The Latest in Paperless Technology
As the pandemic continues to shape American life, homebuyers have decided that now’s the time to purchase. After a very slow March and April, as much of the country was in lockdown, the late spring and summer have seen a surge of buyers.
Many are looking for new places to live away from the cities as commuting is a considerably less important factor. Others are looking for more space in their homes to accommodate working areas. Finally, some are opting to move closer to family.
Over the last decade the number of US families (parents with children) owning homes decreased by 3.6 million. In the Bay Area (including San Francisco) the number dropped by 10 percent or 31,000. Meanwhile, the number of families renting increased by 57,000 or 33 percent.
The reasons behind this trend are simple: between 2006 and 2016 Bay Area rents increased by 39 percent while home prices increased by 80 percent.
Despite strong buyer demand, strongly reflected in increased price growth and faster sales, pending home sales fell for the fifth consecutive month in May. Analysts agreed that a lack of inventory was primarily responsible throughout the entire country.
On the positive side, experts pointed to the strong economy and healthy job market as prime indicators going forward.
The National Association of Realtors’ latest Pending Home Sales Index for September reports as home sales in California continue to drop, two-thirds of those home that are on the market are receiving multiple offers.
Home that sold over the asking price averaged an increase of 13 percent, up from 8 percent in 2016.
Pending home sales in the Bay Area declined by 10.8 percent, the 12th consecutive month of year-over-year decline
Low inventory is forcing California homebuyers, particularly in the Bay Area, to act quickly and they are: homes in the nine-county sold in an average of 20.4 days in June. The California average of 22.4 days was the lowest since 2004.
San Mateo County had the fastest pace of sales with properties selling within 17.6 days followed by Alameda County (17.8 days) and Santa Clara County (17.9 days)
Prices continued to rise in the Bay Area on a year-over-year increase of 7.9 to a median sales price of $908,740.
While March generally sees a boost in sales over the winter months – typically around a 45 percent increase – Bay Area home sales had a strong 60 increase in March 2017.
Prices increased 10 percent on a year-over-year basis and competitive bidding resulted in an increase in the number of homes selling over the asking price.
Inventory remains low, however, with the number of Bay Area homes for sale down nearly 8 percent from March 2016.
According to the National Association of Realtors® strong buyer demand couple with a limited inventory has pushed the national median sales price past its 2006 peak and to a record high of $236,400. This is an increase of 6.5 percent over 2014 and eclipses the previous high of $230,400 set in July 2006.
While prices continue to rise so do existing-home sales which reached the highest pace in over 8 years.
Experts say that strong job growth and an improving economy are the driving forces behind the home buying demand as is the widely held belief that interest rates will rise in the near future.
According to The Associated Press, home sales in the United States are on pace for their best year since 2007. The job market remains strong, mortgage rates are still low but rapidly rising home prices and the potential of rising loan rates is causing many buyers to act fast. Moreover, many of these buyers are in the housing market for the first time.
According to experts, “demand is off the charts in 2015” with June 2015 the fourth consecutive month of the sales rate exceeding 5 million homes. The median home price now sits at $236,400, higher than the July 2006 peak.
With unemployment down to 5.5 percent – down from 6.3 percent a year ago – many would-be buyers are more confident about their own future and this is strongly reflected in their desire to purchase a new home.
According to a recent report by the National Association of Realtors, the percentage of homes bought by first-time home-buyers is at it’s lowest level in nearly 30 years. Currently 33 percent of homes purchased are by first-time buyers down from 38 percent in 2013 and significantly below the long-term average of 40 percent.
The reasons cited include higher prices, lower inventory, tighter lending policies, and a still uncertain job market. However, Federal regulators have begun easing the lending procedures somewhat in an effort to encourage more first-time buyers to enter the market. Even at that the National Association of Realtors is predicting home sales will decrease in 2014 for the first time since 2010.
Sanity, of course, is a relative term and, when dealing with California home prices, sanity is not one that immediately comes to mind. According to a recent article by Kathleen Pender in the San Francisco Chronicle “Home prices getting slightly less insane” in that they only rose by 10.8 percent in a 20-city index in April. Meantime, the rate of appreciation continues to decline as it has every month since November, 2013. In March, the rate was 12.5 percent year over year. Some experts predict that by the close 0lose of 2014 year over year increases will be in the 4 to 7 percent range.
Asking prices rose by 8 percent in May, the least amount of increase in 13 months. Trulia Chief Economist Jed Kolko reported that “…there has been a clear slowdown in price gains. That is a good thing. That is happening even before we have gotten back to a housing bubble.”
Many realtors in San Francisco saw little evidence of a slowdown in the spring with 29 percent of all sales selling for 20 percent or more over the asking price.
June is typically a fairly slow month in sales and many realtors report a rise in inventory.
