Market Trends Report

The Silicon Valley Real Estate Market Trends Report: August 2022

In this issue

Santa Clara County (SCC): Sales Continue to Slow

Sales of single-family, re-sale homes were down for the eleventh month in a row, year-over-year, in July. Sales fell 44.8%. There were 603 homes sold in Santa Clara County last month. The monthly average since 2000 is 987.

The median sales price for single-family, re-sale homes fell, month-over-month, for the third month in a row. It was down 3.3% from June. Nevertheless, it was up 5.1% compared to last year. That’s the thirty-second month in a row the median sales price has been higher than the year before.

The average sales price for single-family, re-sale homes was down, month-over-month, for the fourth month in a row. It lost 1.3% from June. It was up 7.7% year-over-year.

The sales price to list price ratio fell from 106.3% to 101.2%. Multiple offers continue to be the norm.

Pending sales were up 0.6% year-over-year.

After being down, year-over-year, thirty months in a row, inventory of single-family, re-sale homes was up for the fifth month in a row. It gained 45.7% compared to last year. As of August 5th, there were 1,119 homes for sale in Santa Clara County. The average since January 2000 is 2,703.

Days of Inventory, or how long it would take to sell all homes listed for sale at the current rate of sales, rose from 38 days to 56 days. The average since 2003 is 89.

It took only twenty-two days to sell a home last month. That is the time from when a home is listed for sale to when it goes into contract.

The median sales price for condos was up 5.2% compared to last July. The average sales price gained 7.7% year-over-year.

Condo sales were down 40.8% year-over-year. There were 300 condos sold in July.

The sales price to list price ratio fell from 105.6% to 102%.

Condo inventory rose 15% compared to last July.

As of August 5th, there were 483 condos for sale in Santa Clara County. The average since January 2000 is 757.

Days of inventory rose from thirty-nine to forty-eight.

It took an average of twenty-one days to sell a condo last month.

If you are planning on selling your property, call me for a free comparative market analysis.

July 2022 Sales Statistics (SCC)

* Total inventory is active listings plus pending     listings. Active listings do not include pending.

More information is available in our on-line report at https://avi.rereport.com/market_reports

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Want straight answers to your real estate questions?
Call 650-305-1111 or send me a note to schedule a complementary & confidential one-on-one meeting.

 

VISIT https://avi.rereport.com/ for a free on-line market analysis of your property.
You can also perform your own personal search of properties for sale.

In The Range Of Neutral (SCC & SMC)

July 29, 2022 — Amid accumulating signs that the economy has both slowed and is slowing, the Federal Reserve raised the federal funds rate by another three-quarters of a percentage point, placing the key monetary policy rate in a range of 2.25% to 2.5%, the highest it has been since July 30, 2019.

The next increase in the federal funds rate — currently expected to be a half-point move in September — will lift the federal funds rate to more than a 14-year high. The Fed is of course trying combat inflation that currently is running at about a 40-year high, and expects to continue to tighten policy until it sees clear signs that inflation is likely to sustainably return to the Fed’s speed limit of 2% core PCE.

Settling back and then some is the housing market, as high prices and high mortgage rates continue to push folks to the sidelines to await more favorable conditions. The latest evidence of this came in the report covering sales of newly-built homes, where a 8.1% decline in June to a 590,000 annual rate of sales was seen. This came on top of a downwardly-revised May figure, where 54,000 homes previously counted were subtracted, leaving May’s tally at 642,000. The 590,000 annual pace for June was barely above the pandemic-shutdown low of 582K, and in reality is more akin to three-and-a-half-year-ago levels than not. Compared to as recently as December, the annual run rate for sales of new homes is down by 29%.

With the ongoing slump in sales, inventories of homes built and ready to be sold continue to balloon; the 457,000 units available in June is the highest level of inventory since May 2008 and represent a 9.1-month supply at the present rate of sale. For the month, the median price of a new home sold in June was $402,400, down 9.5% from May’s $444,500. Perhaps this is a case of more supply than demand shifting some power towards homebuyers who could negotiate lower prices, or perhaps builders simply trimmed asking prices to help attract buyers and move stock. It may also be that challenging affordability conditions saw buyers choosing less costly models with fewer amenities, too.

Existing home sales have been softening for months, and indications are that this may intensify a bit more yet. The National Association of Realtors Pending Home Sales Index for June slumped hard, posting an 8.6% decline compared to May. This measure of contracts signed portends sales 30-60 days down the road and so will be reflected in July and August sales figures. As well, not all executed sales contracts make it all the way to the closing table, so the decline in sales forecast here may ultimately be even more pronounced than what is suggested by the June PHSI. Leaving out the hard-stop months of the pandemic, by our reckoning the June PHSI was the lowest reading since September 2011.

Mortgage applications continue to signal flagging activity, too. The Mortgage Bankers Association reported another 1.2% decline in overall applications for mortgage credit in the week ending 22, and requests for mortgage funds remain at about a 22-year low. Purchase-money mortgage applications slipped 0.8%, a fourth consecutive decline, while those for refinancing dropped another 3.7%. This week’s drop in mortgage rates and the potential for them to hold or decline somewhat more from current levels may see a touch more refinance activity at best, but little more than that.

While acknowledging that the fair bit of data due out next week may make markets a bit restive, we think that the average offered rate for a conforming 30-year fixed-rate as reported by Freddie Mac is likely to decline again, possibly by another 10-12 basis points or so.

For further details and a city-by-city breakdown statistics, go to https://avi.rereport.com/market_reports.

