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Not So Hot Spring Market In Bay Area
The Spring Market is in full swing but where is the inventory? This time of year is generally when most homeowners are putting their homes on the market and buyers are out in droves looking to make a move. It is very one sided this year which is unusual. However, we are just coming out of an unprecedented downturn in the housing market which has caused many homeowners to sit tight and ride out the storm. Based on recent news, including builder data and consumer confidence, it appears as though the final clouds in the housing market are blowing past us. Values have done a 180, bouncing off bottom near the end of 2011. Multiple offers have become the norm in the Northern California / East Bay market since spring of 2012. Property prices have risen about 15% in Contra Costa & Alameda County and similar percentage increases are being seen in surrounding areas. Even higher in the South Bay. Expectations and current activity translate to a similar uptick in values this year. Buyers are out as rates are still firmly in the 3.5%-3.75% range. That is an exceptional value for funds. When you consider inflation along with a tax adjustment for deduction of interest, the cost of funds at that level is just about 2% depending on your tax bracket. That is an amazing opportunity and finally buyers are on board with an enthusiastic appetite for homes. This eagerness to purchase is being seen across all buyer types as well. First time home buyers, investors, move up and down sizing clients. The dilemma in this rosy picture is a 36% downturn in inventory over the last 90 days. My best guess is once homeowners realize the increase in value and that they are sitting on a far favorable equity position, than just a few years back, then we will start to see more inventory come to the market.
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Report available for all cities in Contra Costa & Alameda County