Negative Equity in the US

Negative Equity in the US.

CoreLogic, a California based research firm, reported that as of the 3^rd quarter of 2013, the number of properties with a mortgage in the US is about 42,6 million.  About 6.4 million – or 13% – still have a negative equity. 

 

CoreLogic indicates that, of those 42.6 million properties with positive equity, 10 million have less than 20% equity, leaving them in a situation where it’s still hard to refinance due to underwriting constraints.

 

"Fewer than 7 million homeowners are underwater, with a total mortgage debt of $1.6 trillion," said Mark Fleming, chief economist for CoreLogic. "Negative equity will decline even further in the coming quarters as the housing market continues to improve."

 

The state of Nevada had the highest percentage of mortgage properties in negative equity at 32.2%, followed by Florida (28.8%), Arizona (22.5%), Ohio (18%) and Georgia (17.8%).

HousingWire.com article by KerriAnn Panchuk

 PS: let’s remember that many transactions are cash: According to this very nice RealtyTrac study, all-cash purchases nationwide accounted for 40 percent of all sales of residential property in July.

 

Thanks for reading, and may you have an excellent Holiday Season!

Francis Rolland
Silicon Valley real estate specialist
Detailed, local trends etc...
Current mortgage rates

non-profit organization worth noting: Partners for New Generations.

Automated valuation systems in real estate

Countless are the times when clients tell me that they believe the value of their home is “X” because Zillow or another automated valuation system on the internet said so. 

Automated home value estimates have been a popular tool for real estate search websites, and while these tools may satisfy clients’ needs for quick information, in many cases the information they provide is inaccurate.  Although many agents and brokers are aware of the limitations of these models, many consumers are not, and improper use of these tools can encourage mistakes.

Automated valuation models (AVM) are designed to predict a home’s price based on comparing it with similar properties in the area. They do this using county property record data from thousands of offices around the country, comparing several attributes such as square footage, the number of bedrooms and bathrooms, and other property features. This data cannot take into consideration the specifics of the neighborhood or the details of the properties (lot size, improvements, quality of the maintenance…).  It is my experience that while they can be a good first indication, and sometimes accurate, they miss the mark in roughly 30% to 40% of cases.  Where all homes are similar, like in a condominium complex or a given tract of identical homes, they may be quite accurate.  In places where each home is unique, in nature or in location, they can be quite off (think: Los Altos Hills, or Palo Alto to cite a few). 

As always with statistical data, a percentage of the evaluations will be accurate – but be careful it is not by mistake.  Also, figures do not know the market conditions, which can only be understood by a professional dealing with local sales 24/7.  I do not mean to be critical, but I just want to remind clients that these valuations should just be a first indication, not the final opinion of value.  Another way to look at it is, as we like to say in the business, "home valuation is not an exact science".

Read more details and the fullRE Insider interview.

Thanks for reading,
Francis

Silicon Valley real estate specialist
Detailed, local trends etc...
Current mortgage rates

Mars, Venus, and Real Estate...

As a full time agent, spending most of my time "in the trenches" I found this Real Estate News Release by Prudential quite refreshing and greatly informative, as it deals with people, attitudes, personal reactions and ... genders.  I had to look twice and - although one has to be careful with generalizations -  found some interesting trends that are not always apparent when you are buried in the details and in the heat of the action.  Also, I found their infographic illustration of their findings quite interesting.

Here is the Prudential Real Estate News Release I am referring to:

  View of Homeownership Differ by Gender
A new survey by Prudential Real Estate indicates that men and women don’t see eye to eye when it comes to homeownership and the responsibilities related to homebuying and selling.

Men claim to be more responsible for financial aspects

while women assume the lead for neighborhood research and planning portions of the process. While 39 percent of men in partnerships claim researching banks and securing a mortgage are completely their responsibility, 42 percent of women in partnerships indicated it is their sole

responsibility to manage appointments, and 34 percent take the lead in researching neighborhoods.

