Here are the highlights of November's transactions and market actions for Santa Clara, San Mateo, Santa Cruz, and Monterey counties. Your comments and questions are welcome. If you have an update as to what you are witnessing in your neighborhood, please don't hesitate to share with us. You may leave comments here, or contact me through my website.
> Market continues to show improvement -- March 2009 saw the trend change in Santa Clara County. Market activity has continued to display improvement for seven months and saw closings in Santa Clara County reach 899 versus an anemic 613 in November 2008 or 46% more. For some perspective, this November 2009 level of closings represents just slightly under the ten year average. My analysis of the transactional information reveals:
* The supply of homes available for sale (inventory) continues to trend lower in each of the four counties without exception. This trend has been virtually uninterrupted since February 2009 and it is still more pronounced in Santa Clara and Monterey counties. Santa Clara County available homes inventory has fallen 58% from November 2008.
* The sale price to list price ratio continues above 100% in Santa Clara County and stands at 100.7%, continuing an upward trend; San Mateo stands at 99.5%.
* The Days of Unsold Inventory (DUI) continues to improve generally in each county for single family residences and condos/townhouses, respectively.
> Super-heated Seller's Markets? -- You bet! Blossom Valley, South San Jose, Evergreen, Santa Teresa, East Valley, Santa Clara, North Valley, Milpitas. The characteristics of a seller's market are shorter time on the market, fewer number of homes available for sale, higher probability of multiple offers with many sale prices exceeding list prices and a tendency towards price appreciation.
> Buyer's Markets? -- For Santa Clara County, we see buyer's markets in Los Gatos Mountains, Los Gatos and Saratoga. Saratoga exhibits the highest Days of Unsold Inventory in the county at 265 and is currently the "Best Buy" area in the county. To refresh you, characteristics of a buyer's market are longer time on the market, higher number of homes available for sale, lower probability of multiple offers or even an offer with most sale prices below list price. The tendency is to have price depreciation or stable prices at best case under this market condition.
Where do I get "Seller's" and "Buyer's" market information? This is not an opinion thing but a calculation I make using the number of homes for sale (supply) and the number of sales (demand) in the prior month which results in days of unsold inventory (DUI). Additionally, this is not based on price levels but a supply-demand relationship. For instance, the higher-priced area of Palo Alto/Mountain View/Los Altos exhibits a DUI of only 64 which translates into a balanced market.
> Median prices -- Santa Clara County median prices took another jump upwards last month and now stands at $605,000 versus $593,250 or 2.0% higher from October and $515,000 or 17.5% higher over November 2008. San Mateo County's median reached $725,000 and now stands 8.9% higher than November 2008. I coach my clients to not use an entire county's median price level to decide on whether to buy or sell but use the trend information in a general manner. To formulate an effective strategy, I use analysis of the supply-demand characteristics of the neighborhood, in most cases.
> Tale of Two Markets -- Sales of affordable homes in Santa Clara County less than $450,000 level have gotten even hotter than the past few months. There are just 24 days of unsold inventory for single family residences below $450,000 and 40 for homes with prices from $450,000 to $600,000. As the price ranges increase, the DUI increases in what we call a normal pattern. For Santa Clara County, high-priced homes in the $2,500,000 to $5,000,000 range showed a DUI of 206 or about seven months of supply whereas in San Mateo County showed a similar result of 150 or about five months of supply.
> Polarized Market -- Sales of higher-priced homes (above $1,000,000) are sluggish at best, depending upon area. Last month, there were just one sale of a $5+ million home in Santa Clara County (equivalent to about 3.5 years of unsold inventory!) and none in San Mateo County. With slow movements in higher-priced homes and a white-hot situation in lower-priced homes, I call this a polarized market.
> Phoenix Rising/Bay Area Falling -- Not necessarily a good thing is that the amount of homes listed for sale climbed in Phoenix and Tucson, AZ, Las Vegas, NV, Los Angeles and Orlando, FL. This according to the ZipRealty latest monthly survey.
The San Francisco Bay Area saw this number drop about 9%, exceeding all other metro areas in the country. Now, inventory usually drops every year at this time of year but the rate of decline has been greater than the average seasonal tendency.
> Sellers Be Sooner Still -- I continue to maintain my recommendation for sellers of higher-priced homes, especially those above $1 million that they should consider selling sooner and having an initially more-aggressive list price as the market usually softens when we go move into the winter/holiday season. Sellers need to be positioned properly otherwise they risk languishing on the market.
For those considering a purchase of a home in an expensive area like Los Altos Hills, Los Gatos/Monte Sereno, Saratoga, an opportune time for negotiating is upon us! Some motivated sellers are reducing their list prices but as you may know, not all sellers have to sell.
> Investor's Corner -- Activity continues to trend upwards as more and more investors reenter the market, many of them are completing all cash purchases, especially in the more affordable price ranges. For Santa Clara County, there were 63 sales during the month with 41 of them in the less than $600,000 price range as that price range had a DUI of just 47 whereas the DUI for residential investment properties above $600,000 jumps to nearly a year. For investors who have the ability to purchase higher-priced properties (above $1,000,000), currently there is about 1.4 years of unsold inventory. This represents a BUYER'S market as I'm sure there are at least some motivated sellers in that range!
Thanks for reading my blog. I'm Tom McEvoy -- Let me know your comments, questions, observations you may have or any future topics you'd like me to address.
Friday, December 11, 2009
Friday, November 20, 2009
November Silicon Valley Real Estate Market Highlights
Here are my observations of October's transactions and market actions for Santa Clara, San Mateo, Santa Cruz, and Monterey counties. You are encouraged to leave your comments and questions or even update us on what you are witnessing in your neighborhood or area.
> Market continues showing strength and improvement -- Market activity has continued to display improvement for six months! For instance, in Santa Clara County, October saw an 18% increase in closings over the same month last year. My analysis of the transactional information reveals:
* Buyers continue to trip over each other to submit offers for homes in the more affordable areas of Santa Clara, San Mateo, Santa Cruz, and Monterey counties. Many offers submitted are for all cash or have substantial down payments. There are still only 22 days of unsold inventory on single family residences in Santa Clara County with a price of under $450,000! For those in the range of $450,000 to $600,000, there is only 33 days of unsold inventory. It is similar in San Mateo County.
* The supply of homes available for sale (inventory) continues to trend lower in each of the four counties without exception. This trend has been virtually uninterrupted since February 2009 and it is still more pronounced in Santa Clara and Monterey counties.
* The sale price to list price ratio continues above 100% in Santa Clara County and stands at 100.8%, continuing an upward trend; San Mateo stands at 99.3%.
* The Days of Unsold Inventory (DUI) continues to improve generally in each county for single family residences and condos/townhouses, respectively. Santa Clara's DUI stands at 47 and 44, San Mateo's DUI is 69 and 77, Santa Cruz's DUI is 108 and 105 and Monterey's DUI is 70 and 83.
> Super-heated Seller's Markets? -- You bet! East Valley, South San Jose, Blossom Valley, Evergreen, Santa Teresa, Santa Clara, North Valley, Milpitas. To refresh you, characteristics of a seller's market are shorter time on the market, fewer number of homes available for sale, higher probability of multiple offers with many sale prices exceeding list prices and a tendency towards price appreciation.
> Buyer's Markets? -- For Santa Clara County, we see buyer's markets in Saratoga, Los Gatos, and Los Gatos Mountains. Los Gatos exhibits the highest Days of Unsold Inventory in the county at 141. To refresh you, characteristics of a buyer's market are longer time on the market, higher number of homes available for sale, lower probability of multiple offers or even an offer with most sale prices below list price. The tendency is to have price depreciation or stable prices at best case under this market condition.
Where do I get "Seller's" and "Buyer's" market information? This is not an opinion thing but a calculation I make using the number of homes for sale (supply) and the number of sales (demand) in the prior month which results in days of unsold inventory (DUI). Additionally, this is not based on price levels but a supply-demand relationship. For instance, the higher-priced area of Palo Alto/Mountain View/Los Altos exhibits a DUI of only 56 which translates into a balanced market.
> Median prices -- Took another jump upwards last month median price now stands at $593,250 for Santa Clara County and $702,000 for San Mateo County. These are UP about 8% from the same month a year ago in Santa Clara County and down 1% in San Mateo Ccounty. I coach my clients to no use an entire county's median price level to decide on whether to buy or sell. To formulate an effective strategy, I use analysis of the supply-demand characteristics on a much smaller area down to the neighborhood in most cases.
> Tale of Two Markets -- Sales of affordable homes in Santa Clara County less than $450,000 level have gotten even hotter than the past few months. There are just 21 days of unsold inventory for single family residences below $450,000 and 41 for homes with prices from $450,000 to $600,000. As the price ranges increase, the DUI increases in what we call a normal pattern. For Santa Clara County, high-priced homes in the $2,500,000 to $5,000,000 range showed a DUI of 242 or about eight months of supply whereas in San Mateo County showed a similar result of 192.
> Polarized Market -- Sales of higher-priced homes (above $1,000,000) are sluggish at best, depending upon area. Last month, there were no sales of $5+ million homes in Santa Clara County and just one in San Mateo County (4.2 years of unsold inventory). With slow movements in higher-priced homes and a white-hot situation in lower-priced homes, I call this a polarized market.
> Forbes Says We're Safe -- According to an article in the Silicon Valley Business Journal, Forbes Magazine reported that San Jose-Sunnyvale-Santa Clara was the 7th safest area in the country. Factors included were: violent crime, workplace fatality rates, traffic death rates and natural disaster risk. Silicon Valley was the second safest area behind the Twin Cities of Minneapolis-St. Paul.
> Sellers Be Sooner -- I continue to maintain my recommendation for sellers of higher-priced homes, especially those above $1 million that they should consider selling sooner and having an initially more-aggressive list price as the market usually softens when we go move into the holiday season. In any case, check with a Realtor knowledgeable about the technical aspects of the market conditions to guide you in positioning your home for maximum activity and price while minimizing time on market.
For those considering a purchase of a home in an expensive area like Los Altos Hills, Los Gatos/Monte Sereno, Saratoga, your time is getting closer! Be ready but I think we'll see list prices reduced and sale prices dropping as we get into the holiday season this year. Most years we experience more activity in the early spring and spring so the best time for a purchase is coming up soon!
> Investor's Corner -- Activity continues to trend upwards as more and more investors reenter the market, many of them are completing all cash purchases, especially in the more affordable price ranges. For Santa Clara County, there were 88 sales during the month with 47 of them in the less than $600,000 price range as that price range had a DUI of just 37 whereas the DUI for residential investment properties above $600,000 jumps to nearly a year. For investors who have the ability to purchase higher-priced properties (above $1,000,000), there is about one year of unsold inventory at current sales demand and represents a BUYER'S market as I'm sure there are at least some motivated sellers in that range.
Thanks for reading my blog. I'm Tom McEvoy -- Let me know your comments, questions, observations you may have.
> Market continues showing strength and improvement -- Market activity has continued to display improvement for six months! For instance, in Santa Clara County, October saw an 18% increase in closings over the same month last year. My analysis of the transactional information reveals:
* Buyers continue to trip over each other to submit offers for homes in the more affordable areas of Santa Clara, San Mateo, Santa Cruz, and Monterey counties. Many offers submitted are for all cash or have substantial down payments. There are still only 22 days of unsold inventory on single family residences in Santa Clara County with a price of under $450,000! For those in the range of $450,000 to $600,000, there is only 33 days of unsold inventory. It is similar in San Mateo County.
* The supply of homes available for sale (inventory) continues to trend lower in each of the four counties without exception. This trend has been virtually uninterrupted since February 2009 and it is still more pronounced in Santa Clara and Monterey counties.
* The sale price to list price ratio continues above 100% in Santa Clara County and stands at 100.8%, continuing an upward trend; San Mateo stands at 99.3%.
* The Days of Unsold Inventory (DUI) continues to improve generally in each county for single family residences and condos/townhouses, respectively. Santa Clara's DUI stands at 47 and 44, San Mateo's DUI is 69 and 77, Santa Cruz's DUI is 108 and 105 and Monterey's DUI is 70 and 83.
> Super-heated Seller's Markets? -- You bet! East Valley, South San Jose, Blossom Valley, Evergreen, Santa Teresa, Santa Clara, North Valley, Milpitas. To refresh you, characteristics of a seller's market are shorter time on the market, fewer number of homes available for sale, higher probability of multiple offers with many sale prices exceeding list prices and a tendency towards price appreciation.
> Buyer's Markets? -- For Santa Clara County, we see buyer's markets in Saratoga, Los Gatos, and Los Gatos Mountains. Los Gatos exhibits the highest Days of Unsold Inventory in the county at 141. To refresh you, characteristics of a buyer's market are longer time on the market, higher number of homes available for sale, lower probability of multiple offers or even an offer with most sale prices below list price. The tendency is to have price depreciation or stable prices at best case under this market condition.
Where do I get "Seller's" and "Buyer's" market information? This is not an opinion thing but a calculation I make using the number of homes for sale (supply) and the number of sales (demand) in the prior month which results in days of unsold inventory (DUI). Additionally, this is not based on price levels but a supply-demand relationship. For instance, the higher-priced area of Palo Alto/Mountain View/Los Altos exhibits a DUI of only 56 which translates into a balanced market.
> Median prices -- Took another jump upwards last month median price now stands at $593,250 for Santa Clara County and $702,000 for San Mateo County. These are UP about 8% from the same month a year ago in Santa Clara County and down 1% in San Mateo Ccounty. I coach my clients to no use an entire county's median price level to decide on whether to buy or sell. To formulate an effective strategy, I use analysis of the supply-demand characteristics on a much smaller area down to the neighborhood in most cases.
> Tale of Two Markets -- Sales of affordable homes in Santa Clara County less than $450,000 level have gotten even hotter than the past few months. There are just 21 days of unsold inventory for single family residences below $450,000 and 41 for homes with prices from $450,000 to $600,000. As the price ranges increase, the DUI increases in what we call a normal pattern. For Santa Clara County, high-priced homes in the $2,500,000 to $5,000,000 range showed a DUI of 242 or about eight months of supply whereas in San Mateo County showed a similar result of 192.
> Polarized Market -- Sales of higher-priced homes (above $1,000,000) are sluggish at best, depending upon area. Last month, there were no sales of $5+ million homes in Santa Clara County and just one in San Mateo County (4.2 years of unsold inventory). With slow movements in higher-priced homes and a white-hot situation in lower-priced homes, I call this a polarized market.
> Forbes Says We're Safe -- According to an article in the Silicon Valley Business Journal, Forbes Magazine reported that San Jose-Sunnyvale-Santa Clara was the 7th safest area in the country. Factors included were: violent crime, workplace fatality rates, traffic death rates and natural disaster risk. Silicon Valley was the second safest area behind the Twin Cities of Minneapolis-St. Paul.
> Sellers Be Sooner -- I continue to maintain my recommendation for sellers of higher-priced homes, especially those above $1 million that they should consider selling sooner and having an initially more-aggressive list price as the market usually softens when we go move into the holiday season. In any case, check with a Realtor knowledgeable about the technical aspects of the market conditions to guide you in positioning your home for maximum activity and price while minimizing time on market.
For those considering a purchase of a home in an expensive area like Los Altos Hills, Los Gatos/Monte Sereno, Saratoga, your time is getting closer! Be ready but I think we'll see list prices reduced and sale prices dropping as we get into the holiday season this year. Most years we experience more activity in the early spring and spring so the best time for a purchase is coming up soon!
> Investor's Corner -- Activity continues to trend upwards as more and more investors reenter the market, many of them are completing all cash purchases, especially in the more affordable price ranges. For Santa Clara County, there were 88 sales during the month with 47 of them in the less than $600,000 price range as that price range had a DUI of just 37 whereas the DUI for residential investment properties above $600,000 jumps to nearly a year. For investors who have the ability to purchase higher-priced properties (above $1,000,000), there is about one year of unsold inventory at current sales demand and represents a BUYER'S market as I'm sure there are at least some motivated sellers in that range.
Thanks for reading my blog. I'm Tom McEvoy -- Let me know your comments, questions, observations you may have.
Friday, November 13, 2009
Tastefully Updated Birdland Sunnyvale Home with Cupertino Schools
Open House available this Saturday and Sunday, November 14 & 15
from 1:30pm to 4:30pm, sharp.
from 1:30pm to 4:30pm, sharp.
~ Established Birdland, Sunnyvale Neighborhood Home with Cupertino Schools ~
Beautiful hardwood floors highlight this tastefully-updated Lindsey home with expanded master suite, kitchen and bathrooms. Kitchen was extensively remodeled and offers expansive, Corian counter tops, upgraded cabinetry and top built-in appliances. Living room can be used as dining room. Step-down family room with gas fireplace and wet bar opens to patio with wood deck and spa — great for family gatherings. Recent upgrades include 40-year roof, gutters/downspouts, and fresh exterior paint. Stocklmeir Elementary, Cupertino Middle, Fremont High School.
Take a Virtual Tour and see more Slides
If you have any questions or comments, please contact me, Tom McEvoy, Realtor at 408-830-0092 or by leaving your comment here.
Thursday, October 15, 2009
October Silicon Valley Real Estate Market Highlights
Here are my observations of September's transactions and market actions for Santa Clara, San Mateo, Santa Cruz, and Monterey counties. You are encouraged to leave your comments and questions or even update us on what you are witnessing in your neighborhood or area.
> Market continues showing strength and improvment -- Market activity has continued to display improvement for five months. For instance, in Santa Clara County, September saw an 18% increase in closings over the same month last year. My analysis of the transactional information reveals:
> Buyer's Markets? -- For Santa Clara County, we see buyer's markets in Los Gatos, Los Gatos Mountains with Saratoga the market that exhibits the highest Days of Unsold Inventory at 155. To refresh you, characteristics of a buyer's market are longer time on the market, higher number of homes available for sale, lower probability of multiple offers or even an offer with most sale prices below list price. The tendency is to have price depreciation or stable prices at best case under this market condition.
Where do I get "Seller's" and "Buyer's" market information? This is not an opinion thing but a calculation I make using the number of homes for sale (supply) and the number of sales (demand) in the prior month which results in days of unsold inventory (DUI). This is not a price thing but a supply-demand thing. For instance, higher-priced area of Palo Alto/Mountain View/Los Altos exhibits a DUI of only 64 which translates into a balanced market.
> Median prices. Up sharply since March but declined from $590,000 last month, it stands at $565,000 for Santa Clara County, $699,250 for San Mateo County. These are down about 6% from the same month a year ago in Santa Clara County and down 7% in San Mateo Ccounty. An entire county's median price level should not be used to decide on whether to buy or sell. I recommend you work with a real estate advisor who can complete an analysis on a much smaller area (as small as a neighborhood!) to form the basis of a strategy.
> Tale of Two Markets -- Sales of affordable homes in Santa Clara County less than $450,000 level have gotten even hotter than the past few months. There are just 22 days of unsold inventory for single family residences below $450,000 and 33 for homes with prices from $450,000 to $600,000. As the price ranges increase, the DUI increases. For Santa Clara County, high-priced homes in the $2,500,000 to $5,000,000 range showed a DUI of 341 or almost one year of inventory whereas in San Mateo County showed a similar result of 331!
> Polarized Market -- Sales of higher-priced homes (above $1,000,000) are sluggish at best, depending upon area. Last month, we had one sale of a $5+ million home in Santa Clara County (4.3 years of unsold inventory!) and just two in San Mateo County (2.0 years of unsold inventory). With slow movements in higher-priced homes and a white-hot situation in lower-priced homes, I call this a polarized market.
> TFT PDQ -- A "TFT" stands for Transaction Fallen Through and has occurred much more frequently of late and is especially evident in short or bank-owned transactions which we call "lender-controlled" transactions. Many buyers walk away from short sales due to their extremely long escrows lasting months as banks sit on paperwork and do not make decisions in a timely manner. So, the short sale listing sells again and again, in many circumstances but does not close. For this reason, I advise buyers to steer away from short sales.
Lender-controlled transactions accounted for 43% of the closings last month in Santa Clara County. We're far better off. Monterey County saw 72% of their closings made up of lender-controlled transactions (short sales and bank-owned). I have anecdotal evidence that in some Central Valley locations the percentage is 90%!
> Sellers Be Sooner -- I continue to maintain my recommendation for sellers of higher-priced homes that they should consider selling sooner and having an initially more-aggressive list price as the market usually softens when we go move into the fall and the holiday season. In any case, check with a Realtor knowledgeable about the technical aspects of the market conditions to guide you in positioning your home for maximum activity and price while minimizing time on market.
For those considering a purchase of a home in an expensive area like Los Altos Hills, Los Gatos/Monte Sereno, Saratoga, your time is getting closer! Be ready but I think we'll see list prices reduced and sale prices dropping as we get into the holiday season this year. Most years we experience more activity in the early spring and spring so the best time for a purchase is coming up soon!
> Investor's Corner -- Activity continues to trend upwards as more and more investors reenter the market. For Santa Clara County, there were 71 sales during the month with 52 of them in the less than $600,000 price range as that price range had a DUI of just 40 whereas the DUI for residential investment properties above $600,000 jumps to nearly a year. For investors able to purchase higher-priced properties, there is about one year of unsold inventory at current sales demand with at least some motivated sellers.
Thanks for reading Tom McEvoy's Blog -- what are your thoughts, comments, questions, observations?
> Market continues showing strength and improvment -- Market activity has continued to display improvement for five months. For instance, in Santa Clara County, September saw an 18% increase in closings over the same month last year. My analysis of the transactional information reveals:
- Buyers continue to trip over each other to submit offers for homes in the more affordable areas of Santa Clara, San Mateo, Santa Cruz, and Monterey counties. Many offers submitted are for all cash or have substantial down payments. There are still only 22 days of unsold inventory on single family residences in Santa Clara County with a price of under $450,000! For those in the range of $450,000 to $600,000, there is only 33 days of unsold inventory. It is similar in San Mateo County.
- The supply of homes available for sale (inventory) continues to trend lower in each of the four counties without exception. The lower trend is still more pronounced in Santa Clara and Monterey counties.
- The sale price to list price ratio is above 100% in Santa Clara County and stands at 101.2%, continuing an upward trend; San Mateo stands at 99.8%.
- The Days of Unsold Inventory (DUI) continues to improve generally in each county for single family residences and condos/townhouses, respectively. Santa Clara's DUI stands at 49 and 42, San Mateo's DUI is 71 and 73, Santa Cruz's DUI is 107 and 154 and Monterey's DUI is 66 and 91.
> Buyer's Markets? -- For Santa Clara County, we see buyer's markets in Los Gatos, Los Gatos Mountains with Saratoga the market that exhibits the highest Days of Unsold Inventory at 155. To refresh you, characteristics of a buyer's market are longer time on the market, higher number of homes available for sale, lower probability of multiple offers or even an offer with most sale prices below list price. The tendency is to have price depreciation or stable prices at best case under this market condition.
Where do I get "Seller's" and "Buyer's" market information? This is not an opinion thing but a calculation I make using the number of homes for sale (supply) and the number of sales (demand) in the prior month which results in days of unsold inventory (DUI). This is not a price thing but a supply-demand thing. For instance, higher-priced area of Palo Alto/Mountain View/Los Altos exhibits a DUI of only 64 which translates into a balanced market.
> Median prices. Up sharply since March but declined from $590,000 last month, it stands at $565,000 for Santa Clara County, $699,250 for San Mateo County. These are down about 6% from the same month a year ago in Santa Clara County and down 7% in San Mateo Ccounty. An entire county's median price level should not be used to decide on whether to buy or sell. I recommend you work with a real estate advisor who can complete an analysis on a much smaller area (as small as a neighborhood!) to form the basis of a strategy.
> Tale of Two Markets -- Sales of affordable homes in Santa Clara County less than $450,000 level have gotten even hotter than the past few months. There are just 22 days of unsold inventory for single family residences below $450,000 and 33 for homes with prices from $450,000 to $600,000. As the price ranges increase, the DUI increases. For Santa Clara County, high-priced homes in the $2,500,000 to $5,000,000 range showed a DUI of 341 or almost one year of inventory whereas in San Mateo County showed a similar result of 331!
> Polarized Market -- Sales of higher-priced homes (above $1,000,000) are sluggish at best, depending upon area. Last month, we had one sale of a $5+ million home in Santa Clara County (4.3 years of unsold inventory!) and just two in San Mateo County (2.0 years of unsold inventory). With slow movements in higher-priced homes and a white-hot situation in lower-priced homes, I call this a polarized market.
> TFT PDQ -- A "TFT" stands for Transaction Fallen Through and has occurred much more frequently of late and is especially evident in short or bank-owned transactions which we call "lender-controlled" transactions. Many buyers walk away from short sales due to their extremely long escrows lasting months as banks sit on paperwork and do not make decisions in a timely manner. So, the short sale listing sells again and again, in many circumstances but does not close. For this reason, I advise buyers to steer away from short sales.
Lender-controlled transactions accounted for 43% of the closings last month in Santa Clara County. We're far better off. Monterey County saw 72% of their closings made up of lender-controlled transactions (short sales and bank-owned). I have anecdotal evidence that in some Central Valley locations the percentage is 90%!
> Sellers Be Sooner -- I continue to maintain my recommendation for sellers of higher-priced homes that they should consider selling sooner and having an initially more-aggressive list price as the market usually softens when we go move into the fall and the holiday season. In any case, check with a Realtor knowledgeable about the technical aspects of the market conditions to guide you in positioning your home for maximum activity and price while minimizing time on market.
For those considering a purchase of a home in an expensive area like Los Altos Hills, Los Gatos/Monte Sereno, Saratoga, your time is getting closer! Be ready but I think we'll see list prices reduced and sale prices dropping as we get into the holiday season this year. Most years we experience more activity in the early spring and spring so the best time for a purchase is coming up soon!
> Investor's Corner -- Activity continues to trend upwards as more and more investors reenter the market. For Santa Clara County, there were 71 sales during the month with 52 of them in the less than $600,000 price range as that price range had a DUI of just 40 whereas the DUI for residential investment properties above $600,000 jumps to nearly a year. For investors able to purchase higher-priced properties, there is about one year of unsold inventory at current sales demand with at least some motivated sellers.
Thanks for reading Tom McEvoy's Blog -- what are your thoughts, comments, questions, observations?
Friday, September 25, 2009
Robbing the Bank to Pay Back the Bank!
Wow, a 69-yr old robs San Diego bank to pay for his 17% mortgage! The authorities should round up the loan officer, strip him of his license, place him in the clink and throw away the key! Seniors beware -- a lot of crooks are after you (us!). Work with someone you know AND trust.
Click on the link to view the source newscast but we here in Silicon Valley were not insulated from some of these crooks in the real estate and lending business who looked out for themselves and didn't place their client's best interest first and foremost. Some loan officers, many working for unscrupulous mortgage brokers, placed unsophisticated and unsuspecting borrowers into weird loans with prepayment penalties and the like to earn huge fees at the expense of the borrowers.Probably most of the borrowers that were trapped by these crooks were not seniors but I think it is even more egregious when a senior is the victim.
Tuesday, September 15, 2009
Wednesday, September 9, 2009
September Silicon Valley Real Estate Market Highlights
Here are my observations of August's transactions and market actions for Santa Clara, San Mateo, Santa Cruz, and Monterey counties. You are encouraged to leave your comments and questions or even update us on what you are witnessing in your neighborhood or area.
> Market continues showing improvment -- Market activity continues to display improvement, something that we've been saying for the past four months. For instance, in Santa Clara County, July saw a 38% increase in closings over the same month last year. My analysis of the transactional information reveals:
> Buyer's Markets? -- Far fewer than in the past, there are some buyer's markets located in Santa Clara County in Saratoga, Los Gatos and Los Gatos Mountains. To refresh you, characteristics of a buyer's market are longer time on the market, higher number of homes available for sale, lower probability of multiple offers or even an offer with most sale prices below list price. The tendency is to have price depreciation under this market condition.
Where do I get "Seller's" and "Buyer's" market information? This is not an opinion thing but a calculation I make using the number of homes for sale (supply) and the number of sales (demand) in the prior month which results in days of unsold inventory (DUI).
> Median prices. Up sharply since March but declined from $590,000 last month, it stands at $560,000 for Santa Clara County, $685,000 for San Mateo County. These are down 14% from the same month a year ago in each county. An entire county's median price level should not be used to decide on whether to buy or sell. I recommend your real estate advisor complete an analysis on a much smaller area (as small as a neighborhood!) to form the basis of a strategy.
> Tale of Two Markets -- Sales of affordable homes in Santa Clara County less than $450,000 level have gotten even hotter than the past few months. There are just 20 days of unsold inventory for single family residences below $450,000 and 39 for homes with prices from $450,000 to $600,000. As the price ranges increase, the DUI increases. For Santa Clara County, high-priced homes in the $2,500,000 to $5,000,000 range ended with a DUI of 359 or almost one year of inventory whereas in San Mateo County ended with a DUI of 222!
However, sales of higher-priced homes (above $1,000,000) are sluggish at best. For instance, we continue to have no sales of $5+ million homes in the last five weeks in Santa Clara County and just six in San Mateo County.
> Sellers Be Sooner -- I continue to maintain my recommendation for sellers of higher-priced homes that they should consider selling sooner and having an initially more-aggressive list price as the market usually softens when we go deeper into the late summer and into fall. In any case, check with a Realtor knowledgeable about the technical aspects of the market conditions to guide you in positioning your home for maximum activity and price while minimizing time on market. .
For those considering a purchase of a home in an expensive area like Los Altos Hills, Los Gatos/Monte Sereno, Saratoga, your time is getting closer! Be ready but I think we'll see list prices reduced and sale prices dropping as we get closer to the holiday season this year.
> Investor's Corner -- Activity continues to trend upwards as more and more investors reenter the market. For Santa Clara County, there were 71 sales during the month with 40 of them in the less than $600,000 price range as that price range had a DUI of just 59 whereas the DUI for residential investment properties above $1,000,000 showed more than one and a half years supply at current sales demand.
Thanks for reading Tom McEvoy's Blog -- what are your thoughts, comments, questions, observations?
> Market continues showing improvment -- Market activity continues to display improvement, something that we've been saying for the past four months. For instance, in Santa Clara County, July saw a 38% increase in closings over the same month last year. My analysis of the transactional information reveals:
- Buyers continue to trip over each other to submit offers for homes in the more affordable areas of Santa Clara, San Mateo, Santa Cruz, and Monterey counties. Many offers submitted are for all cash or have substantial down payments. There are still only 20 days of unsold inventory on single family residences in Santa Clara County with a price of under $450,000.
- The supply of homes available for sale (inventory) continues to trend lower in each of the four counties without exception. The lower trend is more pronounced in Santa Clara and Monterey counties.
- The number of closings have turned are now lower in each county as the seasonality takes hold as we see less closings in the late summer after a peak around Memorial Day.
- The Days of Unsold Inventory (DUI) continues to improve generally in each county for single family residences and condos/townhouses, respectively. Santa Clara's DUI stands at 51 and 42, San Mateo's DUI is 74 and 70, Santa Cruz's DUI is 97 and 105 and Monterey's DUI is 65 and 80.
> Buyer's Markets? -- Far fewer than in the past, there are some buyer's markets located in Santa Clara County in Saratoga, Los Gatos and Los Gatos Mountains. To refresh you, characteristics of a buyer's market are longer time on the market, higher number of homes available for sale, lower probability of multiple offers or even an offer with most sale prices below list price. The tendency is to have price depreciation under this market condition.
Where do I get "Seller's" and "Buyer's" market information? This is not an opinion thing but a calculation I make using the number of homes for sale (supply) and the number of sales (demand) in the prior month which results in days of unsold inventory (DUI).
> Median prices. Up sharply since March but declined from $590,000 last month, it stands at $560,000 for Santa Clara County, $685,000 for San Mateo County. These are down 14% from the same month a year ago in each county. An entire county's median price level should not be used to decide on whether to buy or sell. I recommend your real estate advisor complete an analysis on a much smaller area (as small as a neighborhood!) to form the basis of a strategy.
> Tale of Two Markets -- Sales of affordable homes in Santa Clara County less than $450,000 level have gotten even hotter than the past few months. There are just 20 days of unsold inventory for single family residences below $450,000 and 39 for homes with prices from $450,000 to $600,000. As the price ranges increase, the DUI increases. For Santa Clara County, high-priced homes in the $2,500,000 to $5,000,000 range ended with a DUI of 359 or almost one year of inventory whereas in San Mateo County ended with a DUI of 222!
However, sales of higher-priced homes (above $1,000,000) are sluggish at best. For instance, we continue to have no sales of $5+ million homes in the last five weeks in Santa Clara County and just six in San Mateo County.
> Sellers Be Sooner -- I continue to maintain my recommendation for sellers of higher-priced homes that they should consider selling sooner and having an initially more-aggressive list price as the market usually softens when we go deeper into the late summer and into fall. In any case, check with a Realtor knowledgeable about the technical aspects of the market conditions to guide you in positioning your home for maximum activity and price while minimizing time on market. .
For those considering a purchase of a home in an expensive area like Los Altos Hills, Los Gatos/Monte Sereno, Saratoga, your time is getting closer! Be ready but I think we'll see list prices reduced and sale prices dropping as we get closer to the holiday season this year.
> Investor's Corner -- Activity continues to trend upwards as more and more investors reenter the market. For Santa Clara County, there were 71 sales during the month with 40 of them in the less than $600,000 price range as that price range had a DUI of just 59 whereas the DUI for residential investment properties above $1,000,000 showed more than one and a half years supply at current sales demand.
Thanks for reading Tom McEvoy's Blog -- what are your thoughts, comments, questions, observations?
Tuesday, August 11, 2009
August Silicon Valley Real Estate Market Highlights
Here are my observations of the most recent market actions for Santa Clara, San Mateo, Santa Cruz, and Monterey counties. You are encouraged to leave your comments and questions or even update us on what you are witnessing in your neighborhood or area.
> Market continues improving! Market activity continues to display improvement, something that we've been saying for the past four months. For instance, in Santa Clara County, July saw a 38% increase in closings over the same month last year. My analysis of the transactional information reveals:
Recently, I sold a bank-owned home in San Jose that generated 17 offers as my buyer's offer beat the other 16. As first time buyers who were pre-approved for an 80% loan, they are extremely pleased to be in contract. I employed my research on the fair market value of those in the same neighborhood to recommend an offer price range and my buyers accepted my recommendation.
> Seller's Markets? -- Yes! the hottest markets in Santa Clara County were Santa Teresa, South San Jose, Blossom Valley, North Valley, East Valley, Santa Clara, Cambrian, Evergreen, Milpitas and Downtown San Jose. To refresh you, characteristics of a seller's market are shorter marketing time, fewer number of homes available for sale, higher probability of multiple offers with many sale prices exceeding list prices with added price appreciation.
> Buyer's Markets? -- OK, yes, there are some of those too! Areas of Santa Clara County experiencing a buyer's market condition are: Mountain View, Los Altos, Palo Alto, Willow Glen in San Jose, Saratoga and Los Gatos. To refresh you, characteristics of a buyer's market are longer marketing time, higher number of homes available for sale, lower probability of multiple offers or even an offer with most sale prices below list price with price depreciation.
Where do I get "Seller's" and "Buyer's" market information? This is not an opinion thing but a calculation I make using the number of homes for sale (supply) and the number of sales (demand) which results in days of unsold inventory (DUI).
