Do You Know the Way to Pay in San Jose?

WASHINGTON – (By Dale King, Realty News Report) – The would-be California homebuyer may be asking: Do you know the way to pay in San Jose?

That’s because home prices have reached record highs in San Jose, Calif. – the highest in the nation – the highest median price ever recorded.

In San Jose, the median home price of an existing single-family home hit $2,008,000 in the second quarter of 2024, the National Association of Realtors reported.

That marked the first time since NAR began tracking metro area single-family home prices in 1979 that a major urban region’s median home cost exceeded the $2 million mark.

The record-breaking California city was not the only American city with rising home prices.

Nearly 90 percent of metro housing markets in the U.S. — 199 out of 223, or 89 percent – registered home price hikes during the second quarter of 2024 as the 30-year fixed mortgage rate tap-danced between 6.82 percent and 7.22 percent, says the latest quarterly housing report from the National Association of Realtors.

“The record-high home prices in most metro markets bring good and bad news,” said NAR Chief Economist Lawrence Yun. “It’s terrific news for homeowners who are moving ahead in wealth gains. However, it’s difficult for those wanting to buy a home as the required income to qualify has roughly doubled from just a few years ago.”

For the quarter just ended, the nation must have been California dreaming, indicates the NAR report. Seven of the top 10 most expensive markets in the U.S. were in the Golden State, including aforementioned San Jose and its metro neighbors Sunnyvale and Santa Clara ($2,008,000). Next were San Francisco-Oakland-Hayward ($1,449,000); Anaheim-Santa Ana-Irvine ($1,437,500); San Diego-Carlsbad, ($1,050,000); Salinas ($1,035,700); Oxnard-Thousand Oaks-Ventura ($927,900) and San Luis Obispo-Paso Robles ($895,300).

Rounding out the top 10 metros were Urban Honolulu, Hawaii ($1,101,500); Boulder, Colo. ($888,300) and Naples-Immokalee-Marco Island, Fla. ($867,000).

The median price is the midpoint where half the homes sold for more and half for less.

The 10 metro areas with the largest year-over-year median price increases — which can be influenced by the types of homes sold during the quarter, NAR noted — all posted gains of at least 14.1 percent. These included Racine, Wisc. (19.8 percent); Glens Falls, N.Y. (19.8 percent); El Paso (19.2 percent); Morristown, Tenn. (16.7 percent); Manchester-Nashua, N.H. (16.2 percent); Anaheim-Santa Ana-Irvine (15.0 percent); New York-Jersey City-White Plains, N.Y.-N.J. (14.8 percent); Springfield, Ill. (14.8 percent); Dutchess County-Putnam County, N.Y. (14.2 percent) and Trenton (14.1 percent).

Among all major segments of the U.S., the South registered the largest share of single-family existing-home sales (45.5 percent) in the second quarter, with year-over-year price appreciation of 2.3 percent. Prices also bounced 9.8 percent in the Northeast, 5.5 percent in the Midwest and 5.4 percent in the West.

On the other hand, nearly 10 percent of markets (22 of 223) experienced home price declines in the second quarter, up from 7 percent in the first quarter, said the NAR report.

“Previously fast-gaining markets took a breather in the past quarter, including Nashville, Durham, Austin and several Florida metro areas,” Yun said. “Conversely, some markets that experienced declines last year have roared back, such as San Francisco, Anaheim and New York.”

Housing affordability worsened in the second quarter, said the NAR analysis, as mortgage rates increased. The monthly mortgage payment on a typical existing single-family home with a 20 percent down payment was $2,262, up 11.1 percent from the first quarter ($2,036) and 10.3 percent – or $212 – from a year ago. Families typically spent 26.5 percent of their income on mortgage payments, up from 24.2 percent in the previous quarter and 25.3 percent one year ago.

Yun said first-time buyers ran into some nagging obstacles while in search of a new home, such as limited inventory and rising home prices in the second quarter, resulting in weakened affordability conditions compared to the prior quarter.

For a typical starter home worth $358,800 with a 10 percent down payment loan, the monthly mortgage payment jumped to $2,218, up 11.1 percent from the previous quarter ($1,997). That was a hike of $207, or 10.3 percent, from one year ago ($2,011).

First-time buyers typically spent 40 percent of their household income on mortgage payments, up from 36.5 percent in the prior quarter.

The NAR economist did offer some words of hope for folks frustrated by long and fruitless home searches. “Housing affordability will improve in upcoming months. Mortgage rates have fallen measurably, and more supply is reaching the market. Therefore, the income required to buy a home will decrease.”

Mark Your Calendars:

CommGate will hold its Economic Outlook – Powered By Moody’s – Wednesday Sept. 11 from 3 to 6 p.m. at the Houston Country Club. Economist Jeff Havsy of Moody’s Analytics will present an economic forecast. Information:

Downtown Houston + will present its State of Downtown Annual Meeting on Oct. 16 at 11 a.m. to 1:30 p.m. at the Hilton Americas, Downtown 1600 Lamar St. Keynote speaker: General Stan McChrystal. Information: