Luxury Market - Silicon Valley - an update...

Silicon Valley’s Luxury Home Sales Soar Again in May

Posted on June 20, 2012  - from our Coldwell Banker posts.
Silicon Valley’s luxury housing market turned in another stellar month in May as high-end property sales soared from the previous month and year-ago levels, according to a new report by Coldwell Banker Residential Brokerage.

A total of 148 homes sold for more than $1.5 million in May, up a whopping 59 percent from May 2011, when 93 high-end properties changed hands. Last month’s sales were also nearly 16 percent higher than April’s total. May had the most monthly sales since last November.

The upper end of the luxury market also turned in an extremely strong performance in May with 57 sales above $2 million compared to 42 a year ago, and 14 transactions over $3 million, nearly double the eight sales at that price range last year.

The median sale price for a luxury home was essentially flat from a year ago, measuring $1,887,500 last month and $1.9 million in May 2011.

The figures were derived from Multiple Listing Service data of all homes that sold for more than $1.5 million last month in Santa Clara County.

“Silicon Valley is showing all of the signs of a classic seller’s market with strong buyer demand, a severe shortage of home listings to choose from, and multiple offers on many properties,” said Rick Turley, president of Coldwell Banker Residential Brokerage. “With inventory levels remaining near record lows, I suspect we’ll continue to see this scenario play out, at least for the near term.”

In many areas of the South Bay, inventory is down 30-50 percent from just a year ago, leaving the scales of supply and demand tipped heavily in favor of sellers. Multiple offers are becoming the norm in a number of communities and homes are often selling for more than the asking price – sometimes much more.

Some key findings from this month’s Coldwell Banker Residential Brokerage luxury report:

■The most expensive sale in Silicon Valley last month was a six-bedroom, seven-bath 4,500-square-foot home in Palo Alto that sold for $5,098,000;
■Palo Alto and Los Altos tied for the most luxury sales with 40 apiece, followed by Saratoga with 23, and San Jose and Los Gatos with 15 each;
■Homes sold in an average of 36 days compared to 41 days a year ago and 35 days the previous month;
■Sellers on average received 103 percent of their asking price compared to 101 percent the previous month and 99 percent a year ago.

The Silicon Valley Luxury Housing Market Report is a monthly report by Coldwell Banker Residential Brokerage, a specialist in high-end real estate sales. Through its internationally renowned Coldwell Banker Previews® program, the company is recognized around the world for its expertise in the luxury housing market.

Thanks for reading!
Francis
http://www.frolland.com/

What's going on downtown Los Altos?

People ask me all the time what is going on downtown Los Altos, as it seems the whole town has been a work in progress since last year.
The City started redoing the corners of the downtown streets at the end of last year, 2011, but there are a lot more things that were started then.

I thought I would show something published by the Town Crier about a year ago, which I find myself copying often and sending to the curious inquirers  - ok, this is not recent, but still gives a better idea to the occasional visitor ;-)    Please see below:

and:

Kind regards,
Francis

Useful links

... More Perspective on the Market - Silicon Valley...

Following up on my previous blog of last year, entitled "Some Perspective on the Silicon Valley Market", I updated the graphs for this year for both the County of Santa Clara and the County of San Mateo, to reflect again pretty much the same story of rising prices as the year advances.

The comparison between last year and this year is also fairly similar, in that prices are slightly higher this year than last year, as an average.

When looking at some specific Cities though we do know that some areas are much higher this year than last year.  This will be coming in my next blog(s).

This set of figures begs for the question: "what's the story of: both houses and condominiums, combined"?
This is shown below:

... not very different, in fact.

Curious about your area?  Do let me know and I will study it for you.
Thank you,
Francis

Silicon Valley Real Estate

Local market trends

useful links

Current Mortgage rates

Local Housing: Quarterly Prices: a perspective...

Here is a graph that I update regularly for the Cities around here:
Quarterly prices of houses since 2007 in the Valley:

Although we have to be careful with any statistical figures, one can definitely see a trend for the Cities of Los Altos and Palo Alto.
The average price of homes in a given area can be influenced by several factors: just because the graph points upwards, it does not necessarily mean that prices are going up. Instead, you could have just a few large and very expensive homes raising the average in a tight market where few homes have sold.
Conversely, you could have a lot of entry-level houses sold and fewer more expensive ones, which would keep the average price low, even though you may have an actual up-market.