> Median prices. Up 31% since March to $590,000, Santa Clara County was at $450,000 as recently as March! This is down 18% from the same month a year ago. Less lower-priced homes in the mix of what sold last month and a corresponding higher portion of moderate homes and higher-priced homes was the main culprit. I do repeat, though, that an entire county's median price level should not be used as part of a strategy for buying or selling -- analysis must be done on a much smaller area as small as a neighborhood to form the basis of a strategy.
> Lost Wages and Other Things -- For this, "lost wages" affectionately refer to Las Vegas. Sales in Las Vegas in June 2009 were 44% higher than in June 2008 - a welcome sign. Median price was 41% lower than the same month a year ago. Comparable numbers for Portland were a 6% drop in sales and a 13% drop in median price. For Phoenix, the number of sales spurted by 40% but the median price was 37% lower than the same month a year ago.
> Tale of Two Markets -- Sales of affordable homes in Santa Clara County less than $450,000 level have gotten even hotter than the past few months. There are just 20 days of unsold inventory for single family residences below $450,000. There are more homes in sales pending status than available for sale! The DUI was 38 for those less than $600,000. Even with adjustments made for the portion of transactions that do not close escrow, these figures represent seller's markets with one characteristic being price appreciation.
However, sales of higher-priced homes are sluggish at best. For instance, we are back to having no sales of $5+ million homes in the last five weeks in Santa Clara County. Last month, there were 90 sales of homes with a list price of at least $1,000,000 with the highest a home that sold in Palo Alto with a list price of $3,700,000. Sunnyvale saw four such sales, 13 in Cupertino. For closings, there were 62 that closed escrow last month in the county, a higher number than in previous months which help increase the median price.
> Sellers Be Sooner -- I maintain my recommendation for sellers of higher-priced homes that they should consider selling sooner and having an initially more-aggressive list price as the market usually softens when we go deeper into summer. In any case, check with a Realtor knowledgeable about the technical aspects of the market conditions to guide you in positioning your home for maximum activity and price while minimizing time on market. There are more than ten months of unsold inventory in the $2.5 million to $5.0 million price range on the market in Santa Clara County.
For those considering a purchase of a home in an expensive area, your time is getting closer! Be ready but I think we'll see list prices reduced and sale prices dropping more before they are likely headed higher.
> Santa Clara County Foreclosure Ranking -- With all the "talk" about the amount of foreclosed homes in the county, here's a couple of things to think about. First, Sean O'Toole of ForeclosureRadar said recently that Santa Clara County ranks 45th among 54 counties in California in foreclosures per population. My yes, we have a lot of dwellings to house more than 1.6 million folks in the county as there are some 430,000 single family homes, condos and townhomes in the county according to the Santa Clara County Tax Assessor's office. Second, more than 30% of these have NO loan on them and are owned "free-and-clear" and have enjoyed their mortgage-burning parties. Of those that do have a loan, the rate of foreclosure based on the 591 homes that were foreclosed in the county in June would be about 2.25% or about one out of 44 homes.
> Investor's Corner -- Activity continues to trend upwards as more and more investors reenter the market. For Santa Clara County, there were 75 sale pending properties during the month with more than 50 of them in the less than $600,000 price range as that price range had a DUI of just 44, making it on the border between balanced and seller's market. Not so with higher priced multi unit properties.
Thanks for reading -- what are your thoughts, comments, questions?
> Market continues improving! Market activity continues to display improvement, something that we've been saying for the past four months. For instance, in Santa Clara County, July saw a 38% increase in closings over the same month last year. My analysis of the transactional information reveals:
- Buyers continue to trip over each other to submit offers for homes in the more affordable areas of Santa Clara, San Mateo, Santa Cruz, and Monterey counties. Many offers submitted are for all cash or substantial down payments like 50%. There are only 20 days of unsold inventory on single family residences in Santa Clara County with a price of under $450,000.
- The supply of homes available for sale (inventory) continues to trend lower in each of the four counties, except a flattening in Santa Cruz County. Normally, inventory is increasing at this time of the year. Lowered inventory and strong demand means HIGHER PRICES!
- The number of initiated sales (in contract) have changed directions and heading lower as summer periods are normally less active in real estate. July initiated sales in Santa Clara County was still 18% higher than the same month a year ago.
- The Days of Unsold Inventory (DUI) has generally improved (decreased) substantially in the last year in each county for single family residences. Santa Clara's DUI stands at 55 (47 for condos and townhouses), San Mateo's DUI is 75, Santa Cruz's DUI is 102 and Monterey's DUI is 64.
- Median prices have increased in every county and is up 31% in Santa Clara County since March!
Recently, I sold a bank-owned home in San Jose that generated 17 offers as my buyer's offer beat the other 16. As first time buyers who were pre-approved for an 80% loan, they are extremely pleased to be in contract. I employed my research on the fair market value of those in the same neighborhood to recommend an offer price range and my buyers accepted my recommendation.
> Seller's Markets? -- Yes! the hottest markets in Santa Clara County were Santa Teresa, South San Jose, Blossom Valley, North Valley, East Valley, Santa Clara, Cambrian, Evergreen, Milpitas and Downtown San Jose. To refresh you, characteristics of a seller's market are shorter marketing time, fewer number of homes available for sale, higher probability of multiple offers with many sale prices exceeding list prices with added price appreciation.
> Buyer's Markets? -- OK, yes, there are some of those too! Areas of Santa Clara County experiencing a buyer's market condition are: Mountain View, Los Altos, Palo Alto, Willow Glen in San Jose, Saratoga and Los Gatos. To refresh you, characteristics of a buyer's market are longer marketing time, higher number of homes available for sale, lower probability of multiple offers or even an offer with most sale prices below list price with price depreciation.
Where do I get "Seller's" and "Buyer's" market information? This is not an opinion thing but a calculation I make using the number of homes for sale (supply) and the number of sales (demand) which results in days of unsold inventory (DUI).
> Median prices. Up 31% since March to $590,000, Santa Clara County was at $450,000 as recently as March! This is down 18% from the same month a year ago. Less lower-priced homes in the mix of what sold last month and a corresponding higher portion of moderate homes and higher-priced homes was the main culprit. I do repeat, though, that an entire county's median price level should not be used as part of a strategy for buying or selling -- analysis must be done on a much smaller area as small as a neighborhood to form the basis of a strategy.
> Lost Wages and Other Things -- For this, "lost wages" affectionately refer to Las Vegas. Sales in Las Vegas in June 2009 were 44% higher than in June 2008 - a welcome sign. Median price was 41% lower than the same month a year ago. Comparable numbers for Portland were a 6% drop in sales and a 13% drop in median price. For Phoenix, the number of sales spurted by 40% but the median price was 37% lower than the same month a year ago.
> Tale of Two Markets -- Sales of affordable homes in Santa Clara County less than $450,000 level have gotten even hotter than the past few months. There are just 20 days of unsold inventory for single family residences below $450,000. There are more homes in sales pending status than available for sale! The DUI was 38 for those less than $600,000. Even with adjustments made for the portion of transactions that do not close escrow, these figures represent seller's markets with one characteristic being price appreciation.
However, sales of higher-priced homes are sluggish at best. For instance, we are back to having no sales of $5+ million homes in the last five weeks in Santa Clara County. Last month, there were 90 sales of homes with a list price of at least $1,000,000 with the highest a home that sold in Palo Alto with a list price of $3,700,000. Sunnyvale saw four such sales, 13 in Cupertino. For closings, there were 62 that closed escrow last month in the county, a higher number than in previous months which help increase the median price.
> Sellers Be Sooner -- I maintain my recommendation for sellers of higher-priced homes that they should consider selling sooner and having an initially more-aggressive list price as the market usually softens when we go deeper into summer. In any case, check with a Realtor knowledgeable about the technical aspects of the market conditions to guide you in positioning your home for maximum activity and price while minimizing time on market. There are more than ten months of unsold inventory in the $2.5 million to $5.0 million price range on the market in Santa Clara County.
For those considering a purchase of a home in an expensive area, your time is getting closer! Be ready but I think we'll see list prices reduced and sale prices dropping more before they are likely headed higher.
> Santa Clara County Foreclosure Ranking -- With all the "talk" about the amount of foreclosed homes in the county, here's a couple of things to think about. First, Sean O'Toole of ForeclosureRadar said recently that Santa Clara County ranks 45th among 54 counties in California in foreclosures per population. My yes, we have a lot of dwellings to house more than 1.6 million folks in the county as there are some 430,000 single family homes, condos and townhomes in the county according to the Santa Clara County Tax Assessor's office. Second, more than 30% of these have NO loan on them and are owned "free-and-clear" and have enjoyed their mortgage-burning parties. Of those that do have a loan, the rate of foreclosure based on the 591 homes that were foreclosed in the county in June would be about 2.25% or about one out of 44 homes.
> Investor's Corner -- Activity continues to trend upwards as more and more investors reenter the market. For Santa Clara County, there were 75 sale pending properties during the month with more than 50 of them in the less than $600,000 price range as that price range had a DUI of just 44, making it on the border between balanced and seller's market. Not so with higher priced multi unit properties.
Thanks for reading -- what are your thoughts, comments, questions?
Thursday, July 9, 2009
July Silicon Valley Real Estate Market Update
Here are my observations of the most recent market actions for Santa Clara, San Mateo, Santa Cruz, and Monterey counties. You are encouraged to leave your comments and questions or even update us on what you are witnessing in your neighborhood or area.
> Market continues in turnaround mode! My recent posts have mentioned that the market activity is turning around. Well, June's activity continues the trend and provides more evidence that we could have seen the bottom! My analysis of the transaction information reveals:
> Seller's Markets? -- Yes! the hottest markets in Santa Clara County were Blossom Valley, Cambrian, North Valley and Milpitas. To refresh you, characteristics of a seller's market are shorter marketing time, fewer number of homes available for sale, higher probability of multiple offers with many sale prices exceeding list prices with added price appreciation.
> Buyer's Markets? -- OK, yes, there are some of those too! Areas of Santa Clara County experiencing a buyer's market condition are: Los Gatos, Saratoga and Willow Glen. To refresh you, characteristics of a buyer's market are longer marketing time, higher number of homes available for sale, lower probability of multiple offers or even an offer with most sale prices below list price with price depreciation.
Where do I get "Seller's" and "Buyer's" market information? This is not an opinion thing but a calculation I make using the number of homes for sale (supply) and the number of sales (demand) which results in days of unsold inventory (DUI).
> Median prices. Stuck at $450,000 for Santa Clara County these past few months, moved up to $470,000 in April increased yet again to $490,000. Where are we now? The June median price (the middle transaction) for Santa Clara County jumped to $550,250! This is down 26.6% from the same month a year ago. Less lower-priced homes in the mix of what sold last month was the main culprit along with a slight awakening of those higher priced home sales. I do repeat, though, that an entire county's median price level should not be used as part of a strategy for buying or selling.
> Tale of Two Markets -- Sales of affordable homes mainly in the less than $450,000 level have gotten even hotter than last month. There are just 27 days of unsold inventory for single family residences below $450,000; 36 for those less than $600,000. Even with adjustments made for the portion of transactions that do not close escrow, these figures represent seller's markets with one characteristic being price appreciation.
However, sales of higher-priced homes are sluggish at best. For instance, there have been no sales of $5+ million homes in the last five weeks in Santa Clara County. Last month, there were 87 sales of homes with a list price of at least $1,000,000 with the highest a home that sold in Monte Sereno with a list price of $3,485,000. For a twist, Sunnyvale saw seven such sales, the same as Palo Alto!
> Sellers Be Sooner -- I maintain my recommendation for sellers of higher-priced homes that they should consider selling sooner and having an initially more-aggressive list price as the market usually softens when we go deeper into summer. In any case, check with a Realtor knowledgeable about the technical aspects of the market conditions to guide you in positioning your home for maximum activity and price while minimizing time on market.
