California: Millennials - Baby Boomers

The definition of a Millennial is not straightforward as evidenced by the many resources found online. However, if we follow the general guidelines of the Pew Research Center we can agree that these would be the people between the age of 19 and 35 as of 2016  (i.e. born between 1981 and 1997).
For the 3rd straight year nationwide, millennial homebuyers made up the largest part of all homebuyers: 35%, edging out Gen X (26%), boomers (31%) and the silent generation (9%).

Lots has been said and written about the level of indebtedness found associated with this slice of the American population (see for instance the article by Maya Pope-Chappell that I show on my previous post on my FB page:  "buried-in-debt millennials...").  Because they are the largest part of all homebuyers, we can only assume that more people nationwide would be engaged into the process of owning a home if the Millennials were not so saddled with student loans.  This could have in turn very positive repercussions on the US economy as a whole.

In California, these are some of the stats for Millennials and Baby Boomers (born between 1946 and 1964):

Click on the picture to see it larger.

Thank you for reading,
Francis

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

News from the trenches .... in the Silicon Valley.

Taking the pulse of the local offices, and managers and agents in the local cities.  It does not get more "down to earth" and "raw" than that!   ;-)

SF Peninsula – Listing inventory is steadily increasing in the Burlingame area, and so are sales, according to our local manager. Across the hill in Half Moon Bay, there has been a continuous increase in inventory. Our local manager provided this update for the area of Half Moon Bay, El Granada, Montara, Moss Beach, and Pescadero market update: The average listing price is $1,428,716, highest listing price is $3,388,888, and the lowest listing price is $699,000. Pending Average listing price is $1,372,445, highest listing price is $1,988,000, and the lowest listing price is $785,000. Sold average listing price is $1,062,552, the sold price is $1,071,980, days on the market is 14 days. ...  Our Menlo Park manager said the local market is steady but cautious. No throwing money at houses now like caution to the wind. She adds that sellers are more likely to look at a pre-emptive offer now realizing that we could be close to the ‘top of the market’ if anyone can really see that without it being behind them.  Our Redwood City-San Carlos manager reports lots and lots of frustration out there for everyone (sellers, buyers, agents). It’s a definite alteration in the market (which was needed). Only the ideal homes with the ideal location and the ideal price are selling quickly. All the rest are remaining on the market with very little, if any, showings. The San Mateo market has slowed down, our local manager says. Our Woodside-Portola Valley manager says that
Woodside continues to be a good/bad market. It is a month to month thing. Big buyers are out there but always waiting for the RIGHT house. The market is feeling cautious, she notes.

Silicon Valley – Our Cupertino manager says homes are staying on the market longer and need to be priced right. Open houses are spotty. That can be a good thing because agents have more chances to engage visitors in conversation, and perhaps get new clients. She adds that the luxury segment has been slowing. In the Los Gatos area, competition remains heavy for entry-level homes listed under $2,000,000. More inventory is hitting the market in the $2,000,000 plus range. Our San Jose-Almaden manager says we’re starting to see an increase number of active listings as well as a lower number of homes pending in Santa Clara County. The available inventory is actually higher than the number of available in 2014. Not surprising were the lower number of units sold for May. There were 35 properties sold in Almaden for the month which is down 25% from last month and 18% from the previous year. Blossom Valley was slightly better with a total of 101 homes sold for the month which is down 8.5% from the previous year. Cambrian was almost flat, with 78 properties selling for the month which is just down 2.5% for the previous month and year. Santa Teresa had 27 homes sold which is down 16% from the same time last year. Willow Glen had a sleepy Memorial Day week. Sales were slow and not many new listings came to the market. The following week things started moving again we had one of our better sales weeks and listing inventory is back up to 92 units. We are still hovering at 3-4 year highs for active listing inventory. The local market seems to be driven mainly by price point. Anything under or around the $850,000 price point is drawing lots of attention and still attracting multiple offers well over list price.

It is my experience that in Los Altos / Mountain View / Palo Alto the market is a little slower like elsewhere, but still quite active: anything priced right is selling quite well, even if sometimes it is not right away (like the first week).  I think the consensus is that prices are going to be flatter unless the property is among the most desirable in its category (and not overpriced).
The least expensive house in Mountain View sold in April for $1,050,000.
The least expensive house in Palo Alto sold in February for $1,325,000  (with a lot of 2,875 sq.ft.).

Thanks for reading, and hoping each finds his/her own area in the above ;-)
Francis

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

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

Direct news from the City of Mountain View Affordable Housing initiatives.

The City of Mountain View has earmarked $36 million for affordable housing.   (See: "The View of Spring/Summer 2016).

Of these funds, $22.25 million were allocated by the City Council to contribute to a project  of a new 116-unit affordable family development located at the corner of East Evelyn Ave and South Bernardo Ave.  This project aims to benefit people with incomes at or below 60% area median income (AMI), with a particular focus on those who live or work in Mountain View.  This development by ROEM Development Corporation is anticipated to be fully occupied by late Summer 2018.

Another project by Palo Alto Housing Corporation is a 67-studio unit development located at 1701-07 W. El Camino Real.  It will provide 30 units of veteran housing with the remaining units available to extremely low-income households earning 30 % AMI or less, and very-low income households with annual incomes at or below 60% AMI.  Here the City Council reserved $8 million funding in Oct 2015 and the completion of construction is anticipated for late 2017.

For more information on these projects, or to sign up on the interest list for the proposed affordable developments, go to the Affordable Housing tab of the City of Mountain View web site.  

