As 2007 winds down, I am frequently asked if this is the time to buy or if the New Year will present “added” opportunity. Unfortunately, my crystal ball is broken, so I can only look at what is in front of us now – and that is opportunity. With strong inventory in many areas and interest rates that remain at near historic lows, there is a unique opportunity for first-time and move-up home buyers. We may not know what tomorrow holds, but we can look into the past and see that California homes have historically been a strong investment; there may be no better way to start off the New Year than in a new home.
Santa Clara County’s median is very different from most of the the others in the State. After staying securely in the 600s for years and breaking through $700,000 only in April, it settled in September to $700,000 again. Sales dropped by about a third between June and July, but were relatively flat for the rest of the summer.
As for interest rates, The Fed has cut both the discount rate and the Fed funds rate; prime is 50 points lower than it was a year ago. Some analysts are betting against another round of rate cuts in December. Rates are averaging about 6.6% for 30-year fixed, 6.3% for 15-year fixed and 5/1 ARM, and securely over 7% -- perhaps as much as 7.25% -- for a jumbo.
Overall Assessment: Today’s buyers, especially those who can secure jumbo loans, are highly qualified. Well-qualified prospects and abundant selection are a good match. Buying a home in California has been a historically strong investment and in a new home, buyers will be that much better able to prepare for and ride out whatever the economy has in store.
One of life’s biggest comforts is having the right roof over your head.
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