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July Market Snapshot

Here are some interesting findings from the month of July 2013

A Tale of Two Markets

   With the Federal Reserve signaling an impending scale back of its quantitative easing program,
interest rates soared in recent months. The average 30 year fixed rate jumped more than 100
basis points from 3.35 percent in early May to 4.46 percent in late June, and reached its highest
level since July 2011. The increase in mortgage rates had an impact on the housing market as
home sales in California pulled back slightly in June. Sales dropped on a month-to-month basis
for the first time in the last four months, and were down 3.7 percent when compared to June 2012.
Despite the decline in overall sales, higher-end markets continued to show strong growth on a
year-over-year basis. Sales above $500,000 increased 33.6 percent when compared to June
2012, and sales of million dollar plus homes jumped 31.7 percent from last year. This was
evident in coastal markets such as San Francisco County, Marin County, and Santa Cruz
county as all of them experienced double-digit sales increase in June. Lower price segments
of the housing market, however, continued to decline with sales under $200,000 dropping
43.6 percent from last June and sales between $200,000 – 300,000 decreasing 25.7 percent
year-over-year.
The vast difference in sales trends between the lower and upper price ranges were due in
part to the constraint in the housing supply. Overall housing supply in June improved slightly
from the previous month but remained tight by historical standards. Inventory levels,however
vary across the board with a significant shortage in lower-price segments but are less
constrained in higher-priced markets. The supply of homes priced under $300,000,for example
dropped 47.1 percent from last June, while inventory for million dollar homes increased 7.5
percent when compared to last year.

 

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