You can get away with a little more in terms of price but what a seller is offering needs to be worth the price their asking.

Staniec: We might be seeing the housing market slow down, and continue to slow before we get that increase in the market again. The reason why we are more likely to see more regression towards that market is because of the economy. While we do have a low unemployment rate we are not seeing any wage growth, which is alarming from an economic standpoint because if people are not earning more money, then elastic markets like the housing market get hit. To have a healthy economy, low unemployment and wage growth have to happen.

With the market showing signs of slowing down can we expect anything similar to 2008?

Gillespie, Staniec. Hoffman, Underhill: No, since the housing crash many regulations have been tightened and certain practices more closely scrutinized, such as:

Underhill: “Liar loans,” which were used by overzealous Realtors to fudge a buyer’s annual income, which would allow them to purchase homes they could not afford.

Staniec: “Interest-only loans,” which allow buyers to only pay the interest on the mortgage for a set term before principal payments kick in. After the interest-only term sets on the adjustable-rate loans, buyers look to refinance into a fixed rate or sell their home. However, values collapsed during the housing downturn and homes were under water. When the principal payments came due, many homeowners couldn’t afford the payments and didn’t have enough equity to sell the homes.

Gillespie: “Subprime mortgages,” allowed people with bad credit and poor credit history to purchase homes that they did not qualify for and couldn’t afford.

 Are there any trends that are making buying a home less attractive?

 Staniec: The Federal Reserve’s recent rate hikes have led to higher interest rates for mortgages, which will add to the cost of owning a home. Also, recent tax changes that limit mortgage interest and property tax deductions can make housing less attractive than renting.

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