🔴 Median Home vs Median Income | Home prices rise 9 months in a row 🚨 State of the Market SAN JOSE
- Median Home vs Median Income
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🔴 Median Home vs Median Income | Home prices rise 9 months in a row 🚨 State of the Market SAN JOSE
Introduction:
In today's housing market, there is a growing concern about the widening gap between median home prices and median incomes. In this blog post, we will dive into the current state of the market in San Jose, California, and explore the implications of rising home prices on affordability. We'll also touch upon other noteworthy trends, such as the REWTF of the week, the increase in foreclosures, and the snapshot of the housing market. Let's get started!
The REWTF of the Week: Home Prices on the Rise
The housing market has been experiencing a continual increase in home prices for the past nine months. Although the rate of increase might not be as high as in previous years, it is still a significant trend, particularly in Santa Clara County, Silicon Valley, and the Bay Area. As demand remains strong and inventory stays limited, prices have been steadily climbing. However, some areas like Modesto and Stockton are beginning to feel the impact of this trend, with slower growth or slight declines in home prices.
The Impact of Median Income on Affordability
One crucial factor when considering home affordability is the relationship between median income and median home prices. In 2023, the median income across the United States was $67,500, whereas the median sales price for a house currently stands at $387,500. However, in Santa Clara County, which encompasses Silicon Valley, the median sales price is significantly higher at $1,181,300. This means that half the residents in Santa Clara County earn less than $181,300, reflecting the financial challenges many face when trying to afford housing in the area.
Calculating Affordability and Debt-to-Income Ratios
To better understand the affordability of homes, it's important to consider various factors such as down payment, mortgage rates, and monthly payments. Taking into account a 20% down payment and a mortgage rate of approximately 6%, the monthly payment for a median-priced house would be around $2,353. This translates to an annual cost of $28,000, representing 41% of the median income of $67,000. In Santa Clara County, where housing costs are higher, the debt-to-income ratio increases to about 70% due to the higher median sales price and monthly payment requirements.
Foreclosure Trends and the Market Outlook
While foreclosures have been on the rise recently, it is important to note that the numbers are still relatively low. As the forbearance program comes to an end, we may see a slight increase in foreclosures compared to the past year, but it is unlikely to reach the levels seen during the 2008 financial crisis. Banks now face more stringent regulations and challenges in the foreclosure process, which may result in a slower rate of foreclosures. However, it will be interesting to monitor how this trend develops in the coming months.
Snapshot of the Housing Market: San Jose and Santa Clara County
As of the latest data, there are currently 93 homes on the market in Santa Clara County that have been listed for over 90 days. This indicates a relatively low number of homes that have been sitting on the market for an extended period. Additionally, the number of bank-owned properties in various Bay Area counties, including Santa Clara County, remains relatively low. This suggests that the market is still favoring sellers, with homes selling quickly, often at or above the list price.
Conclusion:
The San Jose housing market continues to demonstrate strength, with home prices increasing for the past nine months. Affordability remains a significant concern, particularly in Santa Clara County, where the median sales price far exceeds the median income. As the market evolves, it is important to monitor trends like foreclosures and inventory levels, which can impact supply and demand dynamics. Despite some challenges, the market outlook remains positive, with strong buyer demand and low inventory contributing to a competitive seller's market.
Remember, these are just snapshots of the current housing market. For more in-depth analysis, insights, and expert advice, stay tuned for our upcoming conversations with industry professionals who can provide a broader perspective on the state of the market. As always, we're here to guide you through your real estate journey in San Jose and beyond.
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median income. We'll go through that in a bit, but just stand by because we have REWTF of the week, home prices rise nine months in a row, REO of the week, and market snapshot. Let's get moving. Oh yeah, I'm entering a new era of showing houses that are on the market around. That's the county.
#REWTF of the Week
The first thing is our EWTF of the week. Look at that nasty thing. I'm sure you've seen it on Facebook. If not, friend me on Facebook and then you get to see it. I do these once or twice a day, sometimes every couple of days, they're pretty random, but whenever somebody, people send them to me now, it's awesome because they think of me.
When they look at toilets. I love that. Ha. There you go. Nice little up close dual dueling banjo, dueling pianos, and now dueling toilets. Love it. Okay.
National Single-Family Home Prices Rise
home prices rise 9 months in a row
National single-family home prices rise for the ninth straight month. We talked about this earlier. I just wanted to bring this back up because I thought it was important.