Women also seem to enjoy the process of purchasing a home more so than men. A full 87 percent of women said they enjoy looking at homes compared with 77 percent of men. Moreover, feelings associated with homeownership are more pronounced in women than in men. When asked about the reasons why homeownership is “very important,” more women associated it with a sense of pride or accomplishment (16 percent higher than men) and independence (11 percent higher). For men, “control over living space” and “more space for my family” were most important.  -- Complete News Release.

 

One last thought: different personalities will attract different people, and therefore each of us will have a different experience and perception of people's reactions.

What is your own experience?

Francis

Silicon Valley real estate specialist
Detailed, local trends etc...
Current mortgage rates

non-profit organization worth noting: Partners for New Generations.

2013 Cal. Annual Housing Market Survey

The Annual Housing Market Surveys conducted by the California Association of Realtors is always full of interesting tidbits, some of them not so small in fact.  All these facts, figures, percentages are fascinating if you like figures. 
-- If you are not so much interested in the statistics of the California real estate market, I would skip this blog.
If on the other hand you are curious about it, with a macro vision of the market, it yields some interesting thoughts and points.  Here it is:

C.A.R. Releases “2013 Annual Housing Market Survey”

Nearly half (49.5 percent) of all homes sold in 2013 were sold above asking price, nearly twice the share in 2012 (25.9 percent) and triple the share in 2011 (16.6 percent).  The 2013 figure was more than twice the long-run average of 18 percent during the past 20 years.  For homes that sold above the list price in 2013, the median premium paid over the list price was 4.8 percent, unchanged from 2012.  Note: in Palo Alto, the average ratio of Sales price over List price is 111.7%.

For the third consecutive year, an increasing number of home sellers – nearly half – planned on purchasing another home in the future.

The shortage of housing supply intensified further this year, leading to heightened market competition and more multiple offers, with more than seven of 10 home sales (72 percent) receiving multiple offers in 2013, up from 57 percent in 2012.  The 2013 figure was the highest in at least the past 15 years, with each home receiving an average of 5.7 offers, up from 4.2 offers in 2012 and 3.5 offers in 2011.  Note: in Palo Alto and Los Altos, 10 to 20 offers are fairly common.   

The distressed market continued to be the most competitive segment of the market, with more than 9 in 10 (91 percent) real estate-owned (REO) properties attracting multiple offers, an increase from 71 percent in 2012. The short sale market was less intense than the REO market, but still 3/4 of all sales received more than one offer, a jump from 66 percent in 2012.  There is no "deal" in the local real estate market...
Close to seven of 10 equity sales received multiple offers in 2013, a surge from 51 percent in 2012.
More information on the CAR website.

Francis
Silicon Valley real estate specialist
Detailed, local trends etc...
Current mortgage rates
A place worth noting: Our Brother's Home in MountainView

Haunted house anyone?

Realtor.com® Releases Haunted Housing Report
Realtor.com has released the results of its Haunted Housing Report, which explored consumer sentiments around their perceptions of "haunted" real estate. Survey results from nearly 1,400

respondents reveal consumer thresholds for purchasing haunted houses for sale, past experiences with spooky homes, popular "warning signs" of a haunted home, expected discounts when buying "perceived" haunted houses for sale and intolerable scary occurrences.

According to the survey, 26 percent of respondents indicated that they would consider purchasing a haunted house for sale, while 38 percent would not. Of the respondents that would consider purchasing a haunted home, 12 percent reported that they would pay full market value or over for a haunted house; 34 percent shared that they would purchase a haunted home if it was discounted 1 to 30 percent; 22 percent indicated that they would purchase a haunted home if it was discounted 31 to 50 percent; and 19 percent revealed that they would purchase a haunted home if it was discounted 51 percent or more.

However, of the respondents that would contemplate purchasing a haunted home, the following spooky occurrences would stop them from buying a home:

• 75 percent would be scared off by levitating objects from purchasing a home
• 63 percent would be deterred by objects being moved from where they were placed
• 63 percent would be dissuaded by ghost sightings
• 61 percent would be discouraged by supernatural sensations
• 61 percent would be scared off by flickering lights/appliances
• 60 percent would pass on a home with strange noises (footsteps, doors slamming)
• 34 percent would be deterred by warm or cold spots.

