Posts Tagged ‘How’s the market’

STATE OF THE MARKET Jan 1st, 2013

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For Santa Clara – San Mateo – South Alameda – Santa Cruz Counties.

2012 saw a continuation of 3 major trends which began in mid 2012:
1. A RAPID INCREASE IN SALES PRICES:
o. As always, Up and Down movements start at the low end of the market and rise or fall till they include the whole price range.
o. Typically this is over a 2 to 3 year period, after which prices settle down to a 3 to 5% annual increase till the next Boom or Bust. This places us about half way through the current upward stage of the cycle.
2. MAJOR REDUCTIONS IN SHORT SALES & FORECLOSURE.
o. This is mainly due to banks finally co-operating with the Federal Government sponsored Loan Modification programs i.e. HARP, HAMP, and HAFA. These programs are also allowing many current homeowners to refinance into much lower payments even when there is little or no equity in the home.
3. LARGE INCREASE IN NUMBER OF QUALIFIED BUYERS:
o. First time Buyers who thought they were priced out of the market in 2008 now find the reduced prices and Tax benefits make owning cheaper than renting, and are jumping on the home ownership wagon.
o. Multiple Federal Government supported low/no down payment loans i.e. FHA, V/A etc.
o. Multiple great 1st Time Buyer programs from the IRS (MCC), plus Santa Clara County, (MAP), and San Mateo County (HEART) 3% down payment programs.
o. A flood of Investors, both domestic and foreign, who see California Real Estate as a great investment when compared to more traditional options.
HOW MIGHT THIS SITUATION AFFECT YOU.
1. MOVING UP? (New baby, bigger house, better school district etc).
o. Excellent time in most situations. Get top dollar for your current home in strong Sellers Market, and a good deal buying into a more expensive property where it’s still more of a Buyer’s Market.
2. MOVING DOWN? (Kids all grown and gone, retirement, want smaller but closer to Grand children etc).
o. Good possibility of top dollar for current home in strong Sellers Market, and getting a good deal buying outside our market area where prices are seeing little if any improvement i.e. anywhere other than the Bay Area.
3. STAYING HERE? (No reason to move).
o. Nice to see home equity growing again. Get refinanced as soon as possible. Call for advice if needed.

BAD DATA = FALSE RESULTS

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Consumers are constantly using the Internet to do research about planned purchases and that is particularly true for home buyers, but the accuracy of listing information is not guaranteed in most cases.
Popular consumer real estate listing sites such as Trulia, Redfin, and Zillow get their Listing Data from the Real Estate Industries Multiple Listing data bases i.e. www.mlslistings.com However, They are not regulated and do not keep the data up to date, typically updating every 7-9 days.
MLS Listings is a tightly regulated industry data base system which dynamically updates itself in real time 24 hours per day, 7 days a week.
If you like flashy graphics and multiple advertisements/solicitations then stick with the Zillows of this world.
If you want accurate data with no adverts then your only source is your local MLS site. In my case that’s www.mlslistings.com.
You can easily find your local service by Googling “xxxxxmls”

FOREIGN REAL ESTATE BUYERS

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Here in Silicon Valley were hearing a great deal about the Asian Buyers who are fueling the crazy boom market now in full force.
Every new listing is selling with multiple offers within day of hitting the MLS, and often not even getting to the MLS.
Buyers with less than 20% down payment have very little chance of even getting their offers considered, much less accepted.
While this is true it’s not accurate to suggest that any one ethnic group is driving this situation.
If we just consider the 2 States where most outside money is driving the market we find some interesting statistics:
o. 26% of all sales involving out of the country Buyers are happening in Florida.
o. 11% are in California.
o. In both cases 24% of such sales are coming from Canada.
o. 11% are from China.

PENDING RATIOS STILL IMPROVING

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The ratio between pending sales and listed properties is the best single indicator of future market direction.
Silicon Valleys Pending Home Sales Index (PHSI) has now improved for 16 months in a row from from February 2011 to May 2012.
A PENDING SALE is defined as a Signed Purchase Contract.
Given the Federal Reserves commitment to keep rates down for at least another year this trend seems sure to continue with a steady increase of home prices.