For those considering a purchase of a home in an expensive area, your time is getting closer! Be ready but I think we'll see list prices reduced and sale prices dropping more before they are likely headed higher.
> Investor's Corner -- Activity continues to trend upwards as more and more investors reenter the market. For instance, there were 46 closings in Santa Clara County, more than double the activity in the last few months. There were just 13 closings in San Mateo County, a much smaller market than Santa Clara County.
Thanks for reading -- what are your thoughts, comments, questions?
> Market continues in turnaround mode! My recent posts have mentioned that the market activity is turning around. Well, June's activity continues the trend and provides more evidence that we could have seen the bottom! My analysis of the transaction information reveals:
- Buyers are all but tripping over each other to submit offers for homes in the more affordable areas of Santa Clara, San Mateo, Santa Cruz, and Monterey counties.
- The supply of homes available for sale (inventory) continues to trend lower in each of the four counties, except a slight uptick in Santa Cruz County. Normally, inventory is increasing at this time of the year. Lowered inventory and strong demand means HIGHER PRICES!
- The number of initiated sales (in contract) have jumped in Santa Clara County and is trending higher in the other counties, too. Monterey County set a record in the number of closings!
- The Days of Unsold Inventory (DUI) has improved (decreased) substantially in the last year in each county. Santa Clara's DUI stands at 56, San Mateo's DUI is 74, Santa Cruz's DUI is 92 and Monterey's DUI is 69.
- Median prices have increased in every county.
> Seller's Markets? -- Yes! the hottest markets in Santa Clara County were Blossom Valley, Cambrian, North Valley and Milpitas. To refresh you, characteristics of a seller's market are shorter marketing time, fewer number of homes available for sale, higher probability of multiple offers with many sale prices exceeding list prices with added price appreciation.
> Buyer's Markets? -- OK, yes, there are some of those too! Areas of Santa Clara County experiencing a buyer's market condition are: Los Gatos, Saratoga and Willow Glen. To refresh you, characteristics of a buyer's market are longer marketing time, higher number of homes available for sale, lower probability of multiple offers or even an offer with most sale prices below list price with price depreciation.
Where do I get "Seller's" and "Buyer's" market information? This is not an opinion thing but a calculation I make using the number of homes for sale (supply) and the number of sales (demand) which results in days of unsold inventory (DUI).
> Median prices. Stuck at $450,000 for Santa Clara County these past few months, moved up to $470,000 in April increased yet again to $490,000. Where are we now? The June median price (the middle transaction) for Santa Clara County jumped to $550,250! This is down 26.6% from the same month a year ago. Less lower-priced homes in the mix of what sold last month was the main culprit along with a slight awakening of those higher priced home sales. I do repeat, though, that an entire county's median price level should not be used as part of a strategy for buying or selling.
> Tale of Two Markets -- Sales of affordable homes mainly in the less than $450,000 level have gotten even hotter than last month. There are just 27 days of unsold inventory for single family residences below $450,000; 36 for those less than $600,000. Even with adjustments made for the portion of transactions that do not close escrow, these figures represent seller's markets with one characteristic being price appreciation.
However, sales of higher-priced homes are sluggish at best. For instance, there have been no sales of $5+ million homes in the last five weeks in Santa Clara County. Last month, there were 87 sales of homes with a list price of at least $1,000,000 with the highest a home that sold in Monte Sereno with a list price of $3,485,000. For a twist, Sunnyvale saw seven such sales, the same as Palo Alto!
> Sellers Be Sooner -- I maintain my recommendation for sellers of higher-priced homes that they should consider selling sooner and having an initially more-aggressive list price as the market usually softens when we go deeper into summer. In any case, check with a Realtor knowledgeable about the technical aspects of the market conditions to guide you in positioning your home for maximum activity and price while minimizing time on market.
For those considering a purchase of a home in an expensive area, your time is getting closer! Be ready but I think we'll see list prices reduced and sale prices dropping more before they are likely headed higher.
> Investor's Corner -- Activity continues to trend upwards as more and more investors reenter the market. For instance, there were 46 closings in Santa Clara County, more than double the activity in the last few months. There were just 13 closings in San Mateo County, a much smaller market than Santa Clara County.
Thanks for reading -- what are your thoughts, comments, questions?
Monday, June 15, 2009
June Silicon Valley Real Estate Market Update
Here are my observations of the most recent market actions for Santa Clara, San Mateo, Santa Cruz, and Monterey counties. You are encouraged to leave your comments and questions or even update us on what you are witnessing in your neighborhood.
> Market continues in turnaround mode! My recent posts have mentioned that the market activity is turning around. Well, May's activity continues the trend and provides more evidence that we could have seen the bottom! How can this be?
> Bank-owned homes offer the best deals? -- First, that's a myth in general as banks are actually sophisticated sellers. They've already lost money and maintaining a listing costs them even more so they hire listing agents, who in many cases, set list prices at ridiculously low prices to spur activity AND multiple offers. This sets up in the minds of potential buyers that they can actually buy the home at or even under the list price. Invariably, the home sells for it's fair market value.
Second, prices have adjusted tremendously in many areas so are a lot less than they were at the peak in real estate pricing which differs in each area.
> Seller's Markets? -- Yes, there are! Areas of Santa Clara County experiencing a seller's market condition are: Blossom Valley (hottest market in Valley), South San Jose, East Valley (Alum Rock), Santa Teresa, Cambrian and Evergreen. To refresh you, characteristics of a seller's market are fewer days on market, lower number of homes available for sale, higher probability of multiple offers with many sale prices exceeding list prices and some added price appreciation.
> Buyer's Markets? -- OK, yes, there are some of those too! Areas of Santa Clara County experiencing a buyer's market condition are: Saratoga (coolest market in Santa Clara County), Los Gatos, Almaden Valley, Mountain View, Los Altos, Los Altos Hills, Palo Alto. To refresh you, characteristics of a buyer's market are longer days on market, higher number of homes available for sale, lower probability of multiple offers or even an offer with most sale prices below list price with general price depreciation.
> Sales per Day -- The amount of average sales per day in May reached 56.7 for Santa Clara County. The last time this figure was this high was in May 2005 when the market activity was nearing a crescendo! The only other May that had higher sales per day was in 2004 which was over 64. The big difference between 2004 and 2005 and May of 2009 was that many transactions this year did not close!
> Median prices. Stuck at $450,000 for Santa Clara County these past few months, moved up to $470,000 in April increased yet again to $490,000. Median prices (the middle transaction) for an entire county are actually worthless to use as part of a strategy for buying or selling. Each area, down even to the neighborhood, has differing dynamics of supply and demand so needs to be looked at accordingly. We've observed that market mix has helped bring down median prices due to more low-priced homes closing as a percentage of total closings. With more of the lower-priced home selling briskly there will be a lot less of them available and buyers will have to buy some higher priced ones.
> Tale of Two Markets -- Sales of affordably-priced homes mainly in the less than $450,000 level are HOT. On the other hand, sales of higher-priced homes are virtually dead, as some would say, in the more expensive areas. For instance, there have been no sales of $5+ million homes in the last five weeks in Santa Clara County.
So keep this in mind that if you are considering a sale in an expensive area, you probably want to sell quickly rather than waiting but in any case check with a Realtor knowledgeable about current market conditions to guide you in positioning your home for maximum activity and price while minimizing time on market. You really don't want to be on the market for a year or more.
And, if you are considering a purchase of a home in an expensive area, get ready to buy! Why, get ready? I think we'll see list prices reduced and sale prices dropping more before they are likely headed higher.
> Want to sell with multiple offers? The percent of completed sales or closings with a sold price greater than list price stands at 37.1%. This level, up a bit, means that fully one out of three sellers received more than their asking price. Oh, and another 8.1% of sellers received their full list price!
Want to hear a little secret? Some of those sellers receiving either their list price or something higher had to reduce their list prices to generate one or more offers. These figures don't calculate what the sale price to original list price ratio is but only what the current list price was at the time of sale.
> Loan Traffic Jam Lets Up! Last month, I mentioned that if you have applied to refinance your existing mortgage that lenders were clogged with loan applications. Well, what a difference a month of increasing mortgage rates makes. There's still a backlog but if you were trying to play the interest rate game and waiting for another 1/8th or 1/4 point drop, the mortgage rates shot up almost a full point!
Moral of this story is that if the current rate works (benefits you financially) then lock in the rate and close the loan!
> Investor's Reawaken Somewhat - A bit more activity in the multi-unit properties but wanted to mention that those properties with list prices less than $600,000 are seeing much more activity. The days of unsold inventory (DUI) for this type of property in this level has dropped to 54 versus an improved 122 overall.
Thanks for reading -- what are your thoughts and comments?
> Market continues in turnaround mode! My recent posts have mentioned that the market activity is turning around. Well, May's activity continues the trend and provides more evidence that we could have seen the bottom! How can this be?
- Buyers are all but tripping over each other to submit offers for homes in the more affordable areas of Santa Clara, San Mateo, Santa Cruz, and Monterey counties.
- The supply of homes available for sale (inventory) continues to decline in each of the four counties. Normally, inventory is increasing at this time of the year. Lowered inventory and strong demand means HIGHER PRICES!
- The number of initiated sales (in contract) have jumped in Santa Clara County and is trending higher in the other counties, too.
- The Days of Unsold Inventory (DUI) has improved (decreased) substantially. The DUI for single family residences in Santa Clara County for under $450,000 is an astonishing 26 which means when freezing inventory, ALL homes would sell in less than month!. Anything less than 45 represents a Seller's market with market characteristics of multiple offers, high percentage selling above list price AND, price APPRECIATION.
- Median prices have increased in each county except for Monterey.
> Bank-owned homes offer the best deals? -- First, that's a myth in general as banks are actually sophisticated sellers. They've already lost money and maintaining a listing costs them even more so they hire listing agents, who in many cases, set list prices at ridiculously low prices to spur activity AND multiple offers. This sets up in the minds of potential buyers that they can actually buy the home at or even under the list price. Invariably, the home sells for it's fair market value.
Second, prices have adjusted tremendously in many areas so are a lot less than they were at the peak in real estate pricing which differs in each area.
> Seller's Markets? -- Yes, there are! Areas of Santa Clara County experiencing a seller's market condition are: Blossom Valley (hottest market in Valley), South San Jose, East Valley (Alum Rock), Santa Teresa, Cambrian and Evergreen. To refresh you, characteristics of a seller's market are fewer days on market, lower number of homes available for sale, higher probability of multiple offers with many sale prices exceeding list prices and some added price appreciation.
> Buyer's Markets? -- OK, yes, there are some of those too! Areas of Santa Clara County experiencing a buyer's market condition are: Saratoga (coolest market in Santa Clara County), Los Gatos, Almaden Valley, Mountain View, Los Altos, Los Altos Hills, Palo Alto. To refresh you, characteristics of a buyer's market are longer days on market, higher number of homes available for sale, lower probability of multiple offers or even an offer with most sale prices below list price with general price depreciation.
> Sales per Day -- The amount of average sales per day in May reached 56.7 for Santa Clara County. The last time this figure was this high was in May 2005 when the market activity was nearing a crescendo! The only other May that had higher sales per day was in 2004 which was over 64. The big difference between 2004 and 2005 and May of 2009 was that many transactions this year did not close!
> Median prices. Stuck at $450,000 for Santa Clara County these past few months, moved up to $470,000 in April increased yet again to $490,000. Median prices (the middle transaction) for an entire county are actually worthless to use as part of a strategy for buying or selling. Each area, down even to the neighborhood, has differing dynamics of supply and demand so needs to be looked at accordingly. We've observed that market mix has helped bring down median prices due to more low-priced homes closing as a percentage of total closings. With more of the lower-priced home selling briskly there will be a lot less of them available and buyers will have to buy some higher priced ones.
> Tale of Two Markets -- Sales of affordably-priced homes mainly in the less than $450,000 level are HOT. On the other hand, sales of higher-priced homes are virtually dead, as some would say, in the more expensive areas. For instance, there have been no sales of $5+ million homes in the last five weeks in Santa Clara County.
