This is what I was asked at every party this past holiday season. I’m sure you heard folks discussing this as well. I’m happy to report that the news is not as bad as you might think!
Despite all the hype, the median home price (house and condo) in the city was remarkably stable in 2009, running between $685,000 and $710,000 from April through October 2009, then ticking up to $731,000 in November. It is too soon to tell if November’s increase in median price is the beginning of a trend or just an anomalous blip. This is after the general 15% to 25% decline in values from their times of peak value in most neighborhoods.* In comparison, in 2007, the median home price in the city hit $829,000.
While prices are down from each neighborhood’s “peak,” the city-wide median home sale price has been disproportionately affected because the low end has been disproportionately active. This activity is being driven by the low interest rates available on government backed mortgages below $729,000. Loan interest rates are a vital part of the home-purchase affordability equation because of their impact on both qualifying for a loan and the ongoing monthly cost of home ownership. Interest rates hit at all time low in late November. While it’s harder to qualify than in past years, the rates are fantastic. If your home (or the home you want to buy) is well-priced and that price is below about $910,000, activity/competition will be high. The further the value/price is away from $910,000, the fewer buyers there will be who can get a great interest rate, and there will be commensurately less activity. ($729,000 is just about 80% of $910,000 and most loan products offering great rates require a minimum 20% down payment.)
More listings accepted offers in October than in any month in the past 2 years. You can see that this is the case in the chart of recent sales. All of these closings took place since December 1, 2009. When I pulled the same sample data for my piece in August 2009, I had to include almost 2 months to get enough data! New ratifications began to taper off in November, which is common for the holidays, but the number of accepted offers was still higher than in November 2008 or 2007. The holiday season was a good time for buyers to make offers because there wasn’t as much competition from other buyers and sellers are eager to move on with their lives. Now that it’s January, it can be a good strategy to have your agent review recently expired or withdrawn listings. These homes may still be for sale – just taking an official break from marketing while waiting for spring.
These have been stressful times for all of us. Before you worry about the value of your home, I encourage you to ask an expert. Realtors spend all our time discussing, researching and thinking about property values. So if you need to know about your home – just ask one of us!
*The southern neighborhoods hit hard by foreclosures have seen 25% – 40% declines. As has been the case since the foreclosure crisis began, the majority of bank-owned (REO) house sales occur in the city’s less affluent, southern border neighborhoods running from Oceanview to Bayview-indeed, a little more than half of all house sales in those neighborhoods are either REO or short sales. For REO condos, the main neighborhoods are SOMA, South Beach and Mission Bay, where most recent condo development has taken place.