In terms of the most popular "warning signs" a home could be haunted, 61 percent of respondents thought a cemetery on the property may be an indication; 50 percent shared that homes over 100 years old could be haunted; 45 percent thought quick transitions in owners might be a sign; 45 percent believe that an unexplainable low price on the home is alarming; and 43 percent felt that homes in close proximity to a battlefield may be haunted.

Francis
Silicon Valley real estate specialist
Detailed, local trends etc...
Current mortgage rates

How long to own a home?

Most people don't buy or sell a home very often. 
 

In fact, a recent National Association of Realtors® study found the median length of time that people who sold a home in 2012 had owned that residence was nine years, two years longer than the proverbial seven-year time frame. 

What's more, recent buyers had even longer time horizons in mind: first-time purchasers expected to own their newly bought home a median of 10 years. For repeat buyers, the median was 15 years. 
 

Sure, many people move more frequently, often due to the birth of a child, marriage or divorce, job loss or relocation, retirement, someone passing away, or other major life event. Yet there's still no doubt that a move is pretty hard on anyone… and avoided if possible.

How long have you owned your home in average?

Thanks for reading,
Francis

Silicon Valley real estate specialist
Detailed, local trends etc...
Current mortgage rates

Grand Opening at the San Antonio shopping center

It has been a while since I wrote a note about the San Antonio shopping center, and the transformations happening there. 
Since then a new Safeway opened, apartment buildings opened, a Starbucks and a few other well known franchises.  Tomorrow Saturday there is an event worth mentioning here for those who live close by, and especially dog lovers:
the Grand Opening of the Village Green Park and Dog Park.  Tomorrow Saturday October 19th, 10:30 to 3 pm.

Francis
Silicon Valley real estate specialist
Detailed, local trends etc...
Current mortgage rates
A place worth noting: Our Brother's Home in MountainView

Housing shortage in the Bay Area .. Facebook takes note.

Facebook to Build Apartments for Employees

A mockup of a new housing complex in Menlo Park for Facebook employees has been released. The project will cost $120 million and will create 394 units. The entire complex will be 630,000 square-feet.

Along with apartments, the area will have shops, a sports bar, a doggy day care, as well as an outdoor community pool. Designed primarily to house Facebook employees, the complex will be within walking distance or a five-minute bike ride from the corporate campus.

The majority of units will only be available to Facebook employees and sold at market rate. Fifteen units will be open to non-Facebook employees who are low-income. Construction begins this month and is expected to be completed in 24 months.

Source: Silicon Valley Association of Realtors.

Thanks for reading,
Francis

Silicon Valley real estate specialist
Detailed, local trends etc...
Current mortgage rates
A place worth noting: Our Brother's Home in MountainView

Micro apartments...

Micro apartments. In some major metropolitan areas, people are living large in smaller spaces.

So-called micro apartments—which are often less than 200 square feet—are becoming popular in San Francisco, New York, Seattle, Boston, Providence, R.I., and Portland, Ore., reports CNN Money (by Les Christie).
But it’s not only those just-out-of-college grads flocking to these tiny units. In some “micro buildings,” the average tenant is 33 years old and makes less than $35,000 a year, according to Reuters. 

 

On a separate (real estate) note, not quite the same size, you can have a look at what’s inside the ultimateman cave … (by Anastasia Anashkina @CNNMoney)  - Ok, this is not your typical home. But I know many who are going to dream.

Thanks for dreaming! - huh... reading!

Francis

Silicon Valley real estate specialist
Detailed, local trends etc...
Current mortgage rates

non-profit organization worth noting: Partners for New Generations

California: fastest rising list prices

As of July 2013...
This is not new information, but it is not going to be much different today, and it gives a good perspective on the market, as we currently witness a slowing down, attributed to much higher prices and higher interest rates.  The market locally is still quite good by all measures...

