Posts Tagged ‘santa clara county.’

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.

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.

Cupertino Schools Reputation-Co-incidence?

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Most Silicon Valley residents consider Cupertino schools are the reason why people will gladly spend more for their house than for a similar one in the surrounding Cities. I agree.

However, here’s a brief excert from a Mercury News Article discussing how different School Districts are handling the swinging budget cuts they are getting as the State works on cutting it’s huge deficit. http://www.mercurynews.com/cupertino/ci_15090121

“The exception to continued cuts is the Cupertino Union School District. A teacher union agreement to take furlough days, plus an unprecedented community campaign that raised more than $2 million, saved 107 teacher jobs and will preserve 20-to-1 class-size ratios in primary grades”.


Anyone aware of other school districts where all interested parties are co-operating to ensure the level of education is treated as the most important factor?

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Mortgage Credit Cerificates (MCC)

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Here is another dynamite program for 1st time home buyers.

Details here are for Santa Clara County but other Counties and Cities also operatate these programs.

The County of Santa Clara has been awarded a new MCC Allocation in the amount of $3,031,944.

This award should serve approximately 70 Households.

MCC Applications will be accepted beginning February 12, 2010, until the allocation is depleted.

MCC PROGRAM: The Mortgage Credit Certificate Program is available for first-time home-buyer’s purchasing their first home in participating cities in Santa Clara County. The Mortgage Credit Certificate Program gives first-time home-buyer’s a federal income tax credit of up to 15% of the interest paid on their first mortgage loan each year the home-buyer keeps the same mortgage loan and lives in the same property as their primary residence.

The Maximum Income Limits for 2010:

Effective February 12, 2010:

1 or 2 person household = $102,500

3 or more person household = $117,875

The Maximum Purchase Price Limits are:

Resale/Existing Units = $570,000 and for,

Newly Constructed Units= $630,000

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Reality vs. Partisan Pundits. No Contest

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The Administrations well meant efforts to make it possible for many homeowners to avoid foreclosure has stirred up a hornet’s nest among some media commentators.

The Plan described at http://www.makinghomeaffordable.gov/ uses up to $75 billion to provide incentives to holders of FANIE MAE and FREDDY MAC loans to work with Borrowers to refinance, or modify existing problem loans, rather than simply go ahead and foreclose.

This is a classic version of the glass ½ full, or ½ empty. Typically, in our current exclusively partisan media, the answer is dictated solely by political affiliation regardless of the facts.

This is unfortunate because there are legitimate reasons for supporting, opposing, or, better still, improving the current process.

One the one hand it is a legitimate effort to try to help Joe Public get through a situation brought about by failures in our economic systems. Given the Trillions of dollars being ploughed back to the very people who caused this situation, the $75 Billion allocated to this program is peanuts.

On the other hand there is a valid argument to be made that subsidizing refinances, or modifying problem loans, is simply putting off an inevitable final default. This can often hurt the very people it purports to help by having them use up scarce funds in a doomed attempt to save an impossible situation, rather than simply give the property back to the Lender and getting  on with life.

The December report on the status of this program provides ample ammunition for both schools of thought, and the regulators have shifted emphasis to try to deal with the problems showing up.

The summary shows that 728,000 loan modifications are already in the required trial phase. Unfortunately only 31,382 have completed that phase and have become permanent, saving homeowners an average of $550 per month. The low rate at which Trials become Permanent  is a serious problem raising concerns that a significant number of these modifications are simply allowing the Banks to delay acknowledging the number of bad loans on their books and to avoid taking the losses on to their Balance Sheets.

If that is true then the inevitable result will be a longer period of foreclosed properties coming to market as these failed modifications fall apart.

As with most things there is not a simple answer, but on balance I come down on the side of giving the program a fair shot. This is based mostly on my view that given the countless billions we have poured into supporting the financial institutions that caused the problems,  a little effort to give similar assistance to the victims is not unreasonable.

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?

100% Loans For 1st Time Buyers

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100% financing is a reality for 1st Time Buyers just about anywhere in Santa Clara and San Mateo Counties.

A multiplicity of State, County, and City programs are available and in many cases can be used simultaneously to make housing much more affordable than you would ever know. Even the I.R.S. has got into the game.

Some of these programs provide for an 80% first mortgage, while others provide a wide range of down payment assistance for the remaining 20%. These cover a wide range of strategies from equity sharing to straight cash grants. Often more than one of these will be used to provide the 100% needed.

It is important to use a mortgage broker familiar with all of these programs as the process needs to be co-ordinated with several different agencies.

Rather than try to summarize them all here are links to as many web sites as I am aware of, so do a little homework and contact me with specific questions:

STATE PROGRAMS

0 CALHFA. CALifornia Housing Finance Agency. http://www.calhfa.ca.gov/ This State Agency is the most common provider of the 80% base loan as they partner with most of the City and County programs.

CITY PROGRAMS

0 SAN JOSE. http://www.sjhousing.org/program/homebuyer.html has info on great programs for school district teachers, plus faculty and staff of San Jose State University, and down payment assistance on 16 new construction developments. http://www.sjhousing.org/program/HBList.html.

0 Santa Clara City. http://santaclaraca.gov/plan_inspection/first_time_buyer.html for info specifically for first time buyers. Also http://santaclaraca.gov/pdf/collateral/Santa-Clara-Model.pdf for a presentation about the Citys BMP (Below Market Price program). You will find the description beginning on page 10 of the presentation slides.

FEDERAL PROGRAMS

0 FHA http://www.fha.com/. A huge web site dealing with the best loans available today for buyers who do not meet the specific requirements for the first time programs. 3% down and flexible qualifying make this the first choice. For a snapshot see http://mccordrealtyservices.com/2008/06/08/fha-the-new-mortgage-of-choice/

0 MCC (Mortgage Credit Certificates). http://www.sccgov.org/SCC/docs/Affordable%20Housing%20Office%20of%20(DEP)/attachments/MCC_Brochure_2008.pdf. This is a dollar for dollar reduction of Federal Income Tax in an amount equal to 15% of the total mortgage interest paid each year.