Separately, but in the same vein on the affordable housing subject, the City is updating its companion unit regulations to allow for and encourage additional diverse housing opportunities.  What is more commonly known as "granny units", or "in-law units", or "accessory dwelling units" currently need to fit fairly strict guidelines, some of them laid out in this part of the City of Mountain View "City Code" page (Chapter 36 - Zoning).
Will we see loosening of the guidelines soon?  Some people like the idea. 

Thank you for reading,

Francis

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

A non-profit of interest:  the Salvation Army - Silicon Valley.

Is it too hard to get a loan nowadays?

Mortgage lenders are easing up on credit, but not much…. 

“Credit is expanding very, very slightly from absurdly tight levels”  said Laurie Goodman, Ph.D., Director of Housing Policy at the Urban Institute.  (see CAR's magazine - Nov/Dec 2015).

The Institute’s Housing Credit Availability Index (HCAI) measures the probability of a loan ever going 90 days delinquent.  Based on the Index, the fourth-quarter 2015 default rate was 5.6%.  As a comparison, the average default rate for the whole mortgage market in the years 2001 to 2003 was 12.5%, and considered standard. 

Lenders are taking much less risks nowadays, and it shows in the current process that buyers have to go through right now in order to get their loan.  Underwriters have to show that they have been super careful.  As loose criteria lead to abuses - as we have seen too well 6-8 years ago, this is a good thing. But current criteria are too tight for some, who would like to see more "willing and able" buyers have access to home ownership.  Indeed the renting alternative can be brutal and in some cases more costly, actually. 

"Current criteria" also include the lack of bridge loans, which were so prevalent up until the financial crisis.  In my opinion, this is one of the main reasons why the market is currently so tight: most people who would like to move up, or down, do not have the means to qualify for both houses, which is what lenders currently demand.   Before the crisis, banks would only ask the buyers to qualify for their new purchase, not both the new purchase and the currently owned home.  All they wanted to see was some proof that the currently owned home was going to be sold (i.e. a listing agreement with a Realtor).  But this is not the case any more.
The reason why bridge loans are not available is a mystery to me: there is no risk at all for the banks in the Bay Area (and many other appreciating areas, see my last blog on underwater properties), to lend money on a move-up or down purchase. The demand for housing is so strong that the previous home will sell very fast.  More houses sold means more loans made by the banks, doesn't it?
These new tight lending rules certainly contribute to the lack of inventory, which also make it harder for buyers to make a purchase.  I have several clients would have moved by now if real bridge loans were available.

As is often the case, the pendulum swung too far the other way in my opinion.

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.

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.

"under water" properties at their lowest level in a long time!

Just read on RisMedia:

One million borrowers regained equity in 2015, bringing the total number of mortgaged residential properties with equity at the end of the 4^th quarter of 2015 to approximately 46.3 million, or 91.5 % of all mortgaged properties, according to a new CoreLogic® analysis.  Nationwide, borrower equity increased year-over-year by $682 billion in Q4 2015. 

The total number of mortgaged residential properties with negative equity (“under water”) decreased 19.1 % year over year from what it was at the end of last year.

Interestingly, Miami-Miami Beach-Kendall, Florida, had the highest percentage of mortgaged properties in negative equity (22% of the total).

San Francisco-Redwood City-South San Francisco, CA, had the highest percentage of mortgaged properties in a positive equity position, at 99.3%.    Houston, then Denver followed SF in that category.

To read the full article on RisMedia.

Thanks for reading!

Francis

The 2016 French Fair is coming to Palo Alto:

March 19th - Lucie Stern community Center

1305 Middlefield Rd - Palo Alto.

http://www.frenchfair.org/
See you there, for French food, fashion, dance, live music, art, company!

Try out neighborhood before buying. What a novel idea!

Didn't you ever wish you could try out your neighborhood - before buying your home there? 

What a novel idea!:

Realtor.com’s new partnership with Airbnb, which launched in June 2015, aims to allow just that. 

A buyer thinking about buying in a specific neighborhood can “try out” the area by renting a place for a few days through Airbnb. 

Such recommended accommodation can be found on realtor.com in the same area as the home listing they are viewing.  “Real estate professionals are finding that buyers are more likely to be happier if they are able to try out a neighborhood before choosing to buy” says a Realtor.com spokesperson.

Checking out noise levels, culture, overall vibes gives prospective condo and single-family home owners important information as they make their decision.

Thank you for reading!

Francis

The 2016 French Fair is coming to Palo Alto:

March 19th - Lucie Stern community Center

1305 Middlefield Rd - Palo Alto.

http://www.frenchfair.org/
See you there, for French food, fashion, dance, live music, art, company!

Fewer first-time buyers...

The share of first-time home buyers declined for the 3rd consecutive year and remained at its lowest point in nearly three decades, according to the NAR (National Association of Realtors^®). 
The overall strong pace of home sales in 2015 was driven more by repeat buyers with dual incomes, according to NAR's annual survey.

In the past 5 years, this is the share of new buyers among all the buyers of real estate:

To continue on with this survey, this is how buyers responded overall to the question: Why buy now?

"Homes affordable" was not popular...  ;-)
It is refreshing to see "Right time" come up so much in the results - isn't it the best reason to buy?

Thanks for reading!
Francis

Silicon Valley real estate

Trends: Local prices and graphs.
A worthy local non-profit to remember: Community Services Agency in Mountain View