coldwell Banker - April MARKET FLASH
Statistical data from CAR and DataQuick
BELLS ARE RINGING! (WHICH ONES, THOUGH?)
Intro: The
glass was half-empty because it was February, and half-full because
it was (nearly) the best (or maybe the best) February on record.
Nobody knows where this market is going, except that it keeps going
up, even while a lot of people say it ought to be going down. But
you can’t argue with the numbers we’re about to give
you – especially the Top Ten List, which is looking fabulous.
Statistics:
Statewide:
The median resale price of a single-family detached home in California
for February was $471,620, a 3% decline for the month but an increase
of almost 21 percent from February 2004. Sales activity increased
3.2% from a year earlier. Unsold resale inventory represented a
3.9 month supply, compared to 2.4 months (our figure) for the same
period a year ago. Median number of days till sale was 40 in February,
up from 27 for the month a year earlier.
Top Ten List: The ten
California communities with the highest median home prices in February
were: Los Altos, $1,400,000; Burlingame/Hillsborough, $1,400,000;
Newport Beach, $1,285,000; Santa Barbara, $996,500; Mill Valley,
$932,000; Danville, $875,000; Menlo Park, $841,500; Cupertino,
$840,000; Rancho Palos Verdes, $825,000; Los Gatos, $787,500; Mountain
View, $750,500. Amazing! Eight in the top ten…and in a way
that betokens very broad strength in the top-end market.
Bay Area: : Region-wide median
sales price, at $677,850, is up 1.7% for the month and a startling
13.5 percent from this time last year – so that, clearly,
neither rising lending rates nor relaxed inventories (which may
exist mostly in theory anyway) are cooling this market off. With
7,463 total sales, this was the second strongest February in Dataquick’s
records, after February 2000 with 7,507. People from all over the
world still have a passionate desire to live in or near San Francisco,
and they’ve got the wads of cash that make it possible.
Sacramento/Capitol Region: Median
price at a robust $351,700 is up about 1.4% for the month and almost
27% for the year; sales activity is up 4.2% for the year and, even
more impressive, 1.5% for the month – one of only two regions,
the other being the Central Valley, showing increased sales for
both the month and year. Even now that money is harder to get,
Sacramento offers irresistible value, with residential prices as
low as $200-$250/sq ft even in desirable areas.
Interest Rates: Thirty-year
fixed rates at 5.64% are exactly where they were a year ago, but
it’s the slope that’s scary; from a low average of
5% in mid-February, fixed rates took off steeply, paused for a
couple of weeks in mid-March, then took off almost straight up.
5/1 ARM rates are now at 5%, where 30-year fixed was six weeks
ago, and a far cry from this-time-last-year’s 3.55%. Personally,
we wouldn’t even get an ARM this month – with the rate
only two-thirds of a point lower than 30-year fixed!! – but
people will, after all, borrow whatever they can qualify for.
Look: The fundamentals can no longer be ignored, the Fed funds
rate has inched up to 2.75% from its historic low of 1%, and The
Party Is Over. “The run-up in mortgage rates began with Alan
Greenspan's ‘conundrum’ comment in his prepared Congressional
testimony on February 16,” says Bankrate.com's expert Greg
McBride. “To the bond market, which is the basis for rates
on mortgages...the message was clear: Long-term interest rates
must rise.” Whether they rise a lot or a little can be settled
only by a crystal ball better than ours, but we will say that – before
too long, if not this minute – mortgage rates may become
the primary deterrent for prospective buyers in general.
Inventory: : Again we
like what the President of the CAR – this year it’s
Jim Hamilton – has said about inventory: “While the
number of homes available for sale has improved, the short supply
of homes on the market contributed to price appreciation.” There
are enough homes available that you can show a prospect a good
time (as it were), but strategically speaking, there will probably
never be as many residences for sale in California as there are
people who want to buy them. Prospects are fanning out into the
Sierra foothills, the Central Valley, and the High Desert, and
near-ghost towns of a few years ago are boomtowns today.
News Media: Rates, affordability,
the falling dollar, and a continuing uncertain job market all pose
important cautions – so much so, in aggregate, that some
columnists are essentially saying “People are nuts to buy
in this market.” But even if that’s true, impatience
continues to be the prevailing mood among prospects, because so
many people want to act quickly and avoid being caught by any squeeze
in the offing. Result: record or near-record statistics, also worthy
of reporting.
Overall Assessment: Go
back to the title; are those the bells of warning or celebration?
There are reasons to call this entire economy precarious, and yet,
long-term job growth is a positive sign, the fall of the dollar
may have slowed, and the situation in the Middle East isn’t
quite as bad as it was. The world is substantially more interconnected
and sensitive than it was four years ago, but that works both ways;
people may be putting more thought and effort into the process
of home purchase in California, but at the same time, even more
of them are doing it. This Market Flash ends here because you wouldn’t
have time to read more, your phone’s about to ring.