 Francis

Silicon Valley real estate specialist
Detailed, local trends etc...
Current mortgage rates

The Growth of Single Households: Singles Make Up Quarter of All Buyers

The Growth of Single Households: Singles Make Up a Quarter of All Buyers
Source: REALTOR® Magazine

Whether people marry later, divorce more frequently, and/or live longer, more people are living alone.
In fact, single buyers comprised a quarter of all home purchases last year, according to the NATIONAL

ASSOCIATION OF REALTORS®  (from 17% in 1970). The living solo trend is evident in the country’s 33 million one-person households. Young adults ages 18 to 34 are the fastest-growing group of people living alone.

• Solo households are also mostly women: 18 million women live alone versus 14 million men. Twice as many single women bought homes as did single men in 2012.
• A single buyer can face challenges in this post-recession market, especially when it comes to qualifying for a mortgage because a single buyer cannot rely on the advantages of dual incomes or shared responsibly that a two-person household does. That being said, single buyers are not dragged down by a partner's credit score, loans, or credit card debt.
• Single households are prominent in other countries as well, with Sweden having the largest proportion of solos (47 percent). The United Kingdom has a rate of 34 percent, Japan’s is 30 percent, and Norway’s is 40 percent.
• Around 11 million Americans living alone are elderly, and the majority of solo households are in cities and metro areas.
• Purchasing a home can be a means of self-expression for singles, and they can express their lifestyles and values while focusing on the exact communities, home styles, and features that cater to their individuality with much less compromise.

More details on this article from the Realtor Magazine.

Thanks for reading,
Francis

Silicon Valley real estate specialist
Detailed, local trends etc...
Current mortgage rates
A place worth noting: Our Brother's Home in MountainView

Properties for sale "off MLS"

The market is so "hot" in the Valley that it is easy to sell a property without putting it in the MLS (multiple listing service). While it may be the way to go for very specific situations or sellers' requirements, statistically the vast majority of agents agree that it may not bring the best deal overall for the seller.  If you are thinking of selling your property "off market", I'll be glad to go over the advantages and disadvantages of such a strategy.  But unless you have very specific needs to address, it will be hard to find any benefits to doing it without the vast exposure of the MLS.

• Real estate agents marketing a property for which they have obtained a listing generally will place that listing on the Multiple Listing Service (MLS). At times, however, listings are not placed into the MLS. These listings are commonly referred to as off-MLS or pocket listings.
• While not a new concept, pocket listings are growing in number – as many as 10 percent to 15 percent of homes offered for sale today are “off-MLS” listings, according to one MLS.     
• Sellers should strongly urge their agent to place their home on the MLS. A property that is listed on the MLS has the advantage of being marketed to every real estate agent who belongs to the MLS and, through those agents, to their vast network of potential buyers.
• Active marketing on the MLS usually includes open houses, broker tours, and inclusion of the seller’s property in the MLS’ download to various real estate Internet sites commonly used by the public to search for properties.
• A pocket listing generally is marketed by a single agent to one or a select few potential buyers. The marketing pool can be so small that in some cases, other agents within the same brokerage or brokerage office may not even be aware that a fellow agent has the listing.
• While pocket listings sometimes are requested by sellers who wish to maintain their privacy, the downsides to off-MLS listings outweigh the advantages. Primarily, the pool of real estate agents and potential home buyers who will know the property is for sale and make an offer to purchase may be limited. With fewer offers, sellers may not receive the best possible price for their home.

 

Thanks for reading!

Francis

 

Silicon Valley real estate specialist
Detailed, local trends etc...
Current mortgage rates

What do Real Estate Investors buy?

I have been working with investors as well as homeowners in the past few years, through the crisis, and I do agree that investors had a very good and favorable role in the recovery.  This is why I am always curious to see the exact role and impact investors have on the market.

The California Association of Realtors just released a survey of the types of purchases investors have been making.  Here are some of the interesting point:

Investors have played a key role in the California housing market recovery for the past four years. 

Two-thirds (66 percent) of investors who worked with a REALTOR® indicated they are going to keep the property for more than a year, while about one-fourth (26 percent) of investors intend to flip the property within a year.

