Overall, 2015 was a good year for real estate. Home sales in inland Mendocino County were up 6.5 percent from 248 in 2014 to 264 in 2015. Home prices rose 10.5 percent and the time houses remained on the market decreased by 14.5 percent from 103 days in 2014 to 88 days in 2015. Interest rates increased slightly (by about a half-percent), raising the monthly payment on a typical Ukiah home mortgage by about 10 percent. The number of houses on the market in Ukiah remained about the same.
In early 2015, the Dodd-Frank Act had its fifth birthday and certain provisions went into effect that required lenders to be more selective about who qualified for loans (among other restrictions). So during the first part of the year, lenders were doing their best to comply with more restrictive lending requirements with their existing offerings, but as the year wore on, they were able to create new products (types of loans) that followed the new rules but opened the door for more homebuyers. For example, at the beginning of 2015, if you wanted a low down-payment loan, you had to get a government loan. By the end of the year, many banks offered their own low down-payment loans. While I don’t have hard facts to support this, my impression is that lenders were also willing to offer loans on properties that would not have qualified before—they seem a little less picky.
Lenders have also relaxed the criteria in other ways. I saw an advertisement recently that offered loans to people who had just experienced a short sale or foreclosure. By the end of 2015, short sales and foreclosures dropped to an 8-year low in Ukiah, so there weren’t too many people interested in this type of offer, but it still indicates a loosening of restrictive loan practices. Along those lines, I also saw ads for loans to people with low credit scores, as low as 580, which would not have been the case in recent years.
As restrictions loosened (came back into balance after the knee-jerk reaction to crazy lending practices that led to the real estate bubble and its subsequent bursting in 2006), Ukiah saw more first-time homebuyers than it has for quite some time. I attribute this to consumer confidence. For several years, people in their 20s and 30s have preferred to keep their money free and available rather than tying it up in real estate via home ownership. This changed in 2015 with people feeling more comfortable and confident that their jobs would remain steady and the economy would continue to support them.
That same age group began entering the real estate profession in greater numbers in 2015. While the average age of realtors was 57 at the beginning of the year, at Realty World Selzer Realty we added nine agents and a third of them were in their 20s and 30s.
As I look toward the future, I’m not typically one to make predictions, but I do expect interest rates to increase. In 2016, more residential lots will be available in Ukiah with two potential subdivisions being developed: one with about 200 lots south of town and one with 38 lots in Vichy Springs. There may be a couple other small subdivisions of 20-30 lots being developed, too. Costco is likely to clear its final legal hurdle to coming to Ukiah and Chipotle should begin serving fresh Mexican food.
Overall, I’m optimistic about 2016. I think it will be another good year for real estate and for our community.
If you have questions about real estate or property management, please contact me at email@example.com or visit www.realtyworldselzer.com. If I use your suggestion in a column, I’ll send you’re a $5.00 gift card to Schat’s Bakery. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 40 years.