Home sales were off 15.6% compared to last July, while condo sales were down 18.8%.

The new state tax credit has pumped a little life into the high-end market. With more sales in that segment of the market, the average price for homes in July went over $800,000 for the first time since August 2008.

The high-end market has been helped by increasing access to jumbo and super-jumbo loans. Historically, and until July 2007, the spread or difference between conforming mortgage rates and jumbo rates moved within a narrow range of about 0.20%. At the trough of the market, the spread was 1.9%. Now, the spread is down to 0.5%, and the secondary market for jumbo loans is awakening.

The median price for homes was off 1.1% from June, but it was up 7.2% year-over-year. The average price was up 2.4% from June and up 12.3% compared to last July. This is the tenth month in a row prices have been higher than the year before.

The sales price to list price ratio for homes stayed over 100% for the thirteenth month in a row: 100.2%.

The median and average prices for condos were up 3.3% and 9.5% respectively year-over-year.

Pending sales were down from June, but were still higher than the year before. Pending home sales were up 44.2%, while pending condo sales rose 44.7%.

Inventory for homes rose 9.6% year-over-year. This is the first month since November 2008 inventory has been higher than the year before.
Speaking of inventory, Leslie Appleton-Young, chief economist for the California Association of REALTORS® (C.A.R.), said, at a recent Silicon Valley Association of REALTORS® (SILVAR) meeting in Palo Alto last month, in five to ten years California will experience a housing shortage.

She said household growth for the state is expected to be 200,000 a year. The CBIA reports only 13,000 permits pulled in the first six months of the year.

In cities with the best schools, such as Cupertino, Mountain View, Palo Alto, and Sunnyvale, properly-priced and well-maintained homes are still receiving multiple offers and the sales price to list price ratio in all those cities is over 100%.

Investors are buying in the low-end of the market, hoping to buy and flip. That has been somewhat problematic as, when they go to flip, their original purchase price is probably part of the appraisal, which lowers the market value of the property.

It is better for investors to buy and rent it out for a year rather than trying to flip immediately.

The problem with prices in this segment of the market is the poor condition of REO properties that have been stripped by the former owners, and short sales with sellers who are no longer doing any maintenance. These sales are skewing the prices on similar properties.

First-time buyers continue to be edged out by investors for REO properties because the investors are coming in with all cash offers.

First-time buyers should concentrate on well-kept homes in good neighborhoods rather than trying to get a steal. Doing that will lower your frustration level.

The high-end market, above $1.2 million, is probably the weakest segment. Homes here are languishing on the market.

With interest rates at 50-year lows, now is an excellent time to buy a home, particularly if you plan on staying there for a while.

Inflation is coming, make no mistake about that. It’s not a matter of if, but when. In the future, you will look back on this period as a golden time to buy real estate and lock-in a 30-year fixed rate mortgage. Whether or not you look back and smile will depend upon whether you buy or not.

- 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.

- 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.

- 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.

- 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.

- Investors return and are bidding up property values.

- Appraisals are lagging behind the increase in prices.

- Inventory rising, but still far below year-ago levels.

Investors are back in the market, and they’re paying all-cash, mostly for property under $500,000. The effect of this is to freeze out first-time home-buyers who have to get a loan. Banks are still chary about providing loans. About the only loans left for first-time buyers are FHA loans.

So, while the first-time buyer is working through the loan process, the investors are swooping in and buying the best property, which, after slapping a coat of paint on and, maybe, replacing the carpeting, they are putting back on the market. Sometimes, they rent out the property hoping for more appreciation down the road.

Appraisals are also affecting buyers who need a loan. Appraisals lag the market because they use past data, typically six months worth, to calculate current market value. When a market has bottomed out and begins rising, appraisals often come in under the value agreed upon by the buyer and seller. Banks are requiring buyers to come up with extra cash to make up the difference. First time buyers are having a hard time doing this, so we’re seeing many more sales fall out of escrow than normal.

Another thing hanging over the market is the so-called “shadow inventory” of bank-owned property that has not been put on sale. If the banks release these homes in a measured manner, the market should be able to absorb them.

Home sales were down significantly in January, falling 40.1% from December, and off 7.8% year-over-year. This is the first year-over-year decline since June 2008.

The decline in sales is not a result of reduced demand, rather it was produced by a lack of inventory, or should I say, a lack of desirable inventory.

We expect sales to regain their momentum through the Spring because of the extended tax credit and because this is historically the prime time for home sales.

From talking with other Santa Clara County real estate agents, properly priced homes in the most desired neighborhoods and school districts are being sold with multiple offers: many multiple offers.

The sales price to list price ratio, which is a solid indicator of demand, was over 100% in January for the seventh month in a row. At 101.3%, the ratio is at its highest level since September 2005.

- Home sales bounce back in December, ending the year on an up note.

- Home sales were up 28.7% in 2009, while the median price dropped 20.2%.

- The good news? Prices bottomed out in the first quarter and have been rising steadily, albeit slowly, ever since.

