California Real Estate Update

Here are some extracts of the current California Real Estate Update Report, from the California Association of Realtors, which you can browse here in its entirety.   

• Sales in resort communities remained hot in September as housing demand in those areas continued to surge from last year. South Lake Tahoe home sales continued to increase year-over-year by triple-digits (105.4%) for the second consecutive month …
• At the regional level, all major regions posted double-digit price increases from last year. … All regions except the San Francisco Bay Area set a new high in median price in September.   
• All but one of 51 counties tracked by C.A.R. reported a year-over-year price gain, with 39 of them growing 10 percent or more. Lassen had the highest price increase, gaining 51.4 percent year-over-year. Humboldt was the only county where the median price was flat from a year ago, and no counties experienced an annual price decline.

• C.A.R.’s statewide sales-price-to-list-price ratio* was 100 percent in September 2020 and 98.5 percent in September 2019.
• The statewide average price per square foot** for an existing single-family home was $321 in September 2020 and $287 in September 2019.
• The 30-year, fixed-mortgage interest rate averaged 2.89 percent in September, down from 3.61 percent in September 2019, according to Freddie Mac. The five-year, adjustable mortgage interest rate was an average of 2.98 percent, compared to 3.38 percent in September 2019.

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Francis

Silicon Valley real estate
Trends: Local prices and graphs.
How much is your home worth?

Interest Rates Above 5?

It's hard to believe but interest rates are not that high, when you look at them with a 10 or 20-year perspective..

Click on picture to see a larger version.

Of course, we are now used to paying little when we take on a mortgage, and who did not refinance in the past 8 years?  So it looks expensive now to consider a new mortgage - but 10 years ago we were looking at around 6%.
We all hope we don't go back there...

Still, a majority of renters say they want to buy, according to a survey by the National Association of Realtors (NAR).

Thanks for reading,
Francis

Home Valuation tool
Detailed, local trends etc...
Current mortgage rates   (slight regular uptick)
A worthy local non-profit to remember: Second Harvest Food Bank Santa Clara County.

The Effect of Interest Rates Increase

What happens to your mortgage payments when interest rates change?

For all buyers trying to get in contract right now, the same question is on everyone's mind: what are interest rates today, and how much is my loan payment going to be after my offer is accepted?

This informational slide below, compliments of the California Association of Realtors, gives us a pretty good idea on the impact of any change in the rates:

Also, here is a good link for current mortgage rates, to keep abreast of interest rates in general.

Tip: unless you are a gambler, it is usually a good idea to lock the rate the moment you are in contract to purchase a home.
Should 30-yr fixed rates increase too much on you, and you cannot qualify for the same amount any longer, you may have to consider a loan that would be fixed for a few years, and which then becomes adjustable.  These are the "3-yr, or 5-yr, or 7-yr fixed then adjustable" loans.  The starting rate, on which you are qualified by the lender, is lower, and that in turn allows you to qualify for a larger loan amount.  Ask your lender to advise you on the matter.

Let me know if I can help with any of your real estate questions!

Thank you for reading!
Francis

Price your home online

Silicon Valley real estate specialist

Detailed, local trends etc...

A worthy local non-profit to remember: Community Services Agency in Mountain View.

Is the market slowing down?

Is the market slowing down right now?

Ask an agent who is full-time involved in the market, on the buy and on the sell side, and you will probably hear that it looks that way.   

About a year and a half ago, in the middle of January 2012, suddenly in just a matter of a week or two you could tell if you were actively involved in sales that something was changing:  properties were not available any longer to place an offer on, or offers were just going to be heard that evening with 2 or 3 offers expected, or it was too late by a day etc... So we would go to the next best one, and it was gone too, with multiple offers.

In a similar way today little signs appear here and there: a property comes back on the market a few days after being in contract, or we see "offer dates" pass with no offers brought in.  Also the inventory (finally!) increases a bit so that there is actually some choice for potential buyers.  I also hear sometimes that after a few days on the market very few people have actually looked at the disclosures online.  A month ago you would already have had by the start of the week-end most interested buyers checking out the disclosures.

So yes, it seems to me that the market is slowing down.  Sales figures in a month or two will tell us if this is correct.  I would attribute this slight slow-down to factors like:

• Buyers are jaded by so many unsuccessful bids they may have placed,
• Prices have gone up significantly for the same type of house, certainly so in the eyes of buyers, and if the asking price is too close to the last comparable sale, another 10 or 15% jump from that high becomes too intimidating,
• With higher values have also come on the market properties which may not be the same high quality as those who just commended such high prices,
• A sense, at least for some would-be buyers, that they just do not know where prices should be any longer, after the many extreme bids that all can see in the MLS (hence the need for a good Realtor...),
• .. And last but not least, the rise in mortgage interest rates that have shot up in the past 2 weeks, effectively pricing out those buyers who were at the top of their borrowing power.

 

Let’s qualify those remarks though: in the areas with good schools, for properties priced lower than the last sales, there are still multiple offers, no doubt. For areas with very little inventory, the demand which has gone unsatisfied for so long is still there, and even only one offer will often bring a much higher price than the asking price.  The market is still very much a sellers’ market.  But in areas where inventory is larger, the new prices coupled with more choices will give a break to buyers who can still qualify. 

The future will depend a lot on:

-       The inventory (going up, going down again??)

-       The interest rates

-       Seasonality to a certain degree.  There are fewer people around during summer.

If I had a guess I would say that in general, going forward, we should expect prices to reach somewhat of a plateau, a market of muted price increase.  .. well, so there is my crystal ball. Do you want to try yours out in a comment?

Thank you for reading,
Francis

Local real estate
updated loan rates   Rates are up mostly, except for the 1-yr adjustable