In 1996 home prices in San Ramon averaged $300,000 with interest rates at 7.81%. By the year 2000 prices jumped 60% with an average price of $501,000 and interest rates at 8.06%.

From 2004 to 2006 prices skyrocketed up to an average of $946,000, even with interest rates at 6.41%. Of course, we have to take into consideration the relaxed lending requirements during this time, which motivated buyers to get in the market.

Prices began to decline in 2007 thru 2009 dropping almost 22% and then in 2010 prices started to gradually pick up while interest rates dropped to 4.69%.

The lowest fixed rates were in 2012 at 3.66% on average. By end of 2013, rates were fluctuating on average around 4.5%, yet buyers are still eager to own a home in San Ramon.

The average sales price for the first quarter of 2014 came in at $953,150 bringing San Ramon home prices back to their 2006 levels. With interest rates still low (we know they won't stay this way for much longer)  now is  possibly the best time for both buyers and sellers to take advantage of this great market.

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This is a question asked by many. My answer is maybe there will be a pause – but only for a moment. I say this because I was selling homes when interest rates were 12%. Granted home prices weren't as high, yet even with interest rates at 6% to 8% the San Ramon Valley area has always flourished. The demand here is high and will continue to be so.

As we all have our opinions and the above is mine, here is what the "experts" say are the three main reasons they feel we have a strong real estate market going forward.

Number 1: 2014 should prove to be the strongest year for housing activity since before the Great Recession

“Most economists expect an improved job market in 2014, with employment growth accelerating and the unemployment rate continuing to decline. That jobless rate drop will reflect more of a pickup in employment than further declines in the labor force participation rate. This will be the key factor improving housing demand this year, even if mortgage rates rise and affordability declines. While the housing market tends to do especially well when the job market improves and mortgage rates decline simultaneously, that combination of events occurs only rarely…People buy homes when their job and income prospects improve – even if it’s more expensive to do so – rather than buy when it is inexpensive to do so but they’re worried about keeping their jobs.”

“Consumers have taken the interest rate rise in stride. Expectations for continued improvement in housing persist, and sentiment toward the current buying and selling environment is back on track.”

Number 2: Demographics should start to favor housing activity

“If the economy expands at a faster pace this year, bringing a more rapid rate of job creation, that should translate into more households, raising housing demand. We won’t see all three million missing households return to the housing market at once. (That wouldn’t be a good thing for the housing market anyway, since that would be on top of the 1.2 million households that normally would develop this year; such a surge would swamp the existing housing supply). Beginning in 2014, the pace of household formations should accelerate to an above-trend pace for several years, pushing up housing demand.”

Number 3: Mortgage availability shouldn’t worsen and may improve

“The rise in mortgage rates already has reduced mortgage origination volumes as refinance activity declines. If mortgage rates rise further this year, as expected, then refinance activity will fall still more. In response, mortgage lenders probably will ease lending standards to the extent possible under the QM rules to boost lending activity by increasing purchase originations. As a result, the increase in new households expected to be created this year, spurred by a stronger job market, should find that qualifying for a mortgage loan will be somewhat easier in 2014 than in prior years.”

So the question to buyers, is now your time to make a purchase or do you want to continue to wait?

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If anyone has been following the real estate market for the last year or so, then it is obvious that home prices have risen dramatically in such a short period of time. While that is encouraging for homeowners it is posing a problem for many would be buyers.

The article below shows the conflicting views of

"The sharp rise in home prices in 2013 caused two conflicting results: The return of positive home equity for hundreds of thousands of borrowers and considerably weaker affordability for an equally large pool of potential homebuyers.

While positive equity allows more borrowers to move, weaker affordability keeps them in place. So which will be the greater driver of housing this spring?

"There's going to be a reality check in the spring in terms of realizing that what we saw in 2013 is not a real market," said Daren Blomquist of RealtyTrac, a real estate sales and data website. "It's a nice bounce-back market, but ultimately you need the biggest pool of potential homebuyers out there to be able to afford those homes."

In an analysis of housing affordability, RealtyTrac found that the estimated monthly house payment for a median-priced, three-bedroom home purchased at the end of 2013 was a whopping 21 percent higher than it was at the end of 2012 in more than 300 U.S. counties. That includes mortgage, insurance, taxes, maintenance and the subtracted income tax benefit.

The rise is the result of higher home prices and higher mortgage rates. RealtyTrac used a 30-year fixed-rate mortgage with an interest rate of 4.46 percent and a 20 percent down payment. That is versus a 3.35 percent interest rate the previous year.

Some metro regions, especially in California and parts of Michigan, saw monthly house payments rise about 50 percent from a year ago.

"Home prices were boosted by cash buyers in 2013, and as the cash buyers move out of the market in 2014, the buyers left are not going to be able to afford the home prices as readily in some of these markets," added Blomquist." Source CAR

So far in our local San Ramon Valley market what we are experiencing is a  slow down in the frenzy. While there are still multiple offers, the prices in general are coming in closer to list price and there is still a lot of qualified buyers ready to purchase a home.

 

 

 

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It’s Not Always About Business

Sometimes even while looking for business you can brighten someone's day by asking questions and listening.

I was out in a neighborhood the other day, knocking on doors to talk to homeowners about the current real estate market and find out who was ready to take advantage of this great market.

I met a older woman who was having a hard time speaking and I wasn't sure what was wrong. She informed me that she recently had a stroke, at which point I was thinking that I should move along. Yet she was trying so hard and she really wanted to tell me about everyone on the street – who just moved in, how long some of the  people lived there, the renters, etc. So I let her talk.

She was very informative. I thanked her for spending the time to talk with me and then she thanked me saying "this was a delight, this is a break in my day". And that comment made me smile and realize that my job gives me the opportunity to meet so many people, even if they aren't considering a real estate transaction.

 

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Here is an update of the  real estate activity for Danville, Alamo, Blackhawk, San Ramon, Dublin, Pleasanton and Walnut Creek for January 2014

Detached Homes New Listings Pending Sold Average Sales Price
Alamo 24 11 8 $1,373,500
Blackhawk 10 6 4 $1,613,250
Danville 46 24 27 $1,005,574
Dublin 39 29 24 $780,958
Pleasanton 47 26 30 $915,275
San Ramon 56 36 25 $946,786
Walnut Creek 32 74 25 $898,270
Condos/Townhomes

New Listings         

Pending      Sold                Average Sales Price   
Alamo 2 0 1 $780,000
Blackhawk 0 1 0
Danville 14 10 9 $502,888
Dublin 24 14 13 $440,968
Pleasanton 16 12 2 $547,000
San Ramon 28 9 19 $469,458
Walnut Creek 36 25 23 $436,000
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