No doubt about it, 2020 was a difficult time for everyone.
Yet in this unprecedented time, Asante Realty is grateful for the trust that you have given us in buying your dream homes and selling your old homes to move to your next chapter in life.
A lot of businesses, including ours were greatly affected, temporarily freezing all business transactions that require face-to-face meetings. The team had to adapt to the changing times, rolled with the punches and became stronger than ever before. Despite the Open Houses ceasing, we’ve continue to strive for the best of our clients.
That is why after a long 18-month shutdown due to COVID-19, Rama and Sunil decided that we need to have a summer BBQ party for our team, family, friends and our vendors.
It was our way of appreciating all the hard work every team member puts into the business and taking a breather to enjoy good food!
Rama and Sunil welcomed the whole team, their trusted vendors and clients to their home. The whole team is fully vaccinated, safe and healthy, as well as guests, and proper protocols were practiced.
Nothing can really replace the personal human connection. It was a night like no other especially now that things are slowly going back to normal. There were smiles on everyone’s faces, as we finally get to laugh out loud with one another, share our survival stories, and hope for a better future not just for the business but for the whole world.
Truly, the best is just yet to come. Cheers to a hopeful 2021!
If you’ve been keeping watch of our posts on the market update per area, you might be confused with the different paths each area is doing.
In some places, more listings are sold over a shorter period of time, while in another less listings are sold with longer average days on the market.
Even though no one can exactly know what can happen in the next half of 2021, we can look at the numbers. After all, numbers do not lie.
Let’s also look at what experts have to say regarding the housing economy.
Mortgage will increase, but comparatively low
One thing is sure, mortgage rates will not decrease. There’s a steady rise of mortgage rates over the past months as the economy start to recover from the 2021 crisis. According to Freddie Mac in their latest quarterly forecast, an average of 3.4% mortgage rate will be expected by the end of 2021 and 3.8% by the end of 2022.
Slow home price appreciation
According to all industry leaders, home price will continue to appreciate towards the end of 2021.
Senior Markets Economist at J.P. Morgan Joe Seydl said that the projected rise of the home prices should be taken as signal for buyers to grab the opportunity as soon as possible instead of waiting with the expectation that prices will decrease.
Inventory will be a less challenging
The good news is that more inventory is coming in the market, giving more choices for homebuyers and decrease the fast pace.
Here are some statements from experts in the field:
“We have seen more new listings this year compared with 2020 in 11 of the last 13 weeks. The influx of new sellers over the last couple of months has been especially helpful in slowing price gains.” (George Ratiu, Senior Economist at realtor.com)
“As an indicator of the economic impact of housing, there are now 652,000 single-family homes under construction. This is 28% higher than a year ago.” (Robert Dietz, Chief Economist at the National Association of Home Builders)
With the expected rise of mortgage rates, price appreciation and the number of expected inventory in the next half of the year, your chances in the housing market look promising.
The only thing left to do is work with the team that is after your own interests. The Rama Mehra Team is here to make great offers, negotiate for your cause and help you find the best deal for you and your loved ones. Contact us today (925) 415-0835!
Starting this March, we will be releasing our comprehensive market update through our email newsletters. Sign-up here and you’ll get them exclusively and for free! Read on for the summary of the report and get a peak of some of the tables found in our monthly newsletter.
Welcome to our March newsletter. This month, we examine how housing affordability in California may affect future demand by looking at housing affordability in relation to price, interest rates, and per capita income.
COVID-19 cases continue to decrease after peaking in January. The United States is administering nearly two million vaccinations a day, and projects it will be able to vaccinate all U.S. adults by the end of May. While the feeling of hope is palpable, COVID-19 will continue to affect how we live and work for quite some time. We expect demand for housing to remain high for years to come. Even as it becomes safer for people to interact in office settings, we anticipate that working remotely, even if not every day, is here to stay. With less uncertainty around the future, the period of all-time-low mortgage rates is coming to a close, which may boost demand even further over the next several months.
As we navigate an ever-changing economic landscape, we remain committed to providing you with the most up-to-date market information so you feel supported and informed in your buying and selling decisions.
In this month’s newsletter, we cover the following:
- Key Topics and Trends in March: The low supply of housing appears even smaller when considering only 27% of the population can afford to purchase a home. Mortgage rates are likely to remain historically low through 2021 but have begun to rise, which will affect housing affordability.
- March Housing Market Updates: Single-family home and condo prices have shown price stability. As inventory continues to decline, home prices will likely appreciate.
