Andrew Hartland's Blog

HIGHLIGHTS

- Market in a frenzy.

- Sales price to list price over 100% to 100.6%. Palo Alto’s sp/lp ratio was 108.6%.

- Home inventory won’t be increasing any time soon.

Low inventory and high demand are pushing the local real estate market to the extreme with buyers waiving contingencies, property inspections and even appraisals.

The last few months of multiple offers has forced the sales price to list price ratio for single-family, re-sale homes up to 100.6%, a level we haven’t seen since May 2010.

Prices have followed with the average home price now at it’s highest level since July 2008.

The high end of the market, however that is defined in a particular city, is on fire. The low end of the market is being driven by investors with cash and is also totally out of whack. The middle market, the move-up market is soft because the entry-level homeowners are still underwater.

What’s next?

That’s hard to tell because inventory is incredibly low. Home inventory is at its lowest point since December 2004. We don’t see that changing much in the near future for several reasons.

First, there is not a lot of new home building going on, which is necessary to relieve the pressure.

Second, many existing homeowners aren’t going anywhere. If they have good jobs here, where would they go?

Lastly, forget about phantom inventory. As of March, the banks owned 1,757 properties in the county. That number includes homes AND condos. There are currently 1,552 homes AND condos actively listed for sale.

Even if the banks put all their inventory on the market, it’s only five weeks worth!

We’re stuck with this market for at least the next year.

APRIL MARKET STATISTICS

As was to be expected, the largest price increases for single-family, re-sale homes were in Los Altos, up 19.7% year-over-year, Palo Alto, up 22.8%, Morgan Hill, up 17.2%, and Mountain View, up 10.6%. These are the median prices.

Even more telling is the sales price to list price ratios. Palo Alto weighs in at 108.6%. Mountain View and Cupertino were at 104%. Los Altos was 103.4%. The county as a whole was at 100.3%. Even San Jose was at 100%.

Home sales were down 3.9% year-over-year, and that’s not a function of low demand! Home sales have been lower than the year before for the past five months.

The condo side of things isn’t much different. Inventory is at its lowest level since January 2005, The median price for condos was up 22.6% compared to last April. The sales price to list price ratio was 100.9%.

This is an extraordinarily tough market for buyers. It’s important to be calm and realistic. If you don’t know what to do or where to begin, give me a call and let’s discuss your situation and your options.

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

- Mortgage Debt Relief Act to Expire at end of year.

- The median price for homes was up 4.4% year-over-year in February.

- The number of properties owned by the banks was down 15.6% year-over-year.

Once upon a time, when a homeowner did a short sale, the IRS counted the difference between what the bank took and what the homeowner owed as income. Not much incentive there for sellers.

In 2007, the federal government enacted the MDRA that allows qualified taxpayers to exclude that “income”.

The law will end December 31st.  You must close the short sale by then.

Other qualifications include:
· Good for up to $2,000,000 in forgiven debt.

· Only works for principal homes.

· The tax rule can be applied to debt used to refinance your home, provided the principal balance of the old mortgage, immediately before the refinancing, would have qualified.

See “The Mortgage Forgiveness Debt Relief Act and Debt Cancellation” for additional information. Use this link: http://tinyurl.com/5pe43f.

If you are upside down and are having problems making your payments, it’s time to do something. It’s going to take a long time before an upside down property becomes positive.

FEBRUARY MARKET STATISTICS
For fifteen months the median price for single- family, re-sale homes has been lower than the year before. But, in February, the median price was up 4% year-over-year.

Even better, the average price was up 11.9% compared to last February, reflecting that more $1MM+ homes are selling.

Home sales were down 3.4% year-over-year. Condo sales were down year-over-year by 3.9%.

The median price for condos was up 5.1% compared to last February.

Inventory of both homes and condos continues to be weak. Home inventory was down 23.3% compared to last February: 1,389 homes actively listed. Condo inventory was down 70.8% year- over-year.Pending home sales were up 22.9% year-over- year. Condo pending sales were up 12.8% year- over-year.

HIGHLIGHTS

- Sales up, prices down in 2011.

- California Association of REALTORS® forecast for 2012.

- The number of properties owned by the banks was down 15.5% year-over-year.

Single-family, re-sales home sales were up 0.5% last year.

Unfortunately, after a nice gain in 2010, prices were down. The median price for homes dropped 5.3% and the average price was off 1%.

Condo sales in the county were up 12.2% over 2010.

The median price for condos dropped 13%.

THE CALIFORNIA ASSOCIATION OF REALTORS®
expects the median home price to increase 1.7% in 2012. They forecast sales to increase by 1%.

“2012 will be another transition year for the California housing market, as the continued uncertainty about the U.S. financial system, job growth, and the stability of the overall economy remain in the forefront for all market participants,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young.

“An improvement in job growth, consumer spending, and corresponding gains in housing are essential to a broader recovery in the economy, but would-be buyers will remain cautious as they weigh these myriad uncertainties against the clear opportunities presented by today’s very affordable housing market.

“The most likely scenario is for the modest recovery to continue, and this should push sales up slightly next year by 1 percent and maintain levels that are significantly higher than those recorded during the depths of the housing downturn.

“The wild cards for 2012 are many, including federal, fiscal, monetary, and housing policies; the contentious political climate during an election year; and the strength of the U.S. economic recovery,” said Appleton-Young.

DECEMBER MARKET STATISTICS
Sale of single-family, re-sale homes ended the year on a high not, up 8% in December from November. Year-over-year, home sales were off 3.6%.

Condo sales were up 10.5% from November, and were up 12.5% year-over-year.

The median price for homes was down 4.5% year- over-year. This is the fourteenth month in a row the median price for homes has been lower than the year before.

The median price for condos was off 11.3% compared to last December.

Inventory of both homes and condos continues to be weak, which should be good for prices. Home inventory was down 28.5% compared to last December: 1,452 homes actively listed. Condo inventory was down 48.2% year-over-year.

Please remember, while statistics are nice, they will not determine the price you pay or get for a property. That will come down to you and the buyer or seller.