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MorganHomes.com Newsletter Section (Jan 2007 reprint)

By
Real Estate Agent with Carlmont Associates-Belmont

WHAT'S IN STORE FOR 2007-A MARKET LOOK

 

Welcome to 2007! What's in store for our local housing market is always a great topic for conversation, and the holidays offered us ample opportunity to respond to questions about the housing market.

Looking back, the 2006 housing market finally took a breath and relaxed into a more normal, and we feel, sustainable market-locally. Many parts of the country which saw rampant speculation were not as lucky. Areas in Florida and Arizona- and in California, San Diego and the Central Valley for example, which in recent years have seen staggering appreciation at unsustainable levels-were harder hit. Specifically areas with vast open space for expansion saw feverish new development attempting to keep pace with the seemingly endless supply of buyers. As interest rates began to rise, the temperature of the sizzling hot real estate market started to cool. Declining sales were the first indicator of a market slow-down followed by growing inventory and of course softer prices and lower appreciation. Developers reacted in the only fashion they could which was to lower supply by halting new projects and offering discounts and incentives to liquidate existing inventory. On the peninsula of course new development is hardly an issue. The majority of our statistics rely on resale homes, not new construction. The supply of homes is limited, and the continued influx of new jobs to our area should help buoy the market as it did in 2006.

This year should be relatively calm in comparison with recent real estate markets. The California Association of Realtors estimates a 2% decline in real estate appreciation statewide, but we expect local appreciation levels to be slightly above or equal to 2006.  Last year, property values in San Mateo County rose 1.2% which, while not high compared with some recent years, compares favorably with state-wide averages of a loss for the year.  Look to interest rates to drive demand. Inventory levels should be comparable to last year, which means less competition for buyers and lower appreciation for sellers than they have grown accustomed to. We feel lower interest rates and energy costs along with higher consumer confidence and local job growth will increase demand for housing in 2006. If inventory levels grow rapidly and outpace demand or interest rates rise-all bets are off.

Since predicting the future of any market with absolute certainty is impossible, if you are considering a move, now may be an opportune time. In San Mateo County, homes are still worth 50% more than they were just eight years ago and loan rates are near historical low levels. Whether moving to acquire more room, downsizing for simplicity, or searching for an ideal school district, the market has not been as accommodating in recent memory as it is right now. Waning bidding wars and more inventory all equate to a more pleasant buying experience for everyone involved.

Our web page offers an extensive resource for sales data and statistical graphs. Each month we download raw data to form comprehensive graphs illustrating sales, appreciation, inventory levels and more.

Visit MorganHomes.com and click on "Market Reports". Note: The home value appreciation in the graph at left is NOT an average of the median prices for the 12 preceding months, but rather a "snapshot" taken on the last day of the year.