Hello there. I am Nagaraj Annaiah, your trusted realtor in the Bay Area. Here are the top realty headlines of the week. Did you know that almost half of America’s “million-dollar cities,” where the average price of a home is at least $1 million, are in California? Live Oak, one of the smallest and most controversial independent coastal parks in Santa Cruz County, will soon come under public control. Bay Area hotel Housing prices in California are driving residents to Mexico. Housing wealth soared in the US as home equity grew by 42% in 2021. Napa, Sonoma, Solano, Marin hotel projects back on track after stalling in pandemic economy. The affordability of California housing improves in the fourth quarter of 2021 as incomes grow and prices level off. According to another real estate report, two out of three renters in the Bay Area cannot afford to buy a home; one in two pay more than 30% of their income for rent as a result of rising rental prices, and Asian Americans have more access to affordable housing than anyone else because nearly half of them earn more than $100,000. You can download the PDF from the link given in the description. And the big story for this week? Get to know the biggest real estate hot spots in the Bay Area. You could jump to your favourite chapter, and view it right away. If you have any property-related query, ask away in the comments section below. And if you are planning to buy or sell a home in the Bay Area, call me NOW.
THE BIG STORY: 8 realty hotspots to invest in Bay Area
If you are thinking of buying a house in the Bay Area, invest in the hottest real estate neighborhoods in every Bay Area county because location is so important.
The realty hotspots of Bay Area are: Aston Ave in Sonoma, Central Napa in Napa, Bel Marin Keys in Marin, May Valley in Contra Costa, Forest Hill in San Francisco, Redwood Heights in Alameda, Belmont Heights in San Mateo, and Blossom Valley in Santa Clara. Clearly, something is right about these places if people are flocking there in droves. The herd mindset is a powerful selling tool in real estate because human instinct is to go where the crowds are. Nobody wants to make a decision by themselves. Therefore, this decision is made collectively by many home buyers. However, what explains their popularity? The pandemic and the "work at home" culture caused people to move out of the big cities into smaller towns where they had more space and better access to recreation amenities like parks, trails and waterways. It is only natural that home prices shot up in these areas, since there are more buyers than sellers at the moment. Price ranges are mind-boggling, with prices in one county slightly above half a million dollars and those in another almost three million. But that's a fact, and you can't ignore it. Here is how the prices went up in each of the counties: Marin (by 50%), Alameda (42%), Contra Costa (41%), Santa Clara (36%), San Mateo (33%), Napa (31%), Sonoma (25%), and San Francisco (21%).
The truth is out there. Almost every expert got the answer wrong this time. Most experts predicted that mortgage rates would be in the low 3% range in Q1, but the rates have reached 3.75%, and continue to rise. The consumer price index indicated that inflation has reached a 40-year high in the last week as rates kept climbing. How can this be? The industry relies heavily on outdated data, and that partly explains the confusion. Although rates have crossed 4%, the data still shows 3.69%. In addition, there is another issue. Construction is delayed due to material shortages, eroding builders' confidence. When this happens, things can only get worse since construction costs rise, and homes become even more unaffordable for prospective buyers. Now I am not saying this. In the statistics, it is evident that construction costs are up 21% year over year. Demand for homes will never decrease despite higher interest rates and low inventory. One thing is clear. Our housing market is still in a boom phase; we're not in a bubble. Now is the time to buy homes before the price increases even further. The results were evident for everyone to see. There was a 8.1% drop in mortgage applications last week, a 7% drop in refinance applications, and a 10% drop in purchase applications. January's consumer price index rose by 0.6% month-over-month. Since 1982, the index has risen by 7.5% annually. The numbers don't lie. Instead, they reveal facts we would rather ignore. In spite of what the experts have been saying, interest rates have consistently been rising since May 2021. It will be interesting to see how the month unfolds. In my opinion, if you want to enter the housing market, you need to set aside 20% more money because prices will continue to rise, and the only way to beat the competition is to be prepared to pay more and to close quickly before the prices go up further.
From a sellers' market, it's now appearing to be a buyers' market as there are more houses available compared to the number of houses being sold. But don't get me wrong when I say that it's still a seller's market. Stay with me, and I will explain this for you with hard data. In Santa Clara, the 'sale vs sold' gap has remarkably reduced from December to January. That's why you will see that the months of inventory that stood at 0.3 months have gone up to 0.8 months. You see, more than double the houses were put up for sale in January compared to December. And also note that the gap between sold and active sales has come down dramatically in January. By the way, the gap is even more dramatic in San Mateo county where the months of inventory have gone up from 0.6 in December 2021 to 1.1 in January 2022. While 244 houses were for sale, only 219 got sold. Actually, this is quite the opposite of the statistics in November and December, when far more homes sold and far fewer were on the market. Monterey County also shows this trend, where 224 houses were for sale but only 166 went through. Santa Cruz has also experienced a role reversal, as 106 homes have been listed but only 86 of them have sold. The opposite happened in December, when 96 houses were for sale and 133 were sold. A similar trend was seen in San Benito county as well, as only 36 homes were sold in January while 48 houses were for sale. It was yet another role reversal for the county in December as 72 houses were sold while only 48 houses were listed for sale. This is not a surprising trend, by the way. Traditionally, the housing market slows down during winter. Fewer houses get sold and more go on the market.
But if you are thinking that the market might cool off, you couldn't be more mistaken. If we look at the prices of single family homes in Santa Clara, we can see how the market has behaved in the last year. The average sale price in March 2021 was $1.9m. By June 2021, it had crossed $2.1m and has since cooled.
Nevertheless, the price is coming close, as January again crossed $2m, and February will do more. Another indicator of the price hike is the sale price to list price ratio, which has only increased since January 2019. From 99.5% in 2019 to 113% in 2022, it is still a 'hot market' with many competitors. If you think it's a buyers' market and you hold the reins because there are fewer available homes than sold, don't be fooled. If you think it's a buyers' market and you hold the reins because there are fewer available homes than sold, don't be fooled. There are many millennial buyers driving up the housing boom, and you will have to resort to the 5 ways of buying a home in the Bay Area that I mentioned in my last video. If you haven't seen it, please click on the link in the description below. It's a must-watch if you want to close a deal before the other person does.
In the last 10 years, the Bay Area has always been a seller's market. But what exactly is a seller's market, you ask? There is a well-balanced, four-month supply of homes in the market if there are 800 active listings and 200 sales a month. In a "seller's market," there is less than four months' supply, and in a "buyer's market," there is more than six months' supply. What does this mean? The buyers don't have an upper hand in price negotiations. This year's Jan and Feb may also seem like the 13th or 14th month of 2021 going by the price rise. So who can own a home? For every 1,200 buyers with the same annual income, anyone earning between $100,000 and $125,000 has a chance at owning a home in the South Bay. Due to the low inventory numbers in years, the market is highly competitive. A realtor like me can help you in this situation. So what are you waiting for? Call me NOW.
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