Why Summer 2020 Could Be a Good Time to Buy a Home in the Bay Area

Highlights from this mortgage and housing update:

• Mortgage rates dropped again last week, according to Freddie Mac.
• They continue to hover at historically low levels.
• Bay Area home buyers can capitalize by purchasing in spring or summer.
• Summer 2020 could bring a surge of buying activity in the Bay Area.

---

Another week, another reassuring report about the housing market. That has been our theme lately, over the past few weeks. And this week brings more good news for home buyers across the San Francisco Bay Area.

According to a new report, 30-year mortgage rates dropped to an average of 3.24% last week. The was the second-lowest average in roughly 50 years of record keeping. That’s just one reason why summer 2020 could be a good time to buy a house in the Bay Area.

Buyers Have ‘Good Reason to Continue Shopping’

Last week, the housing and economic research team at Freddie Mac reported another drop in mortgage rates. The average rate for a 30-year fixed mortgage loan (the most popular loan among Bay Area home buyers) dropped to 3.24%.

To put that number into perspective: 30-year mortgage rates were averaging 3.7% at the start of 2020, and 4.06% one year ago. So they’ve come down considerably since then.

For a lot of potential buyers, now could be a good time to buy a home in the Bay Area. This trend is expected to stretch into summer 2020 as well. That’s just one reason why we are seeing an increase in home-buying activity, in the Bay Area and also nationwide.

As Freddie Mac reported on May 21:

For the fourth consecutive week, the 30-year fixed-rate mortgage has been below 3.30 percent, giving potential buyers a good reason to continue shopping even amid the pandemic. As states reopen, we’re seeing purchase demand improve remarkably fast, now essentially flat relative to a year ago. Going forward, mortgage rates have room to decline as mortgage spreads remain elevated.

There’s a lot to unpack in that paragraph. So let’s take it one piece at a time:

• Mortgage rates below 3.3%. As mentioned above, the average interest rate assigned to 30-year fixed home loans has been hovering below 3.3% for several weeks. That’s a significant development for Bay Area mortgage shoppers, making now a good time to buy or refinance a home.
• Good news for buyers. Freddie Mac’s economists claimed that today’s incredibly low rates gives potential buyers in the Bay Area and nationwide a good reason to continue shopping. And it seems a lot of house hunters already know that. As we reported recently, home loan applications have risen over the past few weeks as buyers seek to capitalize on low rates.
• “Even amid the pandemic.” Yes, it’s entirely possible to buy a home during the coronavirus (COVID-19) pandemic. Real estate is considered an essential business under state health guidelines. The housing market continues to march on, albeit at a slower pace.
• Purchase demand improves. Freddie Mac’s research team has seen a significant improvement in home-buying demand over recent weeks. In fact, that particular metric is now “essentially flat relative to a year ago.” That means current home-purchase demand is about where it was a year ago. Demand fell sharply in mid-April, but has been gradually improving since then.

Is now a good time to buy a home in the Bay Area?

That’s a hard to question to answer across the board, because everyone has a different financial situation. But for many Bay Area home buyers, now could be good time to make that purchase. These positive trends could extend through the summer of 2020 as well.

Related: How to buy in the Bay Area

California’s Gradual Reopening Continues

We’ve covered some Bay Area housing market improvements above. Here’s one more. The state is now moving into a new phase of its gradual reopening plan, which could give our economy a much-needed boost.

On May 26, Governor Gavin Newsom announced some new guidelines for the reopening of barbershops and hair salons in parts of California. As you know, those types of businesses were closed due to the public-health crisis. Now, some counties are close to allowing them to open again.

Newsom also joked about his kids trimming his own hair over the long weekend, in a “family effort” to fix what his wife called a “mullet.”

All jokes aside, this is the latest step forward during a critical time for the state’s economy. In his press conference, the governor also said that new guidelines were forthcoming for the reopening of gyms and fitness centers.

This is another positive development for the Bay Area housing market, and for home buyers who are considering a purchase. Over time, this gradual opening should help restore some of the jobs that have been lost in recent weeks.

In Closing: A Quote About the Bay Area Housing Market

Last week, Ellen Paris from Forbes had an interesting conversation with Selma Hepp (CoreLogic’s Deputy Chief Economist) and Mark McLaughlin (Compass California President). The conversation focused on recent changes in the Bay Area and Southern California housing markets.

Paris asked two two real estate experts which markets would recover faster — those in the Bay Area, or those within the Los Angeles area. Here’s what CoreLogic’s Selma Hepp said:

I do believe the Bay Area will recover faster than Los Angeles. More counties are opening sooner around San Francisco than in the Los Angles metro area. Los Angeles also experienced a larger jump in unemployment.

So there you have them, a few reasons why now could be a good time to buy a home in the San Francisco Bay Area.