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REALTOR®: Low interest rates fail to spark August home sales

Wednesday, September 17, 2014

The latest report from the California Association of REATORS® (C.A.R.) indicates August was a slow month for housing in most parts of the state, despite low interest rates and a slight rise in inventory.

According to C.A.R., closed escrow sales of existing, single-family detached homes in the state totaled 394,280 units in August, down 1.2 percent from 398,940 in July and down 9.3 percent from 434,910 in August 2013. August marked the 10th straight month that sales were below the 400,000 level and the 13th straight month that statewide sales have declined on a year-over-year basis.

The median price of an existing, single-family detached California home rose 3.3 percent from July's median price of $464,750 to $480,280 in August and up 8.9 percent from the revised $441,010 recorded in August 2013.  The August 2014 price was the highest observed since 2007. 

Mortgage rates were down for the second straight month in August, with the 30-year, fixed-mortgage interest rate averaging 4.12 percent, down from 4.13 percent in July and down from 4.46 percent in August 2013, according to Freddie Mac. Adjustable-mortgage interest rates in August were also down, averaging 2.37 percent, down from 2.39 percent in July and down from 2.65 percent in August 2013.

"California's housing market continues to be bifurcated both geographically and demographically, with the San Francisco Bay Area and high-end housing markets outperforming other regions and market segments," said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. "A strong job market and barriers to building new housing are creating an imbalance between supply and demand in some housing markets. Buyers who are not impacted by affordability issues are fueling sales in the high-end market, which is putting upward pressure on home prices."

The Silicon Valley housing market is facing these issues, said David Tonna, president of the Silicon Valley Association of REALTORS®. "There are those who say we are in another 'bubble' and there are those who feel that the current trend will continue indefinitely. All trends do turn around at some point, but the trend that we are experiencing seems to be in its early stage of growth, as we are just coming out of the Great Recession," said Tonna.

Tonna noted Silicon Valley has transformed itself from an agricultural area to one of high-tech. He indicated companies like Verizon, Walmart, Mercedes Benz and General Electric are either leasing new buildings and adding employees, or investing in tech initiatives in the area. When the new Apple Campus 2 in Cupertino is completed, the building is expected to accommodate as many as 24,000 employees.

"This is only the tip of the iceberg of the commercial growth in our area that is fueling our residential resale and new home construction," said Tonna.


The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.

The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.

Variations of this article have appeared in local area newspapers.

For further information, please contact Rose Meily at SILVAR Public Affairs, email , or phone (408) 200-0109.

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