Market Snapshot – Melanie Snow https://www.melaniesnow.com Top Real Estate Agent Specializing in Orinda, Moraga and Lafayette Sat, 07 Aug 2021 23:55:19 +0000 en-US hourly 1 https://wordpress.org/?v=6.8 https://www.melaniesnow.com/wp-content/uploads/2018/09/Asset-2@4x-150x150.png Market Snapshot – Melanie Snow https://www.melaniesnow.com 32 32 Out Migration: It’s A Housing Story https://www.melaniesnow.com/out-migration-its-a-housing-story/ Sun, 10 Dec 2017 19:00:40 +0000 http://www.melaniesnow.com/?p=2881 California has an out-migration problem. Recently released figures from the State’s Department of Finance (DOF) shows that the number of Californians leaving the state each year is on the rise. After falling significantly during the Great Recession, outmigration from California is exhibitionist on a 4-
year uptrend. The DOF reports that nearly 118,000 people moved to other states in 2016, and more than half a million people have left California since 2010. Much can be said about our high taxes, hostility towards business, and strict regulatory environment in the Golden State, but our out-migration problem is really a symptom of a much deeper problem: the lack of housing affordability in the state. According the Census Bureau, the top 3 destinations for people leaving California in 2015 were Nevada, Arizona, and Texas, which accounted for nearly two-thirds of all outmigration. These are states where job and economic growth has been slower than in California, which suggests that it isn’t simply a booming economy that is luring our resident away. These states just have less expensive housing: the median home price in Nevada and Arizona is less than half of what it costs to live in California; and in Texas, housing is 66% more affordable. At the same time, the largest outflows came from some of our least affordable housing markets: Los Angeles, Santa Clara, Orange, San Diego, and San Mateo Counties accounted for virtually all the out-migration from California last year. Our survey research consistently shows that consumers still believe in homeownership as a way to achieve the American Dream, but only 31% of households are able to afford the median-priced home here.

The notion that high housing costs (rather than taxes or business climate) are driving people away is further supported by who leaves and what they do in their new states. For example, nearly two-thirds of people who left the state purchased homes in their new state of residence—these are people who want to be homeowners. The vast majority of out-migrants earned less than $100,000 per year. Given our exceptionally progressive tax rates in California, you would expect to see that higher income earners who pay the most taxes leaving. That they are not suggests that something else is the primary motivator. Further, 3 out of every 4 out-migrants were either Millennials or Gen X-ers, who have much lower rates of homeownership than previous generations. Finally, all of the outmigration was done by those with an Associate’s Degree or less educational attainment. In short, for many working-age, working-class people who want to own their own homes leaving California is the only option. California’s migration problem is really a housing problem.

]]> How interest rate jumps affect purchase decisions and affordability in CA https://www.melaniesnow.com/how-interest-rate-jumps-affect-purchase-decisions-and-affordability-in-ca/ Tue, 10 Oct 2017 18:50:04 +0000 http://www.melaniesnow.com/?p=2876 Mortgage rates have shot up in the two weeks following the election, moving to highest levels in two
years, with the 30-year fixed rate loan at 4.25 percent. This has instantly pushed up the cost of borrowing and home purchasing for many people in California, caused many to try to lock in current rates and has caused an immediate drop in mortgage refinancing. Homebuyers on the market are pushing to lock in rates and to speed through closings: the median monthly payment for a California single family home instantly jumped up $110 from the pre-election median price of $2510. Each .25% increase in rates translates into roughly a $60 increase in payments.

The rapid jump was driven by a mix of expectations of inflation, Fed rate hikes, and anticipation of the new administration’s fiscal and tax policies. For many people looking to buy this means pushing forward to lock in rates that are still at historically low levels, with an eye for further upward movement over the coming months and years.

Near-peak prices, low levels of affordable homes on the market and the non-existence of new building, particularly – for entry-level homes, have combined to drive affordability in California to lows. Rate jumps will further suppress the number of people who can afford to buy, and while price increases in the future will moderate, affordability will not improve if current market conditions persist . As such, sales activity in the California housing market may stall or even slowdown in the coming years. Both buyers and sellers will need to acclimate to the reality in the future that supply may increase, but only due to fewer buyers at middle and lower housing price segments.

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