So keep this in mind that if you are considering a sale in an expensive area, you probably want to sell quickly rather than waiting but in any case check with a Realtor knowledgeable about current market conditions to guide you in positioning your home for maximum activity and price while minimizing time on market. You really don't want to be on the market for a year or more.
And, if you are considering a purchase of a home in an expensive area, get ready to buy! Why, get ready? I think we'll see list prices reduced and sale prices dropping more before they are likely headed higher.
> Want to sell with multiple offers? The percent of completed sales or closings with a sold price greater than list price stands at 37.1%. This level, up a bit, means that fully one out of three sellers received more than their asking price. Oh, and another 8.1% of sellers received their full list price!
Want to hear a little secret? Some of those sellers receiving either their list price or something higher had to reduce their list prices to generate one or more offers. These figures don't calculate what the sale price to original list price ratio is but only what the current list price was at the time of sale.
> Loan Traffic Jam Lets Up! Last month, I mentioned that if you have applied to refinance your existing mortgage that lenders were clogged with loan applications. Well, what a difference a month of increasing mortgage rates makes. There's still a backlog but if you were trying to play the interest rate game and waiting for another 1/8th or 1/4 point drop, the mortgage rates shot up almost a full point!
Moral of this story is that if the current rate works (benefits you financially) then lock in the rate and close the loan!
> Investor's Reawaken Somewhat - A bit more activity in the multi-unit properties but wanted to mention that those properties with list prices less than $600,000 are seeing much more activity. The days of unsold inventory (DUI) for this type of property in this level has dropped to 54 versus an improved 122 overall.
Thanks for reading -- what are your thoughts and comments?
Thursday, May 14, 2009
May Real Estate Market Highlights
Here are my observations of the most recent market actions for Santa Clara, San Mateo, Santa Cruz, and Monterey counties. You are encouraged to leave your comments and questions or even update us on what you are witnessing in your neighborhood.
> Market is in turnaround mode! My recent posts have mentioned that the market activity is turning around. Well, April's activity continues to provide more evidence that we could have seen the bottom! How can this be?
> Buyer's Markets? -- OK, yes, there are some of those too! Areas of Santa Clara County experiencing a buyer's market condition are: Mountain View, Los Altos, Los Altos Hills, Palo Alto, Willow Glen Los Gatos, Los Gatos Mountains, Saratoga (coolest market in Valley). To refresh you, characteristics of a buyer's market are longer days on market, higher number of homes available for sale, lower probability of multiple offers with most sale prices below list prices and price depreciation.
> Mortgage Refinance Tips -- Some of you may know that I used to "do" mortgage loans and advised my clients on a couple of handy "rule-of-thumbs" as quick indicators to see if refinancing would be a financial benefit to the borrowers, not the loan officer!
> Sales per Day -- The amount of average sales per day in April reached 55.5 for Santa Clara County. The last time this figure was this high was in April 2005 when the market activity was nearing a crescendo! Inventory or the amount of available single family residences for sale has dropped 33% from the levels of April 2008. Normally, inventory levels trend higher this time of year but has been going the other way. This shows a "tightening" market and a swing toward a seller's market in many areas.
> Foreclosures up and NOD's down - How can that be? -- Recently, the San Jose Mercury News reported that the number of foreclosures rose but the number of Notice of Defaults (NOD's) issued have dropped. Remember, the moratoriums placed on banks during the holiday months? Well, there have been moratoriums in place for six of the past eight months. With those moratoriums relaxed, banks are back to foreclosing. Another artificial barrier has been the state of California where they will institute a lengthening of the process so banks have to wait about seven months instead of the current four. These governmental barriers actually prolong the pain as well as exacerbate the problems of separating those that can't make consistent mortgage payments with those who can. For current homeowners wishing to trade up or trade down, the impact on values in many neighborhoods continue.
> Median prices. Stuck at $450,000 for Santa Clara County these past few months, moved up to $470,000 in April. Median prices (the middle transaction) for an entire county are actually worthless to use as part of a strategy for buying or selling. Each area, down even to the neighborhood, has differing dynamics of supply and demand so needs to be looked at accordingly. We've observed that market mix has helped bring down median prices due to more low-priced homes closing as a percentage of total closings. We have also seen the opposite occur in 2007 when higher-priced homes sold and the lower-priced homes were engulfed with the sub-prime loan issues and didn't sell as frequently.
> Some are Hot, Some are Not -- Sales of affordably-priced homes mainly in the less than $450,000 level are HOT. On the other hand, sales of higher-priced homes are virtually dead, as some would say, in the more expensive areas. If you are considering a sale in an expensive area, you probably want to sell quickly rather than waiting but in any case check with a Realtor knowledgeable about current market conditions to guide you in positioning your home for maximum activity and price while minimizing time on market. And, if you are considering a purchase of a home in an expensive area, get ready to buy! Why, get ready? I think we'll see list prices reduced and sale prices dropping more.
> Want to sell with multiple offers? The percent of completed sales or closings with a sold price greater than list price stands at 33.4%. This level, back up a bit, means that fully one out of three sellers received more than their asking price. Oh, and another 7.7% of sellers received their full list price!
Want to hear a little secret? Some of those sellers receiving either their list price or something higher had to reduce their list prices to generate one or more offers. These figures don't calculate what the sale price to original list price ratio is but only what the current list price was at the time of sale.
> Traffic Jam! If your GPS unit has live traffic updates, it still won't be able to help with those lenders who are clogged with loan applications. With the lowest mortgage rates since the '60's continuing, the demand by borrowers trying to refinance has created an avalanche of work for the lenders. Things to remember are:
> Investor's Reawaken - We've mentioned that investors have not been doing much lately with multi-unit residential properties. A couple of reasons are more stringent loan application and increased down payment requirements lenders have imposed. But, there are now 83 investor properties in escrow in Santa Clara County -- much higher than in recent months. The days of unsold inventory (DUI) for this type of property has dropped to 148 from more than triple current levels. Two-thirds of the activity is in the less than $600,000 price range.
Thanks for reading -- what are your thoughts and comments?
> Market is in turnaround mode! My recent posts have mentioned that the market activity is turning around. Well, April's activity continues to provide more evidence that we could have seen the bottom! How can this be?
- Buyers are all but tripping over each other to submit offers for homes in the more affordable areas of Santa Clara, San Mateo, Santa Cruz, and Monterey counties.
- In Santa Clara County, there have been only four months in the past ten years where we've seen as many or more homes sold!
- The number of initiated AND completed sales or closings are trending upwards in Santa Clara, San Mateo and Monterey counties. Only Santa Cruz County has relatively-flat transactions. Monterey County continues setting records.
- The Days of Unsold Inventory (DUI) has improved (decreased) substantially. The DUI for single family residences in Santa Clara County for under $450,000 is an astonishing 28 which means when freezing inventory, ALL homes would sell in a month!. Anything less than 45 represents a Seller's market with market characteristics of multiple offers, high percentage selling above list price AND, price APPRECIATION.
- Median prices have increased in all four counties.
> Buyer's Markets? -- OK, yes, there are some of those too! Areas of Santa Clara County experiencing a buyer's market condition are: Mountain View, Los Altos, Los Altos Hills, Palo Alto, Willow Glen Los Gatos, Los Gatos Mountains, Saratoga (coolest market in Valley). To refresh you, characteristics of a buyer's market are longer days on market, higher number of homes available for sale, lower probability of multiple offers with most sale prices below list prices and price depreciation.
> Mortgage Refinance Tips -- Some of you may know that I used to "do" mortgage loans and advised my clients on a couple of handy "rule-of-thumbs" as quick indicators to see if refinancing would be a financial benefit to the borrowers, not the loan officer!
- First, the rate should be more than 10% difference, obviously lower, than your current rate. That means if your currently at 5.50%, the new rate should have a rate at least 10% under this or 4.95%. (For the math, you'd subtract 10% of 5.50 or 0.55 from 5.50 to equal 4.95%.) A rate lower than this level should benefit you and amortize the costs (no free lunch!) of the loan so you can more quickly start accruing the savings AFTER the cost of doing the loan, AND
- Second, it matters most how long you plan on keeping the LOAN. If you plan a sale in a year or so, it probably does NOT make financial sense to refinance.
> Sales per Day -- The amount of average sales per day in April reached 55.5 for Santa Clara County. The last time this figure was this high was in April 2005 when the market activity was nearing a crescendo! Inventory or the amount of available single family residences for sale has dropped 33% from the levels of April 2008. Normally, inventory levels trend higher this time of year but has been going the other way. This shows a "tightening" market and a swing toward a seller's market in many areas.
> Foreclosures up and NOD's down - How can that be? -- Recently, the San Jose Mercury News reported that the number of foreclosures rose but the number of Notice of Defaults (NOD's) issued have dropped. Remember, the moratoriums placed on banks during the holiday months? Well, there have been moratoriums in place for six of the past eight months. With those moratoriums relaxed, banks are back to foreclosing. Another artificial barrier has been the state of California where they will institute a lengthening of the process so banks have to wait about seven months instead of the current four. These governmental barriers actually prolong the pain as well as exacerbate the problems of separating those that can't make consistent mortgage payments with those who can. For current homeowners wishing to trade up or trade down, the impact on values in many neighborhoods continue.
> Median prices. Stuck at $450,000 for Santa Clara County these past few months, moved up to $470,000 in April. Median prices (the middle transaction) for an entire county are actually worthless to use as part of a strategy for buying or selling. Each area, down even to the neighborhood, has differing dynamics of supply and demand so needs to be looked at accordingly. We've observed that market mix has helped bring down median prices due to more low-priced homes closing as a percentage of total closings. We have also seen the opposite occur in 2007 when higher-priced homes sold and the lower-priced homes were engulfed with the sub-prime loan issues and didn't sell as frequently.
> Some are Hot, Some are Not -- Sales of affordably-priced homes mainly in the less than $450,000 level are HOT. On the other hand, sales of higher-priced homes are virtually dead, as some would say, in the more expensive areas. If you are considering a sale in an expensive area, you probably want to sell quickly rather than waiting but in any case check with a Realtor knowledgeable about current market conditions to guide you in positioning your home for maximum activity and price while minimizing time on market. And, if you are considering a purchase of a home in an expensive area, get ready to buy! Why, get ready? I think we'll see list prices reduced and sale prices dropping more.
> Want to sell with multiple offers? The percent of completed sales or closings with a sold price greater than list price stands at 33.4%. This level, back up a bit, means that fully one out of three sellers received more than their asking price. Oh, and another 7.7% of sellers received their full list price!
Want to hear a little secret? Some of those sellers receiving either their list price or something higher had to reduce their list prices to generate one or more offers. These figures don't calculate what the sale price to original list price ratio is but only what the current list price was at the time of sale.
> Traffic Jam! If your GPS unit has live traffic updates, it still won't be able to help with those lenders who are clogged with loan applications. With the lowest mortgage rates since the '60's continuing, the demand by borrowers trying to refinance has created an avalanche of work for the lenders. Things to remember are:
- First, rates for refinance loans average about 1/4 point higher than similar program purchase loans.
- Second, the process can take as much as 60-90 days as purchase loans get first priority due to the impending event of close of escrow.
- Third, there's no cash-out refi's as that option effectively disappeared.
> Investor's Reawaken - We've mentioned that investors have not been doing much lately with multi-unit residential properties. A couple of reasons are more stringent loan application and increased down payment requirements lenders have imposed. But, there are now 83 investor properties in escrow in Santa Clara County -- much higher than in recent months. The days of unsold inventory (DUI) for this type of property has dropped to 148 from more than triple current levels. Two-thirds of the activity is in the less than $600,000 price range.
Thanks for reading -- what are your thoughts and comments?
Thursday, April 9, 2009
April Real Estate Market Highlights
Here are my observations of the most recent market action in Santa Clara, Santa Cruz, San Mateo and Monterey counties. You are encouraged to leave your comments and questions or even update us on what you are witnessing in your neighborhood.
