Hold on for rising interest rates, trade tariffs,

tax limits and Trumponomics


November 2018

By Al Ricci


As the job market stays strong, the stock market falls, and the real estate market is building inventory. Housing prices are holding, but trending down.

As our economy fares uncertainly, homebuyer demand has been lackluster, causing sellers to do price improvements (reductions).

The market change is a result of several factors. The main reason is the rise in interest rates. As the interest rates rise, resulting in higher payments, the affordability of the purchase price decreases. For those of us that can remember 17 percent interest rates, the five percent range is still an attractive long-term interest rate.

The recent sharp declines in the stock market also have a chilling effect on the funds for a down payment. Whether the buyer is in the stock market with investments or not, the volatility in the market has a direct effect on consumer confidence.

Foreign investment money is not flowing into the country as it once was. Cities like Irvine have over 750 active listings, almost double the inventory from the beginning of the year.

And finally, the Trumponomic tax plan limits the mortgage interest deductions to $750,000 and puts a cap on tax deductions. That does not help coastal cities, North Tustin, nor Villa Park, where the average property taxes and mortgage interest typically exceed the $10,000 limit.

The general trend is that inventory is building up, prices are not as aggressive, and the benefits of homeownership, while still good, are not as good as they were last year. 

It will be interesting to watch the market next spring, when prices typically increase. Bottom line – it is still a good time to buy a home!Type your paragraph here.