Why Choose a REALTOR

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There are many different Business Models in the Real Estate Industry. Here’s just a few examples:

1. Buyer Only Brokers.

2. Buyer Rebate (Kick Back) Brokers.

3. Virtual Office Brokers. No physical location.

4. Reduced Commision Brokers.

5. Fixed Price Brokers.

6. Transaction Facilitation Brokers.

Etc, etc.etc ad infinitum.

All of these and many more are proof that we have a lot of competition in our business, and that the Consumer (Buyer or Seller) has lots of choices.

I won’t try to explain the pro’s and con’s of any of these options, but will strongly suggest that whichever of them you choose you  strongly consider working with a REALTOR.

My reason for this specific advice is as follows:

1. There are more than Half a Million Licensed Real Estate Agents in California. This is the minimum required qualification for the job.

2. Only 165,000 of them are REALTORS who have voluntarily agreed to subscribe to a strict Code of Ethics, and are paying members of their Local, State, and National Associations of Realtors.

Amongst many other services Realtors provide to the public is the web site Realtor.com. the most popular of all on-line Real Estate sites. Check out http://www.realtor.com/.

Why Be A Buyer Now

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Why do I make more money in December than any other Month of the Year? and why do I expect this year to be even better.
Here’s why.

1. Most Realtors think this is a slow time and choose to take more time off. RESULT; less competition.

2. There are fewer Listings and fewer Buyers, but those who are active  are serious. RESULT; more productive use of time.

But this year things are very different. There will still be fewer Agents working and fewer Buyers looking, BUT there will be many more Listings to choose from.

WHY? Because we will still have all the normal Sellers who are serious, PLUS a large number of REO Properties which are not affected by the holidays. Banks know that each day they own a property costs them a lot of money so they will be putting them on the market as soon as they can regardless of the time of year.

So why be a Buyer now? Because you will have less competition but more properties to choose from. (Not to mention the extended and improved Tax Credit Program).

A Fluke or a Sea Change

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At the low end of the Santa Clara and Alameda Counties single family home market ($300-$400k) I’ve got used to having to make multiple offers ror each Buyer before getting a deal

I’ve also noticed this creeping up to the $400-$450k market.

However, until last week there was no sign of the same thing happening at higher price levels in the more “up scale” neighborhoods.

Here’s what just happened just 10 days ago

Fri 9:30 I enter a nice new Cambrian listing for $665,000 and schedule for the following weeks Campbell/Cambrian Broker Tour.

Sat Open House has 35 groups of people through.

Sun Open House had 29 more.

By noon Monday I’d received 3 excellent offers and we had accepted a full price clean one.

Early afternoon I get a call from the organizer of the Brokers Tour telling me that the tour had been canceled as all the scheduled properties had sold over the weekend and I would have been the only property to tour. I was actually sitting at my keyboard to update to a Pending Status, so in fact there were no new listings left to tour.

Is this a onetime situation, or a harbinger of calmer waters coming fast?

All Real Estate Is Local

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Most successful Realtors know the truth of my Title (Paraphrased from ex Speaker of the House of Representatives Tip O’Neill “All politics is local”).

Unfortunately many of our clients get most of their information from the talking heads and empty suits of the mass media whose purpose is to sell advertising, with LITTLE or NO REGARD to TRUTH or CONTEXT.

They are therefore led to believe that any house can be bought for at least 20% less than a year ago, anywhere it happens to be located.

Here are a couple of facts that might be thrown into the running conversations about “How’s the market”

Over the past 10 years the average home price has INCREASED by 6.2% Nationwide.

Over the past 20 years the average home price INCREASE has been 4.7% Nationwide.

Source www.ofheo.gov

These are way below the numbers for Santa Clara County (Silicon Valley) where I live and work, and they are way above the numbers for Dallas Texas.

The Morale is “East San Jose is NOT Palo Alto. Sacramento County is NOT Santa Clara County, Southern California is NOT North California”. Florida statistics are not relevant to any other State.

ALL REAL ESTATE IS LOCAL