The Bay Area Real Estate Report - February 2020
With the Superbowl here and gone, the 2020 Bay Area buying season has kicked off and there isn’t much inventory for Buyers to choose from. Due to a surge in home buying in the latter half of 2019 and the lowest mortgage rates in 3+ years, inventory has shrunk back towards the historically low levels we saw in early 2018, even well into the period of sellers starting to put properties on the market. While inventory is still 43.2% higher than it was at this time in 2018 and 8.4% higher than at the same time in 2017, it’s a sign that we’re continuing to trend back towards the historically wide supply/demand imbalance we saw at the most recent peak of the market in June/2018.
The main reason that we experienced a lull in the market between mid-2018 and mid-2019 was that record low home price affordability had become untenable for most Bay Area residents and inventory rose with prospective Buyers being forced to the sidelines. Since then, mortgage rates have fallen back, Buyers have come back out in droves, and inventory has shrunken back.
For a 2nd straight week, mortgage rates plummeted last week, with 30-year fixed-rate mortgages now averaging 3.51%, down from 3.6% the previous week. A year ago at this time, 30-year fixed mortgages were almost a full percentage point higher, at an average of 4.46%. Last week’s rock-bottom rates are the lowest ever reported during a late January in the 49-year history of Freddie Mac’s Primary Mortgage Market Survey, according to a MoneyWise.com finding that Freddie Mac confirmed. Rates haven't been this low since September, when 30-year mortgage rates nosedived to an average of 3.49%, which was a 3-year low at the time. If rates keep dropping, they'll close in on the all-time low of 3.12% from November/2012.
Despite the excess of demand vs. the lagging supply/inventory over the past 6 months+, home prices haven’t been rising significantly. The median price for a greater Bay Area single family home was $908,750 in December, which was down 1.8% from the previous month and “up” 6.9% Year-over-Year. Among Inner Bay Area counties, Contra Costa (8.6% YoY gain), Santa Clara (6.5% YoY gain), and Alameda (3.7% YoY gain) Counties led the way with the biggest Year-over-Year gains.
And the median price for a greater Bay Area Condo/Townhome “dropped” 4.1% Year-over-Year in December, from $705,000 in December/2018 to $676,000 this past December. This was also a 7.4% drop from the previous month. Among inner Bay Area counties, San Mateo and San Francisco County had the least percentage of Year-to-Year drop-off in Condo/Townhome median sale price, dropping just 2% and 1.3% respectively. And Marin was the only county that had a slight (.8%) Year-to-Year uptick.
Overall, as we wind down the 2020 winter and head towards the busiest time of year for Bay Area Real Estate activity, we’re riding a 6 months+ surge in the market, spurred by renewed buyer demand and shrinking inventory. As it typically does this time of year, inventory should grow over the next few months, but there may not be enough inventory coming online to meet the level of demand that continues to be fueled by strong consumer confidence and mortgage rates that are heading back in the direction of all time lows.
Mortgage Rate News - February 2020
Mortgage rates plummeted for a 2nd straight week last week, with 30-year fixed-rate mortgages dropping to an average of 3.51%, down from 3.6% the previous week. Average rates dropped a bit further to begin this week, but then inched higher these last couple of days. Overall, they remain very close to the 3-year lows seen last week.
Assuming strong credit and at least 20% down payment/equity, the rate for a typical 30-Yr Fixed Conforming Loan (w/0 Pts) is now at about 3.25%, while a typical 30-Yr fixed High Balance Conforming Loan (w/0 Pts) is at about 3.375%, and a typical 30-Yr Jumbo Loan (w/0 Pts) is at about 3.5%
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