Hello friends, welcome back to the channel. I'm Nagaraj Annaiah, a Bay Area tech realtor. On this channel, I will talk about some of the most happening real estate news in the Bay Area besides giving you practical advice on how to buy or sell a home in this region. Keep watching as I will take an in-depth look at the big story this week: Should you or should you not sell a home now? Jump to your favorite chapter and view it immediately. And if you plan to buy or sell a home in the Bay Area, text me now.
REALTY NEWS OF THE WEEK
- Okay, folks, here's the first big news of the week. 4 out of 10 Bay Area homes sell for over $100,000 above the asking price. San Jose and San Francisco make it to the top five list of high sale prices in the US.
- Bay Area hotels open amid COVID lodging recovery. Six new hotels will add about 1,800 rooms to four cities in the Bay Area. But hotel occupancy levels and average room rates may not return to pre- COVID levels until 2024 or 2025, according to experts.
- Five days after it hit the market, a Sunnyvale three-bedroom, 1,500-square-foot home sold for $800,000 above the asking price. A house on 1668 Hummingbird Lane sold for $2.82 million after being listed for $1.995 million. It is unusual, since Sunnyvale's median home price rose 27 percent from a year ago to $1.78 million, though still below the Hummingbird Lane price.
- San Francisco's priciest home sale this year was a six-bedroom, seven-bathroom mansion built more than a century ago in Pacific Heights for $13 million after being listed for $17 million. That’s definitely an anomaly in San Francisco as homes here have sold at a four-year high of 122 percent above asking prices last month.
- According to the California Association of Realtors, despite higher interest rates and geopolitical uncertainty, California's housing market maintained a solid sales pace, even though the number of homes sold were lower than last year's exceptionally strong market. That’s the undying spirit of Bay Area housing for you!
- Sharon Stone's 'Basic Instinct' house in Monterey County has been massively reduced in price. The sleek California Modern-style property was initially listed for an outrageous $52.375 million, but is now available for a much lower $29.625 million.
Why You Should (and Shouldn't) Sell Your Home in 2022
Selling your house at this time is a valid option, but you should be patient. What do I mean by that? Well, keep watching. We have to understand one thing. Life and real estate are both about timing, so you want to get it right the first time. This is crucial, because it can affect the sale price of a home as well as the chances of winning the bidding war in a competitive market. Therefore, historically rising Days on Market has resulted in lower prices, and vice versa.
If you are a seller, a rising number of days on market should prompt you to sell while prices are high. And if you are a buyer, remain patient if you see the days on market rising in the area. When interest rates start to go up, your buyer pool will begin to shrink and the market will be less in demand. A higher supply should result in lower overall prices due to sellers having less negotiating power. However, buyers shouldn't get carried away as only cash buyers benefit from this. If you want to know the benefits of cash buyers and how I can help in this department, watch my previous video, whose link is given above.
Now remember, financing your loan may result in a higher monthly payment on a lower priced home. The low interest rate is what makes many people willing to buy a record-high priced home. In 2022, sellers will still have the upper hand, but interest rates will rise, creating a more balanced market. It won't be long before the bidding wars stop and common sense returns. But we also have to understand that demand will outpace supply in some areas and price ranges.
Historically, selling a house usually takes place in the late winter through mid-summer. At this time, homebuyers are the most active. Therefore, it is best to wait until the fourth quarter of the year to purchase if you are seeking the best deal. In late summer, homebuyers shrink to their smallest size. A few weeks before Thanksgiving until Christmas, the real estate market gets downright cold. As a buyer or seller, you are most likely to make mistakes when the market is too busy.
So what are the main takeaways for buyers?
- High demand and low housing supply will create a seller's market, but not as intense as in 2021.
- It is expected that home prices will continue to rise, but at a slower pace than last year.
And the main takeaways for sellers?
Actually, there are many takeaways for sellers:
- The market will still be strong for them, but compared to 2021, a bidding war will be less likely to push up your offer price.
- Prepare your home for sale in advance. Due to shortages of supplies and labor, it is taking longer for repairs and upgrades to be scheduled and completed.
- Real estate is always local. It is possible that some markets, or sub-markets, are stronger or weaker than others.
- Hire a local real estate professional like me who knows your target market.
- Home values are expected to rise at about half the rate we saw during the peak of 2021.
- Bidding wars may still occur, but they aren't likely to be as intense or frequent. This means sellers are less likely to be picky about which offers they accept.
Last week, rates reached new multi-year highs every single day. At 4.5%, the mortgage rate was one of the four biggest jumps over the last decade. For those who don't know, mortgage rates are based on movement in the bond market, and bonds have surprisingly lost ground every day for eight straight days. I am surprised because mortgages or other long term rates aren't directly affected by the Fed Funds Rate, but the outlook for future hikes or cuts will certainly impact them.
So why are rates rising so rapidly?
The fact is, as the world recovered from the pandemic, they were always going to rise. But what made it worse was the persistent inflation and the sudden passing of the omicron surge that increased the Federal Reserve's sense of urgency. After the war in Ukraine, oil and commodity prices caused inflation to skyrocket, which affected bonds and interest rates.
One of the biggest pleasant surprises of the pandemic has been the growth in residential construction, as well as the logical impact it has had on builder confidence, which is also due to the speed at which materials and labor have become available.
Mortgage Applications Little-Changed Despite Big Rate Spike
The Mortgage Bankers Association has announced that there has been a modest increase in mortgage applications, in spite of all the drama unfolding in the mortgage rate world. The association continues to do an excellent job of capturing average rate movements every week, and correctly predicted last week's big spike to the highest levels since the first half of 2019. There was no significant response to the surge in mortgage applications. Refinancing applications fell only 3%. Purchase applications actually increased by 1% after experiencing a more substantial increase of 9% last week.
Rents Are Rising 4 Times Faster Than They Did in 2020
Think of renting a two-bedroom apartment for $1500 a month in 2021 and getting a renewal letter for $2079. I am not joking here. According to CoreLogic's Single-Family Rent Index released last week, that's the reality for renters in the metropolitan area where rents are rising the fastest. While Miami saw the highest annual change of 38.6%, other metros were well above 2020's levels as well. In fact, rental prices are rising more than four times faster than the average for 2020, which stood at 12.6% compared to 2.6%. Quite a trend, isn't it?
If you have watched my video this far, please leave a comment saying, "Make it in the Bay Area". If you are a buyer, knowing what you can afford and sticking to a realistic budget will help you avoid panic buying, and house buying FOMO...the fear of missing out. If you are a seller, cash offers and conventional loan offers with waivers of appraisal contingencies were often requirements for winning bids in 2021. But this year, you may be able to be more flexible this year, even if you're not necessarily getting the best deal on the price. That’s the only way to ‘make it in the Bay Area’. If you need a local realtor to help you with this, text me now.