Written by David Castellon
After a few highly active years for Valley home sales, real estate experts had anticipated sales to slow down toward the end of 2018.
But the slowdown was more extreme than some may have anticipated in three Valley counties.
Normally, home sales slow down at the end of the year, but in Kings County, home sales dipped by 17 percent in December of last year compared to December 2017.
And in Tulare and Madera counties, the declines were even worse, down 20.1 and 34.6 percent, respectively, from December to December, according to data provided by the California Association of Realtors.
Among the four Valley counties, only Fresno County’s real estate market avoided a double-digit dip, with December home sales down only 4.7 percent compared to December 2017, well below California’s statewide 11.6 percent decline over that period.
But realtors contacted in the four Valley counties said the sales declines – even the severe ones – don’t appear to be signs of crisis in the local real estate market.
In fact, they say a number of factors from higher interest rates in the U.S. to California wildfires to global political conflicts stoking concerns about the economy all may have played parts in December’s declining home sales, but they expect the market to pick up this year.
“I see no solid economic factors for why it slowed down. I think people’s perceptions was the [home] prices have gone up, interest rates have also gone up with them, and demand has kind of leveled out,” said Brian Gilbert, president of the Tulare County Association of Realtors.
Add to that concerns about the U.S. and global economies fueled by the tariff war with China and the political major infighting in Great Britain over developing a plan to exit the European Union.
“So we had a lot of uncertainty going into the holidays. But I think people had the money, but I think they stayed on the fence, instead of spending it” on buying homes, Gilbert said.
Alex Salazar, president of the Madera Association or Realtors, attributed the trend last month partly to interest rates going up in October and a low inventory of available homes in his county.
But one particularly unexpected factor was how major wildfires in other parts of the state last year slowed home building in Madera County, he said.
“The 34 percent, I think it’s an anomaly,” because Pacific Gas & Electric had to delay connecting electrical lines to numerous homes under construction last year because many electrical crews were sent to deal with the effects of major wildfires in other parts of California.
Those include the Mendocino Complex Fire that started in July up north and became the largest wildfire in California history, burning more than 459,000 acres, and November’s Camp Fire in Butte County, that burned more than 153,000 acres.
Salazar said the Camp Fire seemed to spur a particularly heavy draw of PG&E crews from Madera County, increasing the delays in home construction and sales at the end of the year.
He noted one of his clients building homes was supposed to have power hooked up in November, and current expectations are that PG&E will not be able to do it until February.
“And I have to say that is impacting quite a bit of new construction.”
That’s leaving people who had been planning to buy new homes either waiting for the utility company to hook up the homes or switch gears and start their home searches all over again, this time for existing homes, Salazar said.
“But with tight inventory as it is [in Madera County], that means very low existing homes to purchase.”
It’s also important to note that “We slowed down from a very hot market,” so the slowdown in sales is less severe than the percentage drop might indicate at first blush, said Don Scordino, president elect of the Fresno County Association of Realtors.
“So it’s still a good, normal healthy market.”
Art Quintera, president of the Kings County Association of Realtors said he agreed, as did the other realtors contacted.
As to the reason for the December home purchase slowdown, Scordino said, “It happened because the overflow of buyers that were backed up from years earlier had finally gotten out there and bought.
“Their job security and consumer confidence all brought them forward for purchasing, and now we’ve kind of run out of the overflow, and now we are in an evenflow.”
And that’s good, because “We are slowing down to normal. We could not sustain the speed we were going at,” Scordino said of the Valley’s rate of home sales in recent years.
Gilbert agreed, saying, “I would say this is a normal cycle. We have seen abnormal cycles for the past five years of being very busy in November and December, when historically they have been much slower months. So we have reaped the benefits of a strong November and December –probably more than we should have, if you look at the historical data for real estate.”
And there are signs the market here is healthy, said Gilbert, noting that over the last couple of months of 2018, “I think people just took a pause.
“People held onto their money for 60 days, but I’ll tell you, as soon as January hit, the phone calls started rolling in,” he said.
“So I think we are going to have a normal year,” Salazar said of 2019. “But you can’t compare it to 2017, where we had a significant jump in home values from year to year.”
Gilbert said he expects Tulare County’s home sales to increase 3-5 percent this year, while Salazar said he anticipates Madera County home sales to get a shot in the arm when several newly-built homes become available this year within the city of Madera and in the unincorporated Madera Ranchos area, where two major home developments – Tesoro Viejo and Riverstone – are being built.
“They have been selling,” with the buyers primarily coming from Fresno and Clovis, he said.
“We have not seen people in Madera sell their homes in town to move into those Rancho communities there.”