California’s Wildfires Will Push Home Prices Even Higher

 

California’s wildfires will push home prices even higher

Source: Realtor.com
Deadly wildfires have always been a fact of life for Californians. But over the past few years they've caused unprecedented devastation—with this year becoming the worst wildfire season on record. The fires are having a catastrophic impact on lives and businesses across the state.

And they're impacting the state’s housing market by pushing up prices in communities that have been ravaged by the infernos, in some cases dramatically. Areas like Napa and Sonoma Counties were already experiencing housing shortages, exacerbated by fires from previous years. Of course the exact areas devastated by fires lose a lot of their value, and it takes time to regain those values. But all around is a different story.  See the article here.

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Francis

Silicon Valley real estate
Trends: Local prices and graphs.
How much is your home worth?

Real Estate Price Seasonality - Bay Area of San Francisco

Santa Clara County:  As I regularly do every year, I look at the evolution of real estate prices from month to month, and compare that with the year prior.

I just finished putting down 2017 and 2018 on graphs, and until the end of February 2019 - shown below:

Click to see larger.


Several remarks:

We had a feeling in 2017 that prices were not slowing down during the usual slow periods of the year: in summer, and in winter.  Well it shows clearly here that July and August did not go down in value (whether it is in average, or as a median price), and hardly came down in Nov. and Dec.

This is to be compared with last year in 2018 which everyone identified as a "slower market": indeed, after May 2018 prices started to go down a bit, with a verifiable dip in July and August (showing a month later when properties close), a typical regain in activity in September, and then a continued soft market after that.  The end of 2018 was definitely a good time to get in the market.

February is showing us that, with the help of low mortgage interest rates, the market is picking up.

Currently, these gentle interest rates along with a fairly low inventory of homes for sale contribute to a rise in prices - right on cue... statistically.

Thinking of buying soon? Message me!

Thank you for reading,
Francis

My Home Valuation tool
Detailed, local trends etc...
Current mortgage rates   (pretty stable, and low.. )

Price Correlation - SF Bay Area - Nasdaq

Interesting correlation between the average sales price in the San Francisco Bay Area, and the Nasdaq over the past 20 years or so.

This graph is compliment of our Coldwell Banker analysts, and shows the average sales price for Coldwell Banker properties only, not ALL of the sales of properties on the market.

Still, it shows how heavily our local market, around San Francisco, is leaning on the high-tech heavy Nasdaq.

Click on the graph to see larger.

Thanks for reading!
Francis

Price Your Home
Detailed, local trends etc...
Current mortgage rates

Effect of current tax structure on local Bay Area real estate market.

' just read a really good article in the Chronicle about how the current tax structure is hindering home sales in the Bay Area (San Francisco), and bringing prices up.

When you sell a property that has been a principal residence for many years, you usually have a large capital gain, and the tax that comes with it. In a very common scenario, there is a capital gains tax exemption of $500k if you are a married couple, or $250k if you are single.  The problem arises when you have bought your home a very, very long time ago: the purchase price is so low that when compared to the sales price today, and after factoring in the costs and capital improvements ( - thanks to CPA's for helping with all these calculations 😊  ), the capital gain is so high that the tax due on it is a big deal.

Some would say that this is a good problem to have.  But in fact, many people do not want to have such a tax hit, or some people just cannot pay the tax (i.e. if you have borrowed a lot on your equity, you don't have much left when you sell).

This situation is so acute in the Bay Area (think: large appreciation) that it has contributed to the lack of inventory we've seen in the past few years, and this in turn is pushing prices up.

While there are several options to try to deal with the problem, none of them is so easy or straightforward - except for dying, which I will pass on - no pun intended...  So homeowners who find themselves in that situation often just delay the sale until later, and later... and there are fewer homes on the market.

The article was written by Kathleen Pender, Business Columnist at the SF Chronicle.
Check here to see the article and the interactive map showing where the capital gains are most prevalent, in the 9 Counties that make our "Bay Area".

Thank you for reading,
Francis

Silicon Valley Real Estate
Smart local Stats and Graphs 
non-profit organization worth noting: Partners for New Generations.

Bay Area: some relief for homebuyers?

As demand for housing remains quite strong locally in the San Francisco Bay Area and the Silicon Valley, are homebuyers going to see some relief coming their way soon?

Inventory is key to this equation.  Look at the situation the way it was last year, and what it is today, in the cities around Palo Alto and Los Altos:

Inventory for all houses, condominiums & townhouses, a year ago,
-------------  on March 31, 2015 ----- Inventory today - April 6 2016:
Los Altos:...............27               - - - - - - - - - -        29
Palo Alto: ...............45               - - - - - - - - - -        51
Mountain View:......26              - - - - - - - - - - -       43
Sunnyvale:..............46              - - - - - - - - - - -       82
Menlo Park: ...........21              - - - - - - - - - - - -     30
Cupertino: ..............31              - - - - - - - - - - - -     67
For Mountain View, Sunnyvale and Cupertino, this is almost twice as many homes for sale now than last year.  This could mean some relief for homebuyers.