Additionally, three-fourths of investors are of the small mom-and-pop type, owning 1-10 other investment properties, with 15 percent owning just one property, 46 percent owning 2-5 properties, and 14 percent owning 6-10 properties.  
      
Of the properties purchased by investors, single-family homes were the preferred property type, with 78 percent of transactions involving single-family homes.  Multifamily properties comprised 14 percent, 7 percent were other property types, and bulk sales made up only 1 percent.
More info  on this C.A.R.'s 2013 Investor Survey Results.

Thanks for reading,
Francis

Silicon Valley real estate specialist
Detailed, local trends etc...
Current mortgage rates

Homeowners and their yard.

 

 

Thank you for reading,
Francis
Silicon Valley Real Estate

Smart stats
Current mortgage rates

Student-Loan Debt Keeps Buyers Out of the Market

Student-Loan Debt Keeps Buyers Out of the Market
 As we hear that Congress struggles with the "student loans" question, it is good to put it in perspective with a few facts. I thought the article below was kind of important to keep in mind.

 

The impact of student-loan debt on the nation's housing market has real estate analysts worried due to the importance of first-time buyers to the health of the market. Questions linger about whether the housing recovery will be limited as deeply indebted college graduates struggle to stabilize their finances, which means young, first-time purchasers are not entering into homeownership at traditional rates.

• According to the NATIONAL ASSOCIATION OF REALTORS®, first-time buyers comprised just 28 percent of purchases in the resale market during May. For comparison, typically these buyers make up 40 percent of purchases. The lower rate is not surprising when one considers the statistic that college graduates on average carry $21,402 in student loan debt, and troublingly, only 39 percent are in a capacity to repay. Clearly, many college graduates have no choice but to postpone the purchase of a home due to heavy debts from student loans.
• The homeownership rate for those individuals who are still paying off student loans is 36 percent lower than among their peers who have no student debt, according to research from the One Wisconsin Institute.
• Student-loan debt will remain a long-term issue because the average payoff time is 21 years, ranging from 17 years for those who attended college but did not get a degree to 23 years for those with graduate degrees.
  
• The country’s total outstanding student debt has surpassed $1.1 trillion. For recent graduates, the debt load averages just under $27,000, but an estimated 13 percent of outstanding balances range from $54,000 to $100,000.

Read the full story on the Los Angeles Times article from Kenneth R. Harney, 6/28/13.
Do you have any thoughts on the subject? Feel free to chime in!

Francis

Silicon Valley real estate
Local market: Smart graphs
Current mortgage rates

Is this a safe neighborhood?

“Is this a safe neighborhood”?  ... is a question that we as Realtors® often hear from clients. (side note: a Realtor® is a real estate agent who is a member of the National Association of Realtors®, who adheres de facto to a very strict code of ethics - not all agents are Realtors®).
What people typically do not know is that as Realtors®, we are not allowed to answer such a question: it could be construed as discrimination.  Also, the opinion about how safe an area is can be so personal and relative!

I find that the best way to answer such a concern is to advise my clients to come back at different times of the day and walk around in the neighborhood, and talk with the neighbors as much as possible.  I would add that I believe it is always a good idea to do so, no matter how pretty or ugly an area may look.  You can learn a lot about a street, a block or a group of blocks by talking with the people living directly in the area.

Finally one has to remember that conditions change all the time: I live in an area that is fairly uneventful when it comes to crime, except that in the past few weeks there have been a well publicized increase in break-ins and thefts in that general part of Mountain View.  So the best way to answer such a question is to check for yourself with the police department and get a crime report, to talk to the neighbors (who will often tell you a lot about what happens nearby - and sometimes more than you want…), and also look at some internet resources on the subject.  Here are, below, some of the sites that I have come across in the past; but I recommend to check carefully how they collect their information, and what exactly they cover and do not cover.

https://www.crimereports.com 

http://www.spotcrime.com

http://www.mylocalcrime.com 

 

There is a specific web site for sex offenders:  http://www.meganslaw.ca.gov/

 

Some good information may also be found in the local newspaper.  For instance in the Mountain View Voice under "Crime Brief" or "Police Log",  and for Palo Alto "the Pulse" (PA Weekly).  Each local paper has a similar section.  One may need to check the evolution over a period of time to better judge a neighborhood.

