Local Market Update
AUGUST MARKET FLASH
Statewide: The median resale price of a single-family detached home in California for June was $368,250. That’s a decrease of about 38 percent from June 2007 and just over four percent for the month. But, unsold resale inventory represented a 7.7-month supply, compared to 10.1 months for the same period a year ago. Median number of days until sale was 49 in June, down slightly from 52 for June 2007.
San Mateo County: After a substantial slide between November and January, median seems reasonably stable right around $700,000. Sales have oscillated between roughly 300 and 700 for the last year, so the current 461 isn’t bad at all!
Santa Clara County: Sales are recovering from a slight dip in May and are easily double the once low in January. Median has lost $95,000 year-over-year and has been fairly steady since January, but prices here are still high enough that many prospective buyers will face the added hurdle of securing a jumbo mortgage. After all, this county’s fortunes, more than any other’s, are tied to Silicon Valley which is facing some difficult times.
Interest Rates*: Thirty year fixed is around 6.7 percent, 15-year fixed is slightly above 6.2 percent and 5/1 ARM is heading for 6.4 percent—which doesn’t matter as much as it did because adjustable-rate mortgages are now only about 7 percent of the market. A 5/1 ARM currently saves less than $50 a month compared to a 30-year fixed. Considering it can be almost as difficult to qualify for, we think going the extra mile for a fixed-rate loan is still worth it. Thirty year fixed jumbo is at roughly 7.7 percent—too close to the major psychological barrier at 8 percent.
*Area interest rates are reported to be as follows:
San Francisco Bay Area and Silicon Valley regions: Princeton Capital reports that as of August 7, 2008, the “Agency Jumbo” rates are as follows: 30-year fixed with one point is 6.625%, the 15-year fixed with one point is 6.000% and the 5/1 ARM with one point is 6.375% for loan amounts up to $500,000.
Inventory: In general, inventory is fine. A year ago, most of the sales in California were of homes between $500,000 and a million. Now, most sales are of homes below $500,000 and the high end is shrinking fast. In most counties, foreclosed properties are making a sizable contribution to sales, but in some (like San Francisco) they hardly matter at all. The upshot is that, while this market isn’t tight, availability varies so much by neighborhood that you may or may not have an easy time finding the specific property that you and your prospect would like.