Morgan Hill housing prices have continued their steady climb
into the stratosphere with the median home price rising to $830,000
by the end of June, but the blistering hot market is slowing,
according to some local real estate agents.
“It’s not the seller’s market it was a few months ago, when
buyers lined up and a home would sell in 10 minutes,” said John
Agresta, Managing Broker of Alain Pinel Realtors in Morgan
Hill.
Morgan Hill housing prices have continued their steady climb into the stratosphere with the median home price rising to $830,000 by the end of June, but the blistering hot market is slowing, according to some local real estate agents.
“It’s not the seller’s market it was a few months ago, when buyers lined up and a home would sell in 10 minutes,” said John Agresta, Managing Broker of Alain Pinel Realtors in Morgan Hill.
The home buying frenzy, fueled by low-interest and interest-only loans, has calmed lately said Keith Hively, a realtor-broker with Intero Realty. Though prices remain high, the number of homes on the market has also increased, said Kevin Moles, vice president and managing executive of Morgan Hill’s Intero Realty.
“During the first quarter (of 2005), it was tough. There were few properties, people were bidding on so few properties,” Moles said. “It’s not like it was in January. Now, we have more inventory, so there are more choices for the consumer.”
“We’ve seen a significant slow down, particularly in upper end homes,” Agresta agreed.
“Interest rates are creeping back up a bit, and it’s normal to see prospective buyers step back a bit. Particularly if they are buying upper end homes, they would be incurring a very large property tax bill of over $1,000 dollars.”
Also, Agresta said, with more homes in the market, the buyers now have choices. As of last week, 121 single family homes were up for grabs in Morgan Hill.
More expensive homes are now taking even longer to sell, averaging 25 days on the market to find a buyer, he said.
Inspite of the increase in prices, Morgan Hill resident Kevin Vondemkamp insists that buying his new home last fall was the best decision he’s ever made.
“We love it here,” Vondemkamp said of the Quail Creek home he shares with his wife Sherry and their 5-year-old son Nathan. “Our whole experience here has been awesome.”
The median price of single family homes sold in Morgan Hill at the end of June was $830,000, a jump from the median price of $770,000 at the end of March. That figure increased from the median price of $731,000 at the end of 2004. Only a year ago, the median home price in Morgan Hill was $650,000. And five years ago, it was $508,000.
The figures, taken from RE Infolink, show Morgan Hill home prices appear to receive top dollar. The median price of a home in Gilroy costs more than $100,000 less than in Morgan Hill. Gilroy’s median home price was $718,000 at the end of June, $630,000 at the end of March, and $590,000 at the end of 2004.
In South County, from Morgan Hill to Gilroy, 970 single family homes have sold so far this year, according to Moles. The end of the second quarter last year saw 1,166 home sales.
Currently, Morgan Hill is home to 57 houses priced over $1 million. The lowest home on the market is asking $529,000 and the most expensive is $4.4 million, a mansion located on Jasper Highlands Drive.
But in spite of slowing market and expensive real estate, Hively said Morgan Hill is still one of the more desirable Santa Clara County cities for families.
“People like the lifestyle here, the small town feel, the open spaces,” said Hively, a Morgan Hill resident since 1979, when the city had a population of just 15,000 people. Today, the city’s population is at approximately 35,000, according to the U.S. Census Bureau estimates for 2004.
“I’ve lived everywhere, in Palo Alto, in Silicon Valley, and I like it here the best,” said Hively.
Homes staying on the market for a longer period of time is not a bad sign, according to Hively.
“A few months ago, homes would sell over a weekend; now it may take one to two months, but that’s still good,” Hively said.
Moles agrees. He remembers when the South County area saw three to four years of double digit appreciation of properties in the late 1980s. Then, when the tech bubble burst in Silicon Valley, “the phones just stopped ringing. … The market corrected itself by 15 percent,” Moles said.
Moles still believes, with the ups and downs of the market, that real estate is still a good investment if homeowners can hang on to their property.
“Over a period of time, in the long run, values always go up – not every year, but the chances are good, as long as you have the ability to keep it over time. There’s been a continual influx of people to the Bay Area,” said Moles.
“I don’t believe the bubble is going to burst,” said Agresta. “There may be a hiss, a leak in the bubble, but I don’t see it bursting at all,” said Agresta.
The Vondemkamps agree. They used to live in Southern Florida, where the average home sold for $250,000. They moved to San Jose in 1998, started out by renting a townhouse there, and a couple of years later, they bought a home in Half Moon Bay. When they learned about the extension of U.S. Highway 101, they saw the potential for growth in the South Bay area. They drove around Morgan Hill and fell in love with the city.
“The city has a low office vacancy rate, with U.S. Highway 101 completed and 1 percent capital growth, this combination makes Morgan Hill a great investment,” said Vondemkamp. “Prices of homes here are still $300,000 below those in Almaden. As office space fills up, people will not want to pay as much to commute.”
The couple bought a 2400 sq. ft. eight-year-old four-bedroom home with an office at Hamilton Square in the low $600,000 in 2002. They were able to sell it last fall and bought their current home at the Quail Creek. The home, built by South Valley builders, is 2,200 sq. ft., with three bedrooms and an office. Since they bought the home, its value has increased by over $100,000 dollars.
Vondemkamp believes it’s a no-lose situation if people buy a house in the area.
“The basic laws of real estate don’t apply to the Bay Area,” he said. “There’s been a lot of immigration to California; everyone wants to live here. We have the mountains, the ocean, the vineyards, the lakes. And from Gilroy to Hollister, Morgan Hill is the last beautiful Mecca.”
Not everyone shares the local optimism. The housing markets most susceptible to a sharp downturn in prices are in California, Massachusetts and New York, according to PMI Group Inc., a mortgage insurance provider based in Walnut Creek, Calif.
Based on a recently completed analysis, PMI predicted six major metropolitan areas face at least a 50 percent chance of enduring a drop in home prices within the next two years: Boston-Quincy, Mass.; Nassau-Suffolk, NY; San Diego County; Santa Clara County; Orange County; and the East Bay.
In the nation’s 50 biggest markets, the average risk of a price decline during the next two years stands at 21 percent, PMI said.
Rose Meily covers City Hall for the Morgan Hill Times. Reach her at 779-4106 ext. 201 or by e-mail at rm****@*************es.com.