However, in this case these graphs confirm what we have been seeing in the past few months: a large demand, not satisfied by enough inventory, resulting in a sharp rise in housing prices.

Francis

Silicon Valley Real Estate

Local market trends

useful links

Community Services Agency - worthy of interest...

A roof over your head...

There are several types of roof that you can have over your head, -hopefully you only need one ;-)

Cost and durability are not the same of course.

- The most typical type of roof might be the “composition shingle” roof. It is a combination of thick tar-paper-like material, and something that looks like rough sand on top of it. The sand/stone material that covers it is in fact to protect the material itself from sunlight. If not protected, the material would age a lot faster. New materials make these roofs attractive, with various duration spans – 25, 35 and 45 year materials.

- Wood shake, with wood shingles of various thickness. This type of roof is not allowed any longer in some Counties because of the heightened fire risk. These roofs are more expensive than the former and can last up to 50 years; they are considered more attractive because of “natural” materials – wood.

- Another very typical type of roof, for Eichler homes for instance and houses that have flat roofs: “tar and gravel”, which as the name indicates, is made of a thick tar paper layered in such a way as to make a water proof protective barrier on top of the roof. The tar is melted when the layers are put down, and at the edges. There again there is gravel on top of the roof, not to make it more attractive, but mainly to protect the tar paper. This is a fragile roof, as cracks develop easily with hot/cold variations and the aging of tar. But they are economic.  Needless to say that all these roofs have to be installed by good professionals...

- Along the same lines, (mostly seen on Eichlers), there is another type of roof that is very prized (and more expensive): the foam roof. There, special foam is layed / blown over the roof with elaborate machines, and a protective layer is put on top of it. It makes for a great roof insulation on these otherwise lightly built houses. The coating has to be renewed every 5 years or so, there again to protect from the UV and harsh solar treatment. That type of roof is more expensive.

- Clay tiles and concrete. Do you picture these Italian roofs, redish in color and so stylish? Clay tiles last a long time (50 to 100 years) and can be fragile.

- Metal roof: in the various forms of tiles, or panels. They are quite expensive especially if you go to copper. This will last also between 50 to 100 years. Beware of the rain noise on it though…

- Slate: do you picture one of those old European houses, with slate roofs that last for a century or two? The slates can be thick on some of those, and heavy. This type of roof on modern houses is elegant and durable (and thiner), .. and expensive too…

- Dirt. Yes, dirt, with plants on top of the house. Energy efficient and green. Mostly on flat roofs. You need to make sure that under that dirt, there is a good waterproof membrane to cover the roof of the house.

- Solar shingles. New materials are being created that enable to incorporate some shingles that create electricity (solar panels) with other shingles. Some of those can be seen on the roofs of the new houses at the Enclave in Mountain View, on Levin. Are these the roofs of the future of Earth? It is an elegant concept.

- Tin. as in tin roof in shanty towns...  Many, many people on earth only have a cheap layer of metal above their heads as a roof.  .. as a thought here, just to remember to appreciate what we have...  This being said, metal roofs (under which category "tin roof" falls) can be made of many different types of metal, like tin, or aluminum, or galvanized steel, and they can last a long time if well installed.

Here is an example where you can see 3 types of roofs together: tin, wood shakes, and slates:

Let me know if you need a few names of professional roofers around here.

Thanks for reading!

Francis

Silicon Valley Real Estate

Local market trends

useful links

Our Brother's Home - a non-profit organization worthy of interest.

Will you want some cash with that ?...

Freddie Mac reported this week that 79 % of homeowners who refinanced their first-lien home mortgage either maintained about the same loan amount or lowered their principal balance by paying-in additional money at the closing table in the first quarter of 2012.

Of these borrowers, 58 percent maintained about the same loan amount, and 21 percent of refinancing homeowners reduced their principal balance; the share of borrowers that kept about the same loan amount was the highest in the 26-year history of the analysis.

“Cash-out" borrowers, those who increased their loan balance by at least 5%, represented 21% of all refinance loans; the weighted average cash-out share during the 1985 to 2008 period was 50 percent.

The median interest rate reduction for a 30-year fixed-rate mortgage was about

1.5 % points, or a savings of about 27 % in interest rate, the largest percent reduction recorded in the 27 years of analysis. Over the first year of the refinance loan life, the median borrower will save about $2,900 in interest payments on a $200,000 loan.