It's not going up huge, but that's because we are not in a massive firestorm like we saw in 2019 or 2020 it's strong. Some places are going down, but it's not here in Santa Clara County, Silicon Valley, or the Bay Area of Northern California. There are some places like Modesto and Stockton is starting to hurt.
Sacramento is slowing down a little bit. We're still doing really strong here. Mostly because there are just not enough houses for sale. We're going to go into that. If you look at this is like a heat map over the years of increases. Overall increases over the year, over every month, right?
So if you look, we've had 1, 2, 3, 4, 5, 6, 7, 8, 9, 9 straight increases. That doesn't include November or December. I want to see what this looks like later on, but It's continuing to go strong mostly because we had rates stabilizing supply shrinking and the economy here, even though we're announcing a lot of layoffs, people are still buying houses here.
This is across the United States, but also it's everywhere. So there you go. Confidence in the market. Great. What's to come. I don't know. Yesterday I had a two-hour conversation with this amazingly brilliant guy. We'll be putting it on the channel here in a couple of weeks. But you could take a look at it and understand the bigger 500-foot view of everything and how everything impacts everything.
Median Home vs Median Income
So median income versus median price. Now latest median income for There it is. With 67, 000 across the United States. Median U. S. income in 2023 was 67, 500. The median sales price right now for a house is 387. Vito, why are you boring me with these numbers? You'll see in a second. The median sales price is income In Santa Clara County is 181, 300.
That's a smack dab in the middle. Half the people in Santa Clara County make less than 181 and the other half make more and a lot make a lot more.
It's important.
Understanding Home Buying
This is my standard buyer. This is a rough draft part of my counseling and education process. When we start with buyers, they show them something like this. So they see they're looking at as far as the price, their down payment, et cetera. So it just goes. I start with default basics, like whatever the price average is that they're looking at, plus their down payment of 20 percent and what I think they're going to get.
I will know what that price is and what that rate's going to be once we actually get into the contract and lock in. So these are all suppositions, but right now you can get a rate of about 6 percent, and the median price, as we saw was three 87, 500. Oops, sorry, 600. Let me change that. Oh, no. And then I did calculations.
The median income is 67, 000. If you bought a house, a median-priced house, your PITI would be, your monthly payment would be 2, 353. It's right down here. It calculates it all automatically and assumes property taxes and all that is pretty basic. I think this has to go up again because insurance is going crazy high so much that this isn't super accurate.
It's close enough. This is just an idea, right? It's your annual PITI. If you're making 67, 000 a year, your total annual cost to live in a median-priced house is 28, 000.
That's 41 percent of your income. That means everything else goes towards taxes, food, car, kids, school, clothes, heating, maintenance, and everything else.
Santa Clara County Housing Market
Now, Santa Clara County is a little bit different. Let me bring this up so you can actually see it. Bring this to 200.
Yeah. So these are the numbers right here for us, Santa Clara County. You're. The debt to income ratio is 67 or 70, 70 percent basically. Your median income is 181 and your monthly payment would be 10, 000. All things are the same. That's all the same thing here, right? It doesn't matter what city or town.
Your down payment would have to be 350, 000 and your median home would be once 1. 739, which is not a lot, right? That's, it's a basic house in South San Jose, fairly upgraded. So where I live, I would argue that my house, which is 2, 300 square feet, is one of the largest houses in this tract. I don't think I would be able to sell it for 1.
7 removing my ego and hubris. I would say probably 1. 6, 1. 65 on a good day, probably 1. 55.
So you're looking at Willa Glenn, Amidan, and then you take a big step up because right away you're at 2. 1, our ballot, right? Just keep that in mind. Just wanted to have this conversation because the struggle is real for a lot of Americans. If you can afford it. Let's have that conversation, but it's not, it's just something to be aware of, right?
This is a topic of conversation. We, part of what we talked about yesterday, that two-hour conversation, I thought it was really smart. So I dug a little bit more into it. I'll be sharing that with him.
Foreclosure Update
REO of the Week https://www.onereal.com/vito-scarnecchia-
Foreclosures are up, but not a lot. Not compared to what it is. I think this. I think this is less than what it should be because we're now getting out of the forbearance, the foreclosure forbearance, I think these numbers will be shooting up just a little bit.
I wouldn't be surprised if we got up to five, half a percent, or even 0. 7 in that coming. In the coming year. I don't know if we're going to go up that high because the Foreclosure process has become far more difficult for banks to have to take back property Mitigate them and take them off their books.
