Home prices up, yet some homebuyers are still paying cash for San Jose real estate
Across the United States, home values are increasing in numerous popular metro areas. This is, arguably, more apparent in various California cities than it is in many others in America. Following the housing bust of the mid-to-late 2000s, many West Coast metros suffered declining property values and high foreclosure rates. However, as the nation's economy has improved, so has the status of real estate in San Jose.
According to data from the S&P/Case-Shiller Home Price Indices, home prices across the nation have increased by 4.3 percent in the 12 months leading up to October 2012. Real estate experts are confident that the trend will continue into 2013 despite the slight decline in value from September 2012 to October 2012. The housing market typically sees a decline in home values and sales during the late fall to winter months, so the decrease recorded in 2012 is fairly typical.
"The October monthly numbers were weaker than September as 12 cities saw prices drop compared to seven the month before," said David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices.
Instead of looking at month-to-month housing data, experts such as Blitzer believe it is more valuable to make annual comparisons.
"Annual rates of change in home prices are a better indicator of the performance of the housing market than the month-over-month changes because home prices tend to be lower in fall and winter than in spring and summer," Blitzer stated.
Despite the reported drop in home values from October 2012 to November 2012, property values are still strong in San Jose. According to ALTOS Research, the median price for a single-family home as of December 21, 2012 was $503,310.
In addition, a significant portion of homebuyers are still paying cash outright for properties in the California metro. Real estate research organization DataQuick found that 28.7 percent of all home sales in November 2012 were made entirely with cash. This figure represents a decrease from the 29.6 percent total in October 2012, and is same rate seen in October 2011.
The trend is somewhat unusual, considering that the monthly average for all-cash purchases going back to 1988 is 12.7 percent. In November 2012, cash buyers paid a median price of $320,000 - up 27 percent from $252,000 in November 2011. It seems that despite the increase in home values, homebuyers are still purchasing properties using cash in the Bay Area.