Andrew Hartland's Blog

HIGHLIGHTS for May 2010

- Home sales increased, year-over-year, by 8.5% in May. Year-to-date, home sales are up 26.7%.

- The median price for single-family, re-sale homes gained 4.5% from April, down 35.8% year-over-year.

- Days of Inventory now stands at 93.

The aftermath of the Fed tax credit, which expired April 30th, won’t be completely known until the end of June. Although the tax credit expired at the end of April, when buyers needed to be in escrow, buyers have until June 30th to close the sale.

The effect of the tax credit was complicated by the new state tax credit which started May 1st. Many buyers delayed escrow so they could take advantage of both credits, stealing sales from April, down 1.4% year-over-year, and pushing them into May, where home sales were up 21.1% year-over-year.

Pending home sales, goosed by the tax credits, continued to be near the record high recorded in April. We expect home sales to be strong in June.

The median price for single-family, re-sale homes edged upward in May by 0.2% from April. It was up 29.1% from last May. This is the eighth month in a row the median price has been higher than the year before.

Although inventory grew 2.4% from April, it was down 19% year-over-year. This is the eighteenth month in a row inventory has been lower than the year before, putting upward pressure on prices.

The sales price to list price ratio stayed over 100% for the eleventh month in a row: 100.9%. This signifies that well-priced homes in the best areas are receiving multiple offers.

ARE WE THERE YET?

If the previous numbers don’t convince you the real estate market in Santa Clara County has bottomed out, let’s look at some other statistics.

First, foreclosures levels: they dipped by 2% in April year-over-year. That’s the first annual decrease in more than five years, according to report issuer RealtyTrac.

Second, shorter marketing time: in May, average days on market was 39. That’s the shortest time since July 2007.

Third, Case-Shiller Home Price Index: often considered the gold standard for real estate statistics, the index for the San Francisco Bay Area was up for the eleventh month in a row, according to their latest statistics reported for March 2010. I expect when they report on April and May, we will see the index continue rising.

- In April, the median price for single-family, re-sale homes reached its highest level since August 2008.

- The sales price to list price ratio was over 100% for the tenth month in a row.

- Pending sales reach record levels in April.

- Details on the new state tax credit for home buyers.

The median price for single-family, re-sale homes reached its highest level since August 2008: up 34.6% year-over-year to $632,450.

The sales price to list price ratio, a good indicator of demand, for single-family, re-sale homes in Santa Clara County was 101% in April.

This is the tenth month in a row the indicator has been over 100%.

Home sales were up 4.1% from March, but down 1.4% year-over-year.

Pending sales reached record levels in March with 2,519 homes under contract. This bodes well for sales in the next few months.

Inventory also increased in April from March: up 8.2%, and it was up 0.2% compared to April 2009. This is the first time inventory has been higher than the year before since January 2009.

Seems like home owners are beginning to feel more confident in the market. Of the 1,022 homes put on the market in April, only 85 were bank-owned.

Go to my on-line site SCVReport.com for the full report, plus a city-by-city breakdown.

If you would like to search for properties in the Santa Clara Valley, go to my online search form at: MLS Search

If you find the Santa Clara Valley Real Estate Report useful and know someone else who might, please feel free to forward this e-mail to them. There is also a four page printable version with more articles here:
Printable Report.

HIGHLIGHTS for March/April 2010

- Sales price to list price ratio stays over 100%.

- Home sales up 40% from February and up 15.1% year-over-year.

- Details on the new state tax credit for home buyers.

The sales price to list price ratio, a good indicator of demand, for single-family, re-sale homes in Santa Clara County was 100.8% in March.

This is the ninth month in a row the indicator has been over 100%. The local market has split into three parts: the lower-end, under about $600,000, where multiple offers are common; the mid-range, between $600,000 and $1.5MM where the market is more balanced; and the upper end where, if you can afford it, there seems to be a plethora of bargains.

Home sales bounced back last month, up 40% from February and 15.1% year over-year.

Inventory also increased in March from February: up 11.4%, but was off 20.7% compared to March 2009.

Pending sales continues to show strength, up 55.5% year-over-year, which is a good thing as a higher proportion of escrows have been falling out due to low appraisals and problems obtaining loans.

HIGHLIGHTS for February 2010

- Mortgage rates expected to rise after March.

- Appraisals are lagging behind the increase in prices.

- Inventory down, year-over-year, for the thirteenth month in a row.

The Fed plans to stop buying mortgage-backed securities the end of March.

The general consensus among mortgage brokers is rates will have to rise to attract new buyers of MBS if the Fed does stop buying. After reaching a low last November, the rate for 30-year fixed mortgages has already risen .25%-.375% in anticipation.

The only MBS that are being sold right now are those that are backed by Fannie Mae and Freddie Mac because they are backed by the U. S. government, at least for loans up to $729,000 in our area.

The question becomes, who is going to buy MBS and at what price?

With money market and treasuries yielding between 1%-2%, MBS are looking much more attractive to Wall Street, private investors and foreign governments.

But, at some point, the Fed will have to start selling their MBS which will drive prices down and yields up.

Local mortgage brokers expect rates to rise one-half point fairly quickly after the Fed stops buying. Many think mortgage rates will hit 6% by the end of the year.

That said, the biggest problem facing the local market right now is lack of quality inventory: quality meaning priced right and in the best neighborhoods.

From all accounts, there is a lot of pent-up demand, especially in the entry-level market. Bank-owned property and private, re-sale homes properly priced are still receiving multiple offers.

The move-up tax credit of $6,500 has had little impact on the market because so few people can take advantage of it. First, anyone that is upside down on their mortgage won’t be taking a loss to gain only $6,500. Second, if you’re still working and have equity, why would you sell only to see your property taxes rise?

About the only people who will take advantage of this tax credit are seniors who are retired. They can take advantage of propositions 13, 60, and 90 to downsize yet retain their property tax base if they move within the same county or to a reciprocating county. For more information about eligibility and a list of reciprocating counties, see: http://www.boe.ca.gov/proptaxes/faqs/pro….

The high-end market has problems with appraisals, if you need a loan, and we’re beginning to see a few foreclosures in that market.

Go to my on-line site <a href=”http://www.scvreport.com”><b>SCVReport.com</b></a> for the full report, plus a city-by-city breakdown.