Low mortgage interest rates sustain January’s housing market

Continued record low mortgage interest rates maintained last year’s sales momentum in January as home prices pulled back from one of the highest levels recorded last year, according to the California Association of Realtors. While sales rose from last year in all major regions, in the Bay Area, sales dipped one percent from a year ago as prices there increased two percent from last year.

In Santa Clara County, sales were down five percent from the same time a year ago and dropped nearly 40 percent from the previous month. The median sales price of a single-family home in January was $1,200,000, up 1.3 percent from the median of $1,185,000 in January 2019 and down two percent from the December 2019 median of $1,225,000.

A bright spot is monthover-month inventory and new listings rose in January. MLS Listings reports inventory in Santa Clara County was up 13 percent from December, though down 38 percent from January 2019. The median days on market remained at 19 days, the same as the month before. While down 16 percent from January last year, the number of new listings for January 2020 increased 151 percent over December 2019.

Mary Kay Groth, president of the Silicon Valley Association of Realtors, indicated the low mortgage interest rates are sustaining the market, keeping it healthy and competitive. “According to the MLS, the median single-family home sold in 21 days for 101 percent of the list price based on 418 sales in January 2020. This indicates there is still healthy demand, as buyers are willing to pay list price and more where there is heavy competition,” said Groth.

Statewide, closed escrow sales of existing, single-family detached homes dipped 0.7 percent in January from the 398,370 level in December, marking the second straight month that sales fell below the 400,000 benchmark. Still, sales were up a solid 10.3 percent from January 2019. The median price was down 6.5 percent from December’s revised $614,880 to $575,160 in January, marking the largest drop in the median price in the last seven years.

With prices rising faster in recent months as housing inventory continued to shrink, consumer optimism rose both monthover-month and year-overyear for those who believe it is a good time to sell a home. A monthly Google poll conducted by C.A.R. in January, found 62 percent of respondents say it is a good time to sell, up from 56 percent a month ago, and from 50 percent a year ago. The same motivating factors, however, may have curbed the optimism for home buying as 23 percent of respondents believe that now is a good time to buy a home, slightly less than last year (25 percent), when interest rates were higher.

Realtor officials are cautiously optimistic about the future of the housing market. “The Mortgage Bankers Association recently reported the mortgage delinquency rate in Q4 2019 fell to its lowest level since the current survey began in 1979. The Fannie Mae Home Purchase Sentiment Index is near an all-time high, reflecting it is a good time to both buy and sell a home. the New York Fed reports that $750 billion in new mortgages were originated in Q4 2019, more than any quarter since Q4 2005,” reported Groth.

“With interest rates on a declining trend again due to concerns about the impact of the coronavirus, motivated buyers will have an opportunity to stretch their purchasing power in the housing market,” said C.A.R. senior vice president and chief economist

Leslie Appleton-young. “The economic outlook, however, is less clear than a month ago before the outbreak of the disease, and we should expect market uncertainties to continue to linger on for the short term.”