Hope you are well! How is everything going given it seems local businesses had started to open up only to get closed again. For me, real estate has been busier than ever given the record low interest rate environment. A client recently got a rate for 2.8% for a 30 year fixed and another got 2.5% for a 10/1 ARM. Absolutely incredible times which is why most real estate prices have hit record highs recently. If you own a home, strongly consider your options to refinance. Just be patient as many of them are extremely backed up. Happy to give you recommendations if need be!
What have I been up to?
It’s been a record setting last 30 days for me! 1 family closed in Foster City, $88,000 below list price after one week on the market (listed at $1.988M), and another family we bought for $80,000 below list price in North San Jose (listed at $1.15M). The Realtor matters and can easily save on the buy side tens of thousands of dollars. While the market is very competitive and we have hit record high prices in most counties, the strategy for every home is different! I’m also in contract for 5 homes (3 of which are new construction properties!) New construction homes are a great option give how low inventory levels are and there may even be flexibility on price and/or closing costs.
How is the market doing?
The real estate market has never been busier. Almost all homes are selling with multiple offers and higher than recent market comps. We have hit record highs in certain counties, and Santa Clara County seems to be the busiest from what I experience as I make offers in every county, every week. You can see how mid July is already trending versus all of the previous months. June was the highest in history, but July/August will shape to to be a record month given that pending results will be published 30 days later.
Interest rates continue to decline to record lows
Mortgage rates continue to decline by another 0.1% since last month. For new homeowners, these are amazing opportunities to get out of the rental market and lock record low rates. It’s also a fantastic opportunity to trade up for a bigger home as you are basically borrowing at close to nothing after you discount inflation. If you are still working, you may strongly consider to refinance even if you just bought 3 months ago.
Why do prices continue to rise?
I get asked this all the time as to why this is happening. For those that have hoped for a COVID discount, you can clearly see that once shelter in place happened, we have only gone up from there in most places outside of SF. What’s going on?
1) The Fed and banks have been very aggressive in ensuring that people keep their homes. They had announced unlimited QE and to keep buying mortgage backed securities pushing mortgage rates to record lows. As mortgage rates keep declining, the buyer power of individuals increases. People that pay exorbitant amounts in rent (over $3,000/month) are realizing that they can easily own a home in most places across the Bay Area with the same monthly payment.
2) COVID has not affected people equally. COVID has negatively impacted younger people and the service industry far more than those that are mid-level in their technical careers. If you think and look around as to who is buying in the Bay Area, these are the people still actively buying and having the confidence with their job security.
3) EVERYONE needs more space than ever before. The longer people work from home, the more they realize that their current situation is unbearable. This is why rental figures for 1 BR has plummeted double digits but 2BR and Single Family Homes have done significantly better, even within those same cities. With people being able to work from home longer, people are more comfortable in buying a larger home further away than they initially looked.
4) While inventory levels have improved, we are still much lower than what is needed from a demand perspective. This is actually happening across the US but Bay Area is much more severe given the lack of space/construction in the core Bay Area. We don’t have enough housing in the Bay Area and COVID made that imbalance much worse. Take a look at the stock prices of builders, they are all reporting record demand and can’t build fast enough. As long as there is this problem, prices will likely continue to rise.
That’s it for now! If you or anyone you know is considering to buy or sell, I’m never too busy to help! I would love to be introduced to your friends and family if anyone has goals to buy or sell by 2021.
Spencer Hsu, MBA
Tech Realtor DRE#02077253
EXP Realty DRE#01878277
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