Most people have two main reasons for buying a home. The primary one is to find suitable living space for themselves and their families. No less important is the secondary purpose: to put money into an asset that grows in value so when it is sold, the owner can reap financial rewards.
San Joaquin Valley Homes is a company that fulfills the first reason by providing well-built houses in good neighborhoods that contain the features that homeowners demand. The factors behind the second purpose remain outside our control but we can turn to third-party analysts to determine if those factors remain viable.
Metrostudy is an organization that provides “primary and secondary market information to the housing and residential construction industry.” It forms a reliable source of data for what’s happening in particular areas throughout the country. It considers the Central Valley housing market to be the strongest in eight years as of the fourth quarter of 2015. Building for 2015 was up 27 percent over the previous years.
“Annual new home starts were higher in all of the eight counties,” said Greg Gross, Director of the Central California Valley Market for Metrostudy. “Madera County saw the highest increase in annual starts; up 166 percent over 2014!” He points out that the pattern of increases reveals stability in more expensive markets with increases in more affordable markets.
Despite the increase in housing starts, the finished inventory of homes has decreased over 2015 with only 1.8 months of supply available. However, this is still higher than what was available during the fourth quarter of 2014. Factors in the reduction of inventory may include an increase in interest rates, ongoing drought conditions, and unstable water supply. However, it’s too early to tell how the market for 2016 will be affected.
Prices and Sales
The California Association of Realtors (CAR) reveals the following information for two counties of the Central Valley:
- In Kings County, the median price of a single-family home reached $202,000 as of December 2015, compared to a median $172,500 in December 2014. In January 2016, the median price was $194,280, a decrease of 3.8 percent over the month but an increase of 12.6 percent over the year. Sales decreased by 53.2 percent over the month but remained steady over the year.
- In Tulare County, the median price of a home was $196,210 as of December 2015, compared to a median of $173,330 in December 2014. In January 2016, the median was $193,750, a decrease of 1.3 percent over the month but an increase of 11.8 percent over the year. Sales decreased by 42.9 percent over the month but increased by 6.5 percent over the year.
- In the Central Valley, Merced County showed the highest price increase of 13.8 percent over the year to a median $192,000 as of January 2016. The biggest jump in number of yearly sales was in San Benito at 37.1 percent.
Bay Area Blues
One factor that may be fueling the rise of prices in the Central Valley is the Bay Area.
“The Bay Area’s high median home values, due to its lack of inventory, may price many newcomers out of the market, and many of those buyers could look to the Central Valley,” said Michael Blower, president of the 2015 Central Valley Association of Realtors. Many of these buyers are coming from San Mateo and Santa Clara counties in the Silicon Valley and as far north as San Francisco.
In addition, millennial buyers are becoming a bigger force in the buying market. While they have been delaying home buying in recent years due to low job prospects, many are coming to the area due to the better economy.
If you want to know more about how the local housing market may affect your home purchase or want to check out some of our new homes, please contact us.