> Market turnaround? Remember I've said recently that the market activity is turning around? Well, March's activity has shown me more evidence that we could have seen the bottom! How can this be?
> Mortgage Refinance Tips -- Some of you may know that I used to "do" mortgage loans and advised my clients on a couple of handy "rule-of-thumbs" as quick indicators to see if refinancing would be a financial benefit to the borrowers, not the loan officer!
> Use Zillow.com? If you check out www.zillow.com for estimates of market value in an area, there are couple of potential pitfalls you should be aware of. First, be careful that the size of the home you're looking at compared to the average size in that area. If the home you are curious about is similar to the average sized home, the market estimate may be a reasonable start. If it is much larger or smaller, I've noticed a much larger departure from market value. Not every home sells each month, right? Second, believe it or not, zillow doesn't "see" into homes. They don't have a clue if you have hardwood floors, sloping floors, no floors, granite countertops or whatever. Their proprietary formula (only known by them) is in use and they apply it across all the homes in the area.
Some who used to trade stocks now think that real esate can be "quoted" in the same fashion. Hardly. Who can discern differences? Your friendly Realtor who stays on top of market changing conditions!
> Condos catching up with single family residences -- A couple of months ago, we witnessed the increase in sales of single family homes far exceeding the increase in sales of condos. Remember, I mentioned that there were better deals in condos and townhouses due to the improved affordability (read -- lower prices) of single family residences? Well, this is beginning to turn. Condo and townhouse closings were up 27% from March 2008 to March 2009, while the increase in closings of single family homes was 24%.
> Median prices. Stuck at $450,000 for Santa Clara County these past few months, median prices (middle transaction) for an entire county are worthless. "Warm to the touch" you might say when touching someone in the middle who is freezing on one side and boiling on the other. Each area, down even to the neighborhood, has differing dynamics of supply and demand so needs to be looked at accordingly. We've observed that market mix has helped bring down median prices due to more low-priced homes closing as a percentage of total closings. We have also seen the opposite occur in 2007 when higher-priced homes sold and the lower-priced homes were starting with the sub-prime loan issues and didn't sell as frequently.
> $5,000,000+ home buyers waking up? Sales of these higher-priced homes were virtually non-existent recently but that has changed. In the past month, four homes in Santa Clara County and three homes in San Mateo County have sold and are in escrow! Any interest? If so, you have plenty to choose from as the number of available homes for sale in this price range is 37 in Santa Clara County and 48 in San Mateo County.
> Want to sell with multiple offers? The percent of completed sales or closings with a sold price greater than list price stands at 31.0%. This level, down a bit, means that about one out of three sellers received more than their asking price. Oh, and 11.3% of sellers received their list price!
Want to hear a little secret? Some of those sellers receiving either their list price or something higher had to reduce their list prices to generate one or more offers. These figures don't calculate what the sale price to original list price ratio is but only what the current list price was at the time of sale.
> Traffic Jam! With the lowest mortgage rates since the '60's, the demand by borrowers trying to refinance have created an avalanche of work for the lenders. Yes, this is after they laid-off staff! First, rates for refinance loans average about 1/4 point higher than similar program purchase loans. Second, the process can take as much as 60-90 days! Third, there's no cash-out refi's as that option dissapeared.
> Investor's Corner - We've mentioned that investors have not been doing much lately with multi-unit residential properties. A couple of reasons are more stringent loan application and increased down payment requirements lenders have imposed. The other reason is, quite frankly, a less than optimistic outlook that many investors have. Closings have been enemic: 23 in Santa Clara County; and, 11 in San Mateo County. Most, about 80%, of the activity is in the less than $600,000 price range.
> Go, Monterey, go! Still setting records, Monterey County has seen record-breaking numbers of initiated sales (accepted contracts) and closings and even continues to out sell San Mateo County which is a larger market historically. As you might have guessed, most of the transactions in Monterey County are bank-owned or REO's after a flurry of affordable home building in the county a few years ago caused a tremendous over-supply of homes, especially along the 101 corridor. This has not occurred in Santa Clara, Santa Cruz or San Mateo counties. Still, this means that there are buyers, buyers with money and buyers with money who can get loans and lenders who are lending!
Thanks for reading -- what are your thoughts?
> Market turnaround? Remember I've said recently that the market activity is turning around? Well, March's activity has shown me more evidence that we could have seen the bottom! How can this be?
- Buyers are willing to make offers as initiated sales (accepted offers) are up in Santa Clara, Santa Cruz, San Mateo and Monterey counties.
- This isn't Thanksgiving but even the "turkeys" are selling. I've been caught using the term "turkeys" to denote an overpriced home. Some of these homes have been on the market for more than a year and may be located on an extremely busy street. Also, the median days on market, DOM, for those homes available for sale has dropped from 100 in January to 70 in March. Tells me that Thanksgiving is getting closer!
- The number of initiated AND completed sales or closings are trending upwards in each county. Part of that is seasonal but part has to be market improvement. Levels are not quite breaking records, except in Monterey.
- The Days of Unsold Inventory (DUI) has improved (decreased) substantially. The DUI for single family residences in Santa Clara County for under $450,000 is 42 which means freezing inventory, ALL homes would sell in 42 days. Anything less than 45 represents a Buyer's market! Characteristics of a buyers market is multiple offers, substantial percentage selling above list price AND, get this, price APPRECIATION.
> Mortgage Refinance Tips -- Some of you may know that I used to "do" mortgage loans and advised my clients on a couple of handy "rule-of-thumbs" as quick indicators to see if refinancing would be a financial benefit to the borrowers, not the loan officer!
- First, the rate should be more than 10% difference, obviously lower, than your current rate. That means if your currently at 5.50%, the new rate should have a rate at least 10% under this or 4.95%. (For the math wizzes, you'd subtract 10% of 5.50 or 0.55 from 5.50 to equal 4.95%.) A rate lower than this level should benefit you and amortize the costs of the loan so you can more quickly start accruing the savings AFTER the cost of doing the loan, AND
- Second, it matters most how long you plan on keeping the LOAN. If you plan a sale in a year or so, it probably does NOT make financial sense to refinance.
> Use Zillow.com? If you check out www.zillow.com for estimates of market value in an area, there are couple of potential pitfalls you should be aware of. First, be careful that the size of the home you're looking at compared to the average size in that area. If the home you are curious about is similar to the average sized home, the market estimate may be a reasonable start. If it is much larger or smaller, I've noticed a much larger departure from market value. Not every home sells each month, right? Second, believe it or not, zillow doesn't "see" into homes. They don't have a clue if you have hardwood floors, sloping floors, no floors, granite countertops or whatever. Their proprietary formula (only known by them) is in use and they apply it across all the homes in the area.
Some who used to trade stocks now think that real esate can be "quoted" in the same fashion. Hardly. Who can discern differences? Your friendly Realtor who stays on top of market changing conditions!
> Condos catching up with single family residences -- A couple of months ago, we witnessed the increase in sales of single family homes far exceeding the increase in sales of condos. Remember, I mentioned that there were better deals in condos and townhouses due to the improved affordability (read -- lower prices) of single family residences? Well, this is beginning to turn. Condo and townhouse closings were up 27% from March 2008 to March 2009, while the increase in closings of single family homes was 24%.
> Median prices. Stuck at $450,000 for Santa Clara County these past few months, median prices (middle transaction) for an entire county are worthless. "Warm to the touch" you might say when touching someone in the middle who is freezing on one side and boiling on the other. Each area, down even to the neighborhood, has differing dynamics of supply and demand so needs to be looked at accordingly. We've observed that market mix has helped bring down median prices due to more low-priced homes closing as a percentage of total closings. We have also seen the opposite occur in 2007 when higher-priced homes sold and the lower-priced homes were starting with the sub-prime loan issues and didn't sell as frequently.
> $5,000,000+ home buyers waking up? Sales of these higher-priced homes were virtually non-existent recently but that has changed. In the past month, four homes in Santa Clara County and three homes in San Mateo County have sold and are in escrow! Any interest? If so, you have plenty to choose from as the number of available homes for sale in this price range is 37 in Santa Clara County and 48 in San Mateo County.
> Want to sell with multiple offers? The percent of completed sales or closings with a sold price greater than list price stands at 31.0%. This level, down a bit, means that about one out of three sellers received more than their asking price. Oh, and 11.3% of sellers received their list price!
Want to hear a little secret? Some of those sellers receiving either their list price or something higher had to reduce their list prices to generate one or more offers. These figures don't calculate what the sale price to original list price ratio is but only what the current list price was at the time of sale.
> Traffic Jam! With the lowest mortgage rates since the '60's, the demand by borrowers trying to refinance have created an avalanche of work for the lenders. Yes, this is after they laid-off staff! First, rates for refinance loans average about 1/4 point higher than similar program purchase loans. Second, the process can take as much as 60-90 days! Third, there's no cash-out refi's as that option dissapeared.
> Investor's Corner - We've mentioned that investors have not been doing much lately with multi-unit residential properties. A couple of reasons are more stringent loan application and increased down payment requirements lenders have imposed. The other reason is, quite frankly, a less than optimistic outlook that many investors have. Closings have been enemic: 23 in Santa Clara County; and, 11 in San Mateo County. Most, about 80%, of the activity is in the less than $600,000 price range.
> Go, Monterey, go! Still setting records, Monterey County has seen record-breaking numbers of initiated sales (accepted contracts) and closings and even continues to out sell San Mateo County which is a larger market historically. As you might have guessed, most of the transactions in Monterey County are bank-owned or REO's after a flurry of affordable home building in the county a few years ago caused a tremendous over-supply of homes, especially along the 101 corridor. This has not occurred in Santa Clara, Santa Cruz or San Mateo counties. Still, this means that there are buyers, buyers with money and buyers with money who can get loans and lenders who are lending!
Thanks for reading -- what are your thoughts?
Wednesday, March 11, 2009
March Real Estate Market Highlights
Here are my observations of the recent market action in Santa Clara, Santa Cruz, San Mateo and Monterey counties. You are encouraged to leave your comments and questions. Feel free to update us on what you are witnessing in your neighborhood.
> Increased Sales or Is It? -- Santa Clara County had higher single family residence closings in December than in November because of the calendar. Since the first of the year, closings have dropped into the higher 500 area with January at 568 and February at 579. Now the media states that sales increased 35% over the last year but that number is deceiving as it blends both single family and condos. First, single family residence sales increased by 37% and condos and townhouses increased by only 30%. This is significant in that it blurs the major shift towards single family residences. Second, the increase, though appreciated by some real estate agents, came off the slowest month since 2001. And third, while we're on this, a much higher level of transactions failed to close escrow than before. For these transactions we call "TFT's" for transactions fallen through, this means that all the paperwork entering escrow in these didn't fly!
> Auctions may cost you more! Many folks think that working with a Realtor as their buyer's agent will cost them money out of their pocket. In actuality, buyer's agents are paid out of the seller's proceeds at close of escrow. The gross commissions earned by the buyer broker and agent do not add to the sales price. Auctions, on the other hand, advertise that they'll sell you a home at 40-50% under market. The homes they sell have NEVER sold at that higher price they compare to, so there is absolutely no comparison! Furthermore, to add insult to injury, many auction houses ADD their fees to the price paid by the buyer. This can be as much as 10% or more. What a deal!
Last year, I represented a buyer interested in bidding on a condo at an auction in San Mateo County. I made sure that my buyer wouldn't have to pay the auction house extra and that I might be able to earn a small fee representing her, of course, paid out of the seller's proceeds. With that cleared up front, she was successful in her bid and purchased the condo she wanted. By the way, my wife doesn't allow me to work for free! Something like "we've got two kids in college on the Mom & Dad Scholarship Program".