More info on this Freddie Mac article.

Francis Rolland

Silicon Valley Real Estate

Local market trends

Francis - on Trulia

Current Mortgage rates

Some perspective on the market...

Finally, after a long waiting, CAR - the California Association of Realtors - released the figures that enable me to make my yearly update of the following graphs.

One set of figures is missing as the information is compiled in a different way: the median price for the Bay Area (comprised of the nine Counties around the Bay Area).

Still, interesting to have some perspective on prices over such a long period of time....

Thanks for reading,
Francis

Silicon Valley Real Estate

Local market trends

useful links

Current Mortgage rates

Good news: housing inventory is up..

After some grueling months in the trenches, (if you happen to be looking for a house to buy), seeing the number of homes available on the market dwindle to something not seen since 2005, we relish a breath of fresh air:  the number of houses and condominiums available for sale is finally coming up a bit, promising more balance in the market may be?  We'll see.

When the market is sharply up, people often think that it is "great" for Realtors. Not quite so, unless you strictly work for sellers. If buyers have too hard a time to purchase a property, it does not benefit the community as a whole. Hence the sigh of relief when the market is more balanced.

In the past month, and as of the 18th of May, we have seen the number of homes on the market for sale, in the whole County of Santa Clara, come up from about 1575 to 1720. (below is the average for a given month...).

At the same time, the percentage of houses (not condos) sold for more than listing price has gone up to 44.5%.  By the way, this statistic is available every Saturday in the San Jose Mercury News in the real estate section.

Thanks for reading!
Francis

Silicon Valley Real Estate

Local market trends

useful links

Current Mortgage rates

Rents are up 5% nationwide

Taken from a Trulia article:

Rents Continue To Climb, Rising Nationally 5.0 Percent Year-Over-Year

Asking rents rose over the past year in almost all large metro areas included in the Trulia Rent Monitor. In the largest metros, rents rose 6.2 percent in New York and 6.1 percent in Chicago, but only 0.6 percent in Los Angeles. Rents rose strongly in Miami (12.1 percent) and Denver (9.9 percent), which also experienced large asking price increases. Meanwhile, rental affordability declined in places where rents rose while prices fell, most notably in San Francisco (rents up 11.1 percent), Seattle (9.7 percent), San_Jose (9.4 percent) and Boston (9.2 percent).

On the ground I find that there is a complete penury of rentals in the area centered around Palo Alto, and that rents have gone up in the Silicon Valley by a lot more than 10% in some cases.  It is good to check with your Realtor on the latest values if you are thinking of renting out your property for a while.
I often advise to also check Craigslist's listings.

Francis Rolland

Silicon Valley Real Estate

Local market trends

Francis - on Trulia

Current Mortgage rates

Buy? Sell? Another tack, another take...

Buy now, sell now?? 

This is another take on my previous post, another perspective, quite interesting and informative if you have been thinking about buying, or about selling a property in the "new market" of today.

The article, albeit a bit long, does offer a few tidbits of information which verifiably qualify as interesting, - information taken "from the trenches".

Coldwell Banker: "Reality Check"

My clients know me, I do not like to influence them into a purchase, or a sale.  But there are things that I do advise clients to keep in mind and stay informed about.  Of course the new market, as radical as it is, is one of them.

If you need a sounding board, don't hesitate to write or call me,

Thank you,

Francis

Silicon Valley Real Estate

Local market trends

useful links

Current Mortgage rates

Buy a home? Good time?

Consumer attitudes toward home buying shift.

More consumers may be looking to purchase homes with a shift in several key housing market indicators, according to Fannie Mae’s March 2012 consumer attitudinal National Housing Survey. More Americans now expect both home rental and home purchase prices to increase over the next year. Nearly 1/2 of consumers expect higher rental prices, the highest number recorded since monthly tracking began in June 2010. These trends may be providing Americans with an increased sense of urgency to buy a home as 73% of Americans now believe it is a good time to buy a home, up from 70% in February.

Highlights of the survey include:

- 33% of respondents expect home prices to increase over the next 12 months, a five percentage point increase from last month, the highest level over the past 12 months.

- On average, Americans expect home prices to increase by 0.9 % over the next 12 months (up slightly since last month).

- 39% of Americans say that mortgage rates will go up in the next 12 months, a five percentage point increase from last month.

