The Daly Show | October SD Market Update

Interest rates are helping buyers stay ahead!

October 2016

The market continues to hold strong in a time we usually see buyer activity and home values fall.

Once again, the median price across all property types and price ranges throughout San Diego County lands right around $495,000. At this time last year home values were falling, so we are now showing a 7.8% year over year increase.

Remarkably, overall months of inventory managed to drop significantly from already low levels – we now sit at 2.3 months of supply based on County-wide statistics. This drop is driven by a large (but seasonally normal) drop in new listings coming live during the month accompanied by a higher than seasonally normal amount of properties going into pending status with new accepted offers.

There are many factors that drive the market so I don’t want to over simplify this, but I am going to go out on a limb and say this is almost entirely driven by the ever-increasing favorability of mortgage rates and loosening of lender guidelines. Affordability is still a big issue for buyers which is driving faster price increases in the lower tiers of home values – interest rates continue to drop which is allowing buyers to stay ahead of have value gains.

Brian’s sidebar – I honestly can’t fathom the impact of rates remaining this low for this long, and still (somehow) trending lower with no end in sight (a Fed rate hike may actually reduce mortgage rates further). Is this the new normal? Or is the (global) economy propped up by intervention and pending a correction? The global economy is very weak so money continues to POUR into US bonds…there is nowhere else to put it. 10 year treasury rates sit at 1.69% as of the day of this writing…that’s an annual coupon of 1.69% locked in for 10 years…and money is POURING into it. I don’t know if my astonishment is coming through written text properly so I just want to be clear – that’s CRAZY. That is A LOT of very smart money investing at very little return which basically means this smart money is BETTING that rates will continue to drop (that makes the value of the bonds they bought increase, meaning they can then sell those bonds for a profit and therefore a much larger return than the 1.6% coupon represented by the bond). Please know there are other options out there for your money – I’d be happy to answer questions if you have any.

On that note, I will let our good friend Paul Johnson of Cross Country Mortgage take us home with an update on these ridiculously low mortgage rates.

This month’s fun fact comes from a recent article from The San Diego Union Tribune:

The county had had its most residential units authorized by building permits in a single month in more than 10 years. There were 188 single-family units and 1,083 multi-family units approved, which could signal more building this fall.

Interest Rate Corner

After a favorable Fed meeting outcome and geo political unrest we had a near historic 3 week run of low rates. In the last week and half we gave back some that after some uncertainty arose in Japan and the European Central Bank’s policy in regards to bond purchasing programs moving forward. Freddie Mac average rate ended last week at 3.42 with .5 discount point in perspective a year ago we were at 3.76 with .5 discount point. We will end the week slightly above 3.5 but at this pace 2016 will go down as the lowest average rates in 40 years! Although I am still bullish on the bond and rate markets there is no guarantee it will last long after the election. Now is the perfect time to buy or refinance. My team and I are committed to 5 star service and would love an opportunity to discuss your goals. Contact me directly at 6192067225 or Pjohnson@myccmortgage.com – Paul Johnson, Cross Country Mortgage