McKae Properties Real Estate Market Commentary

While rents collapsed, rent went unpaid and landlords fought to keep above water an exodus evolved from the Bay Area; but within Silicon Valley, Luxury Homes escalated in numbers sold and in median prices. Quite an aberration.  In San Mateo County the number of Luxury Home Sales went from 564 in 2020 to 679.  In Santa Clara the number of Luxury Homes sold went from 1465 in 2020 to 1498 in 2021.   For 2021 Luxury Median Priced homes popped from $1.45 million to $2.90 million and Santa Clara from, $1.33 million to $2.66 million. (Thank you Louis Hansen of the Mercury News) The rush from San Francisco was  evident as Woodside, Portola Valley with their 1 acre minimum parcels provided space and safety.  *News Break states that East Palo Alto is among the Cities where home values are falling the most.  Between January 2020 to January 2021 the typical American Single Family home appreciated by 9.1%.  In East Palo Alto it declined 2.6% with a change in population, only to be beat by San Franc

 Do we need a "wake up call"?  Since the beginning of the year to present, interest rates on 10-year US Government Bonds have risen 3/4%, give or take a few basis points or so (100 basis point equal 1 % point).   SO WHAT? Well the current yield of the 10-year T-bond is the rate mortgages are based upon.  Rising rates also are one of the measurements that banks and mortgage lenders use to determine their willingness to make loans either for their portfolio or to sell in the open market.  Once mortgage originators find an unwillingness to buy mortgages, interest rates must rise to make the buyers willing to take on the potential of higher rates.  The Federal Reserve has been the buyer of last resort that has kept interest rates down.  The FED has failed to stop the dramatic rise in rates. The FED has not accelerated its buying of mortgages in the after market.  Pension funds and investment companies who are the normal sources of buyers of mortgages have been reluctant to buy mo

 2020 was indisputably a year for the real estate history books!  The onset of the global pandemic in a year of stops and starts.  It led to a shift in how we conduct our personal and professional lives.  The navigation through the pandemic witnessed a social and cultural movement that restructured societies, how we conduct business, adjusted to online learning and experienced a shift from large urban centers to rural small communities. The housing market went from cold to hot as the average price of existing home rose on a U.S. average.  It was not necessarily the once hot cities and urban hot spots that dominated.  The resiliency of the real estate industry was one of the biggest surprises of the year.  The large scale shift to working from home created a shift from homes close to work to locations that did not require commuting.  Families sought out more spacious properties to achieve a better work-life balance.   The home migration created a hot market outside of the once hot urban