- On average, respondents expect home rental prices to increase by 4.1 percent over the next 12 months, a significant increase since February, and the highest number recorded to date.

- 48% of respondents think that home rental prices will go up, a three percentage point increase from last month and the highest number recorded to date.

- 66% of respondents say they would buy their next home if they were going to move, up one point since last month, while 30 percent say they would rent, up one point versus last month.

More info on the FannieMae article in question.
Thanks for reading!
Francis

Silicon Valley Real Estate

Local market trends

useful links

Current Mortgage rates

Curious about the (new) San Antonio Shopping Center ?

If you are wondering about what is coming up at the San Antonio Shopping Center, at the crossroads of El Camino Real and San Antonio Rd in Mountain View, here is some information about what is going on there:
San Antonio Shopping Center.

Francis

Silicon Valley Real Estate

Local market trends

useful links

Current Mortgage rates

House financing, refinancing? Hidden fees..

Let's be technical here, just a bit, to understand better what is in a loan "rate".

A hidden fee is set to rise
The guarantee fee – a hidden fee inside the interest rate quoted on a home mortgage – has been mandated by Congress to increase this spring, and other increases are likely later to take place later this year and next.

A little bit of background on the subject:

The guarantee fee has been charged by government sponsored entities like Fannie Mae and Freddie Mac for more than three decades. The fee does not show up in borrowers’ mortgage documents or good-faith estimates, and it is little known outside the industry. According to a Fannie Mae spokesman, the fee “gets incorporated into the underlying rate the borrower pays.”

An interest rate is usually made of up 3 parts: The largest goes to the bank or the investors who buy the loan; the smaller portion is for the mortgage servicer that collects monthly payments; and then there’s the guarantee fee. Fannie and Freddie charge guarantee fees as a form of insurance against default for the loans they acquire and resell to investors.

The guarantee fee will rise 10 basis points on April 1; the increase was included in the two-month extension of the payroll tax reduction last December. A basis point is equal to one one-hundredth of 1 percent, or 0.01 percent.

One way to avoid the guarantee fee is to use a lender that does not sell off its loans – for instance, a community bank or a credit union.

In addition to offsetting risks, the fees provide a primary source of revenue for Fannie Mae and Freddie Mac. Both organizations started raising fee rates in 2008 during the housing crisis, as foreclosure costs rose.

Read the full story in this New York Times article.

Francis

Silicon Valley Real Estate

Local market trends

useful links

Current Mortgage rates

Inspections before sale of property...

Just like home buying must start with a pre-approval, home selling really should start with some inspections.

I have been involved recently in a transaction where no inspections had been done before putting the property on the market.  The result was difficult to watch as the transaction unfolded, as problems started to show up after I ordered a termite inspection and a property inspection for my client, the buyer.

First we discovered the almost "usual" termite problems, as the recommendation was to tent the house, but we were also faced with a description of the problems that entailed opening up an area to see exactly how much damage was occuring.  The termite company knew there were problems in that area, but had to remove the heating ducts in order to know exactly how much it would cost to correct the termite infestation.

Then with the property inspection we learned that the foundation needed significant repairs, which we had priced by a foundation specialist.

The problem with this is that the seller did not know about these problems, and most likely these repairs would have to be done in order to sell the house.  Buyers and sellers entered into a contract without the information.  Then there is a catch 22: you can cancel the transaction, but then you are still faced with the necessity to address the issues with another buyer, or you continue and you have to pay for the unexpected repairs.

These were not the only problems discovered by the inspections, and I felt very sorry for the very nice people selling this house, and for the lovely client I had buying it.  Both were somewhat shaken up by the process.

I made a mental note to keep in mind this story to illustrate the definite need for inspections done ahead of time, for my clients sellers.
When time comes to negotiate, you want to negotiate with as many known facts as possible, and avoid very costly unknowns.

Thanks for reading, let me know your own experiences...
Francis

Silicon Valley Real Estate

Local market trends

useful links

Current Mortgage rates

Refinancing: fixed rate, or ???

A fixed rate alternative


With interest rates at historically low levels, many borrowers are finding value with a reliable fixed-rate mortgage.
However, as clients often turn to me and ask me what they should do, I point out that borrowers who think they will be moving/ selling in the not-too-distant future have another alternative: an adjustable-rate mortgage that offers several years at a fixed interest rate.

