Do You Think We're in a Bubble?
Forgive me. While I may be one of Marin County's most recommended mortgage lenders, I am still only on the lowly home finance side of things. I'm not in the real estate purchase and sale trenches like most of the members on Active Rain and, presumably, I'm therefore not taking the brunt of this blog title's sentiment head on. Since I am hearing the question from my pre-approved buyers so frequently, I know that San Francisco Bay Area real estate agents must also be confronted with the "Do you think we're in a bubble?" concern. I thought to myself, "How can I best help my Realtor partners with this dilemma?"
I sought the refuge of Corelogic/Dataquick's stats for July of 2014. Now I realize that the nine-county Bay Area region (Alameda, Contra Costa, Marin, Napa, San Francisco, San Mateo, Santa Clara, Solano and Sonoma) does not a nationwide trend represent, but it does help us provide locally sound advice for our mutual clients. Here goes:
- In July of 2014 there were 8474 sales in the Bay Area. In July of 2007, there were 14,258.
-
The median price was $617K in July of 2014. In 2007? $665K. - Jumbo loans accounted for 57% of July’s lending. Anybody know what it takes to get a jumbo mortgage these days?
- Total foreclosures in July were less than 3% of sales while short sales were just over 4%. So the imaginary shadow inventory monster must still be under the bed.
- Investors accounted for 19% of all sales and all cash buyers were 20%. Somebody with more capital than the average buyer still believes in this market.
- Total consideration in July was $6.21B. Total financed was $3.7B. Loan to value equals 59.42%. That sure sounds like skin in the game to me.
- Typical mortgage payment in July was $2394. Inflation adjusted, this is down 39% from July of 2007.
- Leading lenders in July? Wells, 13.2% of market share, BofA with 4.7% and RPM with 4.0%. Bay Area borrowers clearly choosing us for reasons other than size and free checking accounts…
In sales, you learn an important lesson early on and if you want to meet any success. "The confused mind always says 'no.'" Our buyers and sellers are confused and concerned by the potential of a repeat of the past. They don't want to get caught in or miss out. I think we've got some very clear evidence that we, in the Bay Area, are in a fundamentally sound market, and one that is very different than the last bubble.
I'd be curious to hear your thoughts below.
Rob Spinosa
Mortgage Loan Originator
NMLS: 22343 CalBRE: 01297944
Cell: 415-367-5959 Fax: 415-366-1590
rspinosa@rpm-mtg.com www.rpm-mtg.com/rspinosa
1058 Redwood Highway, Frontage Road, Mill Valley, CA 94941
RPM Mortgage, Inc - BRE# 01818035 – NMLS# 9472 - CA Bureau of Real Estate, Real Estate Corporation License. Equal Housing Lender.
Comments(2)