Analysts see a strong real estate market in January 2020

Green Escrow | Real Estate online

According to data by realtor.com, January 2020 could a very strong month for home buying or at least searching. Based on the average monthly views per listing, it’s clear that home shopping trends have changed considerably in the last 5 years.

The combination of high prices and low inventory has to lead to would-be home buyers beginning their search earlier in the year. While spring remains the prime season – April was the peak month for online searching in 2015 – January 2019 was the top month in 20 percent of the largest metro areas nation-wide and experts expect this trend to continue in January 2020.

Home value appreciation slowing in major markets

Green Escrow | Real Estate News

According to the Zillow Home Market Real Estate Report annual home value growth slowed in more than 50 percent of the country’s largest housing markets in the last year. Seattle saw a drop from 12.4 percent to 5.0 percent from December 2017 to December 2018 while San Jose declined from 16.8 percent to 9.9 percent over the same time period.

Despite the drop in 19 of the top 35 metro markets, overall the nation’s home value appreciation was up 7.6 percent over the past year. More affordable Southern markets, such as Atlanta, showed an even greater increase.

Buyers taking longer to find the “right” home

Green Escrow | Real Estate Market News

According to a new survey by the National Association of Home Builders, 54 percent of active buyers are taking up to three months or longer to find the right home.

Of course, low inventory is largely responsible as are properties within their price range, according to 49 percent of respondents. Other reasons include the lack of desired features (40 percent) and looking for the right neighborhood (38 precent).

Yet, despite the obstacles, 61 percent say they will keep looking, while 18 percent say they will put off the search for now and resume in the nest year or later.

Fewer families buying homes

Green Escrow | Rental

Over the last decade the number of US families (parents with children) owning homes decreased by 3.6 million. In the Bay Area (including San Francisco) the number dropped by 10 percent or 31,000. Meanwhile, the number of families renting increased by 57,000 or 33 percent.

The reasons behind this trend are simple: between 2006 and 2016 Bay Area rents increased by 39 percent while home prices increased by 80 percent.

Fewer and Fewer Homes “Underwater”

Market News

As home prices continue to appreciate the number of homes “underwater” – those owing more on their mortgages than their homes are worth – are decreasing.

While there are currently 4.6 million properties in the United States owing considerably more than they are worth, this is 1.4 million less than a year ago.

This translates to 8.7 percent of all U.S. properties with a mortgage down from 10.8 percent in 2016.

An underwater home is defined as a property where the combined loan amount is at least 25 percent higher than the property’s estimated market value.

Bay Area Real Estate Forecast: 2018 and Beyond

Green Escrow | Real Estate News

Pacific Union’s fourth annual Real Estate and Economic Forecast featured these key points:

  • The median home price in the Bay Area averaged 9 percent over 2016. These is no reason to believe this trend will not continue
  • Job growth remains strong although the increase in lower income groups is a negative for affordability
  • Proposed tax changes could reduce buyers’ deductions in the future, making it more expensive to buy
  • Proposed tax changes could also keep current homeowners from selling thereby limiting inventory even further
  • Home prices in Alameda and Contra Costa counties are projected to grow by 5 percent from 2018 to 2020

Difficult Time for First-Time Homebuyers

Green Escrow | Real Estate News

Despite good mortgage rates and a strong job market first-time homebuyers are having a difficult time in the current market. According to the National Association of Realtors’ 2017 Profile of Home Buyers and Sellers the percentage of first-time homebuyers declined slightly in the last year to 34 percent.

Fist0time buyers made average down payments of 5 percent in the last year, down from 6 percent in 2016.

One of the biggest obstacles for first-time buyers is student debt. Over 40 percent of first-time home buyers have student loans, averaging $29,000.

Want to Buy a Home in the Bay Area? Better Move Quickly!

Green Escrow | Real Estate online

Low inventory, price appreciation, and rising mortgage rates all add up to stiff competition when buying a home and nowhere is this more evident than in the Bay Area. Properties in Santa Clara County sold within 21 days, the fastest in the nation while San Mateo County saw homes sold within 23 days – the second quickest. San Jose’s 95111 ZIP code (in southern San Jose) had properties selling within 9 days!

With prices continuing to rise – 60 consecutive months and counting – and inventory continuing to fall – 21 straight months of declines – the trend is far from over.

Experts agree that perspective homebuyers should get pre-approval from a lender, clearly define a budget, find a realtor who thoroughly understands your wants and needs, then be prepared to move quickly!

Buying vs. Renting: 2015

Green Escrow Services | Rent or Buy

The Zillow Housing Confidence Index (ZHCI) is reporting that more than 12 percent of current renters in the United States – which equals approximately 5.2 million – say that are planning to buy a house in the next year. This is a nearly one million more than last year who hoped to buy.

Nearly 60 percent of those surveyed stated that owning a home is a reasonable – and possible – long-term investment.

Analysts say that historically low mortgage interest rates and home values still below peak level along with high rental rates are behind this attitude. In fact, some experts argue that the lack of affordable rentals – 300,000 to 400,000 new units are needed every year just to keep up demand – are the prime motivating factor to owning a home.

Millennials Want More Space

Green Escrow | Real Estate News

It’s long been reported that “Millennials” (or Generation Y) prefer city living, with it’s requisite smaller space, to residing in suburbia, long held to be the American Dream. Not so fast, says a recent report by The Wall Street Journal, which cites a survey of over 1,500 people born after 1977 which finds that 2/3 of all respondents want to live in the suburbs. Surprisingly, 24 percent report that they prefer rural areas while on 10 percent desire a city center.

The most common reason for suburbia is the desire for more space with a whopping 81 percent wishing for three or more bedrooms.

All of this suggests that, in the foreseeable future, the demand will be for single-family homes over city condos, just as it has been for the last 60 years.