We Specialize In These SoCal Area Communities

Alhambra - Arcadia - Duarte - Azusa - Pasadena - West Covina - Chino Hills - Diamond Bar - Glendora - Fullerton - Rancho Cucamonga - Brea - Walnut

Have a Question? Ask & I'll Answer It With A Video


Your question has been submitted and will be answered shortly.

Are We Really Headed for Another Market Crash?


Though many are worried about another potential market crash happening in 2017, the numbers say otherwise.

Is our market headed for another crash in 2017? There are six different factors we must look at along with the statistics they reveal to answer that question:
  1. Number of months of unsold inventory
  2. The number of trustee sales
  3. The amount of new home construction
  4. The sales of existing homes
  5. The unemployment rate
  6. Affordability of homes
What do the numbers tells us about these different factors? How do they compare with the last downturns our market experienced in 1989 and 2008 and the years that led up to them?

Let’s start with affordability. Affordability is based on the standard 20% down payment at the median home price, which is $435,000 here in California. At the time of the 1989 crash, our affordability index was at 17%. In 2006, it was at 11%. Right now, our affordability index sits at at 30%.

As far as the number of months of unsold inventory goes—or however many months it takes to sell a home—for the last two years we’ve been hovering around two months. In 2015, the average days on market was 61 days. In 2016, it was 58 days. At the beginning of this year, we had 1.5 months of unsold inventory. From 1989 to 1991, the number of months of unsold inventory jumped from 5 months to 13 months. From 2005 to 2008, it jumped from 2.5 months to nine months. As you can see, in contrast to these last two eras, our inventory is decreasing—not increasing. 

The number of trustee sales has to increase drastically to produce a downturn. From 1989 to 1992, there was a 400% increase in the number of trustee sales. From 2006 to 2008, there was a 1,600% increase. From 2015 to 2016, the number of trustee sales decreased 20%.

New home construction is always a good barometer for our market. We need new home construction—not excessively, but intuitively. This is because it creates more jobs and helps drive our economy. From 1989 to 1991, the number of new home construction units decreased from 161,000 to 77,000. From 2005 to 2008, the number of units decreased from 155,000 to 33,000. Right now, we have roughly 50,000 units being built in California. The number of permit pullouts for new build construction has remained steady at around 40,000 the last few years, which is the lowest it’s been the last 40 years. 

What about the sales of existing homes? Is that number declining or not? In 2015 and 2016, our sales of existing homes stayed flat. Prices have increased somewhat, but the number of sales has stayed flat. From 1989 to 1991, the number of homes sold in California decreased from 423,000 to 330,000. From 2005 to 2007, it decreased from 610,000 to 350,000. For the last five or six years, we’ve been hovering around 400,000 units being sold. 

Lastly, let’s examine the unemployment rate. From 1989 to 1991, the unemployment rate rose from 5% to 8.4%. In 2006, it jumped from 4.9% to 9.3%. Right now, our unemployment rate is 4.8%


"You will not see a market crash in 2017 or 2018."


Based on these factors and the statistics they reveal, you will not see a market crash in 2017 or 2018. You might see an adjustment, but nothing crazy. You can expect a 4% price appreciation, and we’re still in a good market for rentals because the homeownership rate will definitely not increase. Right now we’re at 63%, and we’re predicted to drop another few percentage points in the next 10 years. 

If you have any questions about our market, please don’t hesitate to call me. I’d love to have a conversation with you!

How Our Market Differs From Recession Markets

Many people are worried the changes in the market mean we are headed for another recession. I’ll go over why there’s no reason to worry about that today. 

Many people have asked me if the changing numbers in our market from 2015 to 2016 mean we’re headed for a market recession in 2017. I’ll go over why there’s no reason to worry about that today.

Back in 1989, the number of homes built was about 180,000, and in 1990, when we entered the recession, we still had about 100,000 new homes built.

In 2005, when the market was strong and healthy, there were 160,000 new homes built. In 2006 sliding into 2007, we still had 110,000 new homes built.

In 2015, there were only 55,000 new homes built, less than one-third of homes built in 2005 and less than half of the number we had when we slid into the recession.

As you can see, the current pattern is nothing like the one we saw with the last two recessions.

The lending environment is also incredibly different than it was when the last recession hit. Back in 2008, the percentage of home loans that were given to those with less than a 620 FICO score was 47%, which is almost half of all the homes loans that were granted.

In 2015, the number of loans that were granted to those with a FICO of less than 620 was 2.3%. There are no more liar loans, which means there are nowhere near as many foreclosures.

The market has come back up since the last recession, and the market is more on 2006 levels when it comes to price.

The market is stable and healthy and the interest rate is still great, so there is no reason to worry.

Overall, the market in 2017 will more than likely bring a 3 to 4% appreciation for home values and there shouldn’t be a downward trend. The market is stable and healthy and the interest rate is still great, so there is no reason to worry.

If you have any more questions, I would be happy to meet with you for a cup of coffee to discuss the market. Otherwise, please feel free to give me a call or send me an email. I’m always happy to help!

Did Our Market Improve in 2016?

From 2015 to 2016, our market improved greatly. Here are some numbers to supplement that. 

How did our southern California real estate market do in 2016? I pulled the year-end data and compared it to how the market did in 2015, and the news is good.

According to the U.S. Bureau of Labor Statistics, the 2016 inflation rate was around 1.8%. In our market, the median home price increased by 3.6% from $564,000 in 2015 to $585,000 in 2016. In other words, we doubled the inflation rate. The number of homes sold only increased by 0.5% from 2015 to 2016, but the average number of days needed to sell a home decreased by three days. In 2015, it took 61 days. In 2016, it took 58 days.

For a more in-depth look at our local market activity over the past year, I pulled the numbers from three separate regions and did the same comparison with the previous year.

Alhambra: The median home price increased by 2.25% from $550,000 in 2015 to $562,000 in 2016. The number of homes sold decreased by 6% from 405 in 2015 to 370 in 2016. The average days on market increased from 53 days in 2015 to 57 days in 2016. This increase in the number of days needed to sell a home can be partially explained by the fact that Alhambra is a more mature city, age-wise, with fewer new homes and less overall movement between them.

Chino Hills: The median home price increased by 3.6% from $606,000 in 2015 to $628,000 in 2016. The number of homes sold increased by 3% from 884 in 2015 to 908 in 2016. The average days on market decreased from 69 days in 2015 to 60 days in 2016.

Rancho Cucamonga: The median home price increased by 4% from $467,000 in 2015 to $486,000 in 2016. The number of homes sold increased by 9% from 1,791 in 2015 to 1,807 in 2016. The average days on market decreased from 64 days in 2015 to 58 days in 2016.

As you can see, our market improved in 2016, and a 3.6% overall appreciation rate is fantastic. Keep in mind that you have a one-to-five leverage ratio for your down payment on the average home that you purchase. Paying 20% down to control 100% of the value constitutes a one-to-five leverage ratio. A 3.6% appreciation rate multiplied by five equals 18%. Therefore, your down payment has increased by 18%

If you have any questions about our market, please feel free to give me a call. I look forward to talking with you!