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Housing prices fall for the 3rd month a row

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According to the National Association of Realtors, the median selling price for housing in the United States declined by 2.8 percent in September, marking the third month in a row to see a decrease.

Sales were actually down 2.3 percent compared with September 2020 as high prices continue to keep many first-time buyers out of the market.

Mortage rates remain low but analysts expect the rate to rise to 4 percent next year. Inventories are expected to gradually increase over that time period as well.

Overbidding clashing with appraisals

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The current practice of overbidding has resulted in 23 percent of home sales being delayed due to appraisal issues. Morevoer, 12 percent of the proposed deals ultimately fell through as the problem could not be resolved.

Since mortgage lenders will only lend the amount of the appraisal, those buyers seeking funding are increasingly having a difficult time.

To get around the low appraisal issue, come buyers are waiving the appraisal contingency, meaning they will make up the difference in cash.

Generations compete for housing

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According to a recent report by Zillow, the intense demand for housing is being driven primarily by two generations: millennials and baby boomers. Statistics show that while millennials want to buy, the share of first-time buyers has dropped to 37 percent this year.

Meanwhile, those aged 60+ who are buying increased by 47 percent in the decade from 2009 to 2019.

As homeowners, baby boomers have a distinct advantage as home values have increased by 31.2 percent in the last 10 years. Many millennials are saddled with crippling student debt which makes saving for a downpayment very difficult, if not impossible.

Alameda County to allow 18 in-law units

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Alameda County is launching a pilot program that will allow 18 Accessory Dwelling Units (ADU) to be built in unincorporated areas in the county. The 18 will be selected by lottery after the November 27 deadline. Interest is expected to be high.

In addition, the program will offer free project management services and consulting to more than 100 homeowners who want to build an additional housing unit on their single-family property. The goal is to add affordable housing in existing neighborhoods that adheres to legal permits.

Building costs continue to rise

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Shortages of many essential materials needed to build homes have sent construction companies scrambling to find alternative – and frequently expensive – solutions so they can finish their projects. Over 90 percent of builders say they’re dealing with shortages of framing lumber, plywood, and oriented strand board. Other common materials in short supply include wood paneling, pipes, and ceiling joists.

Finally, dors, windows, and home appliances can be hard to get.

Higher costs for materials mean that the price of a finished home is also considerably higher – not exactly what the housing market needs right now.

Mortgage rates to rise?

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After their late September meeting, the Federal Reserve announced that “a moderation in the pace of asset purchases may soon be warranted.” During the pandemic, the Fed has been buying up billions of dollars in mortgage debt, thus keeping mortgage rates very low.

Analysts expect the Fed to gradually cut back on their purchases, possibly as early as November. Many predict rates will continue to rise into Spring 2022.

Bay Area home sales cool … slightly

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Bay Area home prices dipped in August … to a cool $1.1 million median price, down 6 percent. However, keeping things in context, this is an increase of 12.8 percent over August of last year.

While prices were down slightly, overall sales were up 15 percent over last year. The trend continues to be towards the suburbs as residents leave the big cities for larger homes where they can work remotely.

Gov. Newsom signs 27 housing bills, which means…

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On September 28, Governor Newsom signed 27 housing bills, which, combined with $10.3 billion for affordable housing and $12 billion for homelessness are a strong ste[ as California begins to tackle its housing crisis.

Even the Governor had to admit that as significant as these measures are, they won’t completely conquer California’s housing affordability problem.

How buyers fatigue is affecting the market

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Home prices are at an all-time high, inventory remains low, bidding wars are common, many offers are all cash, often 10 to 20 percent over the asking price.

First-time buyers have it even rougher with approximately 68 percent saying they found the home of their dreams but were not able to purchase as they were either outbid, unable to secure financing, or the home failed the inspection

And some would-be homebuyers are giving up or, at least, taking a break.

Affordable housing coming to East Bay?

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Not long after the recall was shut down, Governor Newsome announced California’s first housing accelerator fund, which is a $1.75 billion dollar initiative to help fund 90 projects of more than 7,000 units of affordable housing in California.

California is prioritizing projects that have already gotten an allocation of state funding and will begin work in the next 180 days.

This is much needed. California has to find a way to make room for its workforce with more affordable housing.