Autumn has officially arrived and the third quarter real estate statistics are in. Let’s look at how September 2018 compares to this time last year.

SANTA CLARA COUNTY MARKET REPORT

There were some notable changes to the single-family home market when comparing September 2018 with September 2017:

• There were fewer sales despite growing inventory. Sales were down from 953 to 730 even though active inventory rose from 700 to nearly 1,300.
• It took nearly one month longer to sell, rising from .9 months to 1.9.
• The median sales price increased from $1.17M to $1.25M, marking nearly 7% appreciation year-over-year.

Other milestones to note:

• The percentage over list price was 102%, a drop from September 2017’s 106%.
• The gap between the median sale price and the median list price has narrowed.
• Inventory has increased from a low in December 2017 (~300) to 1300 homes.

These stats may indicate that buyers aren’t able or willing to pay much over asking as in previous months.

CONDOS SHARE SIMILAR TRENDS

• There were nearly the same amount of condo sales despite growing inventory. Sales were down from 379 to 322 even though active inventory rose from 150 to nearly 550.
• It took over one month longer to sell, rising from .6 months to 1.8.
• The median sales price increased from $726K to $850K, marking nearly 17% appreciation year-over-year.

Other milestones to note:

• The percentage over list price was 104%, a drop from September 2017’s 107%.
• The gap between the median sale price and the median list price has narrowed.
• Inventory has significantly increased from a low in December 2017, from ~50 to 550 condos.

BAY AREA ECONOMY REMAINS STRONG

• The unemployment rate in Santa Clara County dropped to 2.6% in August from the previous month but was higher than June’s low of 2.3%. The national unemployment is at its lowest in over 40 years.
• The Bay Area reached a milestone: 4 million jobs, powered by an economic boom in the nine-county area. This boost marks the region’s 16th consecutive month of job gains.
• The consumer confidence index is the highest in the last 18 years, standing at 138.4 as of September 2018.
• Rising interest rates make it harder for buyers to qualify for hefty Bay Area mortgages. The Bay Area real estate topped ThinkAdvisor’s 10 States with the fastest job growth.

BAY AREA HOT NEIGHBORHOODS

Earlier this year RedFin published an article listing the hottest neighborhood predictions in California. It was no surprise that eight of their top ten are in the South Bay, ranging from Mountain View to San Jose. So how accurate were they? Pretty accurate. These neighborhoods remained “hot” by showing growth in median sale prices:

1. Bucknall (San Jose)
2. Cambrian (San Jose)
3. West Santa Clara (Santa Clara)
4. Sunnyvale West (Sunnyvale)
5. Lakewood (Sunnyvale)
6. Sunnyside (San Francisco)
7. Blacow (Fremont)
8. Rex Manor (Mountain View)

BALANCING AFFORDABILITY & INTEREST RATES

According to Leslie Appleton-Young, Chief Economist for the California Association of Realtors, California residents who rent will be the majority by 2025. We already see that trend; the percentage of renters in major Santa Clara County cities already range between 50-70%. Due to housing affordability and access to reasonably-priced jumbo mortgages, first-time home buyers in the Bay Area have significant challenges to overcome.

However, increased home inventory means there are more options available to buyers. When working with sellers, I’ve found that striking the right balance between list price and curb appeal is even more crucial. Buyers want turnkey homes — meaning a home they can easily imagine living in (professionally staged) and doesn’t have a long list of required or pricey repairs.

The Federal Open Market Committee increased the fed funds rate to 2.25% in September. This is the eighth increase since December 2015. Another projected rate hike is anticipated before years end with more to come in 2019.

Home buyers lose purchasing power when interest rates increase. Even with rising rates, let’s keep perspective. The 30-year fixed mortgage rate is still relatively low when compared to historical levels.

Tracie Southerland, Mortgage & Wealth Advisor at OPES Advisors, is a trusted source of lending information. “I’m seeing more creativity by lenders in helping buyers qualify. These new loan products still have protections in place (income documentation, reserve requirements) with added flexibility that can make all the difference for would-be buyers. Regardless of all the fluctuations, we’re seeing in the marketplace buying real estate is still a smart financial decision.”

BUYING OR SELLING REMAINS A PERSONAL DECISION

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 just like you successfully negotiate the most important financial transaction you’ll ever make. Contact me today to get started.