Here are some of the tables that are worth noting:
Housing Affordability Post-Great Recession
Greater Bay Area Median Home Price
Exclusive comprehensive report includes the following:
- connection between housing affordability and housing demand in California
- effects of rising mortgage rates
- comparison of home price in California, the average 30-year mortgage rate in the United States, and per capita income in California—against housing affordability in California
- comparison of North Bay Inventory, East Bay Inventory, Silicon Valley Inventory, and San Francisco Inventory
- and so much more!
I want to get the comprehensive report! Send it to me.
Are you planning to sell your home? Click here to get a free data-based valuation of your home!
Welcome to our November market update for East Bay. This month, we take a look at the ways in which current U.S. economic conditions are affecting local, state, and national real estate markets. In particular, we examine some crucial economic indicators, such as third-quarter Real Gross Domestic Product (GDP)1 and new housing permits. Although California’s COVID-19 cases remain fewer per capita than those of most other states, cases are rising in California, and the United States as a whole is seeing new peaks every day. Even amidst this uncertainty, demand for homes has never been higher. Mortgage rates continue at all-time lows, and buyers are devoting more of their total spending to housing costs. As we make our way through the autumn months, we continue to provide you with the most up-to-date market information so that you feel supported and informed in your buying and selling decisions.
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In this month’s newsletter, we cover the following:
- Key Topics and Trends in November: U.S. GDP grew 7.4% in 2020’s third quarter,2 but is still 60% of where it would have been without the pandemic. The number of new housing permits is at its highest peak since the 2008–2009 recession. Hiring is slowing, and unemployment benefits have ended for many people.
- November Housing Market Updates: Single-family homes continue to experience high demand, lower inventory, and rising prices. The condo market has shown price appreciation despite higher inventory.
1Real GDP is inflation-adjusted GDP. All references to GDP use Real GDP figures.
Key Topics and Trends in November
In this issue, we dive into some key economic indicators that tend to affect long-term home prices. GDP and employment together explain much of the economic climate and typically trend with housing prices, but they do not explain the current rise in home prices. We will still go over the ins and outs of these indicators, however, because they have received so much press and may affect home prices in the future.
The U.S. Bureau of Economic Analysis reported a 7.4% third-quarter gain to GDP, which is the broadest measure of goods and services produced. During the second quarter of 2020, GDP dropped 9.5% quarter-over-quarter. The second-quarter drop was so sharp that the third-quarter bounce was expected. The long-term effects of the initial drop, however, have yet to be seen. Economists expect lower fourth-quarter GDP growth, which will not make up all the ground lost in the second quarter. Ultimately, the loss in GDP will likely be permanent.
GDP and Output Loss
The chart below illustrates the cost of a recession. While it depicts U.S. GDP from 2005 to present, it illustrates economic patterns that occur in all recessions. GDP tends to grow at a fairly consistent rate during economic expansions. The dotted line in the chart represents the predicted GDP had the 2008 financial crisis never happened, and the green line illustrates the expected third-quarter 2020 GDP had the pandemic never happened. As that green line shows, we are 40% below where GDP was expected to be this fourth quarter. In other words, we are still underwater despite the impressive third-quarter 2020 increase in GDP.
As of October, the Bureau of Labor Statistics reported that 11.1 million workers remained unemployed, which is an unemployment rate of 6.9%. However, the number of out-of-work individuals collecting unemployment insurance has dropped to 7.3 million. In September, the number of unemployed workers and the number of those collecting unemployment insurance were roughly the same. The large number of unemployed workers without government assistance will affect the rental market first, because those working in the hospitality and leisure industries have been most affected by unemployment, and those individuals tend to be renters rather than homeowners.
The employment level does matter in the long term, particularly for the housing market. Disposable personal income and savings, which both dropped in the third quarter, are two of the most important factors when considering whether or not to buy a home. As a result, we will continue to monitor these numbers.
Existing and New Homes Trend
Despite suboptimal major indicators, housing prices have risen considerably. Nationally, home prices have never been higher, and the high demand for single-family homes has dropped the Months of Supply Inventory to the lowest level ever, according to the National Association of Realtors. Months of Supply Inventory is an important marker of real estate market health because it measures how many months it would take for all current homes for sale on the market to sell at the current rate of sales. Low Months of Supply Inventory means that there is a high demand for homes that will push prices higher more rapidly.
Not only are sales of existing homes up, but so are home building permits. The number of home building permits is the highest it’s been since the housing bubble burst in 2006.
Rise of Housing Demand and House Prices
The rise in housing demand and price under the current economic scenario speaks to three factors: (1) the asymmetric effect of the pandemic on personal income; (2) monetary policy (low interest rates); and (3) buyer preference. Many people have not experienced negative financial effects from the pandemic. An average person who did not lose their job may have even gained financially through a decrease in expenses. Less opportunity for travel, entertainment, and leisure activities could result in an increase in savings. At the same time, mortgage rates are historically low (2.78% as of November 5, 2020) and will remain low for the foreseeable future, making financing higher-priced homes more affordable. And finally, because so much time is currently being spent at home, buyers are willing to use more of their income to create nicer living spaces, buying larger homes, luxury furniture, and new appliances.