 

Thanks for reading, as always!,

Francis

 

Silicon Valley real estate

Local market trends
Current Mortgage rates  ... Higher!!

Price increase in the Silicon Valley

To piggy up on my last blog (is the market slowing down?) here is the evolution of sales prices of houses and CID's (common interest development = condos and townhouses).

These graphs that I just pulled show the amount of increase in average prices in a year and a half, and illustrate how indeed this is a factor in a possible slow-down of the activity.

They also show something that is unusual: prices did not really go down a lot at the end of 2012.  On previous studies I showed how prices really adjusted towards the end of the year, in 2011 and 2010.  But the market stayed strong at the end of 2012.

Finally these graphs show that indeed prices are (somewhat) flattening at this point, at least in the case of the County of Santa Clara.

 

 

If you have any area of interest, very local or at the City level, let me know and I will publish it for you.

 

Thanks for reading, as always!,

Francis

 

Silicon Valley real estate

Local market trends
Current Mortgage rates

Non-profit organization worth noting: Partners for New Generations.

Is the market slowing down?

Is the market slowing down right now?

Ask an agent who is full-time involved in the market, on the buy and on the sell side, and you will probably hear that it looks that way.   

About a year and a half ago, in the middle of January 2012, suddenly in just a matter of a week or two you could tell if you were actively involved in sales that something was changing:  properties were not available any longer to place an offer on, or offers were just going to be heard that evening with 2 or 3 offers expected, or it was too late by a day etc... So we would go to the next best one, and it was gone too, with multiple offers.

In a similar way today little signs appear here and there: a property comes back on the market a few days after being in contract, or we see "offer dates" pass with no offers brought in.  Also the inventory (finally!) increases a bit so that there is actually some choice for potential buyers.  I also hear sometimes that after a few days on the market very few people have actually looked at the disclosures online.  A month ago you would already have had by the start of the week-end most interested buyers checking out the disclosures.

So yes, it seems to me that the market is slowing down.  Sales figures in a month or two will tell us if this is correct.  I would attribute this slight slow-down to factors like:

• Buyers are jaded by so many unsuccessful bids they may have placed,
• Prices have gone up significantly for the same type of house, certainly so in the eyes of buyers, and if the asking price is too close to the last comparable sale, another 10 or 15% jump from that high becomes too intimidating,
• With higher values have also come on the market properties which may not be the same high quality as those who just commended such high prices,
• A sense, at least for some would-be buyers, that they just do not know where prices should be any longer, after the many extreme bids that all can see in the MLS (hence the need for a good Realtor...),
• .. And last but not least, the rise in mortgage interest rates that have shot up in the past 2 weeks, effectively pricing out those buyers who were at the top of their borrowing power.

 

Let’s qualify those remarks though: in the areas with good schools, for properties priced lower than the last sales, there are still multiple offers, no doubt. For areas with very little inventory, the demand which has gone unsatisfied for so long is still there, and even only one offer will often bring a much higher price than the asking price.  The market is still very much a sellers’ market.  But in areas where inventory is larger, the new prices coupled with more choices will give a break to buyers who can still qualify. 

The future will depend a lot on:

-       The inventory (going up, going down again??)

-       The interest rates

-       Seasonality to a certain degree.  There are fewer people around during summer.

If I had a guess I would say that in general, going forward, we should expect prices to reach somewhat of a plateau, a market of muted price increase.  .. well, so there is my crystal ball. Do you want to try yours out in a comment?

Thank you for reading,
Francis

Local real estate
updated loan rates   Rates are up mostly, except for the 1-yr adjustable

Not enough money for your downpayment?

Not enough money for a downpayment?