Hybrid adjustable-rate mortgages, or ARMs, originated in the jumbo-loan marketplace at the end of the 1980s. They fell out of favor – along with the riskier ARMs that offered extremely low teaser rates and interest-only components – after the subprime mortgage market collapsed.

Some adjustable-rate mortgages have an interest rate that changed every year, but a hybrid – also known as a delayed first-adjustment ARM – has a fixed interest rate for a period of time. Most loan officers refer to a hybrid by the period during which the rate is fixed. A 5/1 loan, for example, has a fixed rate for five years, then adjusts annually for the remainder of the term; a 7/1 loan adjusts after seven years.

ARMs account for only a small segment of the overall mortgage nowadays, financing just slightly more than 10 percent of home purchases. However, market share for hybrid loans is expected to increase to 14 percent this year, according to an annual survey released last month by Freddie Mac. The 5/1 hybrid was the most popular adjustable-rate loan product in the market, according to the survey. The least popular was a 3/3 ARM, which adjusts once every three years.

A common reason for choosing a hybrid ARM is projected length of homeownership. It’s a nice option for buyers who don’t expect to stay in their home for longer than three to five years.

Rates on hybrid ARMs are also attractive. As of last week, the average rate on a 5/1 loan was 2.81 percent, compared with 3.88 percent for a 30-year fixed-rate loan, according to Freddie Mac.

Borrowers should be aware though that with rates starting at rock-bottom levels, there’s generally only one direction for them to go. And even though there are caps on the rate change amount, the jump could be as much as six percentage points, when it adjusts.

Here is an interesting article from the New York Times on the subject.  Food for thoughts....

Francis

Silicon Valley Real Estate

Local market trends

useful links

Current Mortgage rates

Real Estate and Politics...

Yes, Real Estate is very political, no way to avoid that.

Part of my yearly dues to be a member of the National Association of Realtors, and of the California Association of Realtors (not all agents are members, and it makes a big difference. Members in particular adhere to a code of ethics that is much more stringent), go towards political action aiming at protecting the rights of homeowners, and preventing unnecessary involvement into the real estate transaction, with unwanted fees and requirements.

As such, here is a little news from that front:

C.A.R. leadership meets with members of Congress

Next week, C.A.R.’s Leadership Team will be in Washington, D.C., meeting with members of California’s Congressional Delegation, Fannie Mae, Freddie Mac, FHFA, FHA, and other real estate industry groups. C.A.R. will be advocating on members’ behalf on housing policy issues such as
- protecting the mortgage interest deduction,
- improving short sales,
- reforming the mortgage finance system, and
- modifying the FHA condo rules to encourage more FHA certifications.
C.A.R. also will voice its concern with a proposal to sell large blocks of Fannie Mae- and Freddie Mac-owned foreclosed homes to large investors and ask the GSEs to increase the number of loans to small investors.

Francis

Silicon Valley Real Estate

Local market trends

useful links

Current Mortgage rates

A 3.8% tax on all real estate transactions?

Some of my clients have been asking me now about a "tax" that is supposed to be imposed on all real estate transactions soon, in order to pay for a (small) part of the health care reform law of 2 years ago.

I thought I would post this link to the National Association of Realtors web site article that clarifies this concern.  This is a very limited tax event, if and when it applies.

Francis

PS: I recently posted a link to the "Full Circle Farm Glean Team" in Sunnyvale, for those who have extra fruits to give away, extra fruits growing in your backyard.  A friend of mine pointed out to me that in Mountain View there is also the CSA where you can donate extra fruits in the same manner:
http://www.csacares.org/  Our Community Services Agency who says:
" Backyard Gardeners: Bring in homegrown produce to CSA "

Local zip codes ranking by wealth ...

How do the local zip codes rank by wealth, as compared with all zip codes nationwide??

Just for mere curiosity, here is a short list of most of the local ones, sorted out by median disposable income, in 2010:

Atherton - 94027 - ranks # 1

Los Altos - 94022  - ranks # 4 nationwide

Portola Valley - 94028 - ranks # 7

Saratoga - 95070 - ranks # 18

Los Altos - 94024 - ranks # 23

Los Gatos, 95030 - ranks # 43

San Jose - 95120 - ranks # 65

Palo Alto - 94301 - ranks # 138

Cupertino - 95014 - ranks # 194

Palo Alto - 94306 - ranks # 329

Sunnyvale - 94087 - ranks # 458

The complete list appeared in the December 2 issue of the Business Journal.