In both the short and long terms, housing is one of the best investments one can make.
November Housing Market Updates for the East Bay
Median single-family home prices continued to substantially increase year-over-year with a median home price of $1.05 million in Alameda, an all-time high, and $783,000 in Contra Costa.
Year-over-year, median single-family home and condo prices were substantially up in both countries.
Single-Family Homes and Condos Inventory
Total inventory continued to decline as the number of sold homes rose, far outpacing the new listings that came to market. Like the rest of the country, demand is outpacing new supply, which buoys East Bay home prices. Single-family home inventory is noticeably lower, and is likely to decline as we make our way into the winter months.
The number of condos on the market has increased fairly consistently since May. The demand for condos and new condos coming to market have stayed about the same each month since May with slightly more condos coming to market than bought, which has caused inventory to rise. Condo inventory is 14% higher than last year. However, demand for condos is still high.
East Bay Inventory
Single-family homes sales have climbed since the initial months of the pandemic (March through May). Generally, buyers and sellers left the market in April and May, causing pent-up demand. Sales increased and are still near the highest level this year for single-family homes. Usually, we expect sales to decline in the autumn and winter months, but this year’s summer selling season was delayed and seems to be spilling into autumn.
East Bay Days of Market
The Days on Market (DOM) is lower year-over-year. Months of supply inventory has continued to stay low because of the inventory decline and faster pace of sales.
East Bay Months of Supply Inventory
We can use Months of Supply Inventory (MSI) as a metric to judge whether the market favors buyers or sellers. The average MSI is three months in California, which indicates a balanced market. An MSI lower than three means that buyers dominate the market and there are relatively few sellers (i.e., it’s a sellers’ market), while a higher MSI means there are more sellers than buyers (i.e., it’s a buyers’ market). The MSI remained at 0.8 for single-family homes and 1.9 for condos, both favoring sellers.
East Bay Market Update Summary
In summary, the high demand in the East Bay has sustained home prices. Inventory for single-family homes will likely decline further as we enter the winter months with fewer sellers coming to market, potentially lifting prices higher. Overall, the housing market has shown its resilience through the pandemic and remains one of the safest asset classes. Economic indicators are in an anomalous state, meaning that they are out of trend with each other. The data show that housing has remained consistently strong through this period.
We anticipate new listings to slow through the holiday months. Condo prices will likely remain stable with no outsized gains or losses through the winter months. The autumn/winter season tends to see a slowdown in activity, although we may see a new trend this year with higher-than-normal sales.
As always, we remain committed to helping our clients achieve their current and future real estate goals. Our team of experienced professionals are happy to discuss the information we have shared in this newsletter. We welcome you to contact us with any questions about the current market or to request an evaluation of your home or condo.
Read about the December market update here.
Call us today at 925-415-0835 so we can start planning for your home goals!
Welcome to our January Market Update. This month, we cover the state of employment in the United States and the likelihood of meaningful stimulus. We also dive into how the Democratic Party’s majority control over both chambers of Congress and the White House could affect asset prices and interest rates.
Most of California (around 98% by population) is under a stay-at-home order due to COVID-19, and the United States as a whole is seeing new peaks every day. With the approval of several vaccines, we finally have a glimmer of hope to move out of the pandemic. However, we know that transmission mitigation measures will still be necessary through 2021 at least. The pandemic has substantially raised demand for housing, and we suspect that demand will continue through this year. Mortgage rates remain at all-time lows, and buyers are devoting more of their total spending to housing costs.
As we enter the new year, we continue to provide you with the most up-to-date market information so that you feel supported and informed in your buying and selling decisions.
In this month’s update, we cover the following:
- Key Topics and Trends in January: Economic recovery is decelerating after months of government relief inaction and a dramatic rise in COVID-19. Mortgage rates are at historic lows, which is likely to persist through 2021, making rising home prices more affordable. Heavy fiscal spending by the Democratic-controlled government could increase inflation.
- January Housing Market Updates: Single-family homes continue to experience high demand, lower inventory, and rising prices. Condo prices are rising as inventory begins to fall.
Key Topics and Trends in January
According to the ADP private payrolls, the U.S. lost 123,000 jobs in December 2020, marking the first contraction since April. Economists predicted an increase of around 60,000 jobs in December. However, they did not anticipate larger companies, especially in leisure and hospitality, laying off employees due to reimplementation of stricter COVID-19 restrictions.
