The California Association of Realtors reported that the May median price for California increased 23.2% and home sales increased 1.2%.

For the San Francisco Bay area, sales rose 1.7% over last year. Home sales posted their third largest increase on record for the month of May, due in part to first-time buyers who took advantage of the federal and state tax credits. May also marked the fifth month of double digit gains in the median price, indicating strong buyer demand relative to the supply of homes for sale. With a 4.6 month supply of homes for sale, unsold inventory continues to be well below the long run average of the past 7 months, and will hopefully continue to drive price appreciation over the next several months.

Sales in May 2010 increased 14.1% compared to the previous month of April. Specifically looking at the San Francisco Bay area, the price of a single family home in May rose 48% as compared to February 2010. The median price of a home in May for the Bay Area was $592,930 as compared to $399,040 in February. This, however, is still -30.6% below the peak median home price in May of 2007.

In looking further at the unsold inventory index by price point in California, the $1-million-plus category remains the highest percentage representing almost 38% of the total inventory. However, the good news for home buyers is that the amount of home inventory under $1M has risen significantly over the last year, representing almost 62% of the inventory from 54% last year, indicating that sellers are much more realistic in their pricing from a year ago, and understanding where all the action in sales are in 2010. The other good news for home buyers is that interest rates are still excellent, averaging around 4.89%. Yes, indeed, it is still a great time to buy a home. Consider if the interest rates were just 1 point higher, the average mortgage would be costing a buyer an extra $1,000 per month, and the savings of a 30-year loan is roughly $360,000!

Our local lender even quoted rates last week at 4.75% with a point down, for a loan balance of $729,750 or less.

Amazing!

Posted by:  Rick Smith