There's not, this, the money that the government gives them in case they lose money. There's a supplement, I think it's called subsidize. There were subsidies for banks after 2008 to take on and foreclose. And it went to the Wild West. That's why we saw 2. 8 million in one year. I don't think we're going to see that.
I think it's a little bit more difficult these days. So banks are going to have to hold onto property. I could be completely wrong. Guys, I am not a hundred percent on any of this. These are just my thoughts and my opinions like that. I like to record it.
Bank Owned Properties in Bay Area
OK, that said, there are 57 bank-owned properties in multiple Bay Area counties.
That's not a lot. If you look at it, really. There are two or three in Santa Clara County. That's it this one Yeah, so I looked at this one right here because it's brand new on the market two bedrooms one bath for a million dollars This is what you get for a million dollars In Santa Cruz now granted it's not downtown
this up for you. It's not downtown But that's the boardwalk right there You can walk to the boardwalk pretty easily. And I think that's Santa Cruz. UC Santa Cruz? That's UC Santa Cruz over here. This is UC Santa Cruz. That's UC Santa Cruz. My daughter's thinking about going to UC Santa Cruz. I'm like, eh, there you go.
That's a perfect place for her to shack up. 1, 000, 000. If you look at these houses all along here, they're five, six, four to six and 7, 000, 000, right? Because they're on the water, Santa Cruz, they're beautiful homes, but back here, ones in this condition still rate. I want to see where this goes. I'd love to see where this thing sells and how quickly this thing sells.
So there you go. That's your REO of the week.
Mountain View Home of the Week
Let's talk about Mountain View. Another beautiful house. I can pick them up. I love the fact that it's so close to freeways. Just think of that constant dull roar of your, of the traffic constantly buzzing over your head as you try to fall asleep at night.
This cash offers only exciting opportunities for discerning investors. Builders are hands-on buyers seeking to refine prospective single-family homes and one of the Bay Area's most sought-after cities. Mountain View. It's true. That's that part's true. It's all in the marketing. The property is also ideal for someone looking to establish their business by converting the home into commercial use.
I'll pass on that. Two bedrooms, one bath, 864, 76 years old. Days on market, 41. Yeah, I would rather buy that one at Senec.
I don't know, the fact that they didn't really do any other photos other than this. Obviously, it's a teardown, but then the teardown would be right next to a freeway. Let's see what they have as far as satellites. Yeah, I guess you can convert that to, there's commercial all around it. There's an opportunity there.
.
Market Snapshot: Santa Clara County
MARKET SNAPSHOT
Let's take a look at the snapshot for the week for San Jose Santa Clara. No, these are, yeah, this is all of Santa Clara County. 93 homes have been on the market for over 43 days, 93 days, and 90 days. Over 90 days is 47. It's not a lot. We're at 200, 246 in August. And then the bank owns again, it's not a huge number.
We averaged 38. Our biggest was like six, seven, 78, something like that. REOs across California are 146. We averaged 225 last year. per week active at any given time. So, in San Jose, we have 158, which is a far cry higher than what we had last week before. Told you that we're starting to ramp up. We're going to see more listings come on the market.
This is totally normal. We want to see, we want to see to have a balanced market, about five or 600 homes available for sale at any given time in San Jose. That number across Santa Clara County has to be closer to 1900 18 to 1900 to have a balanced market. When a balanced market, buyers and sellers are both equal right now.
We're still in a seller's market. Houses are selling for less than six months. A lot of houses are selling over the list price. There are a few that are overpriced for their conditions. So they stick on the market, but not compared to the numbers of houses that are being sold every so close last week. We had 31 compared to last year's 25 and we're still at 104 percent over the list price.
Going into the year starting the year really strong and I like that. I want to see that go up I think we're going to continue to see that because rates are coming down supply is maintaining their tightness Demand is going to increase because every time rates go down More buyers enter the market. That means more competition.
So there you go. Houses are still selling at a pretty good clip and it's way under what it was last year, way under what it was the year before. And we have 35 pending since last week. So we have active buyers, not a ton, but then again, there's not a ton of inventory out there either. So there you go. All right.
Conclusion and Wrap-Up
Today we talked about. What are we talking about? Home prices going up, REWTF of the week, the median price of homes versus median income, and how that affects people. This is a deeper discussion. We're going to continue to massage. Foreclosures are rising, but they're not. They're getting back to normal, I think.
Mountain View has a home for sale and inventory is still tight. I'm Vito with Abottano. Thanks for watching. We'll see you out there.
Vito Scarnecchia
Real Estate Broker, Veteran, Dad
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