Gilroy home sales are up!

Home sales rebound in January and inventory levels are down. After a stronger month of home sales in November we saw that number drop slightly in December and increase again in January. Nationwide home sales jumped 6.5% in December. Home sales in Gilroy rose by 11.6% in January compared to December. Current inventory dropped 4.6% last month compared to a nationwide inventory drop of 18% due to improved affordability; the most favorable levels in 39 years. However, the medium sales price of a home in Gilroy dropped from $387,500 to $350,000. It is always difficult to predict when we hit "rock bottom" in home sale prices and according to Lawrence Yun, chief economist, we can expect home sales to stay soft in the first quarter and slowly rise later this year. The jump of pending home sales nationwide of 6.3% is very promising but does not indicate a rebound of the housing slump. Expect the 30-year mortgage rates to hover around 5% this year. The average 30-year mortgage rate saw another increase from 5.20 to 5.3 percent. The 10-year Treasury bond rate is expected to increase from 2.5 to 3.1 by the end of 2009. Most 30-year mortgage loans will be paid off or refinanced within 10 years and the long term mortgage interest rates are closely related to those of the 10-year Treasury bonds. Traditionally 10-year Treasury bond are good indicators as to what the mortgage rates will do, however, in this economy, the yield might increase without affecting the mortgage rates. And lastly, Congress is considering approving the $7,500 home buyer tax credit into a non repayable incentive. Stay tuned for more updates on the housing market here in Gilroy.