Let’s imagine that you really, really want to purchase a home, you have the income to do it, and you’re ready, willing and able (all 3 conditions that as Realtors we always check for).  But there is a little problem: you do not have enough money for the downpayment.

The typical options are: - to get some gift money (it’s got to be from a relative to be acceptable by the bank making the big loan), - or get a second, in the form of an equity line of credit (just making their come back now), - or win at the lotto...

There is however an other option, that I have personally never seen used, but that I just read about and is worth mentioning:

REX HomeBuyer, a form of shared appreciation (or depreciation).

The principle of this option is that a group of investors get together, and loan you money to help with the downpayment on our purchase.

If the property has appreciated when you sell it, they share in the profit.

If the property has depreciated when you sell it, they share in the loss.

This is a good option for people who need some help with a downpayment, and feel shy going it alone on their purchase; it is reassuring in a way to have someone else share in the risks of the market variations.  And all the while you own the house the advantage is that you have used the downpayment money to actually buy a home and live in it, - and for a lot cheaper than if you had to borrow the whole amount.  (remember that when you borrow a 90% amount on a house, you have to pay PMI –Private Mortgage insurance – and this is not cheap: about 1 to 1.5% of the amount you pay, every time you pay anything it seems).

In that option, you do not pay interest on the money that made the rest of the downpayment.  It is like having a friend co-buy with you but without the hassle to draw a complicated “separation agreement” for when you want to be on your own later. Here it is done from the start, in a clear way.

More on this interesting idea on this Los Angeles times article by Lew Sichelman.
As always with financial arrangements, run this by an advisor or an attorney if you are considering trying it...

Francis

Silicon Valley real estate

Trends: Local prices and graphs.
A noteworthy local non-profit:  Our Brothers' Home

Tax break disappears as housing values rise

As property values have been going up sharply in the Silicon Valley, so are the assessors' values of our houses, throughout the area. We can expect therefore to pay more in property taxes, come November and December of 2013.

During the past 4 years I have prepared updated market analysis for several of my clients, in order to justify a lower value to be sent to the tax assessor's office. The goal of course was to pay a lot less in property tax, and I am glad to have been incidental to huge tax reductions in several instances. It is very unlikely that this is going to be possible going forward, as for most of the local area values have gone back to the highs of 2007, and sometimes higher yet. There are some small pockets in the County which would still be lower but there are fewer and fewer of them.

Nonetheless, if you feel that you are being assessed too much, do not hesitate to call on me to double check on it!

An article on the subject was recently published in the Mercury News, stating that "tens of thousands of homeowners will see their property taxes go up significantly this year as rising home values

restore some or all of their homes’ lost equity".

Do you feel you are being assessed unfairly this year? Let me know.

Thanks for reading,
Francis

Local real estate
updated loan rates   Rates are up mostly, except for the 1-yr adjustable
Week ending 6/6/2013 (Source: Freddie Mac)
30-yr. fixed: 3.91% fees/points: 0.7%
15-yr. fixed: 3.03% fees/points: 0.7%
1-yr. adjustable: 2.58% Fees/points: 0.4%

Where the mortgage deduction really pays

Where the mortgage deduction really pays...  an interesting article.
Source: CNN Money

The mortgage interest deduction is one of the most-expensive tax breaks on the books, but its benefits are distributed unevenly across the country, according to a new, comprehensive report by the Pew Charitable Trusts.

In 2010, the year that Pew analyzed, the mortgage deduction resulted in $80 billion of forgone revenue to the federal government. Over five years, the tax break is expected to reduce revenue by about $380 billion.
This article by Jeanne Sahadi @CNNMoney shows however who really benefits from the tax break (and who benefits from other tax breaks),  while these report and maps look at the geographical distribution of the mortgage interest deduction.

Make sure to look at the interactive maps, from the Fiscal Federalism Initiative, showing how widely mortgage interest claim rates and average deductions vary, both across and within states.  They show in particular some key findings like:
- Average deduction per filer, by state,
- the Claim rate, by zip code,
- the average deduction per filer by zip code.

Local info:
Look at the average deduction per household in your local area.

