The National Association of Realtors predicts soft market conditions for existing-home sales will continue in the months ahead, but expects some improvement by the second half of this year, as loan limits are increased.
According to NAR's chief economist Lawrence Yun, sales activity is expected to remain soft through the first half of the year, despite low mortgage interest rates. "Household formation was only half of what it should have been last year given the demographics of a growing population and sustained job growth, so there clearly is a pent-up demand from buyers who are on the sidelines," said Yun.
"Existing-home sales have moved narrowly since last September, but when the full impact of higher loan limits for conventional mortgages begins to impact the market, there is likely to be a notable rise in home sales and prices," explained Yun. "If higher limits are enacted very quickly, we'll see a faster and more meaningful recovery by expanding safe, affordable financing in high-cost areas – that, in turn, would help to stimulate overall economic activity."
Silicon Valley Association of REALTORS® (SILVAR) President Leannah Hunt maintains a positive outlook about the local market in 2008. Hunt believes homes in the area will maintain their value due to pent-up demand and a limited supply of housing in the area.
"We anticipate that the first quarter will move on a positive note and we will continue to have a healthy market because our economy is strong in Silicon Valley. Interest rates are favorable to buyers, and activity continues to be good," she indicated. "We may start off sluggish in the first quarter until we build more inventory, but we are very blessed in this area because we only have a finite amount of housing, and our good schools continue to be a driving factor in the marketability of homes in this area."
Inventory appears to be picking up in the area. MLSListings Inc., SILVAR's Multiple Listing Service, shows 4,563 single family homes on the market in Santa Clara County in January 2008, up from 2,671 in January 2007. Palo Alto had 38 homes on the market in January 2008, up from 20 in the prior month.
Nationwide, NAR projects existing-home sales will rise notably by the second half of this year from around 4.9 million in the first half of this year, and totaling 5.60 million for all of 2009. They expect aggregate existing-home price nationwide should decline 1.2 percent in 2008 to a median of $216,300, and then rise 3.2 percent to $223,200 in 2009.
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 email or call the SILVAR office at (408) 200-0100.