According to a recent Wall St. Journal article, California housing prices have been on the rise, and the Bay Area has experienced a 20% rise in the median price of homes since February 2009 — now standing at $354,000. Naturally, this price level bears no resemblance to Lafayette real estate or home prices found in Orinda or Moraga. It does, however, align with what we have seen in our market area, where the highest velocity of sales is in the sub-$1M price range.
Counterbalancing this is the fact that default notices rose almost 20% in February and roughly 11% of all California homeowners with mortgages are 90 days or more delinquent on their payments. With an “official” unemployment rate standing at around 12.5% for the state, we’ve still got a rough road ahead. The market and consumer confidence are improving, but we have not yet shed the remnants of the enormous financial fire pit from which we are slowly climbing out.
More thoughts on trends/issues to contemplate over the coming months:
- An increasing number of “down-sizers” who will be selling their larger Lamorinda real estate holdings and buying smaller single level homes within Lamorinda, but also taking advantage better value propositions in areas such as Alamo, Walnut Creek and Pleasant Hill.
- As reported in the Wall St. Journal, “The Fed confirmed that it’s ending its $1.25 trillion purchases of agency mortgage-backed securities, which enabled Fannie Mae and Freddie Mac to help keep mortgage rates low by buying mortgages.” This means that there will be increasing upward pressure on interest rates… not substantial by historical comparison, but nevertheless significant enough to potentially impact demand and prices.
- At the upper end of the market, we are observing and hearing from other agents about Lamorinda real estate owners who are not yet delinquent on their mortgage payments, but their combined first and second deeds of trust exceed the market value of their property. The new loan modification programs being introduced will hopefully help these people stay in their homes long enough to make the necessary adjustments to their personal finances. Absent modifications helping them, these properties could find their way to short-sale or foreclosure. This is something to watch closely as the 2010 market unfolds.
- This will be the “year of the move-up buyer”. With the greatest pressure found on higher priced homes, significant demand for lower priced homes, and historically low interest rates, most won’t find a better time to make the move up.
- It may also be the best time to make the move out of Lamorinda real estate. For empty-nesters considering retirement in out-of-state communities, California foothill communities, or other California secondary markets, the timing may never be better than right now. Markets in “second home” communities have been pummeled over the last couple of years, selling at incredible discounts to where they were just a short time ago. In the end analysis, its the delta between the equity netted from your present home sale and the cost of buying the replacement home that counts.