Simply fascinating!...

Thanks for reading,
Francis

Silicon Valley real estate specialist
Detailed, local trends etc...
 

Bay Area real estate values...

As seen on Thursday's front page of the San Jose Mercury News (and also in the SF Chronicle of today Friday), property values in the Bay Area as a whole are definitely picking up.  Typically when it gets in the paper, it is already a few months old, but the information is organized in a way that shows updates in some communities that are not obviously visible to us here in the Silicon Valley.

Some of the East Bay Cities are doing fantastic, showing some real improvement in 1st quarter 2013 over the first quarter of last year.  For instance:
Oakley is 16% higher in median values than in the first quarter of 2012,
Antioch is 28% higher,
Union City is 34 % higher,
Pittsburg is 9 % higher.

The article is also interesting because it touches on a subject I touched on earlier in this blog: why are there so few homes on the market?   They are showing that there are still a lot of houses either underwater, or with not enough equity for people to move:
according to Zillow there are still about 25% of homeowners who are in that situation in the Counties of Santa Clara and San Mateo, and a whopping 46% in the Contra Costa County.

That would include:
- people who bought when prices were higher,
- people who borrowed too much on their home equity over the years,
- prices that are slightly higher than when property was purchased, but would not break even with the costs of the sale.

Francis Rolland

Silicon Valley real estate

Trends: Local prices and graphs.

Own vs Rent ...

Despite US population growth of roughly 1 percent per year, the number of owner households has held steady, in the range of 75 million since 2007, while the number of renter households has increased from 35 million in 2007 to nearly 40 million today. 
This means that the historic proportion of 1/3 - 2/3 tenants - owners in the US is loosing ground.

Some of the reasons are:
- loss of home because of the crisis,
- difficulty to refinance,
- Some renters who would like to take advantage of today's favorable prices and interest rates are finding credit standards too tight to obtain financing.

Here is the evolution over time, nationwide:

In France, that proportion is about opposite: about 1/3 owners, and 2/3 renters.
If you are coming from another Country, let me know what is that proportion where you are coming from!
Thanks,
Francis

PS: in California, the homeownership rate has gone down regularly since 2008 and is now about 54%.

Local market trends

Current Mortgage rates

Non-profit organization worth noting: Partners for New Generations.

California: foreign-born population and homeownership.

California, the most popular State for immigrants...  When I came here first in 1970 the mentality was still very much like: "Go West, young man, go West" and a lot of people were arriving from the East to start anew.  There was a lot of space available, still, right outside your door.

 

What is the situation now?

 

 

Well, it is true that historically, California has been the popular destination for immigrants. Currently, about one quarter of the nation’s immigrants live in California. The top three countries of origin for the foreign born entering the U.S are Mexico, China and India.

However, California’s share of incoming immigrants has been declining since 1990 due to a rise in state bills related to immigration, and the settlements of new immigrant arrivals into different states with historically low concentrations of immigrants.

 

Length of stay and region of origin are significant factors in determining homeownership rate among international buyers. Those who have stayed longer, and have migrated from Europe and other parts of North America are more likely to own a home.

Homeownership rate among the foreign born population is 47.9 percent in California, much less than the rate among those born in the U.S (58.1 percent). When breaking down the foreign born population, naturalized citizens are twice as likely to own a home compare to those who are not (63 percent for naturalized citizens versus 28 percent who are not a U.S citizen).

 

One in five REALTORS® has worked with an international buyer in the past year.

The share of international buyers has slightly increased from 5.3 percent in 2010 to 5.8 percent in 2011.

In 2012, California accounted for 11 percent of home purchases by international clients, second behind Florida (26 percent).

The largest group of international clients in California is from Canada.

The median home price of foreign clients was $505,000, which is double the median price of single family homes in the state ($291,000)

 

The California Association of Realtors has published a new study on the subject.

Full study url:   http://www.car.org/3550/pdf/econpdfs/BusinessDataForInternationalRE_Final.pdf  

 

Thanks for reading,

 

Francis
Silicon Valley Real Estate

Smart stats