Here’s my latest vlog post – I hope you and your family are doing well, staying healthy.
One of the first trends that became evident when quarantines began was the large number of young professionals who had gone home to wait out the virus with their parents. Having left the cities where they work and return to their hometowns, many of these young people may not go back. If the work-from-home situation continues – or if their jobs are eliminated – they might find themselves moving back home for good. This may be one of the factors to my discussion here on this post.
As the quarantine lifts, what are the potential market shifts and migration patterns in the SF Bay Area will we see?
Let me know if you or someone you know is interested in making a change (moving to a bigger home with more office space, multi-generational living, layout changes, bigger garden or fresher outside living at the oceanside.) I’m always here to help you make informed, knowledge-based decisions in the shifting markets!
There is a record nine year high in the number of homes on the market in S.F. as it continues to represent 60% more inventory than at the same time last year and 110% more inventory than in 2015 (according to http://socketsite.com/archives/2020/06/most-homes-on-the-market-in-san-francisco-in-nine-years.html)
It may only be the middle of March but for Silicon Valley real estate, spring has sprung.
Overall, the housing market is on the rise. Available homes for sale or inventory continue to be very low, which has fueled housing price appreciation for the past several years. Historically, inventory rises as the weather warms and we enter the spring selling season. One benchmark comparison that can provide a deeper understanding of the housing market is the overall health of the stock market.
At Intero, we chart the S&P 500 as it relates to home prices in Santa Clara County and San Mateo County. Historically, we find that the two indices are closely correlated. If you examined the chart a few weeks ago, you’d observe a widening gap between the S&P 500 and the average price in our local real estate markets. The unending stock market rally seemed to be marching continuously upward while the real estate market took a breather in 2019, causing a gap between home prices and S&P 500. Then as news of the Coronavirus dominated headlines, the gap narrowed as the current stock market correction began to take hold.
It makes sense local housing prices should chart the S&P 500; many of our buyers in Silicon Valley are employed at companies like Apple, Google or Facebook and use their stock options as down payment capital to purchase homes.
So, when prospective buyers or sellers ask the perennial question:
Presuming the stock market decline did not wipe out your down payment, now is the best mortgage interest rate environment in 50 years!
We suggest that now is a good opportunity to get involved with the housing market no matter what side of the fence you’re on, buyer or seller. Why? Presuming the stock market decline did not wipe out your down payment, now is the best mortgage interest rate environment in 50 years! The uncertainty in the stock market has pushed yields on treasury bills as well as mortgage bonds to all-time lows. Your money buys you more house than it did just a few weeks ago.
Is now a good time for prospective home sellers? The continued low inventory of homes for sale has caused prices to firm over the past six months and in many cases, we’re seeing multiple offers on attractive, well-priced properties. When supply is low and demand is strong, prices tend to rise. Stay calm and sell!
Savvy buyers and sellers will stay calm and proceed with plans to buy and sell. – Brian Crane, CEO Intero
Our hearts go out to those affected by the Coronavirus and we should all take necessary precautions to stay healthy, but this is not the time to retreat from the real estate market. Savvy buyers and sellers will stay calm and proceed with plans to buy and sell. Please let me know if you or someone you know is interested in selling, buying or investing, I’m never too busy for your referrals.
Lynne MacFarlane, Realtor, PFAC Affiliate
(831) 346-2743 text/voice anytime
U.S. house prices rose 1.1 percent in the fourth quarter of 2018 according to the Federal Housing Finance Agency (FHFA) House Price Index (HPI). House prices rose 5.7 percent from the fourth quarter of 2017 to the fourth quarter of 2018. FHFA’s seasonally adjusted monthly index for December was up 0.3 percent from November.
“House prices rose throughout 2018 but at a slower rate than in recent years,” said Dr. William Doerner, Supervisory Economist. “In the fourth quarter, house price appreciation hit one of the lowest levels in the past four years.”
FHFA House Price Index video shows how interest rate increases impact house price appreciation. Dr. Doerner explains in this video highlight of the fourth quarter.
- Home prices rose in all 50 states and the District of Columbia between the fourth quarters of 2017 and 2018. The top five areas in annual appreciation were: 1) Idaho 11.9 percent; 2) Nevada 11.2 percent; 3) Utah 9.8 percent; 4) Georgia 8.2 percent; and 5) Arizona 8.2 percent. The areas showing the smallest annual appreciation were: 1) North Dakota 0.0 percent; 2) Connecticut 0.9 percent; 3) West Virginia 1.6 percent; 4) Louisiana 1.8 percent; and 5) Oklahoma 2.0 percent.
- Home prices rose in 98 of the 100 largest metropolitan areas in the U.S. over the last four quarters. Annual price increases were greatest in San Francisco-San Mateo Redwood City, CA (MSAD), where prices increased by 17.0 percent. Prices were weakest in Urban Honolulu, HI, where they fell by 2.0 percent.
- Of the nine census divisions, the Mountain division experienced the strongest four quarter appreciation, posting an 8.1 percent gain between the fourth quarters of 2017 and 2018 and a 1.6 percent increase in the fourth quarter of 2018. Annual house price appreciation was weakest in the West South Central division, where prices rose by 4.3 percent between the fourth quarters of 2017 and 2018.
In terms home price appreciation, Silicon Valley is preforming at a strong rate. There are two metropolitan locations in California that took the highest home price appreciation, San Francisco – San Mateo – Redwood City (the Mid-Peninsula) and San Jose – Sunnyvale – Santa Clara (the South Bay).
FHFA 4Q report here.
If you’re making plans to move and relocate to another part of the country you will want to be knowledgeable about your housing price appreciation of your future home. Feel free to call me to discuss relocation possibilities, I can assist you locally and nationally.