Real Estate Roundup: The Median Down Payment in Silicon Valley Is $300,000
Here’s a look at recent news of interest to homebuyers, home sellers, and the home-curious.
BAY AREA HOMEBUYERS CONTINUE TO LEAD THE NATION FOR DOWN-PAYMENT SIZE
Amassing a down payment is frequently cited as one of the biggest hurdles to homeownership for first-time buyers, and a recent report sheds light on how difficult that task currently is in the Bay Area’s sky-high housing market.
That’s according to ATTOM Data Solutions’ latest U.S. Residential Property Loan Origination Report, which puts the median down payment for single-family homes and condominiums in the San Jose metropolitan area at of $298,250, nearly 18 times higher than the national average and the most in the U.S. San Francisco homebuyers placed the country’s second largest down payments of $180,000. Those figures represent about 24 percent of the average sales price in both cities.
The Bay Area also leads the country for the number of co-buyers, home purchases made by multiple nonmarried parties. Co-buyers accounted for 48.3 percent of sales in San Jose and 37.9 percent in San Francisco.
“It’s not surprising that in places like Seattle, the Bay Area, and other challenging markets buyers are looking at ways to increase their purchasing power, and reduce the amount of debt they are taking on,” Unison Director of Corporate Communications Michael Micheletti told ATTOM Data Solutions. “The sharing, co-buying and co-owning of a home movement will only grow as more millennials and Gen Z enter the marketplace.”
THE BIGGEST ISSUES FACING REAL ESTATE MARKETS
The Federal Reserve’s decision to raise interest rates last week and the resulting impact on the U.S. economy are perhaps the two biggest factors currently affecting the U.S. real estate market, an industry trade group says.
A report from The Counselor of Real Estate identifies the top 10 factors that will influence real estate markets both in the short term and over the long term. Besides interest rates, short-term issues include the recently passed Economic Growth, Regulatory Relief, and Consumer Protection Act; demographic changes; the evolution of e-commerce businesses; and of course, the nationwide affordability crunch.
Over the long term, CRE identifies infrastructure, immigration, energy and water, disruptive technologies, and natural disasters as having the biggest potential impacts on real estate markets. The organization notes that since 2006, disasters like October’s Wine Country wildfires have caused real estate markets to experience significant losses.
COULD GOLF’S WANING POPULARITY HELP EASE THE HOUSING INVENTORY CRUNCH?
While moribund golf courses represent an opportunity to build more much-needed housing, NIMBYism may prevent that trend from taking hold.
Citing data from Pellucid, a CityLab article says that the number of Americans who regularly gold dropped by about nine million between 2002 and 2016. As a result, golf courses are beginning to close, and that trend is expected to continue. An average 18-hole golf course that sits on 150 acres could accommodate up to 600 new single-family homes, and even more if townhouses and apartments are added to the mix.
But currently, shuttered golf courses in Missouri and Florida are being redeveloped for commercial purposes rather than residential. As CityLab points out, this is partially due to regulations, as many golf courses were zoned for commercial use. But transforming golf courses to housing units is also meeting resistance from residents of nearby communities, many of who are more affluent than others in the area. Earlier this year, residents of a Boston suburb voted down building a senior-living facility on a struggling golf course, while residents of a Rochester, New York suburb opted to buy a golf course and turn it into a park.
MORTGAGE RATES RISE FOLLOWING FED RATE HIKE
Mortgage rates climbed to the second highest level point in 2018 last week after the Fed raised interest rates by 25 basis points.
The latest numbers from Freddie Mac put 30-year, fixed-rate mortgages at 4.62 percent for the week ended June 14, up on both a weekly and yearly basis. Fifteen-year, fixed-rate mortgages rose to 4.07 percent.
In a statement accompanying the report, Freddie Mac Chief Economist Sam Khater said that rising mortgage rates will not have as profound of an effect on consumer budgets as in past cycles because far fewer Americans have adjustable-rate mortgages than they did 10 to 15 years ago. Still, he stressed that stronger wage growth would help homebuyers better keep up with both rising prices and mortgage rates.