Where Do People Get Money to Buy in California? Mom and Dad, Often.

Where do people get money to buy in California? Mom and dad, often.

I read this interesting article (with interactive map) on the KQED news website about the downpayments made for california purchases made with an FHA loan.  Granted, not all loans are FHA in California, especially in our local counties of Santa Clara and San Mateo. But for most of the rest of California, it is interesting to see that parents help with the downpayment of their kids' purchase.

The California Dream series is a statewide media collaboration of CALmatters, KPBS, KPCC, KQED and Capital Public Radio with support from the Corporation for Public Broadcasting, the James Irvine Foundation and the College Futures Foundation.

• KPCC crunched the numbers on more than 600,000 FHA loans, a type of government-backed mortgage that's common with first-time buyers.FHA borrowers can use money from relatives for their down payment. In recent years, that kind of family financial help has been on the rise in California.
• Back in 2011, about one in four FHA loans in California included down payment money from relatives. Today, it's one in three.
• Family down payment support is playing an even bigger role in many parts of California, outstripping the national rate of 26 percent. Last year, in dozens of California ZIP codes — covering parts of East San Jose, North Hollywood, South Central Los Angeles, Santa Ana and Alpine in eastern San Diego County — at least half of FHA borrowers were getting family members to help with the down payment.
• Parents are not just gifting down payments to their kids. They're also co-buying houses.A recent quarterly report
  
  from Irvine-based real estate data firm Attom Data Solutions found that 48 percent of houses purchased in San Jose had sales deeds that listed multiple non-married buyers (often an indication that parents are co-buying with their children). The same was true for 38 percent of homes purchased in San Francisco.

Thanks for reading,

Francis

Home Valuation tool
Detailed, local trends etc...
Current mortgage rates   (slight regular uptick)
A worthy local non-profit to remember: Second Harvest Food Bank Santa Clara County.

HOA's etc... Condominiums and Townhomes

What's in an HOA - Homeowners' Association?

Even though the old timer always said: "the land, son, it's the land that matters", nowadays a lot of real estate is in the form of condominiums and townhomes.  In fact in recent years, nationally, the appreciation is actually higher for condos and townhomes than for traditional houses, called SFR  (single family residences), a term which implies that there is a piece of land that comes with it.  The reason is because since they were cheaper to start with, and they are usually "starter homes", they were more in demand because more affordable.  Also, lifestyles have evolved and many more people live in cities where density is higher (hint: like in the Silicon Valley).

What do homeowners think of their HOA? The following information is provided by the California Association of Realtors.





if you are considering a purchase of a planned unit development ("PUD"), you may want to look at one of my older posts regarding condominiums in the Silicon Valley, or another one regarding the difference between condominiums and townhouses.

Thank you for reading, and share my blog if you like it!
Let me know how I can help you with your real estate needs,
Best regards,
Francis

Home Valuation tool
Detailed, local trends etc...
Current mortgage rates   (going up...)

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

C.A.R. Files Revised Ballot Initiative

C.A.R. Files Revised Ballot Initiative  (California Association of Realtors).

In its continuing effort to address California’s unprecedented housing supply crisis and eliminate the “moving penalty” that severely restricts the ability of seniors, disabled residents, and victims of natural disasters to relocate, C.A.R. as filed a revised initiative with the Attorney General for preparation of title and summary for the November 2020 ballot. The new initiative would:

• Remove the “moving penalty” for seniors 55 and older, the disabled, victims of natural disasters, and those whose homes are located on contaminated property, allowing them to carry their current Proposition 13-protected property tax assessment level to another home of any price, anywhere in the state, any number of times.
• Eliminate intergenerational transfers of primary residences and other inherited property being used as income-producing properties without reassessment.
• Address abuses by commercial property owners who avoid property tax reassessment by means of “creative” transfers.

“Filing this new initiative will allow C.A.R. – in the event the ‘moving penalty’ is not eliminated this November – to immediately begin gathering signatures to qualify the new initiative for the November 2020 ballot and reinforce our commitment to making tax fairness a reality,” said C.A.R. President Steve White. “This new initiative will provide for property tax base portability, reform the intergenerational transfer laws, and address the true ‘split roll’ problem – corporations gaming the current property tax reassessment system. And, most significantly, it will raise money for schools and local governments,” stated White.

C.A.R. has already qualified an initiative for the November 2018 ballot, now known as Proposition 5, which addresses the “moving penalty” on seniors, the disabled, victims of natural disasters, and those whose homes are located on contaminated property.

This Initiative would help a lot the real estate shortage situation in the Silicon Valley, as it would make it easier for a lot of would-be sellers to sell and buy somewhere else in California, while keeping their property tax basis. This in turn would free up inventory and enable more would-be buyers to buy. 

