Real Estate Articles (2014)

Wednesday, December 31, 2014

Upon reviewing the year-over-year numbers for median price and total dollars sold in the counties of Monterey, San Benito, San Mateo, Santa Clara and Santa Cruz, the real estate market in Silicon Valley appears quite stable. MLSListings Inc. reports year-over-year median prices for single-family homes were up across all of the five reported counties in the month of November. However, month-to-month gains have slowed somewhat and dipped in some counties.

San Mateo County saw the highest median price gain of $1,100,000 in November, up 18 percent, followed by San Benito County, with a median of $431,000, with a 14 percent gain, and Monterey’s median of $467,500, up 11 percent.

The median price for a single-family home in Santa Clara County was $852,500 in November 2014, up 7 percent from the November 2013 median of $795,000. For Santa Cruz County, the November median of $685,250 was up 4 percent from the November 2013 median of $659,500.

According to MLSListings Inc., total dollars sold for single-family homes are also up. San Mateo County also leads the way with a whopping 30 percent increase in total dollars sold when comparing November 2014 with November 2013. Monterey is up 10 percent, and Santa Cruz showed a 2 percent increase. San Benito saw a modest decrease of 6 percent year-over-year, and Santa Clara was down a small 1 percent.

The number of closed sales has closely followed the total dollars of homes sold in all reported counties. Compared to November last year, total sales dollars are up, but there is a slight decrease in closed sales. “Fewer homes are on the market, which means fewer homes sold, but because of the stiff competition for homes, price gains continue. There are still multiple offers in pockets of the state, particularly in Silicon Valley, because of the employment growth in the region,” said David Tonna, president of the Silicon Valley Association of REALTORS®.

The demand for homes is pulling up condo prices, too. Year-over-year median price gains have ranged from a 32 percent in San Benito County; 22 percent, San Mateo County; 17 percent, Santa Clara County; 3 percent, Monterey County; and 2 percent, Santa Cruz County.

Month-over-month median prices for condos increased in all reported counties, except Santa Cruz, which showed a 9 percent drop in the median, from $465,000 in October to $422,000 in November. Monterey County experienced the highest gain, up 44 percent, from $286,500 in October to $412,500 in November 2014, followed by San Benito County, a 24 percent gain from $265,750 to $330,000 last month. Gains in the median price of condos/townhomes were slower, at 1 percent in San Mateo County, from $635,000 to $632,594, and at 2 percent in Santa Clara County, from the October median of $555,000 to $566,000 in November.

Wednesday, December 31, 2014

According to the “2014 Housing Review” released by realtor.com, 2014 “demonstrated a steady build-up of housing momentum fueled by significant improvements in economic fundamentals, low mortgage rates, and compressed inventory and is expected to carry the market into 2015 gains.” However, there are also factors that continue to hold back a recovery, including tight credit restrictions and a limited supply of homes for sale.

Realtor.com is the official site of the National Association of REALTORS® that offers listings and essential real estate-related information to nearly 23 million consumers each month. Its “2014 Housing Review” includes the following Top 10 Real Estate Trends that defined the 2014 housing market, with five indications of growth and five limiting factors.

Indicators of a stronger housing recovery
1. Improving economic fundamentals: After an especially harsh winter, the economy picked up steam this spring and produced a banner year for new jobs. GDP this year was higher, resulting in stronger consumer confidence.

2. Historically low mortgage rates continued: Mortgage rates declined despite the end this year of quantitative easing, a monetary policy intended to stimulate the economy.

3. Return to normal price appreciation: After abnormally high levels of home price appreciation in 2012 and 2013, price increases moderated throughout 2014.

4. Decline of distressed sales: Foreclosures and short sales declined throughout the year, and while total home sales decreased year over year, non-distressed home sales increased over 2013.

5. End of the era of major investors active in purchases: The drop in distressed sales opportunities and higher home prices led to a decline of large-scale investor purchase activity in the single-family market sector, leaving more room for traditional first-time buyers.

