The median home price in California edged up for the second month in a row, reports the Mercury News. According to recent data from the California Association of Realtors (CAR), low interest rates have inspired more buyers to get into the market. California home prices remain high, but realtors say the low interest rates are making homes more affordable for buyers, thus they expect it to be a busy summer.
The 30-year, fixed-mortgage interest rate averaged 4.07 percent in May of this year, according to data from Freddie Mac. By comparison, the mortgage rate in May of last year was higher, at 4.59 percent.
CAR President Jared Martin said, “The lowest interest rates in nearly a year and a half, no doubt, have elevated housing demand as monthly mortgage payments have become more manageable to homebuyers in general.”
This May, single-family home sales were up 2.6 percent from where they were in April at 396,780 sales. But they were down 0.6 percent from May of last year at 409,270.
Across California, the median home price reached a new all-time high of $611,190. This was up 1.4 percent from where it was in April at $602,920. And it was up 1.7 percent from where it was in May of last year at $600,860.
According to Leslie Appleton-Young, CAR’s senior vice president and chief economist, the lower interest rates had an effect on home prices. “While lower interest rates have spurred buyer demand in recent months, they also have played a role in ongoing price hikes,” she said. “Buyers could offer higher prices without hurting their bottom lines and maintain the same level of affordability, as rates remain on a downward trend. With mortgage rates expected to stay low in the upcoming months, home prices may inch up further for another month or two before cooling off.”
In the Bay Area, May sales far outpaced those in April, representing an increase of 19.4 percent. On an annual basis, the San Francisco Bay Area was the only region that had more sales in May of this year than May of last year.
Every county in the Bay Area saw more home sales in May than in April of this year. In Santa Clara County, home sales were up 15.6 percent over where they were in April. But they were down by 7.3 percent from where they were in May of 2018.
May median home prices were also up in all counties from where they were in April. San Mateo County saw the biggest increase in median home price from April to May, at 10.3 percent. San Francisco came in second at 4 percent.
Compared to May of last year, median home prices were down in five out of nine Bay Area counties, with Alameda declining the most at 6.4 percent.
In Santa Clara County, the median home price was $1,335,000 in May. This was 1.5 percent higher than what it was in April at $1,315,000. This price was 4.6 percent lower than what it was in May of 2018.
“Home sellers are realizing home price growth has slowed from its hot streak of a year ago,” said Alan Barbic, president of the Silicon Valley Association of Realtors. “They realize they will still receive a substantial gain, but it is unlikely they will get the same high price they might have received a year ago. With interest rates down from last year, more buyers are returning to the market, as evidenced by the jump in home sales from last month.”