Should I Be Buying A Home In Marin County Now? Part 2
Here is Part 2 of “Is It Time To Buy?”
Employment
Moodys shows that jobs have consistently grown in the Bay area throughout 2011. They project job growth over the next year to be 1.4% over the next 12 months, with larger growth in 2012. Bureau of Labor statistics show Bay Area unemployment is at 10.1%.
However, it the city of San Francisco appears to be vastly different. “The office market in San Francisco is on fire right now”, said Tony Zucker, a commercial real estate agent for Jones, Lang, LaSalle. “Rates are moving up, mainly from social networking and gaming companies.” (this article is actually for Tony - he’s been threatening to buy for a long time!)
That also checks with what he hear about the rental market in the city - apartments are difficult to find, and when they’re available, rent quickly with multiple offers. Recent San Francisco Chronicle articles have also talked about all of the hiring in the city.
Credit
If employment has been the weak spot in the recovery, mortgage interest rates have been the engine keeping things going. Rates continue to flirt with historic lows, and there is plenty of money for borrowers with good credit scores, solid employment histories, and down payments. But for buyers who don’t fit the traditional profile, credit is still difficult to obtain.
According to Gina Kemsley of Terra Mortgage, the biggest issue right now is the change in jumbo conforming loan size, from $729,750 to $625,500. That will force some people into a jumbo loan, which is typically a 1/4 point higher. The resulting increased payment will make it difficult for some buyers to get as much house as they want.
Typically in a recession, prices have fallen but interest rates are high. For example, in the 1990-91 recession, rates were 9.5%-10%. In the dot.com bust of 2000, rates were over 6.5%. This one has been different: rates are at historic lows, and prices are around 25% off their high point.
Psychology
The portion of Americans who believe homeownership is a safe investment dropped to 66% in the first quarter, the same as it was one year ago, but down from 83% in 2006, according to Fannie Mae, the government controlled mortgage company.
What’s not clear is whether that is a long term attitudinal shift or a short term reaction to the economy. The Fannie Mae survey also showed that 87% of people preferred owning to renting, but their reasons for doing so are changing. Access to schools, control over the home environment, and other quality of life issues are seen as the key benefits to home ownership, with building wealth and other financial factors viewed as less important. That checks with what we see in Marin. This market continues to be driven by families with children, looking for great public schools and walkable neighborhoods.
What does the future hold for Marin? Hard to say, but as noted every month for the last six, the market here continues to be stable. Transactions year to date are even vs. last year, average sale price down 3.5%. So despite Greece, stock market gyrations, and political turmoil, people are still buying and selling homes in Marin!
Sources: Wall Street Journal; Fannie Mae National Housing Survey; BAREIS MLS.
