We are all eager to learn where the real estate market is heading and how high the mortgage rates will go, and how investments are performing in different regions of the US.

Market Updates

Bay Area home price are increasing while sales are declining to a 5-year low. In Santa Clara County, 2,255 homes were sold this April, about a 20 percent drop compared with 2,830 in April 2005. The median price was $661,000, 8% higher than the median price of $619,000 during the same period last year. Median price for condos was up 13% to $433,045. That happened despite a 17% drop in sales in the county in the Q1 2006. San Mateo County shows 850 homes sold in the first quarter of 2006, compared with 631 a year ago. The median price was $750,000, compared with $731,000.

Below are the numbers for single family homes in Santa Clara and San Mateo County.

Median sales prices for single-family homes fell 3% in the first quarter of the year in Los Altos and Monte Sereno, both of which have median prices exceeding $1.6M. A study of home sales in 15 Santa Clara County Cities showed Los Altos Hills, Los Altos and Campbell homes all sold more quickly this year than they did a year ago. Gilroy, Milpitas, and San Jose homes sat on the market for 10 days or more; longer on average than they did during the same time last year. Yet, the largest price increases for single-family homes were in Gilroy and Milpitas.

 Mortgage Updates

Despite interest rates rising to a 4 year high, an improving local jobs market gives us a solid demand for housing. The typical monthly mortgage payment that Bay Area buyers committed themselves to paying was $3,048 in April 2006. That was up from $2,958 in March 2006, and up from $2,659 for April a year ago.

Indicators of market distress are still largely absent. The use of adjustable-rate mortgages has decreased in the last four months. Down payment sizes are stable and there have been no significant shifts in market mix, DataQuick reported.

3 ways to Beat Rising Mortgage Rates

If you have a fixed-rate loan below 8% or a hybrid ARM that starts adjusting in more than 36 month. You may consider standing pat, and hope rates are lower in three years. For interest-only hybrid loans, pay down your principle as much as you can and when your fixed rate ends, you will have less principle balance.

If you have an interest-only loan, or a variable-rate home equity line or a hybrid ARM that starts adjusting in 12 to 36 months, refi with a fixed-rate loan or a new hybrid loan and consolidate the Equity line into the new first mortgage.

If you have an option-payment loan which adjusts monthly or a hybrid ARM that starts adjusting within 12 months, or a fixed-rate loan over 8%, the answer is DON’T WAIT, refinance into a fixed loan.

Interest-only loans are still a great way to manage cash flow and are available even on 30 year fixed rate products with interest-only option periods of 10 to 15 years. Many savvy borrowers are paying the interest-only payment and investing the principal portion elsewhere to maximize tax advantages, liquidity, and the rate of return on their investment.

Can you still get rich in real estate?

Are you wishful or wary about the threat of a real estate bubble? Nationwide home sales are slowing. The housing market is coming in for a landing – and so far, at least it looks like a soft one. If you have properties elsewhere please check here http://money.cnn.com/2006/05/15/real_estate/NAR_firstQ2005_home_prices/index.htm

As we all know, real estate investment is a long term investment. Buy Quality, Not Quantity; Invest for Income, Not Capital Gains.