SCCAOR President
by Broderick Perkins
© 2008 DeadlineNews.Com
Unauthorized use of this story is a copyright violation -- a federal crime.
Deadline Newsroom - If past shifts in the Silicon Valley, CA housing market are any indication, it could be a good time to get a chunk of real estate known to go golden.
When the price of all homes -- new, resale, condos and single-family homes -- were tallied, the median price sank from $655,000 to $436,000 a 33.4 percent drop according to San Diego-based DataQuick.
The lower prices have improved home sales so much that more than one in three sellers are getting more than their asking price. The average for the area is 97 percent of the asking price.
In December, 35 percent of all sellers got more than their asking price in Silicon Valley. Some of that was from distressed properties where low-ball prices caused buyers to swoop in and bid up the price, said Richard Calhoun, broker-owner of San Jose-based Creekside Realty.
Calhoun and others say the lower median doesn't mean all homes have lost 40 percent of their value. Some hard hit areas have experienced value drops as high as 50 percent from December-to-December. However, the median is tilted by a greater share of sales coming from more affordable housing regions -- just the opposite of what happened during boom times.
"The median price is a statistical number that marks the 'middle price' for sales -- exactly half of the area's sales was above the median. The other half was below the median. When the median falls, it indicates that more lower-priced homes are selling than higher-priced homes," said Stefan Walker, a broker with Alain Pinel Realtors in Los Gatos.
During the boom, east, central and south Santa Clara County yielded about 7 to 12 percent of the region's home sales. Higher-end districts to the west, Cupertino, Los Gatos, and more affluent areas enjoyed a larger share of sales then. That caused the median single-family home price to skyrocket to a record $870,000 in the spring of 2007. But more recently, a full third of the Silicon Valley's market sales have sprung from more affordable markets.
"What was 700 days of unsold inventory on the east side is now 130. That's a dramatic improvement," said Calhoun.
However, the lower sales, falling prices and unknown number of foreclosures yet to hit the market, do tend to depress prices in all regions.
Interest rates are cooperating.
Freddie Mac put the average fixed rate for 30-year conventional loans mortgages at 5.12 percent on Jan. 22, only slightly higher than the 4.96 percent rate weeks earlier -- the lowest average since1971, when Freddie Mac first started tracking rates.
Quincy Virgilio, president of the Santa Clara County Association of Realtors, says the confluence of low prices and low rates is increasing the number of closed sales by contributing to greater affordability.
The California Association of Realtors' "First Time Buyer Housing Affordability Index" for Silicon Valley nearly doubled from the third quarter 2007 to the third quarter 2008. The index rose from 21 to 39 during the period.
The index measures the percentage of households that can afford to purchase an entry-level home in a given area. DataQuick said throughout the nine-county San Francisco Bay Area, the typical monthly mortgage payment dropped to $1,471 in December 2008, from $2,848 in December 2007.
High rents are also prompting renters to buy.
San Jose's average $1,708 monthly rate, the last time Novato-based RealFacts checked, was the fourth highest in the nation.
RealFacts tracks large apartment complexes with an average 255 units, rather than smaller properties where rents could be less.
Home loan money remains tight, but a shift to more sensible financing is also prompting consumers take the home buying plunge.
For more on mortgages see:
• Mortgages that are surviving the crunch
Related stories include:
• Why buyers aren't buying, but how they can
• Bleak new home sales data dashes forecasts
© 2008 DeadlineNews.Com
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Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group -- DeadlineNews.Com, a real estate news and consulting service and Web site and the Deadline Newsroom, DeadlineNews.Com's news back shop. Perkins is also a National Real Estate Examiner. All the news that really hits home from three locations -- that's location, location, location!
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1 comment:
Broderick, that was an excellent article. I'm so sick of the Mercury News only giving the worst side of real estate and never the good side, because there is a good side, and you covered it. I'm not at all pessimistic in this market. Because, like you, I've been in the business long enough to know that this market "only came to pass - it didn't come to stay", and now is a prime time to get a piece of that real estate rock.
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