May 2008 Real Estate Trends

THE WEATHER AND MARKET ARE GETTING HOTTER:

After a slow start in 2008, sales of single family homes have increased dramatically, thanks to the new FHA loan limits and the large inventory of great buys currently on the market in Santa Clara County.

Statistics:
Santa Clara County sales are down year-over-year, and the median price of a single family home in the first quarter of 2008 is down 1% from 1st quarter 2007 and down 7% from the average median in 2007.
However, new sales contracts in February and March were the highest since mid 2007, and in April, new sales contracts of over 1100 were the highest since May of 2006. These positive numbers will be reflected in news reports after they close escrow 4-6 weeks from now.

Interest Rates:
The highly publicized stimulus plan for new conforming rates which raised the jumbo loans to $729k has been slow to materialize in better rates until May 8, when the new conforming rate for 30 year loans came down to 6%. The new FHA loans are allowing 90% and 95% loans for credit worthy buyers which is impacting the low and middle end of the market and is why new sales in April were so high. Now with the other rates coming down, the mid to higher parts of the market should take off.

Inventory:
Inventory of single family homes always increases in the spring and this year is no exception. It is just starting from a much higher base, and the resulting inventory of single family homes is the highest in over 6 years, although there are signs it is leveling and will certainly cycle down by the fall as it always does.
In late march, inventory of Condos and Townhomes matched the highs of last year but have leveled and may be declining slightly in recent weeks.

Overall Assessment:
Prices have adjusted downwards; interest rates have stayed quite moderate and are getting better. This is the time for smart buyers to beat the crowd and get a great home at a great price. If you are getting ready to sell your home, price your home competitively and be sure it shows well.