Thursday, December 30, 2010

Buy, or rent in the Valley?

Nationwide an interesting study by Fannie Mae (link below) indicates that most Americans still aspire to be homeowners. More than half (51 percent) of current homeowners and renters say that the housing crisis has not affected their overall willingness to buy a home, according to the study. However, while homeownership aspirations are high for the long-term, Americans have near-term doubts about buying. For the shorter terms, 59 percent of renters said they would continue to rent in their next move, compared with 54 percent in January 2010.

In our area, the Silicon Valley, and more particularly around Palo Alto, Los Altos and Mountain View, but of course including Sunnyvale, Menlo Park and surrounding areas, the activity that I see at week-end open houses and what is reported in my weekly office meetings indicate that there is a strong demand for homes of all types. This area is doing a lot better than most due to the economic landscape and the high number of hiring companies. It is very common to see many, many visitors at the open houses that agents hold (even under heavy rain) and people are pre-approved and ready to buy the right property.

What I do see too is that the demand is more selective and there is pressure on prices.
The whole study on American homeownership aspirations.

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Wednesday, December 15, 2010

Condominium / Townhouse in the Silicon Valley – Any good?

In the Silicon Valley where there is a limited amount of land to build on, a condominium or a townhouse is often a good alternative to a house. In general, for the same amount of money, one gets a larger and newer property in a PUD or CID (Planned unit development – Common interest development) than in a house. In our local towns (Los Altos, Palo Alto or Mountain View) a lot of the house value is in the land. Consider that an average piece of land ~ 6,500 sq.ft. would easily fetch in Mountain View between $400k and $500k, and this would not be in a prime location. Therefore, when one considers a purchase around $600k to $800k, a PUD is often more appealing to live in.
Some other reasons to prefer a PUD could be safety, or lower maintenance, as various parts of the property are maintained by the HOA (homeowners’ association). For people who travel or work a lot, with little time for yard or house maintenance, a condominium or townhouse can be a good option - also, it is less isolated than a house. Older people may also like the PUD arrangement: less involvement in the maintenance. The “maintenance” is where the “association dues” come into play: depending on the complex the monthly dues can cover some utilities, outside painting, roof, fences or decks, ground maintenance, some insurance, and various amenities included in the complex like: exercise room, pool, spa, kids’ play structure, etc…

It is easy to rate complexes depending on the amount of monthly dues. But it is not that simple. It depends a lot on:
1/ what they cover and
2/ the reserves of the association.   More on this on the following  condominium page  because it would make a very long document on this blog...

Finally, what is the difference? In a condominium one owns only “from the paint on”. The walls belong to the association, and all own a percentage of the whole. In a true townhouse, one owns the land on which it sits, and the building itself. However, it must be noted that in the Bay Area a lot of PUD’s offer a mix of the two, and it is only by the legal definition (on the preliminary title report) that one can be sure of the nature of the unit. Many condominiums are “townhouse style” with two levels, no one above or under, and a 2-car garage.

Let me know if you have any specific questions!...
Thanks for reading! - Francis

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Sunday, December 5, 2010

The Housing Trust of Santa Clara County Offers Help to First-time Home Buyers

“We have money to help your first-time home buyers,” Dan Lachman, program manager of The Housing Trust of Santa Clara County told REALTORS®.
Lachman said The Housing Trust offers three main financial assistance programs for first-time home buyers - the Closing Cost Assistance Program (CCAP), the Mortgage Assistance Program (MAP) and Equity Share Co-Investment (ESCO).
Under the CCAP, The Housing Trust will provide up to $6,500 to help pay for closing costs and other transaction expenses associated with purchasing a first home. This program provides a deferred loan of 3 percent of the purchase price up to $15,000 for down payment and/or closing costs. The loan is not repaid until the house is sold or the owner refinances. No interest or principal payments are due during the term of the loan.

The MAP is a second mortgage of up to $35,000 available to first-time home buyers in Santa Clara County. The Housing Trust MAP loan is a conventional second mortgage, with interest and principal payments due monthly and compatible with most banks and credit unions. It is a 30-year amortizing loan with the interest rate at 1.5 percent above the rate of the first loan.
To qualify for the CCAP and MAP, the income of a single-member household cannot exceed $86,950, or household income for a four-member household cannot exceed $124,200.

Under the “equity share co-investment” or ESCO program, the Housing Trust will advance as much as $75,000 to first-time home buyers. The money will be used to match a buyer’s down payment. Payments on the ESCO loan will not be due until 15 years later or until the house is sold or the borrower refinances. The borrower repays the loan based on the appreciation of the home in equal proportions to the amount of the original down payments. To qualify for the program, the income of a single-member household cannot exceed $103,390, or the household income of a four-member household cannot exceed $147,700.
Lachman said since 2001, the Housing Trust has provided 2,100 down payment assistance loans. He urged REALTORS® to consider the loans for their clients. The Housing Trust considers a person who has not owned a home in Santa Clara County during the last three years a first-time home buyer.

For more details about PAL and other financial assistance programs offered by The Housing Trust of Santa Clara County, visit .

These programs can help some people live much closer to where they work, in cases where they work in expensive areas (Los Altos, Palo Alto, Mountain View?).  Among others, I am thinking about teachers, policemen, firefighters, clerks...

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Wednesday, December 1, 2010

2011 California housing market forecast – what does it mean for the Silicon Valley?

The California Association of Realtors, in its “2011 California Housing Market Forecast” has projected a decline in California home sales for 2010, although home sales are expected to edge up slightly in 2011.

California home sales for 2010 are forecast to decline 10 percent from the 2009 sales figure of 546,500 homes sold. Sales in 2011 are projected to increase a lackluster 2 percent to 502,000 units compared with 492,000 units (projected) in 2010. After two consecutive years of record-setting price declines, the median home price in California will climb 11.5 percent in 2010 to $306,500 and increase another 2 percent in 2011 to $312,500, according to the forecast.

The real estate market has always been privileged in the Silicon Valley in comparison to the rest of the state. This tends to indicate a healthy market in the year to come in our area, and by our area I include Los Altos, Mountain View, Palo Alto and Menlo Park, and of course the Cities nearby.

Almost no one expects prices to rise as they have been doing “pre-crisis”, but based on the hiring done by local companies like Google, Apple and Facebook, to name a few, I would not bet on prices going down next year. What do you think?
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