- 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.

- HARP being expanded.

- Foreclosure starts surge in August.

- Home and condo sales outpacing last year.

The Home Affordable Refinance Program, or HARP, is being revamped. It was originally aimed at a housing market that had an estimated 5 million struggling homeowners. Unfortunately, HARP’s original terms and limits were so restrictive that the program, to date, has reached fewer than 900,000 mortgage holders. The major restriction eliminated any homeowner whose existing mortgage represented more than 125% of the loan-to-value of their home.

The revamping of HARP will let borrowers whose mortgages are backed by Fannie Mae and Freddie Mac refinance those underwater mortgages, presumably no matter how far their home’s value has fallen. In fact, current loan-to-value ratio on the existing mortgage must be greater than 80 percent.

And, mortgage holders can’t double-dip; that is, if they already have an earlier HARP loan, they can’t get another at the even better rate of 4%. The new terms also eliminate the need for yet another property appraisal in calculating LTV, and the program’s end date has been extended.

The plan, announced last week still has certain eligibility limits. For example, your mortgage has to be a Fannie Mae or Freddie Mac instrument, owned or guaranteed by one agency or the other, and you must not have missed any payments in the last six months (since April 24, at present), or have more than one missed payment over the last year.

The FHFA, or Federal Housing Finance Agency, which currently controls Fannie, Freddie, and 12 other Federal Home Loan Banks – located in Atlanta, Boston, Chicago, Cincinnati, Dallas, Des Moines, Indianapolis, New York, Pittsburgh, San Francisco, Seattle and Topeka – is expected to announce the final program parameters by November 15.

This is a much needed expansion of the program. Unfortunately, there are over ten million homeowners underwater and this new HARP will only be available to 10% of them.

MARKET STATISTICS

Sale of single-family, re-sale homes fell 4.9% in October from September, but were up 2.4% year- over-year. Year-to-date, home sales are up 0.5%.

Condo sales were up 3.8% from September and up 12.5% year-over-year. Year-to-date, condo sales are up 11.1%.

The median price for homes was down 13.9% year-over-year. This is the twelfth month in a row the median price for homes has been lower than the year before.

The median price for condos was off 4.1% compared to last October.

Inventory of both homes and condos continues to be weak. Home inventory was down 25% compared to last October: 2,014 homes actively listed. Condo inventory was down 44.2% 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.

- Median price for homes was up 3.4% from April, but down 4.5% year-over-year.

- Home sales off 19% from last May.

Two years talk of phantom inventory was all the rage. There are three components to phantom inventory: first, all the property the banks owned that hadn’t been put on the market, second, all the property on which a notice of default had been filed but had not yet gone back to the banks, finally, there are strategic defaults. These are the property owners who are underwater, meaning they owe more on the property than it is currently worth and have decided to walk away.

Last month, JPMorgan Chase analysts determined that strategic defaults were declining. In their analysis, they found 60% of all defaults were strategic by the middle of 2009, and that this had declined to 30%.

It is important to note these are national figures.

In Santa Clara County, notices of default and notices of sales have been declining for the past year.

County Statistics
Sales of single-family, re-sale homes fell in May, an unusual occurrence, falling 3.1% from April, and down 19% year-over-year.

The median price for single-family, re-sale homes in Santa Clara County was up 3.4% from April, but down 4.5% year-over-year. This is the seventh month in a row the median price has been lower than the year before.

Pricing momentum…
while still positive, has been trending down for the past seven months and now stands at +2, a decline of three points from the month before.

Sales momentum…
turned down last month and dropped four points to –9.

Pending momentum…
a harbinger of future sales, while still positive, has also been trending downward. Last month the number was +1, a decline of four points.

More Statistics…
Year-over-year, home inventory was down by 3.4%.

Pending inventory was down, year-over-year, for the seventh month in a row: 5.4%.

The sales price to list price ratio rose 0.2 of a point to 99.6%.

In the condo market…
The median price for condos was down 17.6%, year-over-year.

Condos sales were down 14.1% year-over-year.

Pending condo sales declined last month, falling 9.6% compared to last May.

Inventory increased for the twelfth month in a row, up 1.2% year-over-year.

- Home sales up year-over-year fourth month in a row.

- Median price for homes was up 3.1% from March, but down 7.5% year-over-year.

- Foreclosure notices surge in March from February, but were down compared to last year.

Sales of single-family, re-sale homes continued to rise in April, gaining 3.4% from March, and up 11.2% year-over-year. This is the fourth month in a row home sales have been higher than the year before. Prior to this period, home sales been lower than the year before for seven months in a row.

The median price for single-family, re-sale homes in Santa Clara County was up 3.1% from March, but down 7.5% year-over-year. This is the sixth month in a row the median price has been lower than the year before.

The average price was up 3.6% from March and posted a 1.1% year-over-year gain. The rise in the average price reflects increased activity in the luxury end of the market.

Sales momentum…
stopped trending downward in January. Last month it gained one point to –5.

Our momentum stats are calculated using a 12-month moving average to eliminate seasonality. By comparing this year’s 12-month moving average to last year’s, we get a percentage showing market momentum.

Pending momentum…
a harbinger of future sales, while still positive, has also been trending downward. Last month the number was +5, a decline of six points.

Pricing momentum…
while still positive, has been trending down for the past six months and now stands at +5, a decline of three points from the month before.

More Statistics…
Year-over-year, home inventory was down for the first time since last June: 5.6%.

