Real Estate stats for Santa Clara County are positive as we enter the winter season. Compared to last year, home values continued to rise — 9.6% from October 2015 to October 2016.
Most notable in the market analysis is active inventory. There are more homes available for purchase in Santa Clara County than we had in October 2015. There was a sharp dip in the number of listings from November 2015 to February 2016. This season, while we still see a decrease, it is not as pronounced. This is particularly good news for buyers as you may have more choices during an off-peak season. Keep in mind the average number of months to sell is 1.6 which is still considered low. To put things into perspective, an average of 6 months marks a balance between buyer demand and seller inventory.
For sellers, the average Days On Market (DOM) has increased 17.86 % to 33 from 28 days and the percentage over asking price dropped slightly (from 3% to 2%). DOM has increased for all homes regardless of price. However, it’s no surprise that homes in the $2 million price range have the longest DOM stat at 36 days.
Home appreciation is still strong at nearly 10%. However, there are some zip codes and neighborhoods where appreciation numbers may be above or below county averages.
Market Factors & Consumers Surveyed
- California job growth is positive 2.3% (+375,000 new jobs year over year) compared to the rest of the nation at 1.7%. The majority of job growth occurred in Southern California (2.1%) while the Bay Area trailed at 0.9%. Of the Bay Area cities, San Jose held the lead, growing jobs at 3.6%.
- Unemployment is near an 8-year low at 4.9% for the U.S. and 5.5% in CA. Santa Clara County rate is at 3.8%.
- 71% of Californians aged 55+ haven’t moved since 1999. Reasons include:
- Concerns about affordability or they enjoy low rates on their current mortgage with low property taxes.
- Deciding to remodel and stay or rent out.
- 64% report they won’t sell their home when they retire
- 52% are worried their children won’t have the same opportunities to succeed
- 53% of Boomers plan to help their children with a down payment
- 44% say that even with $1M+ in home equity, it isn’t enough to retire in style
- Former owner-occupied units are now rentals. This speaks to Boomers turning primary residences into rental income to avoid capital gains hit and/or taking advantage of an appreciating asset.
- Millennials feel the pinch in qualifying as a first-time home buyer; see an out-migration from the Bay Area in search of more affordable housing options.
- Global economic concerns like China’s turmoil and the Brexit vote shook up the financial markets this year.
- Frustration with Bay Area traffic and time spent on commutes is rising.
- The demand for low to moderately priced homes continue unabated. Higher-end property sales are slowing.
- Mortgage rates are still low but qualifying guidelines are still stringent
- Supply of homes for sale in California remains below the norm. The Bay Area market has the tightest inventory.
2016 Year End Observations & 2017 Predictions
Over the last two weeks, I’ve observed the market has changed yet again. It seems Silicon Valley is emerging from the distractions related to the election. I believe October’s increased Days on Market (DOM) stats were heavily influenced by the election media frenzy and will drop as November and December numbers are tallied.
While inventory is higher than compared to a year ago, I see that the quality of available listings isn’t as high (e.g., properties in high-traffic corners or next door to commercial developments). I’m also seeing an increased sense of urgency with buyers due to concerns that interest rates will soon rise. So now (even in the midst of the holiday season) is a phenomenal time to be a seller.
As we move into 2017, I agree with these economic forecasts:
- Fixed rate mortgage rates will increase slightly and gradually. Hopefully, with greater profit margins, banks will ease up on qualifying guidelines.
- Housing sales will steadily grow in 2017 with continued appreciation at a somewhat slower pace.
- Consumers and financial markets are concerned about uncertainty. Any wildcards — for example, unexpected instability to the global players, unexpected rises in interest rates or inflation markets — could dramatically impact the Bay Area’s real estate market.
Whether you’re looking to buy or sell, I can help. I’ve helped hundreds of Bay Area individuals find the right place to call home.