We have multiple economic drivers and underlying fundamentals that impact our local real estate markets.  Housing prices, interest rates, job growth and inflation/deflation are significant variables in the Bay Area housing market.  While we could not predict either the economic shift that began in August 2007 or the duration of the economic volatility caused by the shift, we do have a few very positive fundamentals present today.

Interest rates for conforming mortgages ($729,750) and jumbo mortgages are currently at historic lows since Freddie Mac started recording in 1971 - see the following mortgage rate table.  Housing prices remain 20% - 40% off the 2006 / 2007 peak. Inflation is constrained mainly via Federal Reserve policy and finally, the San Francisco Bay Area job market, while at a 20-year high for unemployment has stabilized (10.5%) and may be illustrating signs of stability / modest growth.

 

 

 

Investing in a home where both the asset and its debt (mortgage) are "on sale" in a pre-inflationary, recovering job market environment may present opportunities whether you are a first time home buyer, you are trading-up for family/quality or trading to provide for a new lifestyle.  Our view is the right purchase/sale decision in the next 6 - 18 months will be revered five years from now as brilliantly executed and reflected upon as opportunistic.  Certainly if you believe inflation and rising interest rates are in our future, you will want to own real estate and finance it at interest rates that represent historic lows.

Whether cyclical, seasonal or "bouncing across the bottom", our real estate markets remain volatile and somewhat unpredictable but they are showing early signs of demand returning to the market versus the 2006 / 2007 peaks. Many of our indicators have turned positive ("green") for the first time in nearly two years.  The most encouraging indicator is volume (units and $) returning to the market.  Although we are comparing statistically to Q2 2009 which was arguably the second worst quarter we may have seen in recent history; the increasing volume is a reflection of client confidence and a precursor to long term stability and ultimately appreciation.  The following charts
provide more specifics on the local markets.

I see opportunity in our real estate markets every day.  My efforts are always focused on balancing your priorities for a home, your investment and budget tolerances versus the dynamics in each local market we serve.  I strive to match these investment criteria with my experience, market knowledge and timing to provide the best advice to you and your family.  Please call on me to review your thoughts on our real estate markets.