From the trenches, dealing with the market on a daily basis, I think many agents would agree that the activity shows signs of leveling a bit - but we have to characterize this with a few caveats: buyers still need to be completely pre-approved, and very motivated.  It's just that where we could expect 10 offers, it seems that we are seeing, say, half that amount lately.  Several factors are in play here, influencing activity:

- overpriced listings will stay on the market for a while, (& there are a few more lately),
- the increase in price is not as high as it has been until now,
- the best properties (most desirable) will always be the ones with the most activity,
- more homes are coming now on the market, and this is normal for the time of the year,
- inventory is -still- not a lot higher in PA, Los Altos and Menlo Park,
- and finally, some buyers have been priced out of the market (hence, a bit less competition).

Whether you are a buyer or a seller, I think a real estate professional has never been so important in helping you see more clearly, and separate the hype from the facts.

Stay tuned! as things change pretty fast here in the Silicon Valley!

Thanks for reading,
Francis

Silicon Valley real estate specialist
Detailed, local trends etc...
Current mortgage rates
A worthy local non-profit to remember: Community Services Agency in Mountain View - our last event there.

Median Sales Price - Santa Clara Cnty - did not let up.

Piggy-backing on my September blog looking at the monthly median prices in the County of Santa Clara, I'd like to share what happened next.

At the time, I was speculating that prices may let up a bit, as is usually the case at the end of any given year.  Buyers looking during the last few months of the year could expect a break and have less competition.

My experience from the trenches, reflected in the updated graph below, is that there were a little fewer offerors on homes for sale, but prices certainly did not go down. The competition remained quite strong.  Overall prices stayed at the same level, at the minimum, and I mostly saw an increase in home values, especially in the entry-level category.

Often seen in the past 3 months were:
- Houses offered at a certain price, and if it did not sell for way over, their asking price changed upward,
- offers being shopped around, in some cases what felt like excessively,
- lower cash offers sometimes selected over higher offers needing a loan - (can make sense of course...),
- some of the latter cash contracts being cancelled  right before close of escrow - setting the clock back to zero on the sales process, and triggering plenty of legal questions marks for all.

Be sure to work with an experienced professional if you are thinking of selling, or buying a place in this tense environment.  It is sometimes hard to make sense of it and to navigate a prudent, legally safe line.

Thank you for reading,

Francis

Silicon Valley real estate specialist

Detailed, local trends etc...

Current mortgage rates

A worthy local non-profit to remember: Community Services Agency in Mountain View.

Home sale strategy: set a date for offers, or not?

Home sale strategy: set a date for offers, or not?

You have prepared carefully for the big day when your property goes on the market;  first it goes on MLS, then you have a Realtor tour, and an open house during the week end.  The critical “exposure” time has started, a full marketing campaign is in place, with paper advertising and internet advertising - the world is starting to learn about your house.

Should you hold off for offers until a certain date (hoping for multiple offers), or do you take offers as they come?


Holding off for offers is a good strategy, if the house is well priced: it ensures that the house has been seen enough, and that potential buyers have had the time to decide what they want to do, and look at all the disclosures and reports your agent carefully helped you prepare upfront.  When offers are reviewed, chances are they are well thought out, and you have a choice between solid offers.  Odds are higher the transaction will close without problems.

But the down side of this strategy is that some buyers are turned off by the process, and do not want to participate in a competition.  Also, if you hold off too long, other competing properties will come on the market and you will lose some potential buyers.  Finally, with this strategy comes the difficult choice to make if a “preemptive offer” is presented to you, often higher than the asking price.  If you take it you will never know what the other offers could have been (the ones that followed your instructions and waited for the “offer date”).  If you do not take it you could lose out on that high offer.

So the alternative is to “take offers as they come”.  But what do you do when one comes too fast, may be even higher than your asking price, and you have the feeling that “not enough people have seen the house”?  Could you have a higher offer by waiting for more people to have the time to see the property and work on an offer?  In real estate we say that the first offer is often the best one...  In a typical market it is often true (the subject of another blog), but the Bay Area market is not typical.

Several elements are in play here:

1/ the (pricing) strategy you prefer to use (low, average, high?)

2/ how active the market is at that precise moment.

3/ how easy it is to show your property,

4/ how desirable your property is (objectively),

5/ the quality of the information you get.  The tools your Realtor is using are going to be critically important, in order to assess the real interest your property generates.  You’ll want to know: - number of showings, - number of page views on the various web sites, - how many people are looking at the info online, - and what exactly they are looking at: some info, or all of the info available?

What I would like to stress here is that you must have this conversation with your Realtor ahead of time, and stick to your chosen course of action. One cannot really have it both ways.  If you set a date for offers, and take a pre-emptive offer, you may hurt yourself by never seeing the offers that played by the rule, and waited to come forth.  The thing is that you will never know - it is a gamble.  My experience has been that, in very active markets, it is better to hold off until about a week after the house has been in full marketing mode.  Taking an offer too fast may leave you with a lot of question marks about what other offers could have been a few days later.

Finally, it is critical that your Realtor follows closely any interested party, and answers questions as best as possible: better informed buyers, or agents, will bring you an offer, and one additional offer may mean a big difference in the final sales price.

Thank you for reading,

Francis

Silicon Valley real estate specialist
Detailed, local trends etc...
Current mortgage rates
A worthy local non-profit to remember: Community Services Agency in Mountain View.

Local real estate - some perspective.

Here is a simple summary of what real estate did lately, and in the past few years, in the Counties of the Bay Area of San Francisco.  Coming directly from the MLS (Multiple Listing Service):

Francis Rolland

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

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.