Silicon Valley Real Estate Market Trend Report:

Santa Clara County (SCC): Home Prices & Sales Continue to Decline

Contrary to what we wrote in March that the plethora of tech IPOs would generate thousands of new millionaires and drive home prices upward, home prices have, instead, declined steadily.

The reason for the decline is the Chinese have abandoned the market. Sales of real estate to Chinese buyers is down 56% year-over-year. See this article in USA Today: https://tinyurl.com/y5vmrq7f.

The median sales price for single-family, re-sale homes in August was down for the seventh month in a row and nine of the past ten months, year-over-year. It fell 7.4%. It was also down 7.8% from July.

The average sales price was down for the tenth month a row, year-over-year. It fell 7.5%. It was down 6.7% compared to July.

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

Home sales fell 4.6% from July, but they were up 13.2%, year-over-year. There were 873 homes sold in Santa Clara County last month. The average since 2000 is 987.

Inventory continues to expand. It has been higher than the year before fifteen months in a row. Last month, it was up 9.4% over last 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 44 days compared to July. The average since 2003 is 89.

As of September 5th, there were 1,293 homes for sale in Santa Clara County. The average since January 2000 is 2,778.

It is taking thirty-one days to sell a home. That is the time from when a home is listed to when it goes into contract.

The median sales price for condos rose 4.7% from July, but, it was down 10.6% from last August.

The average sales price rose 0.2% from July, but was down 10.6% from last August.

The sales price to list price ratio fell from 100.6% to 100.0%.

Condo sales were up 15.1%.

Inventory continues to expand. It has been higher than the year before fifteen months in a row.

As of September 5th, there were 609 condos for sale in Santa Clara County. The average since January 2000 is 757.

Days of inventory fell to fifty-six.

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.

August 2019 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

Comparative Calm To Close Summer (SCC & SMC)

Aug. 30, 2019 — By any reckoning, it was a turbulent summer for financial markets, with records highs for major stock indexes followed by massive selloffs, a Federal Reserve completing a pirouette on policy by cutting interest rates and ending its portfolio runoff early and interest rates plummeting around the world, sometimes to new record low yields in deeply negative territory. The intensification of the trade impasse and corresponding tit-for-tat tariff impositions has roiled economies across the globe, slowing growth and raising the prospects of multi-economy recessions. As a result of all this (and more) mortgage rates certainly are closing the summer at about a half-percentage point below where they began the period, and are much, much closer to historic lows than not.

But to what effect? Certainly, a spate of elevated refinancing activity has broken out for much of the period, but the pool of potential refinances is limited compared to those in periods such as 2012 or 2016, where years of high interest rates followed by record lows and unprecedented refinancing programs (HARP, etc) made virtually all homeowners eligible (2012) or 2016, when a fresh round of low rates appeared after years of property price and job market improvement saw a rush of missed-the-boat homeowners those getting out of HAMP modifications surge into the market.

In different times, we would be in the midst of a cash-out refinancing boom, but still stiff underwriting requirements (LTVs generally not greater than 85% at most) and unfavorable tax treatment of home equity debt (no longer deductible) have certainly trimmed enthusiasm for this particular avenue, although it remains viable for some. That leaves largely good old rate-and-term refinances to pick up the baton; however, home sales have been mostly moderate over the last few years (probably totaling perhaps 17 million or so all told), and mortgage rates were only meaningfully above today’s levels (i.e. a half-point or more higher) for only about two-thirds of period since those 2016 lows, so the potential pool of homeowners who might refinance is not all that large. Recent estimates from Black Knight put that pool at potentially 9.7 million borrowers, but not all will have the motivation, strength of credit, cash on hand or other necessities to jump back into the market… and for those without cash, a “no-cost” refinance will likely leave them with a rate little better than they have now.

Either here or somewhere else, low mortgage rates come from economic malaise, and headlines of impending doom and gloom can bring a psychological cost, too, one that could hinder the benefits of them. The Fed cutting interest rates can also send such a signal, as it shows that the central bank is increasingly worried about the outlook. In turn, consumers may start to anticipate a worsening economic climate and begin to become more cautious about spending, including on things like houses, which would further trim overall economic growth.

Underlying interest rates that influence mortgages ended the week at about their midpoint for the last five days, and provided that there is no outsized reaction to the economic fallout from the new tariffs come Tuesday morning (and absent any new inflammatory messages from either the U.S. or China) we may just see mortgage rates hold steady next week.

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 ANNUAL HOME PRICE GAINS CONTINUE TO WEAKEN

ANNUAL HOME PRICE GAINS CONTINUE TO FALL ACCORDING TO S&P CORELOGIC CASE-SHILLER INDEX

NEW YORK, JUNE 25, 2019 – 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 April 2019 shows that the rate of home price increases across the U.S. has continued to slow. More than 27 years of history for these data series is available, and can be accessed in full by going to https://bit.ly/2JuIPn3

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 Prices Continue to Show Weakness

Contrary to what we wrote in March that the plethora of tech IPOs would generate thousands of new millionaires and drive home prices upward, home prices have, instead, declined steadily.

The reason for the decline is the Chinese have abandoned the market. Sales of real estate to Chinese buyers is down 56% year-over-year. See this article in USA Today: https://tinyurl.com/y5vmrq7f.

Prices for single-family, re-sale homes were down for the third month in a row, month-over-month. The median sales price fell 1.8% and the average sales price fell 4.7%. Year-over-year, the median sales price rose 2.0%, but the average sales price fell 0.3%.

The sales price to list price ratio dropped from 104.7% to 104.2%.

Home sales fell 11.8% from July, but, were up, year-over-year, by 14.3%. That broke a nine month losing streak. There were 335 homes sold in San Mateo County last month. The average since 2003 is 398.

Inventory had been higher than the year before fourteen months in a row. Last month, it was down 6.9% over last year.

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 three to forty days.

As of September 5th, there were 447 homes for sale in San Mateo County. The average since January 2003 is 1,287.

It is taking thirty days to sell a home. 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 14.2% year-over-year. The median sales price rose 12.3% from July. The average sales price rose 4% from July. Year-over-year, the average sales price gained 3.5%.

Condo sales rose 23.6% year-over-year.

Inventory continues to expand. It has been higher than the year before thirteen months in a row. It gained 39.1% over last August.

As of September 5th, there were 131 condos for sale in San Mateo County. The average since January 2003 is 350.

Days of inventory rose to thirty-three.

It is taking only twenty-nine days to sell a condo.

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

August 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.