Market Flash

A LITTLE SUNNY WEATHER

Medians are just about holding and the whole situation with the residential market feels more moderate than it did last summer. It will be interesting to see what happens when spring comes, but over a lot of Northern California, the sun is shining even now. Read on.

Statewide: The median resale price of a single-family detached home in California for December was $567,690, up 2.2% for the month and 3.7% over December 2005. Unsold resale inventory represented a 6.8-month supply, compared to 3.6 months for the same period a year ago. Median number of days till sale was 73 in December, up from 43 for the month a year earlier.

Bay Area: December median price, at $725,900, is about 2% below last month and 2% higher than the December 2005 figure. The Santa Clara County median price of $734,950 is almost 5% lower than last month but roughly level with last December’s figure. Santa Cruz County’s median is down a bit for the month. Monterey County’s year-over-year median shows about a 5% decline, but the region is more resilient at a little over 1% down. San Benito County median was $579,000, up 1.5% from a month earlier but down 11% from December 2005.

Sales activity is generally down, with the Bay Area off almost 14% from last year’s high. Santa Cruz is the only County actually posting an increase, of almost 9% for the year. Santa Clara County is down 14.9% and Monterey County is down 16.6% for the year. Sacramento region, compared to December 2005, shows a decline in activity at 25.6%…but that is much better than what the region was doing over the summer.

Sacramento/Capitol Region: Sacramento median price, at $362,660, is down 4.3% from this time last year. Davis, El Macero, Folsom, Pollock Pines, Shingle Springs, Sloughhouse and parts of Rocklin, Roseville and Woodland are up.

Interest Rates*: After climbing jaggedly for almost two months, 30-year fixed rates at 5.85% are easing slightly, but they are still 20 basis points higher than they were at the beginning of December. Fifteen-year fixed and 5/1 ARM are identical at 5.61%. Thirty-year jumbo fixed, at 6.08%, is now unequivocally above six; when that will also be true of conforming loans is a very good question we cannot answer (yet). Many loans that can be written today are still at five-something, and historically, that is a great deal.

Inventory: While inventory is more plentiful than in years past, there is still a limited supply in areas throughout the Bay Area and even Silicon Valley. Expect inventories to pick up as the traditionally hot spring market approaches.

Overall Assessment: Consider the strategic side of home purchase – the potential impact on quality of life, the savings as affordability improves and the excitement of a selection of homes to look at. If you consider every side of the question, it is obvious that this could be a really advantageous time to buy.

*Area interest rates are reported to be as follows:

Sacramento/Tahoe, San Francisco Bay Area and Silicon Valley regions: Princeton Capital reports that as of February 5, 2007, the 30-year fixed with one point is 6.125%, the 15-year fixed with one point is 5.75% and the 5/1 ARM with one point is 5.875%, on non-conforming loans of $500,000.