I believe we are looking forward to an interesting and likely robust real estate market this year. Amid predictions of economic recovery come concerns about a cooling stock market and rising bond prices. As the government slows Quantitative Easing we anticipate mortgage interest rates may rise slightly and people’s enthusiasm for spending money could cool just a bit as well. Although these changes may come as a relief to some investors, I do not believe that we will see a serious impact on the real estate market here in Silicon Valley or any noticeable difference here in Los Gatos.
In addition, as of January 10, 2014 the lending industry is adjusting to the new Qualified Mortgage / Ability To Repay underwriting guidelines – a product of the Dodd-Frank Wall Street Reform and Consumer Protection Act. These changes have been well anticipated by the lending and real estate communities and should not seriously disrupt business in any way. Click here to read a summary of the QM/ATR changes.
The effects of low inventory here in Los Gatos and throughout the Bay Area (including Santa Cruz, Capitola, etc.) are still a playing a major role in how properties are being bought and sold. A prime example of this is a home that just SOLD in the Blossom Manor on Cherrystone Drive. The property was on the market for 8 days, received 9 offers and is said to have sold for approximately $100K over the asking price. Neither the house nor the property or location is particularly unique in any way. We just have too many buyers and not enough houses.
In summary, even with changes in the greater economy and lending underwriting guidelines, favorable conditions, a thriving local job market and what appears to be a strong appetite for real estate continues to bode well for sellers. Buyers, on the other hand, may continue to find the real estate market a bit “challenging” – or even frustrating at times.
Please call or email me with questions or comments.