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Chart: 30 years fixed mortgage rates January 2022

For a focused review of current and historical market trends go to https://avi.rereport.com/market_reports and click “change’’ see belowChart: Santa Clara and San Mateo counties current and historical market trends

 

FORTUNE Magazine
8-8-2022

Mortgage interest rate predictions: Will rates go down in August 2022?

By Paul Centopani

WSJ
8-3- 2022
7 Tips to Get the Best Possible Interest Rate on Your Mortgage
S.J. Mercury News
8-2- 2022

Sellers beginning to make concessions as prices drop

By Marisa Kendall

FORTUNE

5-27-20222

The housing market just slid into a full-blown correction, says top economist Mark Zandi

By Lance Lambert

California homeowners interested in building accessory dwelling units on their property just caught a break, potentially shaving off thousands of dollars in fees and permits.
In a move proponents say will help ease the Bay Area’s housing crisis, Gov. Jerry Brown on Tuesday signed Senate Bill 1069, making the so-called “granny units” easier and less expensive to build throughout the state.

For more read California eases restrictions on ‘granny units’
and www.hcd.ca.gov/policy-research/AccessoryDwellingUnits.shtml

Helpful resource for home owners

Many new home owners or owners who consider remodeling or rebuilding their homes should take advantage of their county Tax Assessor web site. These web site and their respective city building departments web site typically have vest information regarding the process for applying for permits, the impact on their taxes and many other resources that home owners should be aware are available for them.
For the San Mateo County Tax Assessor office visit https://www.smcare.org/default.asp
For Santa Clara County Tax Assessor visit https://www.sccassessor.org/index.php

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The Silicon Valley 150 Index Corner

The Silicon Valley’s Real estate market is a derivative of the local economy–it prospers and withers depending on how well the local innovation-based sector performs. The San Jose Mercury News tracks the performances of the largest 150 publicly traded companies headquartered in Silicon Valley through an index called the SV150, which may be found at www.mercurynews.com. Stocks are valued based on several criteria, but one of the more important criteria is a company’s future earnings. Therefore, I see the SV150 as a leading indicator for Silicon Valley’s real estate market.

 

Investors Corner

S&P CoreLogic Case-Shiller Index Reports Annual Home Price Gain of 19.7% in May

NEW YORK, July 26, 2022: S&P Dow Jones Indices (S&P DJI) today released the latest results for the S&P CoreLogic Case-Shiller Indices, the leading measure of U.S. home prices. Data released today for May 2022 show that home prices continue to increase across the U.S. More than 27 years of history are available for the data series and can be accessed in full by going to  CLICK HERE

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San Mateo County (SMC): Home Sales Continue Falling

After being higher, year-over-year, fourteen months in a row, sales of single-family, re-sale homes in San Mateo County fell for the eleventh month in a row. They were down 33.5% in July. There were 290 homes sold in San Mateo County last month. The average since 2000 is 398.

The median sales price for single-family, re-sale homes was down 6.4% compared to last year.

The average sales price fell 4.3% year-over-year.

The sales price to list price ratio fell from 108.9% to 103.5%.

Inventory of single-family, re-sale homes was up 40.6% compared to last year. As of August 5th, there were 485 homes for sale in San Mateo County. The average since January 2000 is 1,287.

Days of Inventory, or the amount of time it would take to sell all homes for sale divided by how many homes have sold, rose from forty-four to fifty days.

It took nineteen days, on average, to sell a home last month. That is the time from when a home is listed to when it goes into contract.

The median sales price for re-sale condos rose 0.3% year-over-year.

Year-over-year, the average sales price fell 3.9%.

Condo sales were down 24.2% year-over-year. There were 94 condos sold last month. The average since January 2003 is 122.

Inventory was up 35.4% year-over-year.

As of August 5th, there were 195 condos for sale in San Mateo County. The average since January 2003 is 350.

Days of inventory rose from fifty to sixty-two.

It took an average of twenty-six days to sell a condo last month.

If you are planning on selling your property, call me for a free comparative market analysis.

July 2022 Sales Statistics (SMC)

* Total inventory is active listings plus pending listings. Active listings do not include pending.

You can get more information at: https://avi.rereport.com/market_reports

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Call or email me if you have any questions.

For further details and a city-by-city breakdown statistics, go to

https://avi.rereport.com/market_reports.

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Looking to Downsize?

Keep Your Property Tax Base

Under Proposition 60, California homeowners 55 and older get a one-time chance to sell their primary residence and transfer its property-tax assessment to a new one, but the market value of the new home generally must be equal to or less than the market value of the old home.

Prop. 60 was designed to help longtime California homeowners who want to downsize but don’t want to give up the low property-tax assessment they enjoy in their existing home.

Under Proposition 13, homes are reassessed for property-tax purposes when there is a change in ownership or new construction. In between ownership changes, the assessed value can go up by an inflation rate not to exceed 2% a year. (Homeowners can get temporary reductions when property values go down.)

Prop. 60 lets homeowners 55 or older transfer their base-year value from an existing primary residence to a new primary residence, but there are restrictions.

The new home must be in the same county as the old one or, as Proposition 90 added, in one of eleven counties that accept transfers of base-year value from other counties. The eleven counties are: Alameda, El Dorado, Los Angeles, Orange, Riverside, San Bernardino, San Diego, San Mateo, Santa Clara, Tuolumne and Ventura.

Also, the new home must be purchased or built within two years – before or after – the sale of the original property.

If the new house is purchased before the old house is sold, the market value of the new house on its purchase date cannot exceed 100% of the old home’s market value on the date it is sold.

Silicon Valley Real Estate Market Trends Report

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