Yes, the market is hot. You know that if you see a Santa Clara County home for sale, if you blink, you’ll miss it. According to a report by the National Association of Realtors, our market is not alone as the national picture continues to show high competition among homebuyers. Without need for elaboration, 2017 was a boisterous one on the political and real estate front, which will shape 2018 with interest rate increases, tax reform, and a jittery stock market.
Despite a weak December, existing homes sales have increased hitting their best in December 2017, and more existing homes were sold last year compared to any other year since 2006. These existing sales with completed transactions include single-family homes, townhomes, condominiums, and co-ops, which increased 1.4% to a seasonally adjusted annual rate of 1.3 million in December from a downwardly revised 1.28 million in November.
Home sales increased 34.7% in December to $1.3 million from $965,000 in December 2016. The NAR’s chief economist Lawrence Yun said the housing market performed “remarkably well” in 2017, resulting in a “substantial” gain in wealth for homeowners and “historically low” distressed property sales. The California Association of Realtors shows that home sales in Santa Clara County moved twice as quickly as they did the same period in 2016. Limited housing supply in Santa Clara County is driving home prices sky-high forcing homebuyers to scurry more than before.
Yun said, “Existing sales concluded the year on a softer note, but they were guided higher these last 12 months by a multi-year streak of exceptional job growth, which ignited buyer demand.” Yun added, “Closings scaled back in most areas last month for this same reason. Affordability pressures persisted, and the pool of interested buyers at the end of the year significantly outweighed what was available for sale.” The median time for an existing home in Santa Clara County, to sit on the market in December was nine days – presenting the shortest listing-to-sale in any metro region in the state.
According to Zillow.com, the median home value in Santa Clara County is $1,196,600, with home values in Santa Clara County increasing 21.3% over the past year, and Zillow predicts they will rise another 8.5% within the next year. That marks the 70th straight month of year-over-year price gains. Aaron Terrazas, Zillow Senior Economist, said, “Existing home sales posted a weak December, ending 2017 on a disappointing note after appearing to have picked up momentum in October and November. They ended the year very close to where they began it.”
Sales of condos declined sharply in December despite their strong surge in November.
Information provided by Freddie Mac states “the average commitment rate for a 30-year, conventional, fixed-rate mortgage inched higher for the third straight month to 3.95% in December from 3.92% in November. The average commitment rate for all of 2017 was 3.99%.” Additionally, NAR’s Yun says, “Rising wages and the expanding economy should lay the foundation for 2018 being the turning point towards an uptick in sales to first-time buyers.” He adds, “However if inventory conditions fail to improve, higher mortgage rates and prices will further eat into affordability and prevent many renters from becoming homeowners.”
Silicon Valley shows a long-term housing trend where the demand is going to remain for the near future. Despite a 27% decline in the market between 2008 and 2011, the market increased 75% between 2012 and 2017. This comes as good news for home sellers. It is likely that the demand for homes will continue to outstrip supply causing additional appreciation in the housing market in 2018.
In 2017, the demand for homes showed no signs of slowing, and it is expected to continue in 2018. The Metropolitan Transportation Commission reports that between 2011 and 2015, the nine Bay area counties increased jobs by about half a million, but only 65,000 new homes were available. On the Peninsula, the situation was even more dire considering that for every 15 jobs created; only one house was built. The demand for housing will be robust throughout 2018 as companies continue to expand and grow in the Silicon Valley.
As part of the Myrick Team Estates, I enjoy sharing my knowledge of the current real estate market. If you need additonal statistics or upcoming listings in Santa Clara County, contact me.