Optimistic Outlook for Real Estate
At the national level, quarterly home prices increased again in Q2/2020. The National Association of Realtors reported that 96% of U.S. markets showed home price appreciation, with the national median prices rising 4.2% year over year.
In general, real estate in the SF Bay Area has shown resilience despite Covid-19 restrictions. The following charts show how South Bay neighborhood stats vary.
Housing Affordability Index
The California Association of Realtors released its quarterly Traditional Housing Affordability Index (HAI) Report. HAI measures the percentage of households that can afford to purchase the median-priced home.
The SF Bay Area Region’s HAI dropped from 31 in Q1/2020 to 28 to Q2/2020. When compared to Q2/2019’s index at 24, the region is considered more affordable. To purchase a $989,000 median-priced home, buyers’ minimum qualifying income totaled $186,000.
In Santa Clara County, our HAI remained steady at 22. This is up from Q2/2019’s index of 20. The county’s median-priced home of $1,380,000 requires a minimum qualifying income of $260,000.
American Dream Down Payment Act
Saving enough for a down payment is one of the biggest challenges to buying a home. The bipartisan-sponsored bill, called the American Dream Down Payment Act, would allow first-time homebuyers access to a savings account with tax benefits. If passed, legislation enables states to establish down payment accounts similar to 529 plans which are used for higher-education expenses. While contributions would not be tax-deductible, the funds can be withdrawn without a federal tax penalty. In its current iteration, the bill also allows recipients to use funds to pay closing costs and allow family and friends to contribute to the fund.
CA Eviction Protections Through January 31, 2021
California tenants are protected through January 2021 as long as they pay 25% of rent due starting in the month of September. Governor Newsom signed the statewide Covid-19 Tenant and Landlord Protection legislation on Monday, August 31st. Highlights include:
- No tenant can be evicted before Feb 1, 2021 as a result of rent owed due to a Covid-19 related hardship accrued between March 4 – August 31, 2020.
- For Covid-19 related hardships that occur between Sept 1, 2020 and January 31, 201, tenants must pay at least 25% of the rent due to avoid eviction.
- Landlords may begin to recover this debt on March 1, 2021.
- Small claims court jurisdiction is temporarily expanded to allow landlords to recover the amounts. Landlords that do not follow the court evictions process will face increased penalties under the Act.
If you’re a tenant or a landlord, refer to the official Governor’s AB3088 bill announcement for additional details.
Home Refinancing in the News
When Billionaire Warren Buffet gives financial advice, it’s worth noting. He advises “stop procrastinating” when it comes to refinancing your mortgage.
“This is a very good time to borrow money, which means it may not be such a great time to lend money, but it’s good for the country that it’s a good time to borrow money,” billionaire Buffett said recently during his company’s annual shareholders meeting, held online.
According to the Mortgage Banker Association on September 2, 2020, U.S. mortgage applications fell by 2% in the week ended August 28th, the third consecutive period of decrease. It also followed a 6.5% drop in the previous week.
The new Freddie Mac and Fannie Mae “adverse market refinance fee” has been delayed until December 1. Originally announced on August 12 and to go into effect on September 1, 2020, the 0.5% fee received a strong industry backlash.
While home purchase mortgage applications get priority, now is the time to start a home refinance if you want to reduce your interest rate or home payment. If you’d like a referral, I have a source I’ve trusted for years.
Reach Out & Connect
I’m meeting with clients via phone, video conferencing, and by appointment. Whether you’re looking to buy or sell, you need an experienced guide in this complex and fast-paced real estate market. I’ve helped hundreds of individuals like you successfully negotiate the most important financial transaction you’ll ever make.