Market Flash

JUNE MARKET FLASH

ONE MARKET, MANY CHARACTERISTICS

Intro:
Summer days are just around the corner and as the weather warms up, so does the Northern California real estate market…in certain ways at least. While sales have slowed in comparison to last year, median prices continue to rise – making home investments even more valuable – and most areas are enjoying an abundant supply of available homes for sale. One aspect of the market that is certainly heating up is the million-dollar plus home category where sales are swift. This is one market with many different characteristics. Read on.

Statistics:

Statewide:
The median resale price of a single-family detached home in California for April was $597,640, an increase of 6.2% over April 2006 and 2.1% from last month; but sales activity has declined almost 28% year-over-year. Unsold resale inventory represented a 10-month supply, compared to 5.7 months (CAR’s revision) for the same period a year ago. Median number of days till sale was 53 in April, up from 42 for April 2006.

Bay Area:
April median price, at $843,710, is improved by 7.4% for the month and over 9% from April 2006; sales are down by almost 8% for the month and 19% compared to a year earlier.

The Santa Clara County median price of $868,410 is up 4.6% for the month and a strong 12.1% for the year; sales are down by a hair for the month and 17% from April 2006.

Santa Cruz County, at $744,000, is up 3.5% for the month, 4.5% for the year; sales are down a bit for the month, but almost 25% for the year.

San Benito County median of $587,000 is down slightly over 4% for the month.

And we are adding! – Sonoma County with a current median of $515,000, down slightly for the month but a little over 9% for the year. Sales have decreased almost 17% for the month and almost 24% year-over-year.

Monterey County and region median prices are quite strong with increases of 12% to 13% year-over-year; activity is down for both, with the County at a 36% drop from last year. Perhaps even more than in other regions, rising medians and falling activity mean that entry-level and midrange buyers are constrained by availability of financing, while the million-plus level is doing fine.

Sacramento/Capitol Region:
Led by an 80% sales increase for El Macero, 14 communities and areas showed sales growth in April, including Carmichael, Fair Oaks, Folsom, Lincoln, Pollock Pines, Rio Linda, Truckee, and parts of Roseville and Sacramento. In terms of medians Davis, Elk Grove, Rancho Cordova, Rio Linda and parts of Auburn and Sacramento showed a tiny increase. DataQuick reports meanwhile that regional escrow closings in April were the lowest since 1995. Median prices for new and existing homes ranged from $288,500 in Yuba County to a high of $458,500 in Nevada County, reflecting an overall decline in medians of 3.3% – about the same as 3.4% for Northern California as a whole.

Interest Rates*:

Thirty-year fixed at 6.41%, 15-year fixed at 6.06%, 5/1 ARM at 5.81%. (These may seem high, but we have switched sources for these figures, because many readers felt that the rates we reported were unrealistically low.)

Rates are still attractive although they have gone materially higher in the last couple of months; 6% fixed rates, which not long ago were regarded as a “psychological barrier” are now firmly established and may actually have a slight chilling effect on the market.

Inventory:

There are homes for sale in nearly every neighborhood, at nearly every price point, throughout Northern California. That said, by far the hottest market is million-plus, where the most desirable properties may visit the market for 14 days or even fewer. For the most part, buyers at entry level, in the midrange or in the “ordinary luxury” market, should have an adequate supply of homes to consider.

Overall Assessment:

A situation so complicated that experts are saying, with almost complete unity, “This is not one market; it is a whole bunch of tiny local markets each with its own characteristics, and you have to approach it that way.”

*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 May 29, 2007, the 30-year fixed with one point is 6.25%, the 15-year fixed with one point is 6.00% and the 5/1 ARM with one point is 6.125%, on non-conforming loans of $500,000.