A report published last week in the Redlands Daily Facts cites research by the University of Redlands that predicts the downturn in home prices -- blamed on continued higher than average unemployment and rising mortgage interest rates.
According to the newspaper, the college’s Institute for Spatial Economic Analysis studied three years of data in six cities — Redlands, San Bernardino, Corona, Riverside, Irvine and Anaheim — to form its conclusions.
While prices increased during the past three years, unemployment decreased — from 19.6 percent to 14 percent in San Bernardino and 10.9 percent to 7.5 percent in Redlands.
Meanwhile, the 30-year fixed mortgage rate fell from 5.1 percent to 3.47percent, according to the study.
For this study, researchers predict that unemployment will remain steady but mortgage rates will rise sharply once the FED tappers its purchases of mortgaged backed securities.
The study reports the price of a home in Redlands to decrease by 3 percent during the next year.
“San Bernardino’s prices are the lowest and most volatile in all six cities included in this study and are therefore expected to be the most impacted by economic conditions,” the study says.
In San Bernardino home prices will plummet 15 percent, according to the report.
All of this is tough news for home sellers who may be waiting for prices to rise before selling their homes. It also signals a transition from a market that favors sellers to one that gives buyers the advantage.
Currently, low inventories make it easier for sellers to sell their homes quickly and without the need to negotiate or make a lot of improvements. When prices stall we usually see more homes on the market. An increase in inventory drives down prices and gives buyers the advantage because they have more choices.
If you are thinking of selling your home call and find out what your home will sell for in today's market. That way you can make informed decisions that are right for you.
