Midyear Checkup on Bay Area Real Estate

Is it a good time to buy or sell? Yes and yes, according to South Bay Realtor Rebecca Jepsen. With a finger on the pulse of this dynamic Bay Area real estate market, she proclaims there is no better time to put your home on the market or take the plunge into the home buying pool.

Bay Area real estate is tied at the hip to the stock market, especially the NASDAQ, and right now markets are at an ALL TIME high!

“The fundamentals remain strong mid-way through 2019,” she says. “Prices have flattened out and/or are down slightly in some areas, but not as much as was previously predicted.”

The median price for a home in Santa Clara County decreased 4.6 percent from a high of $1.4 to the current $1,335,000. On the other hand, Santa Cruz County’s median price for a home has risen a whopping 8.1 percent since 2018. Inventories also remain relatively low, she adds despite a 7.4 percent increase over last year. The Central Coast (Monterey, San Luis Obispo and Santa Cruz counties) “is booming. It’s a great choice for folks who only need to commute into Silicon Valley one or two days a week,” says Jepsen. She adds that Tehama, Butte, and Del Norte counties are also growing.

“As of this month (July), we are 10 years into a ‘normal’ seven-year recovery cycle — the longest run since records began in 1854 (Marketwatch), says Jepsen.

Jepsen, however, advises her clients to look at more than the price of a home.

“Interest rates really matter more than the price of a home,” she says. “Interest rates can make a home considerably more affordable than a slight increase in price. Buying power increases when interest rates fall.”

Looking at today’s market and focusing on interest rates, Jepsen says that even if the price of a home decreases by five percent or so, an increase in mortgage rates could push a home out of reach and unaffordable to many would-be buyers.

At the beginning of 2019, interest rates were predicted to be 5.2 percent by the end of the year.

Currently the 30-year fixed jumbo loan is around 3.625 percent, almost at the historically low 3.35 seen in November 2012. Over the last decade, rates reached a high of 4.875 percent in November 2018.

“We are expecting to see another drop in rates when the Feds meet on July 30,” says Jepsen. “Balancing the slight reduction in prices and historically low interest rates — this an amazing time to buy.”

“Buying power increases when interest rates fall,” she tells her clients. And, affordability is up for the first time in 3 ½ years.

“If you were to purchase a $1.25 million home today with 20 percent down and a loan of $1 million at a rate of 3.625 percent, the payment would be about $4,560,” explains Jepsen. “Even if prices drop by five percent and the home falls to $1,187,500; a $950,000 loan (after 20 percent down) would mean an increase in the monthly payment to about $4,673.”

One of Compass’ top realtors doing business in Saratoga, Los Gatos, Campbell and throughout the South Bay, Jepsen continually studies the real estate market, analyzes where it’s been and more importantly where it is going. “My clients rely on me for up-to- date market information throughout the year,” she says and look forward to up-to-date market reports. A downturn in 2020 was predicted at this time last year. The latest analyst predictions actually indicate a slight price increase for 2020, although international tariffs and possible trade wars may derail the current trend. We are already feeling the effects of the tariffs; everything from lumber to countertops to lighting have gone up 10-25 percent.

Jepsen’s clients trust her extensive market knowledge and expertise to direct their journey and help them make smart and informed decisions regarding one of the biggest purchases or sales of their lives.

They also look to Jepsen for her marketing skills that result in higher-than-normal selling prices. A recent high tech client was thrilled with her organizational skills, professionalism, and efficiency. These

qualities “made an otherwise complicated and time-consuming process fast and easy,” he added.

Meanwhile, the good news for sellers is that home prices are at or near all-time highs (depending on the zip code) and inventory remains low. Sales volumes throughout all of California are down only 4.3 percent compared to the 7 percent previously predicted. She adds that about 750,000 Bay Area residents have left the state or area since 2010 and have moved to Sacramento, Idaho, Oregon, Texas, Arizona, Utah, and San Bernardino, San Luis Obispo, and Kern counties.

However, “Buyers, especially millennials, are still out there ready and willing to buy. For the most part, they can afford the monthly payments but they can’t afford the down payment. Many don’t know that there are really good programs available with as low as five percent down,” she adds. Who else is buying? According to Marketwatch, she says, “mom and pop” investors or those who purchased 10 or fewer home were responsible for 60 percent of the transactions in 2018, compared to only 48 percent in 2013. Large, private equity firms and real estate speculators made up another 11 percent in 2018.

“It’s an amazing time to buy a home in the Bay Area because of these falling interest rates,” she adds. Chances are the interest rates will be further cut to also offset any risks imposed by tariffs, according to market analysts with Compass. They reiterate that “low interest rates bode well for the housing market.”

Unemployment is also at its lowest rate in the last 55 years at 3.7 percent, even in rural areas.

Many of Jepsen’s clients on both sides of the negotiating table have relied on her hands on and personal commitment to their home buying and selling journeys and have reaped the benefits of her efforts and this robust market.

“I want to create a fabulous win for my clients!,” she says. “When a property sells in just a few days with multiple offers and way over asking — it is life changing for them and that lights me up!”

Eighty-eight-year-old Dodi Benaron says “without her (Jepsen’s) positive attitude and support, I wouldn’t have been able to get through the tough decisions of downsizing, organizing and letting go.” She echoes several clients who say they “feel very lucky to have her (Jepsen) in my corner.”

“We were impressed by her in-depth knowledge and understanding of the multitude of required documents,” wrote Adrienne and Norm Zimmerman who chose Jepsen to sell their Los Gatos home. More importantly, she took the time to explain the process to them “in simple terms.” They added, “it is obvious that her (Jepsen’s) customers come first.”

Jepsen sold their home in one week with multiple offers and way over asking as well — another “fabulous win”!

She is continually complimented on her professionalism, organization, and sound advice.

Whether you are buying or selling or just want to chat about the current market or where it is going, Jepsen says she is never too busy to answer your phone call or email.

“If you are thinking about making a move (now, or in the future) call me,” she adds. “I am here to help!”