Silicon Valley Real Estate Market Trend Report:

Santa Clara County (SCC): Home Sales Fall in March

Sales of single-family, re-sale homes fell in March compared to last year. I think we all expected this amidst the Covid-19 pandemic. Home sales were down 16.7%. There were 612 homes sold in Santa Clara County last month. The average since 2000 is 987.

The sales price to list price ratio jumped to 105.5% from 104.4%. That’s the highest it has been since July 2018.

Inventory of single-family, re-sale homes was down 41.8% compared to last year. That is the seventh month in a row inventory has been lower than the year before. As of April 5th, there were 669 homes for sale in Santa Clara County. The average since January 2000 is 2,703.

The median sales price for single-family, re-sale homes in March was up 8.1% compared to last year. The average sales price was up 9.6% year-over-year.

Days of Inventory, or how long it would take to sell all homes listed for sale at the current rate of sales, fell three days to 33 days compared to February. The average since 2003 is 89.

It took only twenty 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 down 6.4% from last March. The average sales price fell 3.6% year-over-year.

Condo sales were up 6.7% year-over-year. There were 288 condos sold in February.

The sales price to list price ratio rose to 102.6% from 101.7%.

Condo inventory dropped 49.5% from last March.

As of April 5th, there were 277 condos for sale in Santa Clara County. The average since January 2000 is 757.

Days of inventory rose to twenty-nine from twenty-five.

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

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

March 2020 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 http://avi.rereport.com/market_reports

Hard Economic Realities (SCC & SMC)

Mar. 27, 2020 — The first signs of the effects of the shutdown of broad regions and wide swaths of the economy showed this week, even as the Federal Reserve and federal government moved to improve the functioning of financial markets and try to ameliorate the damage of a hard stop for most economic activity.

Last week, the Federal Reserve announced a re-start of QE programs to buy up Treasuries and MBS — $500 billion and $200 billion, respectively. After the Fed ran through much of that cash in just the fire few days of the program, markets began to seize up again as investors continued a mad dash to sell holdings and rush to cash. Likely fearing another terrible opening for the financial markets on Monday morning, the Fed announced it would have no limits on how many Treasuries or MBS it would purchase, saying “The Federal Reserve will continue to purchase Treasury securities and agency mortgage-backed securities in the amounts needed to support smooth market functioning and effective transmission of monetary policy to broader financial conditions.”

This reassured investors that there would be a purchaser in the markets for these instruments regardless of price or yield, and did finally seem to have the desired effect. Interest rates began to settle; the yield on the 10-year Treasury was as high as 1.26% last Thursday, but closed on Friday at about 0.68%. Stock markets rallied starting Tuesday as the shape of the $2 trillion stimulus bill began to show, but faded on Friday. The selloff did show that markets were functioning more normally — stocks selling off led to bond buys, driving yields down. In recent weeks, both stocks and bonds were being liquidated, so stock prices were falling and bond yields were rising.

Suffice it to say that the Fed actions are a virtual firehose of liquidity aimed at as many facets of the financial markets as the Fed can reach. It seems very likely that if stress shows someplace else, the Fed will look to quickly address it. One such place might be seen in our own backyard, so to speak, for while government-engineered or -backed mortgage markets remain functional, private mortgage markets for non-QM loans remain largely closed and jumbo mortgages somewhat more difficult to come by.

In recent weeks, investors have shunned risk, and there certainly can be plenty of risk in making money available to mortgage lenders who are making loans without government backing to borrowers. As such, funding for these kinds of loans has dried up; at the same time, there are few investors at the moment who might be interested in buying up any loans or MBS comprised of non-guaranteed mortgages. Jumbo markets are still supported in both direct and indirect ways; Fannie and Freddie will buy loans with amounts of up to $765,600 in “high-cost” areas, and depository institutions are almost always interested in making high-dollar loans to customers with the best possible credentials, if probably less so at the moment.

It is good that the Fed has pledged unlimited amounts of MBS purchases, because selling them to investors might prove difficult for a while. Risks of investing in mortgages are on the rise, not only from consumers losing their incomes due to shutdowns creating payment risk but also from various government forbearance programs that may allow mortgage holders to skip making payments for up to a full year. Couple this with the surge in prepayment risk from able homeowners refinancing (something that will likely cool due to job loss in the near term, but may re-fire as mortgage rates will probably test “all-time” lows again in the coming weeks or months), and keeping in mind that new MBS will likely be issued at or near record low yields, it’s not hard to see why investors might not want them… and why the Fed may need to buy up a huge number of them.

Of course, risks in mortgages are likely to persist long after the coronavirus pandemic has been quelled as the effects of the government mandated recession. This will probably result in at least some future need for measures beyond temporary forbearance for some borrowers, and while it’s too soon to tell, we may again be looking at the need for loan modifications for some borrowers at some point.

Sales of new homes were still solid in February, running at a 765,000 annual clip, down a little from an upwardly-revised 800K figure for January. There were 5 months of available supply of new homes at the February sales pace, with 319,000 actual units built and ready to be sold. That was the lowest figure since August 2018, and suggested that we would see a faster pace of building heading into the spring. Again, this is no longer likely.

Call or email me if you have any questions.

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

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 http://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 http://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 Corne

S&P CORELOGIC CASE-SHILLER INDEX SHOWS GROWTH IN ANNUAL HOME PRICE GAINS TO END 2019

NEW YORK, FEBRUARY 25, 2020 – S&P Dow Jones Indices 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 December 2019 show that home prices continue to increase at a modest rate… Read more

U.S. Housing Markets Moving Into Rent Territory for First Time in Over 8 Years: Report

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San Mateo County (SMC): Home Sales Fall in March

Sales of single-family, re-sale homes fell in March compared to last year. I think we all expected this amidst the Covid-19 pandemic. Home sales were down 9.8%. There were 267 homes sold in San Mateo County last month. The average since 2003 is 398.

We expect home sales to continue dropping for the next two months.

The sales price to list price ratio rose from 105% to 106.2%. That’s the highest it has been since October 2018.

Inventory of single-family, re-sale homes was down 23.3% compared to last year. That is the eighth month in a row inventory has been lower than the year before. As of April 5th, there were 329 homes for sale in San Mateo County. The average since January 2000 is 1,287.

The median sales price for single-family, re-sale homes was up, year-over-year, by 9.1%. The average price was up 9.8%.

The median sales price was up 13.7% compared to February. The average sales price was down 1.0%.

Days of Inventory, or the amount of time it would take to sell all homes for sale divided by how many homes have sold, fell eight days to thirty-seven days.

It took twenty-two days to sell a home last month. That is down from thirty in February. 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 5.8% year-over-year. It was up 13.7% from February. The average sales price fell 1% from February. Year-over-year, the average sales price gained 9.8%.

Condo sales rose 13% year-over-year. Condo sales were up 29.6% from February.

Inventory fell 36.1% year-over-year. It was down 0.3% compared to February.

As of April 5th, there were 76 condos for sale in San Mateo County. The average since January 2003 is 350.

Days of inventory dropped to twenty from thirty-seven.

It took only seventeen days to sell a condo.

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

March 2019 Sales Statistics (SMC)

Call or email me if you have any questions.

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