Are we there yet? Amid all the dim outlooks for real estate and the economy in recent days, there’s definitely a positive way to look at it. Something on the order of the old saying, “The darkest hour is just before dawn.”
According to the highly respected Case-Schiller index of real estate prices, prices are now at 2002 levels—even in the Bay Area. Obviously, with mortgage interest rates at their lowest point in decades, that is a great buying opportunity. If that is, you believe the slide in real estate prices is almost over.
According to noted Bay Area real estate economist, Carol Rodini, the worst is likely over in Bay Area real estate for several reasons.
1. There is strong job growth in Northern California propelled by the Internet, which Rodini calls the most important invention of our time.
The most stressed East Bay real estate market is the mid market ($600K to $1.2M) because loans are hard to get. The new mortgage loan limits for jumbo conforming loans will be reduced to $625K effective in October, which will affect that market even more.
Below that, the East Bay real estate market is quite active. Above that, home buyers typically have enough cash and assets to overcome the loan situation.
2. Rents in the Bay Area are going up significantly, which will make owning a home more affordable, relatively speaking.
3. The immediate Bay Area (SF, East Bay, Peninsula and Marin) has a finite supply of housing. As demand increases, so will the prices, since the supply can’t.
All that said, Rodini doesn’t expect large leaps in real estate prices in the next five years. She says Bay Area real estate prices may go up three percent each year. But as she points out, “That’s better than the one percent you get from the bank.”
If you’re ready to make a move, or want a market update on your home, just give me a call: 510-847-2409.