San Jacinto Valley home values continue to rise

As Reported by MRMLS
Here are the summaries of the recent real estate sales in the San Jacinto Valley.

■ By Matt McPherson / Columnist

San Jacinto and Hemet home prices are slowly, but surely, continuing to rise throughout the valley. San Jacinto saw an increase of 7 percent over last year, whereas Hemet saw an increase of 4 percent.
Currently the average home price in Hemet is coming in at $232,388 and San Jacinto at $264,007 maintaining the valley as one of the most affordable markets in the Inland Empire. The slower increase can be attributed to the stagnant market during the holidays, in addition to speculation of rising interest rates.
The volume of sales in Hemet is only third throughout the region with 139 properties sold in January. This amount is down from the peak month of June when 250 properties were sold. Only Temecula and the family region of Menifee out-performed Hemet in sales volume as you can see in the units sold chart.
San Jacinto has seen a slight drop in sales volume producing only 47 sales in the month of January. This is down from the peak month of August which saw 90 units sold. San Jacinto is anticipating seeing an explosion in new home sales with the recent approval of over 200 new units throughout multiple neighborhoods.
One interesting statistic reported by C.A.R. (California Association of Realtors) is the extremely hot home market throughout the state. Some 60.4 percent of all homes listed for sale received multiple offers, with 32.9 percent of all sales sold above the asking price. Another prosperous statistic is the average number of days a home was listed for sale came in at 13 days. Despite tough market conditions, the share of first-time buyers reached the highest level since 2012 at 31.7 percent of all buyers.
A significant factor fueling the sales market is the concern of rising interest rates, although a recent survey by Redfin showed that only 6 percent of buyers would cancel their plans to buy if rates surpassed 5 percent. Surprisingly 25 percent said the rate increase would have no impact on their decision to buy, while 21 percent would increase their urgency to buy to get ahead of the increasing rates.
According to Larry Iest of Megastar Financial the primary focus remains on inflation. He explained: “Home loans are particularly sensitive to inflation and any sign of an increase in inflation tends to cause rates to increase. The reason behind this is bond and mortgage investors receive a fixed return on their investment, which can quickly erode as inflation increases, especially at these low rates.
For example, a 30-year fixed mortgage with a rate of 4.5 percent will give the investor (buyer of the mortgage debt) about a 4 percent return on investment for 30 years. As inflation increases the value of a dollar decreases as does the investor’s rate of return. Since the investment has a fixed rate for 30 years, the investors demand a higher rate to compensate for increases in inflation over that 30-year period, in an attempt to protect their profits.
We had a good look at inflation this week with two important economic reports. The Consumer Price Index (CPI), this measures inflation at the consumer level. The report for January showed inflation from December to January increased more than expected while the year-over-year numbers remained the same. While the year over year figure is encouraging, the monthly increase in inflation was not good news for mortgage rates. Since they release the CPI every month we will keep a close eye on the February report to see if there are additional monthly jumps in inflation.
The Producer Price Index (PPI) measures inflation at the producer level and it also had monthly increases that were above expectations. The inflation at the producer level is not immediately passed on to the consumer but eventually will find its way into the price consumers pay. Home loan rates only increased slightly this week in the face of the inflation news, so given the past few weeks, we will take it!
If you’re planning on selling or buying I suggest you strike while the iron is hot. The numbers favor both buyers and sellers, but a rollercoaster stock market and recent tragedies such as hurricanes and fires have increased mortgage delinquencies nationally, that many anticipate will play a factor on the rates in the near future. Currently 30-year fixed, 15-year fixed and both FHA/VA 30-year loan interest rates are hovering around 4 percent, but expected to rise in the coming months.


Matt McPherson is a licensed real estate agent with Coldwell Banker Associated Brokers and may be reached at MattMcPh@ColdwellBankerAB.com.

As Reported by MRMLS

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