“We’re in a shortage supply,” says Lance McHan, a local real estate agent in San Joaquin County. “Couple that with low interest rates, it’s driving prices up.” What McHan is describing are two of the defining characteristics of the SJC housing market. Interest rates have hit a historical low, and when you think about how the math works on interest rates, it’s easy to see why people are willing to spend more on a home. That’s because for every 1% you take off of an interest rate, another $30,000 can be added to the loan without a jump in monthly payment. “It’s definitely a seller’s market,” Lance says.
In addition, because there simply aren’t enough houses to meet demand, people are outbidding each other to get their foot in the door—literally. Lance says homes are going in a matter of days. He personally has experienced a house get 37 offers and another one where the buyer offered $120,000 over the asking price to secure the deal. There’s a moratorium on foreclosures due to COVID-19 forbearance plans (a chance to forgo paying the mortgage for a set period of time due to financial hardship caused by COVID-19), which is affecting normal turnover. “Typically we run two months to three months of supply, right now we’re like three weeks of supply,” Lance says. In laymen’s terms, that means if no additional houses come on the market in the next three weeks, there would presumably be zero houses on the market to sell.
Not only are there not a lot of homes in general, but homes in the $325,000-$350,000 price range (the average price for a home in SJC) are especially hard to get into. “That’s the purchasing power* in San Joaquin County for 70% [of residents],” Lance says.
With an influx of Bay Area residents buying up Central Valley properties with cash offers, buyers have to get creative if they want to get into a home in San Joaquin County. Lance doesn’t advise purchasing homes “as-is” (with no inspections or opportunities to ask for repairs) but for some sellers, that’s an enticing offer. Nonrefundable deposits and shortened inspection times are two other avenues to try. For sellers, “If you’re thinking about selling, sell,” Lance laughs. But still do so with a reputable agent who will put the house’s best face forward on the first listing, including professional photos and a good asking price.
*Purchasing power = the amount a person can qualify to get a loan for
By The Numbers
$325,000-350,000 – the average purchasing power of an SJC homebuyer
$30,000 – how much more money you can spend on a home with a 1% interest rate reduction
3 weeks – how much local inventory is left in SJC
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