Factors holding back recovery

1. Tight credit standards: Despite historically low rates, many households were prevented from capitalizing on mortgage access because of overlays lenders added to qualification standards in order to limit their risk.

2. Limited inventory: While absolute inventories increased, monthly supply of new homes and existing homes remained beneath normal levels.

3. Depressed levels of first-time buyers: The share of first-time buyers fell to the lowest level in more than 20 years.

4. Record levels of renters and ever-increasing rent prices: Continued declines in homeownership rates resulted in record numbers of renting households. Rent increases became an inflationary concern this year, and the pace of these increases is not slowing down.

5. Lack of recovery in homebuilding and low share of new home sales: Single-family starts barely increased in 2014 over 2013. New home sales remain far from normal share levels – typically near 16 percent, they are now around 9 percent. New home prices increased substantially again this year, limiting the demand.

All the above factors impacted Silicon Valley in 2014, but don’t dampen the region’s housing market outlook. At a recent Silicon Valley Association of REALTORS® district meeting, Moise Nahouraii, owner of Referral Realty in Cupertino, and the local trade association’s 2013 Realtor of the Year, shared his local forecast for 2015-2020. Nahouraii predicts employment will continue to grow through 2020; demand for homes will continue to be greater than supply; tight inventory and multiple offers will continue, especially in prime areas with good school districts; and appreciation will continue upwards of 5 to 10 percent, depending on the neighborhood.

Who will be the buyers? New hires, foreigners, families that want to move up, and families, mostly seniors, that wish to downsize, said Nahouraii.

Nahouraii explained the growth and expansion of high-tech companies like Apple, Google, and Facebook will be phenomenal, but the market’s full recovery will hinge on the need for more housing, along with flexible and available financing.

“We are in the nucleus of everything that’s happening, and that means more people will be needing homes,’ said Nahouraii.

Wednesday, December 17, 2014

Slower price gains and the lowest interest rates in nearly two years did little to spur November home sales as low housing affordability and tight supply conditions remained obstacles to entering the market for would-be buyers, according to a California Association of REALTORS® report released on Wednesday. However, in places like Silicon Valley, an MLSListings Inc. review of the numbers for median price and total dollars sold in the counties of San Mateo and Santa Clara shows these real estate markets continue to be stable.

Wednesday, December 17, 2014

First-time homebuyers often claim coming up with the down payment is the main obstacle to buying a home. However, one study shows it is the additional non-mortgage debt that many borrowers bring to the table that is the bigger obstacle to homeownership.

Wednesday, December 10, 2014

Slower price gains and the lowest interest rates in nearly two years did little to spur November home sales as low housing affordability and tight supply conditions remained obstacles to entering the market for would-be buyers, according to a California Association of REALTORS® report released on Wednesday. However, in places like Silicon Valley, an MLSListings Inc. review of the numbers for median price and total dollars sold in the counties of San Mateo and Santa Clara shows these real estate markets continue to be stable.

Wednesday, December 10, 2014

Pending home sales in California rose in October for the second consecutive month. Pending home sales are forward-looking indicators of future home sales activity, providing information on the future direction of the market. The rise in October ending home sales is a sign that closed sales could pick up for the remainder of the year, according to the California Association of REALTORS® (C.A.R.).

Wednesday, December 3, 2014

The Silicon Valley Association of REALTORS® (SILVAR) offered its third National Association of REALTORS® (NAR) Certified International Property Specialist (CIPS) Institute on Nov. 17-21, with 23 REALTORS® from SILVAR and other REALTOR® associations around the Bay Area in attendance. The CIPS Institute provides REALTORS® the opportunity to learn more about global real estate so they can better serve their international clients.

Wednesday, December 3, 2014

California REALTORS® welcomed the Federal Housing Finance Agency's (FHFA) recent announcement that it would keep the maximum conforming loan limits for mortgages acquired by Fannie Mae and Freddie Mac unchanged in 2015 for most of the country. The FHFA, however, raised the conforming loan limit in 46 counties, including four California counties, because those counties experienced increases in local home values.