Shortage of California homes up for sale...

Shortage of California homes up for sale

For those who like to read technical stuff, this is perfect.  This goes into the nitty-gritty of the real estate market in California:
After years of having too many homes and not enough buyers, real estate agents in California now have the opposite problem – too many buyers and not enough homes for sale.


Let's look at the details:

* The CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported Monday (9/17) that its statewide inventory of unsold homes index for existing, single-family detached homes fell to 3.2 months in August from 3.5 months in July and 5.2 months in August 2011.

* The index reflects the number of months needed to sell the supply of homes on the market at the current sales rate. A six- to seven-month supply is considered normal. When the number goes higher, inventory is plentiful and it’s considered a buyer’s market. When the number goes lower, the advantage goes to the seller.

* Declining inventory helps explain why the statewide median price of an existing, single-family detached home rose to $343,820 in August, up 3 percent from July and up 15.5 percent from August 2011, according to C.A.R.

* Nationwide, the inventory of homes for sale also has declined. In July, there was a 6.4-month supply of homes compared with 9.3 months in July 2011. The current number is in line with the long-term average, according to the NATIONAL ASSOCIATION OF REALTORS®. However, NAR also acknowledges there are “acute shortages” in places such as California, Arizona, Nevada, and parts of Florida.

* Also constraining supply is the fact that so many homeowners are underwater – or owe more than their homes are worth – and unable to sell without taking a loss. As prices rise, more homes will increase in value, but it’s going to take time. Meanwhile, there are still a lot of homes that are not likely to come onto the market.

* At some point, the balance will tip, but it’s hard to predict when. When banks decide prices are high enough, they will start unloading houses they have been sitting on, according to the chief economist for Trulia.

Read the San Francisco Article on the matter for more details.

Thank you for reading!

Francis

Silicon Valley Real Estate

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Homeownership cheaper than renting nationally

To piggy-back on my last blog, this is another take on the subject, which fascinates me, in this area where most real estate seems so expensive for a lot of people.

Trulia’s Summer 2012 Rent vs. Buy Report, which provides information on whether buying a home is more affordable than renting in America’s 100 largest metropolitan areas, found that homeownership is cheaper than renting in all of the 100 largest U.S. metros by a wide margin.

However, relative affordability depends largely on location. Buying a home is 24 percent cheaper than renting in Honolulu, 28 percent cheaper in San Francisco, and 31 percent cheaper in New York, but is 70 percent cheaper in Detroit. However, the actual dollar amount reveals that despite a low 28 percent difference in buying versus renting in San Francisco, the monthly dollar savings is big ($899) because rents and prices are so high in this region.

Note: Cost of homeownership assumes that the home is sold after seven years and includes closing costs, maintenance, insurance, property taxes and other costs. Cost of renting includes security deposit and renters insurance. Monthly costs are based on net present value of costs averaged over seven years, and based on the average across all properties listed in the metro area, including those for sale and those for rent, in summer 2012.

More info on this article from Trulia.

Thanks for reading, your comments are always welcome!
Francis

Silicon Valley Real Estate

Local market trends

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Renting vs buying... an age-old quandary.

In 75% of the US one gets ahead within 3 years by buying a home vs continuing to rent.

Typically, and historically, it was kind of understood that it takes about 3 years to see the advantages of owning instead of renting.  The first years, most often, it seems a lot more expensive, and you do not see yet the tax advantage, when there is one. Then you settle in and start feeling "at home" vs leasing you space in life, and that adds to the financial aspects of the question.

But now that prices have moved a lot and in different ways throughout the US, it is not so straightforward.  In short, where prices have fallen the most would be where it is most attractive to buy, vs to rent.

This study from Zillow gives more detailed information on the new quirks and wrinkles of this age-old quandary.

Francis

Silicon Valley Real Estate

Local market trends

useful links

Current Mortgage rates

Property tax increase.

Property taxes, as levied by the Counties, cannot go up more than 2% per year, right?

Well, not really.  It is true that Proposition 13 capped the increase of property values at 2% per year, but there is another Proposition, - Proposition 8,  which passed the same year as Proposition 13, which allows the property value to go down if the market tanks.

When the market goes back up, though, that same Proposition allows then the reassessment of the properties by the County to go back up by more than 2%, until it reaches the value that it would have been if it had not gone down in the first place.

A little hard to follow?  Just imagine what would be the potential value of your property, after you bought it, if it had increased by 2% per year (assuming the market was going up).  This is the value that it could be reassessed by the County if the market does go back to that value...