Francis

Silicon Valley Real Estate

Local market trends

useful links

Current Mortgage rates

What is considered a bedroom?

Little question, big answer... 

The question often comes up in real estate as to what is considered a bedroom.  In fact, sometimes the County records even have it wrong, and the answer lies in fact with local building codes, and health and safety requirements - which can usually be accessed at your City Hall's building department.

Without going into the details of exact dimensions, which of course make a big difference, we can say that the following characteristics have to be there, at the very least:

- there needs to be heat, and electricity

- natural light, and ventilation,

- a smoke (- and possibly a CO) detector,

- a sufficient way to exit directly to the outside of the house (door or window), also called ingress and egress --a little note here, think "firefighters".

- and a bedroom cannot have direct access  to a garage (either a window or a door) because of possible toxic fumes.

There are a few more requirements, like the size of the windows, spacing of the electrical outlets, a minimum of heat, but among all these criteria, believe it or not, a closet is not a must, although it is often considered such by real estate agents ...  A good source of info is always your local building department.
Have more input on the matter, or a story to share?  Feel free to chime in, I love stories...

Francis

Silicon Valley Real Estate

Local market trends

useful links

PS: worthy cause: have you considered donating your extra fruits this season (if you have fruit bearing trees)?
contact: FullCircleSunnyvale.org

Facebook and the Silicon Valley Market....

Everyone is speaking of the effect of the Facebook IPO on the real estate market around here.  This is an interesting article that I wanted to share:
Coldwell Banker "Table Talk".

I have already experienced in all my activity in Palo Alto a definite "tightness" of the market.  Several of the offers that I have placed recently met with many other offers, most of them very strong (like in: - cash! and very much over asking price).

Francis

Silicon Valley Real Estate

Local market trends

useful links

PS: worthy cause: have you considered donating your extra fruits this season (if you have fruit bearing trees)?
contact: FullCircleSunnyvale.org

Silicon Valley Luxury Home Prices Jump in December ...

Silicon Valley Luxury Home Prices Jump in December, Coldwell Banker Residential Brokerage Reports.

Luxury home prices in Silicon Valley moved higher once again last month as the region’s high-end market continued to gain momentum, according to Coldwell Banker Residential Brokerage, the South Bay’s leading provider of luxury real estate services.

The median sale price for a million-dollar-plus home in Santa Clara County reached $1,471,000, up 8.9 percent from a year ago and 6 percent from November, when it stood at $1,387,000. ....

....Turley said the challenge for the South Bay’s real estate market continues to be a shortage of homes for sale, not lack of buyers.

“I think it’s important for sellers to get the message that the market is getting better in many areas and there are buyers willing to pay competitive prices for homes,” he said. “If you’ve been thinking about putting your home on the market, you shouldn’t wait any longer. It’s time to jump in.”  .....

See the full article on this Coldwell Banker Residential Brokerage Report.

Francis

Silicon Valley Real Estate

Local market trends

useful links

Mortgage rates

Voters place high value on homeownership !

Voters place high value on homeownership.

By an overwhelming margin, American voters strongly value homeownership and would oppose efforts to weaken or eliminate the mortgage interest deduction or diminish a federal role to help qualified home buyers obtain affordable 30-year mortgages, according to a national survey conducted on behalf of the National Association of Home Builders. The survey gauged voters’ attitudes towards homeownership and housing policy issues.
The poll shows that three out of four voters – both owners and renters -- believe it is appropriate and reasonable for the federal government to provide tax incentives to promote homeownership. This sentiment cuts across regional and party line.

Highlights of the survey include:
Two-thirds of respondents say that the federal government should help home buyers to afford a long-term or 30-year, fixed-rate mortgage.

Nearly 75 percent of voters oppose eliminating the mortgage interest deduction.

Sixty-eight percent would be less likely to vote for a congressional candidate who proposed to abolish the deduction.

Ninety-six percent of homeowners are happy with their decision to own, and 84 percent who are “underwater” expressed the same sentiment.

Job uncertainty and saving for a downpayment and closing costs are the biggest barriers to buying a home.

More info on this article from the National Association of Home Builders.

Thanks for reading !
Francis

Silicon Valley Real Estate

Local market trends

useful links

Current Mortgage rates

Housing Taxed to Pay for Extension of Benefits...