> Property tax reviews -- Santa Clara County Tax Assessor, Larry Stone, stated that about 200,000 parcels (single family, condos, townhouses, multi-unit residential) will be reviewed for possible adjustments in their fair market values for property tax purposes. Well, with about 432,000 parcels in the county, that's nearly 50%! The estimated amount of these parcels which will actually be reduced is about 50% or about 100,000. Last year about 44,000 properties were adjusted.
> Free is better than well, not free -- Who wouldn't want to obtain a property tax adjustment? But, why pay extra for something that is essentially free. The county charges a standard filing fee of $30. I'm reminding you that some firms are charging $179 for something that you can do for the county standard filing fee of $30! When you receive a card from the county tax assessor in a few months and think the assessment is too high, go to the Santa Clara County Tax Assessor's website. You can click on Assessment Appeals under Quicklinks to read how to apply, important dates for homeowners, etc. You must file during the open period to qualify otherwise it's tough luck.
> The median prices for single family residences in the affordable areas of Santa Clara County are now below that of the median prices for condos and townhouses in the moderate price areas. If you don't like to mow lawns, in my professional opinion, there are currently better deals in condos/townhouses. Case in point, I just closed a transaction where my buyers purchased a San Jose bank-owned or REO condo for $377,000 which was under the list price even after it had been reduced. This same three-year old condo sold brand new in 2006 for $565,000.
> Buyers wait for sellers to reduce list price. One of the indicators I follow constantly is the average sales price to list price ratio. This ratio, currently standing at 97.8%, means that the average transaction sells at only a 2.2% discount to list price. For the most part, buyers will wait until sellers adjust their list prices rather than put in ridiculous offers. High list prices, relative to the current market, on some homes are one big reason that some buyers wait, and wait, and wait!
> Median prices, revisited. The calculation of median prices used to be a reliable "read" of the market. Not so since the sub-prime loan problems hit during summer 2007. Before, market mix (percent of total for different price levels) didn't vary much. Now we have a much higher percentage of low-priced homes closing as a percent of total closings. But just for the record, the Santa Clara County single family residence median price in February 2008 was $785,000 whereas the median for February 2009 was $450,000, a decrease of 42.7%. This does not mean ALL homes went down this much! Median price is the middle transaction and represents the level of those that closed during the month.
> Another revisit? Can't sell your $5,000,000+ home? There have been NO sales of any homes in Santa Clara County priced above $5,000,000 reported through the MLS since early November! There are 34 of them on the market as of 3/11/09. In San Mateo County, one sale has taken place in the same price range. We'll see if it closes escrow!
> Want to sell with multiple offers? The percent of completed sales or closings with a sold price greater than list price now stands at 33.0%. This means that one out of three sellers received more than their asking price. Oh, and 7.5% of sellers received exactly list price.
> What happened, Foster City? -- With 57 homes available to sell and only two sold during February that means the calculation of days of unsold inventory (DUI) exploded to 998! This means that it would take 998 days to sell the existing inventory in Foster City. The calculation is theoretical but it tells me there's no demand from buyers. This could change quickly but if it doesn't, I see lower prices ahead.
> Investors, where are the investors? Multi-unit investor marketplace has had very few transactions with only 26 closings in February. Tougher lender requirements have contributed to this situation and probably can't leave out the stock market, too! I look at activity in this arena as it is an indicator of investor confidence in the future.
> Go, Monterey, go! Monterey County continues to see more closings than San Mateo County. Most of the transactions in Monterey County are bank-owned or REO's after a flurry of affordable home building in the county a few years ago caused a tremendous over-supply. This has not occurred in Santa Clara, Santa Cruz or San Mateo counties. For Monterey County, the days of unsold inventory (DUI) stands at 89, close to the level we can start to see price appreciation. Shock! Actually, the price levels below $450,000 have already reached the point where we can see price appreciation with a DUI reading of 54! Multiple offers are common for homes priced in this range with final sales prices often going above the list price. Double shock!
Thanks for reading -- what are your thoughts?
> Increased Sales or Is It? -- Santa Clara County had higher single family residence closings in December than in November because of the calendar. Since the first of the year, closings have dropped into the higher 500 area with January at 568 and February at 579. Now the media states that sales increased 35% over the last year but that number is deceiving as it blends both single family and condos. First, single family residence sales increased by 37% and condos and townhouses increased by only 30%. This is significant in that it blurs the major shift towards single family residences. Second, the increase, though appreciated by some real estate agents, came off the slowest month since 2001. And third, while we're on this, a much higher level of transactions failed to close escrow than before. For these transactions we call "TFT's" for transactions fallen through, this means that all the paperwork entering escrow in these didn't fly!
> Auctions may cost you more! Many folks think that working with a Realtor as their buyer's agent will cost them money out of their pocket. In actuality, buyer's agents are paid out of the seller's proceeds at close of escrow. The gross commissions earned by the buyer broker and agent do not add to the sales price. Auctions, on the other hand, advertise that they'll sell you a home at 40-50% under market. The homes they sell have NEVER sold at that higher price they compare to, so there is absolutely no comparison! Furthermore, to add insult to injury, many auction houses ADD their fees to the price paid by the buyer. This can be as much as 10% or more. What a deal!
Last year, I represented a buyer interested in bidding on a condo at an auction in San Mateo County. I made sure that my buyer wouldn't have to pay the auction house extra and that I might be able to earn a small fee representing her, of course, paid out of the seller's proceeds. With that cleared up front, she was successful in her bid and purchased the condo she wanted. By the way, my wife doesn't allow me to work for free! Something like "we've got two kids in college on the Mom & Dad Scholarship Program".
> Property tax reviews -- Santa Clara County Tax Assessor, Larry Stone, stated that about 200,000 parcels (single family, condos, townhouses, multi-unit residential) will be reviewed for possible adjustments in their fair market values for property tax purposes. Well, with about 432,000 parcels in the county, that's nearly 50%! The estimated amount of these parcels which will actually be reduced is about 50% or about 100,000. Last year about 44,000 properties were adjusted.
> Free is better than well, not free -- Who wouldn't want to obtain a property tax adjustment? But, why pay extra for something that is essentially free. The county charges a standard filing fee of $30. I'm reminding you that some firms are charging $179 for something that you can do for the county standard filing fee of $30! When you receive a card from the county tax assessor in a few months and think the assessment is too high, go to the Santa Clara County Tax Assessor's website. You can click on Assessment Appeals under Quicklinks to read how to apply, important dates for homeowners, etc. You must file during the open period to qualify otherwise it's tough luck.
> The median prices for single family residences in the affordable areas of Santa Clara County are now below that of the median prices for condos and townhouses in the moderate price areas. If you don't like to mow lawns, in my professional opinion, there are currently better deals in condos/townhouses. Case in point, I just closed a transaction where my buyers purchased a San Jose bank-owned or REO condo for $377,000 which was under the list price even after it had been reduced. This same three-year old condo sold brand new in 2006 for $565,000.
> Buyers wait for sellers to reduce list price. One of the indicators I follow constantly is the average sales price to list price ratio. This ratio, currently standing at 97.8%, means that the average transaction sells at only a 2.2% discount to list price. For the most part, buyers will wait until sellers adjust their list prices rather than put in ridiculous offers. High list prices, relative to the current market, on some homes are one big reason that some buyers wait, and wait, and wait!
> Median prices, revisited. The calculation of median prices used to be a reliable "read" of the market. Not so since the sub-prime loan problems hit during summer 2007. Before, market mix (percent of total for different price levels) didn't vary much. Now we have a much higher percentage of low-priced homes closing as a percent of total closings. But just for the record, the Santa Clara County single family residence median price in February 2008 was $785,000 whereas the median for February 2009 was $450,000, a decrease of 42.7%. This does not mean ALL homes went down this much! Median price is the middle transaction and represents the level of those that closed during the month.
> Another revisit? Can't sell your $5,000,000+ home? There have been NO sales of any homes in Santa Clara County priced above $5,000,000 reported through the MLS since early November! There are 34 of them on the market as of 3/11/09. In San Mateo County, one sale has taken place in the same price range. We'll see if it closes escrow!
> Want to sell with multiple offers? The percent of completed sales or closings with a sold price greater than list price now stands at 33.0%. This means that one out of three sellers received more than their asking price. Oh, and 7.5% of sellers received exactly list price.
> What happened, Foster City? -- With 57 homes available to sell and only two sold during February that means the calculation of days of unsold inventory (DUI) exploded to 998! This means that it would take 998 days to sell the existing inventory in Foster City. The calculation is theoretical but it tells me there's no demand from buyers. This could change quickly but if it doesn't, I see lower prices ahead.
> Investors, where are the investors? Multi-unit investor marketplace has had very few transactions with only 26 closings in February. Tougher lender requirements have contributed to this situation and probably can't leave out the stock market, too! I look at activity in this arena as it is an indicator of investor confidence in the future.
> Go, Monterey, go! Monterey County continues to see more closings than San Mateo County. Most of the transactions in Monterey County are bank-owned or REO's after a flurry of affordable home building in the county a few years ago caused a tremendous over-supply. This has not occurred in Santa Clara, Santa Cruz or San Mateo counties. For Monterey County, the days of unsold inventory (DUI) stands at 89, close to the level we can start to see price appreciation. Shock! Actually, the price levels below $450,000 have already reached the point where we can see price appreciation with a DUI reading of 54! Multiple offers are common for homes priced in this range with final sales prices often going above the list price. Double shock!
Thanks for reading -- what are your thoughts?
Friday, February 13, 2009
World class chocolates in the Valley of Hearts Delight
You've made dinner reservations at a romantic restaurant (I did at Pezzella's Italian Restaurant in Sunnyvale, CA) and you might have picked up a little something for her at her favorite store (I did that too. How about a beautiful orchid plant.) but then there's always sweets for your sweets for Valentine's Day.
Here are some world class chocolatiers from Silicon Valley to Santa Cruz:
Chocolate Dream Box
39 N. Santa Cruz Avenue, Los Gatos. 408-354-3574
Pictured are selected handmade chocolates from Fleur de Cocoa
Saratoga Chocolates
Schurra's Fine Confections
Shokolaat
Pictured is Dark Chocolate Ganache Truffle from Sugar Butter Flour
Testarossa Vineyards
Why mention a winery? Because they're hosting a wine and chocolate pairing event on Saturday, February 14th from 11:00am to 4:00pm. Five of their award-winning wines will be paired with delectable chocolates. Nominal tasting cost is refunded upon a purchase of Testarossa wines. They're located in the historic Novitiate Winery in Los Gatos. It happens to be the oldest continuously operated winery in the Bay Area dating from 1888. And, I just happen to own a bottle of Novitiate Cabernet from about 1970!
Happy Valentine's Day!
Thanks for reading! What do you do for Valentine's Day?
Here are some world class chocolatiers from Silicon Valley to Santa Cruz:
Chocolate Dream Box
- 710 Blossom Hill Road, Los Gatos. 408-356-2626
Fleur e Cocoa Patisserie Chocolaterie
39 N. Santa Cruz Avenue, Los Gatos. 408-354-3574
Pictured are selected handmade chocolates from Fleur de Cocoa
- 1509 Mission Street, Santa Cruz. 888-685-1871
Saratoga Chocolates
- 14572-B Big Basin Way, Saratoga. 408-872-1431
Schurra's Fine Confections
Shokolaat
- 516 University Avenue, Palo Alto. 650-289-0719
- 669 S. Bernardo Avenue, Sunnyvale. 408-732-8597
Pictured is Dark Chocolate Ganache Truffle from Sugar Butter Flour
Testarossa Vineyards
Why mention a winery? Because they're hosting a wine and chocolate pairing event on Saturday, February 14th from 11:00am to 4:00pm. Five of their award-winning wines will be paired with delectable chocolates. Nominal tasting cost is refunded upon a purchase of Testarossa wines. They're located in the historic Novitiate Winery in Los Gatos. It happens to be the oldest continuously operated winery in the Bay Area dating from 1888. And, I just happen to own a bottle of Novitiate Cabernet from about 1970!
Happy Valentine's Day!
Thanks for reading! What do you do for Valentine's Day?
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