The request for re-evaluation of an assessment by the County can be done electronically now through their revamped web site, which provides easier ways to search for comparables and maps.
Santa Clara County assessor's web site.
and: contesting your assessed value.

If you wish, I can also assist you by providing a study of the recent sales through the MLS - which has saved quite a bit of money to some of my clients in the past few years.

Francis

Silicon Valley Real Estate

useful links

Rates are super low right now! Mortgage rates

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Local ratio: sales price / list price.

For the 3 Cities of Palo Alto, Los Altos and Mountain View combined, this is what the ratio of the sales price over listing price looks like, for all houses listed after the 1st of the year 2012.
This graph shows this interesting ratio sliced by list price range.

One of the interesting bars is the one for prices over $5 million:  -- the luxury market has definitely picked up from the past 3 years.

In the price range of $200k to $400k, this is for a (unique) house that, after a price reduction, was listed at $390,000 and finally sold at $335,199 in Mountain View, along 101.
Curious about your specific neighborhood? Let me know!

Thanks for reading!
Francis

Silicon Valley Real Estate

useful links
Rates are super low right now! Mortgage rates

Californians on the move.

When Californians move, where do they go?

It turns out that when a Californian moves, he/she mostly stays in the same County (49%).

So most likely, when people move they just want to move up or move down.

4 years ago, a lot more people were going to an other state; possibly to deal more easily with the crisis, as the cost of living is so high here?  Once that wave happened, it seems that out-of-state moves settled around 20% of the movers.

Consistently, about 1% of the movers go outside of the US.  Funny to note that in 2009, at the worst time for real estate values, twice as many people left to go outside of the US.

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Thanks for reading,

Francis

Silicon Valley Real Estate

Local market trends

useful links

Current Mortgage rates

Rents increase, more than home prices.

Rent increases outpace modest home price rises (nationwide)...

Despite widespread national asking price rises, rent increases outpaced price increases in 22 of the 25 largest rental markets, according to the Trulia Rent Monitor. Nationally, rents were 5.4-percent higher in June than they were a year ago, and rents increased year-over-year in 24 of the 25 largest rental markets – all except Las Vegas. Furthermore, rent increases accelerated between March and June in most rental markets, with rents in San Francisco rising 14.7 percent year-over-year in June from 10.9 percent in March.

I was noting in one of my May's blogs that rents were up 9.4% in San Jose.

Home price rises are not so modest, by the way, locally (- but then, ditto for rent increases).

More info on this Trulia press release.

As always, thanks for reading,
Francis

Silicon Valley Real Estate

useful links

Current Mortgage rates

Fences and Neighbors...

A surprising number of homeowners are bucking the notion that good fences make good neighbors and taking down the fences in favor of bigger gardens and more space to entertain.

While some homeowners are turning previously neglected corners into shared garden and dining spaces, togetherness does have its down sides. Gardening expenses can be split evenly, but who pulls the weeds and who gets to pick the fruit? What happens when one neighbor wants to sell? Some people draw up legal contracts to help prevent acrimony and spell out how they will disband.

Additionally, yard-sharing is rare in new developments of single-family homes with privacy fences often required under community covenants and building codes.

A shared yard also could dampen an individual home’s value and prolong the time spent on the market, as potential buyers likely will want to put up a fence instantly, adding costs to the home.

Because of these issues, some real estate agents are advising that neighbors restore fencing when either home is offered for sale. It is best to install the fence before the listing the home, as some buyers will not want to be the bad new neighbor who required a fence.

It is my experience that fences provide ample material for problems during a transaction: over the years, the fence may have been replaced, not necessarily by both neighbors, and it may not always be at the right place. Only a surveyor will help you in that case, to determine exactly where the property line is.  Sometimes, a part of the fence has been moved to accomodate a tree, or a structure.  This brings the need to draft an agreement to recognize that and memorialize it, possibly.  An attorney is best to do that.
Obviously the matter is more present in the Hills, where lots are larger.

More often than not, it is in the front part of the properties that you would find fences that are omitted, and there one might see a "shared" front yard.  Still in that case, I believe that it is good to keep a line on the ground, or another mark of sort, to delineate the separate lots. 
Finally, I would note here to keep in mind that typically, when rebuilding a fence, you need a permit.  The City is the best source of info for this.  This is an advice to both buyers, and sellers.

Do you have an experience, good or bad on the matter?  I'd love to hear it!
Thanks for reading,
Francis

Silicon Valley Real Estate

useful links

Current Mortgage rates 

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