Market Trends Report

Next Up: More Fed (SCC & SMC)

Oct 28, 2022 — Various central banks across the globe continue to lift interest rates to combat inflation. The European Central Bank lifted their policy rate by another 75 basis points this week and the Bank of Canada kicked their 50 basis points higher as well. The Bank of England is also expected to join in shortly as well. The Federal Reserve also raised rates by 75 basis point, lifting the key U.S. monetary policy rate to about a 15-year high.

With home prices high and mortgage rates both high and rising, sales of new homes slumped anew in September, declining 11% from August to a 603,000 annual rate of sale. At this pace, sales are also now 17.6% below year-ago levels and the prospect for an uptick anytime soon aren’t very good at the moment, as mortgage rates legged up by quite a bit in October. The slowing in sales helped re-bloat inventories of new homes for sale; at the present rate of sale, there’s an 8.1 month supply, with the 462,000 units available representing the most available since March 2008. With such stockpiles, new home construction will need to slow or builders will need to trim prices to move inventory. At least for September, that didn’t happen, as the median price of a new home sold was $470,600, up from $435,800 in August.

The new house market is a fraction of the size of the existing home portion. With conditions increasingly adverse, potential homebuyers are staying away, and the National Association of Realtors Pending Home Sales Index for September shows this quite clearly. The PHSI dropped by 10.2% in September and is now some 31% below year-ago levels. The index’s actual level is now at about a 12-year low, if the hard-stop of the early pandemic is left out of the comparison. Even then, September’s value is only about a little above that level, so very few contracts to buy existing homes were executed last month. Even then, it’s very possible that some of those that were signed will not come to fruition, and it looks like more slowing is ahead for home sales, and that before we get into the seasonal holiday effects that traditionally dampen sales.

New home sales and pending existing home sales were both down last month, and mortgage rates have run up to 20-year highs this month. As such, there are fewer and fewer applications for mortgages being placed. In the week ending October 21, the Mortgage Bankers Association reported another 1.7% decline in requests for mortgage credit, pulled lower by a 2.3% drop in purchase-money mortgages requests as refinance applications remained unchanged from the prior week. The current twenty-year highs for mortgage rates and corresponding twenty-odd year lows for mortgage applications go hand-in-hand.

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

For a focused review of current and historical market trends go to https://avi.rereport.com/market_reports and click “change’’ see below

Real Estate Related Articles

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

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 Decelerated In August

NEW YORK, OCTOBER 25, 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 August 2022 show that home price gains decelerated across the United States. 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, Prices Down

Sales of single-family, re-sale homes in San Mateo County fell for the fourteenth month in a row, year-over-year. They were down 34.2% in October. There were 250 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 10.4% compared to last year.

The average sales price fell 5.2% year-over-year.

The sales price to list price ratio fell from 100.7% to 100.4%.

Inventory of single-family, re-sale homes was up 67.2% compared to last year. As of November 5th, there were 515 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-seven to sixty-two days.

It took twenty-five 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 2.6% year-over-year.

Year-over-year, the average sales price rose 0.5%.

Condo sales were down 38.7% year-over-year. There were 84 condos sold last month. The average since January 2003 is 122.

Inventory was up 3.1% year-over-year.

As of November 5th, there were 167 condos for sale in San Mateo County. The average since January 2003 is 350.

Days of inventory fell from seventy-four to sixty.

It took an average of thirty-two days to sell a condo last month.

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

October 2022 Sales Statistics (SMC)

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

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.

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.