Housing Taxed to Pay for Extension of Benefits  .. things that go under the radar if you don't pay attention ...

The law signed by President Obama two weeks ago to extend the payroll tax cut and maintain Medicare payments and unemployment benefits uses increases in the fees charged by Fannie Mae and Freddie Mac to guarantee mortgages to help offset its costs. The law also uses funds from premiums charged for insurance on FHA loans. As a result, the Federal Housing Finance Agency has directed Fannie Mae and Freddie Mac to increase their guarantee fees effective April 1 and will remain in effect through September 30, 2021.

The National Association of REALTORS® (NAR) opposed the increase in fees to pay for non-housing-related purposes. Lenders who choose to pass this increase on to borrowers will likely increase the rate offered to a borrower by .1 percent sometime before April 1. Analysts estimate the increase in cost over 30 years to be between $4,000 and $5,400 on a $200,000 loan, or $11-15 per month.

Well, it's always better to be informed..

Francis

Silicon Valley Real Estate

Local market trends

useful links

Mortgage rates

Refinance Program for Underwater Borrowers - more info...

To add more info to one of my previous blogs ( "Refinancing problems? Here is a suggestion" ) on the refinancing options for people owing more than the value of their home, I'd like to reproduce the information I just received from Joan Fischer from First American Home Buyers Protection (a home protection plan company), which originates from DSNews.com (Authors: Krista Franks and Carrie Bay).
A little long, but of great interest for some people.

Francis

Rental market is tight here in the Silicon Valley

I have been exposed to the rental market recently through 2 properties that I have put on the market for rent locally, one in Palo Alto, and one in Redwood City.  (Not all agents deal with rentals BTW...).

I have experienced first hand what has been known for a while now: that the rental market is difficult in the Bay Area (for renters), and prices have gone up since last year - if I had to guess I would say by about 10% easily.  In each instance these properties had several applications within a few days of being on MLS.

Several reasons can explain this increase:
- a better economic outlook in the Valley, leading more people to come here than people leaving the area, (which, incidentally, is also tied to registration in some schools such as the French-American schools and the German-American schools of the Bay)

- a significant number of people loosing their home (i.e. short sales and foreclosures) who find themselves renters suddenly,
- a relative lack of new construction - although there are some new projects being built around which will  somewhat address this penury.

Although this is true in general nationwide, it is more accute in Cities like San Jose, as described in this recently published article in the Business Journal, which goes over a few of these figures and facts.

Thanks for reading !
Francis

Silicon Valley Real Estate

Local market trends

Useful links

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Appraisal problems in the real estate world ..

Appraisals have always been a large part of the normal real estate transaction: 

while a sales price is negotiated between the seller and the buyer, the bank has its say: they will lend to the buyer a percentage of the lower of the two figures: negotiated sales price, or appraised value. 

If they do not think that the property is worth the negotiated price, they will lend less.  But the thing is that real estate is not an exact science, and if you have 2 appraisals done on a property by two different appraisers, they will come up with 2 different values. With the crisis the way it has unfolded, appraisals have become very stringent, very conservative.  Let's just say that the banks are a lot more careful with how they lend money.

It is apparently a big problems for builders too:

one out of three builders reported losing signed sales contracts during the preceding six months because appraisals on their homes were less than the contract sales price, according to a survey by the National Association of Home Builders (NAHB).

Builders claim that due to faulty appraisal practices, brand new homes with upgrades get compared to distressed properties that have been sitting vacant and in disrepair. The result, in many cases, has been that the new house gets appraised at less than the cost of construction.

According to the NAHB survey, 60 % of respondents reported they were experiencing appraisals coming in below their contract sales price. Of those reporting that they had encountered this problem, 53 % said the appraisal amount was actually less than the cost of building the home.

This has some very real consequences:

In normal times, housing accounts for more than 17 % of the nation’s GDP. Constructing 100 new homes generates more than 300 full-time jobs and $8.9 million in local, state and federal tax revenue that supports local schools and communities across the land.

More than half of the single-family builders and developers surveyed by NAHB indicated they had decided to put any new construction or land activity on hold until the financing climate improves.

One last word to buyers and sellers alike: unless the property sold is very desirable, and the buyer does not need a loan, this appraisal question may influence the outcome of the real estate transaction.

Francis Rolland

Silicon Valley Real Estate

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