The health of the housing market has long been tied to other key economic indicators – everything from consumer confidence to the stock market to unemployment rates and hiring trends. For instance, the direction of the Dow is rarely in opposition to Bay Area real estate activity. Local economists and Realtors alike have often noted that the valuation trend lines of the NASDAQ and Silicon Valley home prices typically have a significant correlation. The chart below shows the strong link between Consumer Confidence and Home Sales in the US.
Last week, the Conference Board announced that its consumer confidence index rose in April to the highest level in more than a year and a half. The rise in the index was considerably higher than economists had expected. Although the University of Michigan’s consumer sentiment index took a small step back in April, it’s still hovering at levels not seen since early 2008.
Similarly, the financial markets continue to march higher as growing evidence appears that the nation’s economy is gradually finding its footing. The Dow Jones Industrial Average is up 7 percent year to date and a whopping 70 percent since its March 9, 2009 low.
One last headline of interest: The Federal Reserve last week upgraded its economic outlook amid a better-than-expected recovery, saying the beleaguered labor market is beginning to improve. But the Fed voted to keep interest rates at historically low levels and signaled that wouldn’t change anytime soon.
Low mortgage rates, coupled with the April 30 deadline for the homebuyer tax credit, have helped to fuel strong home sales in many of our markets. In my travels last week to a number of our offices, I’ve heard from agents that many of their buyers have been rushing to beat the tax credit deadline.
All of this is encouraging, but it’s not to say that we’re completely out of the woods. The jobless rate is still extremely high in California and across the country. A new wave of foreclosures could hit the housing market in the months ahead. And the economic recovery is fragile and expected to be slow. But one has to be at least cautiously optimistic by these economic trends, which are so vital for the health and well-being of our housing market. One of the most important trends to follow is our Bay Area Month’s Supply of Inventory. It continues to drop at all price points, from less than 2 months at the entry level, to between 10 and 18 months in some of our Luxury markets. ( ex: San Francisco over $5 million: 19 months supply March ’09, dropped nearly in half to 10 months supply March ’10)
Below is a market-by-market report from our local offices:
SF Peninsula— Burlingame continues to see great listings get snapped up in multiple offers and well qualified buyers are waiting for the right inventory to come on the market. There are 75 active listings and 17 pending sales in Hillsborough. There is great value in a great area and some excellent buys available right now. In Half Moon Bay, more offers are being accepted with ‘sale of property’ contingencies. There’s good traffic at the open houses with serious buyers wanting to get into the market. We’re also seeing more activity on the higher end $1m + range. Our Menlo Park offices report agents have been really busy the last couple of weeks. Parents soccer field talk is that bonuses are coming back and 401ks are being reinstated. General feeling of stability is giving ‘lookers’ a basis to buy. There was a bit of the April 15th hangover last week, previous weeks had several offers written as the market heated up. Well priced listings are selling quickly. Two outstanding properties in San Carlos had multiple offers and sold for more than the asking prices of $1.85 million and $1.95 million. Open houses are very well attended. The San Mateo office reports that pending sales for the six nearby cities are up 33% from 2009 and closed sales are up about 50%. Quality inventory (shows well and priced right) is not as available causing the multiple offers. Similarly, the Woodside office says is has been as busy as they’ve seen it in since spring of 2007 and 2008. Buyers are far more cautious however. Many will make an offer and walk away if they do not have their terms met or discover any type of problem.
Will we see a little less urgency on the part of some buyers now that the Federal tax credit purchase deadline hit on Friday? Or will the new California tax credits pick up the slack? Stay tuned, we may have some indication in another few weeks.
- By Rick Turley
———————————-
We are passionate about the Coastal Real Estate market and would love to help you in your home sale or home search! Give us a call today to discuss your home sale or to view some great properties on the market! We look forward to hearing from you!
Kathy & Michael Rain
Your San Mateo Coastal Real Estate Experts
San Mateo Coastal Real Estate
View San Mateo Coastal Listings
Visit Our Website
Email Us