If you have been watching Silicon Valley home prices soar and keep thinking ‘it’s that Bay Area bubble’ – it is time to think again! Just last week, Mortgage News Daily reported that the last quarter of 2020 resulted in double digit price gains across the nation. Furthermore, the Fannie Mae Home Purchase Sentiment Index (HPSI) revealed that both buyers and sellers are feeling positive about the real estate opportunities in 2021.

JUST HOW HIGH…

So how much have home prices risen in all 4 regions of the nation? According to the MND report, “the national median existing single-family home price rose 14.9 percent on a year-over-year basis, to $315,900 and all four regions were up by double-digits year-over-year. The Northeast led at 20.7 percent, followed by the West at 15.5 percent, the Midwest at 15.1 percent and the South at 14.0 percent.”

JUST HOW COME…

Reasons cited for the increase in home purchase demand and associated price gains include: “the strong demand for vacation homes and affordable homes” on account of COVID-19, new work-from-home freedoms, low mortgage rates, and rising home prices pushing buyers to act now before purchases become out of reach. Last but not least, the lack of inventory called ‘grim’ by Chief NAR® Economist Lawrence Yun played a primary role in the supply and demand difference.

JUST NOT SELLERS…

While it’s no surprise that sellers have expressed increased optimism about selling a home according to Fannie Mae’s HPSI, buyer sentiment improved as well. 52% of respondents expressed positive feelings about buying a home, which was unchanged from the last month of 2020. More notably, negative responses dipped. Doug Duncan, Fannie Mae Senior Vice President and Chief Economist, stated that “lower-income and renter groups were more optimistic this past month across nearly all of the sentiment index's components. We will pay close attention to see if this newfound optimism develops into a trend, which could indicate either that some demographics who have been more negatively impacted by the pandemic may be starting to feel the economic recovery or that this is a response to the additional stimulus enacted in December."

Resources Used:

Q4 2020: Double-Digit Home Price Gains Across All Four Regions

Buyers and Sellers Both More Upbeat in 2021

*For a closer look at your local market stats, we encourage you to read the Real Estate Report presented by Homes of Silicon Valley HERE. Be sure to click on the data to see year-over-year and month-over-month comparisons.

All my best,

Mark