As incredible as it may seem, we're already at the halfway point in 2016. And what a year it has been.
Although this year was widely predicted to be the best in real estate for over a decade, what wasn't anticipated at all was the manner in which it has happened to date.
All the expert forecasts were factoring in a gradual rise in mortgage rates throughout the year, to something between 4.5% and 4.65%. Instead we've seen exactly the opposite occurring and rates are currently near the very best levels we have seen in several years. We therefore might reasonably expect the optimistic outlook for 2016 to be exceeded by a decent margin, all things remaining equal (which of course is not guaranteed).
It really is impossible to overstate the influence all this has had on buyers. With 30 year home loan interest rates currently widely available around 3.6%, buyers have a simply incredible chance to lock in a low monthly payment that can only have a positive implications for their future wealth, lifestyle and investment options.
The key question for the second half of the year has to be in which direction rates will now go?
Because mortgage rates tend to fall at times of risk aversion, continuing uncertainties in financial markets around the globe, and especially in Europe at present, have helped to keep rates lower than they might otherwise have been.
Recent job creation stats at home have disappointed and also affected investor confidence, so we have seen the gradual buildup of a perfect storm for the current ultra-low rates, with many experts speculating that even further rate drops could be ahead of us.
In these blogs, I've always advocated the logic in dealing in the present and taking the position that all the stars are currently aligned in a way we rarely, if ever, see. Indeed I think it might not be exaggerating at all to suggest that buyers may currently be enjoying the opportunity of a lifetime to upgrade, downsize or simply get on the home ownership ladder. Waiting could be very costly…
With demand so high, we've seen inventory of available homes for sale continuing to fall over most of the past six months. But, as I reported a few weeks ago, there are some indications that the situation may be turning around to some extent, including quite steep recent percentage rises in available inventory in San Mateo and Santa Clara.
It could well be, of course, that sellers are finally responding in greater numbers to the possibilities of such high buyer sentiment in the area.
For now, however, supply still struggles to keep pace with demand and, with reduced competition, the opportunity to attract multiple offers at or above asking price is still there.
As if all this weren't enough, we're constantly reminded that our beautiful area operates to a different real estate dynamic than virtually all the rest of the nation. These are exciting times for the tech industry and, with the new Apple Campus in Cupertino moving ever closer to completion, the profile and prestige of this part of the world can only have a positive effect and improved returns for both homeowners and property investors.
In counterbalance to all of this, it must be said that, as we head for a November election, there are plenty of uncertainties that could spoil the party. For now, however, my strong advice is to reflect on the tremendous first half of 2016 for real estate and to rejoice that, for those who are quick to take advantage, the situation still looks so promising for the immediate future, at least.
Call us today to discuss how to make the most of it all.