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:
> Bank-owned and Short Sale Home Marketing -- Bank-owned homes are also called foreclosures or REO's for "real estate owned" (by a bank). Short sale homes are those still owned by the seller (not by the bank) but with the estimated proceeds of a sale not sufficient to cover the loan balance. For transactions with both types of homes, offers need the bank's approval. Now, the bank in each case has already lost money but their marketing has recently taken on a new look. They've given approval to the listing agents they hire to use an extremely low list price strategy to draw a huge number of offers and in a hurry too!.
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 and 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 and 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. Last month, the highest price home that sold was in Palo Alto with a list price of $3,700,000. Sunnyvale saw four such sales and Cupertino saw 13. 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?
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:
> Bank-owned and Short Sale Home Marketing -- Bank-owned homes are also called foreclosures or REO's for "real estate owned" (by a bank). Short sale homes are those still owned by the seller (not by the bank) but with the estimated proceeds of a sale not sufficient to cover the loan balance. For transactions with both types of homes, offers need the bank's approval. Now, the bank in each case has already lost money but their marketing has recently taken on a new look. They've given approval to the listing agents they hire to use an extremely low list price strategy to draw a huge number of offers and in a hurry too!. One such case with a short sale listing, the listing agent received 175 offers! But, what did the home sell for? With a list price of $200,000, I estimated the home's fair market value range at $400,000 to $450,000. Sale price was $438,000. Yes, the come-on is too good to be true but please remember that list price doesn't mean anything in real estate.
> 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?
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?
> 2 Hot 2 Handle? -- How's 20 offers on a single family residence? Or, 81 or even 99 offers? Yes, those are real numbers of offers received on three listings that I'm familiar with. I coach my buyers that list prices don't mean a thing, especially when the list price is way under the fair market value of the home. Research must be done to determine, as best as possible, the fair market value so that an intelligent offer can be submitted otherwise you're just spinning wheels. No seller whether a bank or not is going to sell for less than it's market value. So what we have now is that sales are extremely high but closings (close of escrows) are running at the third worst month in the last ten years!
> 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?
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?
> Seller's Markets? -- Yes, there are! Areas of Santa Clara County experiencing a seller's market condition are: Milpitas (hottest market in Valley) East Valley (Alum Rock), North Valley, South San Jose, Santa Teresa, Blossom Valley. 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 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, 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!
Finally, just about everyone knows that rates bounce all over the place so that a quote you receive one day or spot on the Internet is probably gone the next. The only way you can guarantee a rate is to "lock" it in and that takes an application and commitment to a loan officer not 50 inquiries over the Internet. Need a referral to a trusted loan professional? Please contact me.
> 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?
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?
> Myth Buster! "Lenders are not lending" -- Pure and simple, this is a myth cooked up to make bankers look even worse. Now, I don't have stock in any bank but these are the facts. After paring staff, lenders are flooded with applications for refinances now with mortgage rates in the mid-4% range. In addition, purchasers need loans, too. This huge sea change in demand for loans has caused lenders to push out the time necessary to complete refinances from 30 days to a range of 60-90 days. Purchase loans have an impending event tied to a close of escrow so these loans are given preferential treatment because of that. Those refinancing will have to be patient to begin to see savings.
> 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!
Finally, just about everyone knows that rates bounce all over the place so that a quote you receive one day is probably gone the next. The only way you can guarantee a rate is to "lock" it in and that takes an application and commitment to a loan officer not 50 inquiries over the internet. Need a referral to a trusted loan professional? Please contact me.
> 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?
In the heart of Silicon Valley, CA, broker assists with residential and commercial properties. Visit my website for buyer and seller tips, MLS access, email listing alerts, many free reports and more.
ActiveRain Corp. is not responsible for the accuracy of the site's content (which is written by members of the ActiveRain Real Estate Network) and does not endorse the views of the real estate agents, mortgage brokers, and others listed here.
Powered by the ActiveRain Real Estate Network
© 2009 ActiveRain Corp. All Rights Reserved