Francis Rolland


Home Valuation tool
Detailed, local trends etc...
Current mortgage rates   (recent uptick)

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

Real Estate Silicon Valley - Price Seasonality

Here is an update on my regular graphs on the seasonality of prices in the Valley.  This graph shows the peaks in the County of Santa Clara (mostly = the Silicon Valley) which includes among other big city names: Santa Clara, San Jose, Sunnyvale, Cupertino, Palo Alto, - all big locations for the high tech industry.

As expected, the months of Feb to May show the highest average prices every year, followed by a (small) dip in summer, and a small bump in September-October, and again another slow-down in Nov.-Dec..   As in previous blogs, I'd like to point out that all of this is statistical, and does not necessarily mean that a given property will sell for more or less depending on the month.  It does mean that over large numbers of sales, the trend exists.
The sales prices for a given month show the following month, as transactions usually take about 3-4 weeks to close.


Click on the picture to see it full size.

Thank you for reading, and as always, if you like the post, do share it ;-)

Francis

Home Valuation tool
Detailed, local trends etc...
Current mortgage rates   (slight recent uptick)
A worthy local non-profit to remember: Community Services Agency in Mountain View.

Half of All US Homes Are More Valuable than Pre-Recession Peak

Half of All US Homes Are More Valuable than Pre-Recession Peak.

A decade after the U.S. housing market collapsed, half of the country's homes have regained the value they lost during the recession, according to the June Zillow Real Estate Market Report.

Nationally, the median home value is $217,300, up 8.3 percent over the past year and 8.4 percent above the highest point of the housing bubble. The median home value has surpassed its bubble peak level in 21 of the nation's 35 largest housing markets.

In places that have seen some of the strongest growth since the market crashed, nearly every home is now more valuable than it was during the boom years. However it is not the same everywhere in the Country, and this article implies that there are still about 1/2 of the homes which have not caught up yet with the pre-recession levels.  

Which in my mind is a good reminder that a financial crisis leaves long-lasting scars, and that prudence should be the norm when it comes to financial markets.

Thank you for reading, and let me know when you have a real estate question or need.
Francis

Home Valuation tool
Detailed, local trends etc...
Current mortgage rates   (slight recent uptick)
A worthy local non-profit to remember: Community Services Agency in Mountain View.

California Home Price Fundamentals

California Home Price Fundamentals.

Check out this interactive map of the “Home Price Fundamentals” for California, and individual Counties.

The interactive tool is provided by the California Association of Realtors (CAR)

Some of these graphs are most interesting, like the one called “Years of Savings Required for Down payment”, which is now close to 20.  The one called “Price to Income Ratio” shows that it takes about 8.3 years of paychecks to purchase the median priced home in California right now.

 

If you look at the County of Santa Clara though, the figures are staggering: it takes over 11 years of salary to afford the median priced home, and it takes over 26 years of savings (at 6% of savings rate) to afford the typical 20% down payment.

It also shows that in California, if you are in the median, it takes about 59% of the yearly income to pay for your mortgage...

Thank you for reading,

Francis

Home Valuation tool
Detailed, local trends etc...
Current mortgage rates   (slight recent uptick)
A worthy local non-profit to remember: Community Services Agency in Mountain View.

What Home Buyers Want...

From the California Association of Realtors, and Realtor.com:
these are the attributes most likely to be seeked by homebuyers:

Another thing that I would definitely add to this picture is, for buyers 55+ and older:
- a one-level property with no stairs.
... and in general, my experience is that would-be home buyers are more attracted by homes with a lot of natural light and an open floor plan, and will sacrifice other features in order to get that.

Francis
Home Valuation tool
Detailed, local trends etc...
Current mortgage rates   (slight recent decline)
A worthy local non-profit to remember: Community Services Agency in Mountain View.

Home prices going forward in the US... & Bay Area

US house prices are going to rise at twice the speed of inflation and pay: Reuters poll   
Source: CNBC Article

An acute shortage of affordable homes in the United States will continue over the coming year, according to a majority of property market analysts polled by Reuters, driving prices up faster than inflation and wage growth.

The latest poll of nearly 45 analysts taken May 16-June 5 showed the S&P/Case Shiller composite index of home prices in 20 cities is expected to gain a further 5.7 percent this year.
That compared to predictions for average earnings growth of 2.8 percent and inflation of 2.5 percent 2018, according to a separate Reuters poll of economists.

U.S. house prices are then forecast to rise 4.3 percent next year and 3.6 percent in 2020.

A further breakdown of the April data showed the inventory of existing homes had declined for 35 straight months on an annual basis while the median house price was up for a 74th consecutive month.

About 80 percent of nearly 40 analysts who answered an extra question said the already tight supply of affordable homes in the United States will either stay the same or fall over the next 12 months.

In the Bay Area, things are not better.  The ratio of home completions to job growth is still very small, which will keep pressure on home prices here too:

.. while according to this article from the Mercury News, the nation's top three most expensive places for renters are here in the Bay Area...

Thank you for reading,

Francis
Detailed, local trends etc...
Current mortgage rates
Price your home now
A worthy local non-profit to remember: Community Services Agency in Mountain View.