Case-Shiller Posts Higher Home Prices in the Bay Area

New York, April 30, 2013 – Data through February 2013, released today by S&P Dow Jones Indices for its
S&P/ Case-Shiller Home Price Indices, the leading measure of U.S. home prices, showed average home prices increased 8.6% and 9.3% for the 10- and 20-City Composites in the 12 months ending in February 2013. The 10 and 20 City Composites rose 0.4% and 0.3% from January to February.

“Home prices continue to show solid increases across all 20 cities,” says David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices. “The 10- and 20-City Composites recorded their highest annual growth rates since May 2006; seasonally adjusted monthly data show all 20 cities saw higher prices for two months in a row – the last time that happened was in early 2005.

“Phoenix, San Francisco, Las Vegas and Atlanta were the four cities with the highest year-over-year price
increases. Atlanta recovered from a wave of foreclosures in 2012 while the other three were among the hardest hit in the housing collapse. At the other end of the rankings, three older cities – New York, Boston and Chicago– saw the smallest year-over-year price improvements.

Forget Everything You Thought You Knew About Home Values

It seems there’s even more pent-up demand for housing than there was after the 1989 housing crash. The lower than usual interest rates is undoubtedly a contributing cause for the frenzied activity but what else is creating the stratospheric rise in housing activity?

It’s becoming a common event for a home to have 10-20 offers submitted by enthusiastic buyers. One first time buyer home in San Mateo recently sold with 86 offers! We’ve been in bidding wars ourselves where the winning bid paid over $300,000 more than asking price for a modest San Carlos home.
It’s probably not a leap for you to then believe that the median size home in San Mateo County climbed 29% since last March?
How’d we come up with that 29%? We adjusted it to account for the size of homes selling during the two periods. Had we not done so the raw figures showed a 34% increase.
In March of 2012 the median home in San Mateo country sold for just $689,000 and this March the median home price was $925,000. So did a lot of larger homes sell this year? For sure the upper market is starting to get traction again but the median size home selling in 2013 was only 5% larger. So we roughly estimate that if one can get a 5% large home in 2013 but have to pay 34% more, than prices probably went up by a factor of around 29%.
Looking at the housing picture for San Mateo County for March of 2013 as compare to March of 2012, we see that there were 20% fewer home sales this year as compared to last.
Why the fewer home sales if the market is so hot? Because, simply put, there are fewer homes for buyers to choose from. In 2013 there were 20 percent fewer sales but 29 % fewer new listings-which explains the low inventory.
For buyers wanting to get into a home, it may be now or never as home prices appear to have skyrocketed almost 30% in San Mateo County just in the last year. If interest rates rise, that double whammy may just put home ownership out of the reach for many.

 

 

The information contained in this article is educational and
intended for informational purposes only. It does not constitute
real estate, tax or legal advice, nor does it substitute for
advice specific to your situation. Always consult an appropriate
professional familiar with your scenario.

 

Interest Rates Predicted to be 10% by Year’s End

That could easily have been a headline ripped from the pages in major newspapers back in August of 1994 when rates were only 6%–yet by year’s end the prediction nearly came true as a mere four months later they would rise to almost 10%!

Are you old enough to remember what normal mortgage interest rates were like?

Interest Rates DropAccording to Bankrate.com, mortgage interest rates have been attractive for such a long stretch of time that many homebuyers and homeowners might not realize that rates haven’t always been this low. Mortgage interest rates in the 4-percent range were unheard of until 2010, and rates in the 5-percent range were unknown prior to 2003, according to Bankrate.com surveys through the years and a chart of monthly average mortgage interest rates tracked by the Federal Reserve since 1971.

Prior to 2003, higher mortgage interest rates were the norm. In the early 1970s, rates hovered in the 7-percent range and spiked up above 9 percent in late 1975, late 1976 and most of 1978. At the end of the decade and throughout the 1980s, mortgage interest rates rarely dipped lower than 10 percent.

In the early 1980s, mortgage interest rates brushed the stratospheric highs of 18 percent and even 19 percent. Imagine trying to get a home loan with an interest rate of 18 percent. At that rate, the mortgage interest deduction would be a very lucrative income tax perk, but the monthly payment on a loan would be far more painful than a typicalmortgage payment today.

During the 1990s, mortgage interest rates ranged from around 7 percent to roughly 9 percent for many years. It was only in 2000 that rates began to fall to earth. They held at less than 9 percent in 2000, less than 8 percent in 2001 and less than 7 percent in 2003.


Reproduced with the permission of Mortgage-X.com

If you’ve been putting off refinancing your home or buying a new one, don’t get lulled into inaction with the thought that these new low rates are here to stay.

The information
contained in this article is educational and intended for informational
purposes only. It does not constitute real estate, tax or legal advice, nor
does it substitute for advice specific to your situation. Always consult an
appropriate professional familiar with your scenario.

 

Drew & Christine
Morgan did not necessarily participate in these sales.

DRE License Numbers
01124318 & 01174047

Drew & Christine
Morgan, REALTORS | Notary Public

 

 

Saving More For A Down Payment–is it Wise?

Is it Wise to Save More For Your Down Payment?

Are you a first-time buyer wondering how you’ll ever have
enough of a down payment to buy your first home?

Do you wonder how much down payment you need for a home? Did
you know that if you’re buying a home and using FHA financing your down payment
could be as little as 3.5?. Ten percent down loans are also making a comeback
and are quite common once again.

But should you wait and save more for your down payment so
you can be 20% down? In our current market, that might not be such a great
idea.

Home values have been increasing rapidly in the last year.
An area in Belmont known as Sterling Downs offers many first time buyers
affordable living options. But the values there have been rising with the rest
of the tide.

This graph illustrates the price trend in the last year in
Sterling Downs, Belmont. We used homes which closed escrow since January of
last year that were three bedrooms and between 900 and 1,100 square feet so
that the sale prices weren’t affected by the size of homes selling.

Clearly it would be near impossible to keep up with the increase
in the selling prices simply by saving more money each month from your paycheck. We estimate
that in 2012 to date the average Sterling Downs home increased $75,000 or just over
$5,000 per month.

If you have been waiting to buy a home and need some advice
on some of the varying financing options which are available, feel free to contact us and
we’ll refer you to one of the great mortgage brokers who can answer all of your
questions.

 


Mortgage-rates27-300x300
The information
contained in this article is educational and intended for informational
purposes only. It does not constitute real estate, tax or legal advice, nor
does it substitute for advice specific to your situation. Always consult an
appropriate professional familiar with your scenario.

 

DRE License Numbers
01124318 & 01174047

Drew & Christine
Morgan, REALTORS | Notary Public

All data was retrieved
from MLS Listings, Inc. The Multiple Listing Service for San Mateo County.