The price of local homes may still be soaring, but recent action
taken at the Federal level may balance the housing market sometime
in the near future, local Realtors say.
Hollister – The price of local homes may still be soaring, but recent action taken at the Federal level may balance the housing market sometime in the near future, local Realtors say.
As of this June, the median price of a San Benito County home reached $620,000, up from $498,000 at the end of 2004, according to figures from Multiple Listing Service provided by Roy Navarro, President Elect of the San Benito County Association of Realtors.
While these are the highest prices the county has ever seen, the same figures record the median price for a Monterey county home at $675,000, a Santa Clara home at $760,000, and a Santa Cruz home at $793,000.
“For those looking to buy, the price of homes is outpacing income and forcing those who want to buy farther and farther away from centers of employment,” Navarro said. “That is why we see so many buyers in our area… we are still a bargain compared to surrounding counties.”
The National Association of Realtors’ Housing Affordability index recorded the median price of a home in the Western region of the country at $308,000 – the most expensive in the nation, if substantially more affordable than the typical local home. The average homeowner in the West devotes more than 30 percent of his income to monthly house payments.
The median price of a home in California is $595,000. In order to qualify for the sort of traditional loan needed to purchase a house at that cost, a buyer must have an income of $165,000. As of this June, a mere 16 percent of California residents can afford to buy their own home, according to figures from RIS Media, provided by Kent Pierce, branch manager at Century 21 Su Casa.
While rent prices have increased, they have risen well below the rate of inflation. Though pricey, rents are typically more in line with the average state resident’s income than a mortgage payment. A average mortgage payment in Hollister is approximately $2,500, Navarro estimated. Local apartment complexes charge anywhere from $479 a month to $1350.
“The Hollister and San Benito County markets remain very strong seller’s markets,” said Pierce. “This is mostly due to our relationship to the Silicon Valley, it’s created high demand. Personally, I feel that recent comments by Alan Greenspan could change that. It appears that he is committed to raising interest rates before he retires in January.”
While Greenspan’s recent Congressional testimony on the economy is regarded as an optimistic forecast of the economy’s future, he was cautious about the state of national real estate.
“History cautions that long periods of relative stability often engender unrealistic expectations of its permanence and, at times, may lead to financial excess and economic stress,” Greenspan said Wednesday. “Such perceptions, many observers believe, are contributing to the boom in home prices.”
“If interest rates change by about 1 percent,” Pierce said. “It will have a very strong impact. Thousands, if not hundreds of thousands of people will be driven away. At that point, some people will be in very dire straits. Especially people buying homes with no money down and relying on equity.”
However, Pierce said that, in the very long term, a market correction and more affordable housing will be beneficial for everyone.
“My advice to current buyers is to plan on putting some money down for equity immediately,” he continued. “Plan on living in that house for a while, and defend it for all it’s worth. We’re seeing far too many speculators buying up three or four houses at a time … I would much rather see a strong, healthy market than a strong and unbalanced market.”