US Employment Recovery Path
Data from the Bureau of Labor Statistics differs in the exact numbers but shows the obvious deceleration in employment growth. As time passes, more and more jobs will be permanently lost, likely with real long-term economic impact: fewer people interacting in the economy usually indicates less buying, which trickles into less production, which trickles into fewer workers needed, leading to more unemployed workers.
Job growth is one of the clearest indicators of economic health, so the December jobs contraction underscores a slowing of the recovery and the need for government stimulus. Under the incoming presidential administration, government stimulus is far more likely but will take some time to implement. With aid, businesses will be able to continue operating and will likely be able to hire significant numbers of employees back, setting the recovery back on course.
To help struggling businesses and people, the government will have to spend significant amounts of money. Heavy fiscal spending is often associated with higher inflation. Currently, inflation is around 1.2% (the Federal Reserve targets 2%), and with the expected increase in government spending, the expected inflation will rise as well. Ultimately, money today is worth more than money in the future. Not only can you buy more today, but real interest rates (inflation-adjusted interest rates) will be lower as well, making a home bought today cost less than its future price.
For example, the average 30-year mortgage rate is 2.67%, and if the inflation rate were 2%, the real interest rate on the mortgage would be 0.67%.
The financial circumstances on the individual level are highly variable, now more than ever. Those who have been unaffected (or even positively affected) financially are likely saving more money than ever. Strict COVID-19 restrictions have largely cut travel, dining, and entertainment expenses, allowing potential home owners to devote more of their income toward buying a home that they love. With historically low mortgage rates and an expected increase in inflation, it’s never been cheaper to finance a home.
Demand shows no sign of decline in the near term. Today, housing is one of the best investments one can make, as it has been historically.
January Housing Market Updates for the East Bay
The median single-family home rose to an all-time high in Contra Costa. Alameda was flat month-over-month but still near peak median price. Year-over-year, single-family home prices increased considerably, up 15% in Alameda and a massive 27% in Contra Costa. Inventory has continued to decline, as fewer homes have come to market and sales have remained high, contributing to the price increases.
East Bay Median Home Prices
East Bay Median Price Changes
Condo Prices by County
As you can see in the graph below, median condo prices were up across counties. Contra Costa had an exceptionally large year-over-year median price increase.
Single-Family Homes Inventory
Single-family home inventory was lower through 2020 relative to 2019. Home sales climbed after the initial months of the pandemic (March through May). Generally, buyers and sellers left the market in April and May, causing pent-up demand. Since June, sales have increased and showed unseasonably high levels in November 2020 for both single-family homes and condos. Usually, we expect sales to decline in the autumn and winter months, but homes were selling at extremely high rates. We can attribute this to fewer holiday obligations in 2020, allowing more focus on homebuying. Single-family home inventory dropped in November due to unusually high sales numbers, and it is likely to decline further as we make our way through the winter months.
The number of condos on the market declined significantly in November. New condos coming to market outpaced sales every month in 2020 except for November, when sales inched higher than new supply.
Days on Market
Days on Market (DOM) declined further for single-family homes over the last 12 months, but both single-family homes and condos spent far less time on the market in November 2020 than November 2019. As we will see, the pace of sales affects Months of Supply Inventory (MSI) and has contributed to the low MSI over the past several months.
Months of Supply Inventory
We can use MSI as a metric to judge whether the market favors buyers or sellers. The average MSI is three months in California (far lower than the national average of six months of supply), which indicates a balanced market. An MSI lower than three means that buyers dominate the market and there are relatively few sellers (i.e., it is a sellers’ market), while a higher MSI means there are more sellers than buyers (i.e., it is a buyers’ market). The MSI dropped below one for single-family homes, which firmly favors sellers. The MSI for condos fell 0.2 months to 1.6 months of supply, indicating a sellers’ market as well.
In summary, the high demand in the East Bay has sustained home prices. Inventory for single-family homes and condos will likely decline further into the new year, and fewer sellers will likely come to market, potentially lifting prices higher. Overall, the housing market has shown its resilience through the pandemic and remains one of the safest asset classes. The data show that housing has remained consistently strong through this period.
We anticipate new listings to slow through the holiday months. The autumn/winter season tends to see a slowdown in activity, although we did see a new trend toward the end of 2020 with higher-than-normal sales.
As always, we remain committed to helping our clients achieve their current and future real estate goals. Our team of experienced professionals are happy to discuss the information we’ve shared in this newsletter. We welcome you to contact us with any questions about the current market or to request an evaluation of your home or condo.
Looking for a realtor in the Bay Area? Call us today at 925-415-0835!