- Sales of single-family, re-sale homes rose 27.9% in December compared to December 2008.

With the extension, and expansion, of the tax credit for buyers, we expect sales to be strong through Spring because of the first-time home buyers tax credit of $8,000 for buying a principal residence. First-time buyer is a buyer who has not owned a principal residence in the three-year period prior to the purchase. There are some income limits. For full information, see: http://federalhousingtaxcredit.com.

In addition, the tax credit was expanded to include move-up buyers. The tax credit for move-up buyers is $6,500. A move-up buyer is a person who has owned and resided in the same home for at least five consecutive years of the eight years prior to the purchase date. Again, for full info, see the web site cited above.

P.S. The tax credit expires April 30th. You need to have a signed contract by then and close the sale within 60 days to qualify for the credit.

2009 Annual Report

The best that can be said about last year is it’s over! Home sales were up 28.7% from 2008, which was an abysmal year for sales. The 11,722 re-sale homes sold last year almost matched the 2006 number of 11,848, but is still a far cry from the 15,000 plus homes sold in 2004 and 2005.

The median price dropped 20.2% from 2008. The good news in all this is that prices bottomed out in the first quarter and started strengthening the last nine months of the year.

The year ended with inventory at its lowest level since January 2006. Other positive indicators as we start the new year include: Days of Inventory, which is how long it would take to sell all the homes on the market at the current rate of sales, ended the year at 50 days. We have to go back to the boom years of 2004 and 2005 to see numbers that low.

The sales price to list price ratio, or how much a buyer paid for the home compared to how much the seller was asking, was over 100% for the last six months of the year. When you see that happening, it means there were multiple offers.

Buyers are out there, but they’re looking for bargains. Which begs the question, what is a bargain?

A deal has nothing to do with the sales price to list price ratio. Remember, you are going to have to live in that home and that neighborhood. The most important thing is to find a home, in a neighborhood, you want to live in. If the house is fairly priced, make an offer. But understand, if the house is fairly priced, or even a little under-priced, and it is a good house in a good neighborhood, there will be multiple offers. If you find such a home, you can’t hesitate.

It is endemic among buyers that the deals are in bank-owned or short-sale property. But, banks have the property appraised before they put it on the market, and they price it at, or just a little below, market value. Which is why we’re seeing multiple offers and prices going over asking.

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

- Inventory continued to decline in November: down 66.7% compared to November 2008.

- Pending sales were up 90.4% year-over-year.

The median price for single-family, re-sale homes went over the $600,000 mark in November for the first time since August 2008. It was also up, year-over-year, for the second month in a row.

The median price rose 2.1% month-over-month, and was up 20.3% compared to last November.

Sales of single-family, re-sale homes declined 12.6% last month compared to October. Year-over-year, sales were up 35.6%. November was the seventeenth month in a row that sales were higher than the year before. Year-to-date, home sales are up 21.5%.

Condo sales were down last month, dropping 24.5% from October, but were up 49.5% year-over-year. Year-to-date, condo sales are up 22.4%.

The median price for condos rose 1.4% from the month before, and was up 14% year-over-year.

Inventory continues to decline with the supply of homes down 13.2% from October, and off 66.7% year-over-year. Condo inventory dropped 6.5%, off 66.5% compared to last November.

The sales price to list price ratio for homes stayed over 100% for the fifth month in a row: 100.7%.

Our days of inventory indicator for single-family homes was flat at 60 days. The indicator for condos rose twelve days to 62.

Pending sales, an indicator of what’s going to happen in the next month or two, fell 6% from October, but were up 90.4% year-over-year.

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.

- Inventory continued to decline in October: down 64.4% compared to October 2008.

- Pending sales were up 113.4% year-over-year.

The median price for single-family, re-sale homes rose 5.3% month-over-month, and was up 9.6% compared to last October. This is the first time since January 2008 the median price has been higher than the year before.

Sales of single-family, re-sale homes declined 3.7% last month compared to September. Year-over-year, sales were up 17.4%. October was the sixteenth month in a row that sales were higher than the year before. Year-to-date, home sales are up 20.2%.

Condo sales were up last month, rising 10% from September, and up 36.1% year-over-year. Year-to-date, condo sales are up 20.0%.

The median price for condos rose 3.9% from the month before, but was down 6.7% year-over-year.

Inventory continues to decline with the supply of homes down 7.2% from September, and off 64.4% year-over-year. Condo inventory dropped 9.2%, off 65.9% compared to last October.

The sales price to list price ratio for homes stayed over 100% for the fourth month in a row.

Our days of inventory indicator for single-family homes shed two days, sending the indicator to 60 days. The indicator for condos fell eleven days to 50.

Pending sales, an indicator of what’s going to happen in the next month or two, rose 3% from September, and were up 113.4% year-over-year.

The real estate market is very hard to generalize. It is a market made up of many micro markets. For complete information on a particular neighborhood or for an evaluation of your home’s worth, call me.

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.