Posted by Of House Market
1. Market Snapshot: Single Family Homes, May 2022
2. What Does a Typical (Average) House Look Like in North Los Altos?
3. Los Altos Home Price and Inventory during Jan 2005 – Jun 2022
Months of Inventory is a key indicator measuring supply therefore a leading indicator for the local market movement. It has strong seasonality. This figure is 7.7 months for the whole country, 31 days for Santa Clara County, 36 days for Los Altos.
- This figure tells that in Silicon Valley especially the cities surrounding Stanford University, the real estate market is always comparatively strong because its supply can never match the demand.
- Different from previous Subprime Mortgage Crisis, current homeowners have much more equity on their homes and the number of cash buyers has been substantial, around 25-30% since 2011. Therefore, we don’t see any big jump in months of inventory since 2011 comparable to the one in 2009 when price level touched the bottom.
Of Homebuyers
1. What kind of homes are favored by current homebuyers?
Higher income homebuyers look for homes with spacious and individual space for both working and living during and after Pandemic. Moreover, homebuyers favor turn-key homes as the construction costs have substantially increased since the start of the pandemic in early 2020 (39% for labor and 33% for materials).
2. What do leaders do in today’s economy?
Wealthier families reallocate their portfolio to real estate in best areas to hedge risks due to high inflation, underperforming stock market, and possible economic downturn.
Of Interest Rates
1. Interest rates are still historical low.
Fed will stop raising the rates soon. Buyers will soon realize the current rates are still at historical lows and there are financing options at low costs such as ARM programs, new creative programs by lenders, global lending programs, etc.
2. Mortgage Rates Drop After Three Weeks of Increases
Average rate on 30-year, fixed mortgage falls to 5.70% — WSJ, June 30, 2022
3. Firsthand information
Loan officers have been getting more calls asking for pre-approval letters in May after some quiet time in March and May.