Pending inventory was down, year-over-year, for the fifth month in a row: 4.2%.

The sales price to list price ratio was flat at 99%.

In the condo market…
the median price was down 18.8% year-over-year. The average price was also down, dropping 4.6% year-over-year.

Condos sales were up for the fourth month in a row, gaining 13.1% year-over-year.

Pending condo sales declined last month, falling 22.4% compared to last April.

Inventory increased for the eleventh month in a row, up 7.2% year-over-year.

- Home sales and prices bounce back in March.

- Median price for homes was up 7.1% from February, but down 5.4% year-over-year.

- Foreclosure notices down, but bank-owned property increases.

Sales of single-family, re-sale homes continued to gain ground last month, rising 52.1% from February, and up 11.8% year-over-year.

The median price for single-family, re-sale homes in Santa Clara County was up 7.1% from February, but down 5.4% year-over-year. This is the fifth month in a row the median price has been lower than the year before.

The average price was up 14% from February and posted a 3.8% year-over-year gain. The rise in the average price reflects increased activity in the luxury end of the market.

PRICING MOMENTUM…
while still positive, has been trending down for the past six months and now stands at +0.08.

SALES MOMENTUM…
stopped trending downward in January. Last month it was flat at –6%.

Our momentum stats are calculated using a 12- month moving average to eliminate seasonality.

By comparing this year’s 12-month moving average to last year’s, we get a percentage showing market momentum.

PENDING MOMENTUM…
a harbinger of future sales, while still positive, has also been trending downward. Last month the number was +11%.

MORE STATISTICS…
Year-over-year, home inventory was down for the first time since last June: 5.6%.

Pending inventory was down, year-over-year, for the fifth month in a row: 4.2%.

The sales price to list price ratio was flat at 99%.

IN THE CONDO MARKET…
the median price was down 24% year-over-year. The average price was also down, dropping 10.5% year-over-year.

Condos sales were up for the third month in a row, gaining 23.7% year-over-year. The 397 condos sold were the most in any month since last May.

Pending condo sales declined last month, falling 8.5% compared to last March.

Inventory increased for the tenth month in a row, albeit at its slowest pace in those months: up 1.9% year-over-year.

The median price for single-family, re-sales homes in Santa Clara County was off 3.6% from last February. This is the fourth month in a row the median price has been lower than the year before.

Pricing momentum…

while still positive, has been trending down for the past five months and now stands at +0.1.

Sales momentum…

stopped trending downward in January. Last month it was flat at –6%.

Our momentum stats are calculated using a 12-month moving average to eliminate seasonality. By comparing this year’s 12-month moving average to last year’s, we get a percentage showing market momentum.

Pending momentum…

a harbinger of future sales, while still positive, has also been trending downward. Last month the number was +15%.

More Statistics…

Year-over-year, home inventory was up for the eighth month in a row: 5.4%.

Pending inventory was down for the third month in a row: 3.4%.

The sales price to list price ratio gained 0.2 of a point to 99%.

In the condo market…

the median price picked up from January, but was down 15.9% year-over-year. The average price was also down: dropping 9.3% year-over-year.

Condos sales rebounded smartly in February, rising 41.1% year-over-year. The 295 condos sold were the most in February since 2005.

Pending condo sales reversed course and declined last month, falling 0.7% compared to last February.

Inventory increased for the ninth month in a row: up 21.6% year-over-year.

- Home sales up year-over-year for the first time since May.

- Notices of default down in December.

Prices for single-family, re-sales homes in Santa Clara County fell for the third month in a row in January, both month-over-month and year-over-year.

The median price was off 0.4% year-over-year, while the average price dropped 1.4%. This is after thirteen straight months of price appreciation.

Home Sales…

dropped to their lowest level since February. But, were up year-over-year for the first time since May.

Sales momentum…

stopped its slide in January. While still negative, sales momentum rose 2 points and is now at –6%. Our momentum stats are calculated using a 12-month moving average to eliminate seasonality. By comparing this year’s 12-month moving average to last year’s, we get a percentage showing market momentum.

Pending momentum…

a harbinger of future sales, while still positive, has also been trending downward. Last month the number was +18%.

In the condo market…

the median price fell to its lowest level since March 2009: $275,000. The median price was down 15.9% year-over-year. The average price was also down 12.6% year-over-year.

Condos sales, while down from December, were up for the first time year-over-year since August: 0.5%.

Pending condo sales were up for the first time since July: 8.9%.

Inventory increased for the eighth month in a row: up 40.4% year-over-year.

More Statistics…

Year-over-year, home inventory was up for the seventh month in a row: 15.5%.

Pending inventory was down for the third month in a row: 4.9%.

The sales price to list price ratio gained 0.3 of a point to 98.8%. This after dropping for the previous eight months.

- Home prices down, condo prices up.

- Home sales up second month in a row. Still down year-over-year.

- C.A.R.’s 2011 forecast.

Prices for single-family, re-sales homes in Santa Clara County fell for the second month in a row in December.

The median price was off 0.9% year-over-year, while the average price dropped 1.8%. This is after thirteen straight months of price appreciation.

For the year, the median price was up 14.1%.

Home sales…
rose for the second month in a row. The 900 homes sold represent an 11.2% increase from November. Year-over-year, home sales were down 4.4%. This is the seventh month in a row home sales have been lower than the year before.

Much of this can be attributed to the foreclosure mess. Although foreclosures are predominately clustered in the entry-level market, the sharp decline in prices has made many homeowners underwater. The effect of this is they can’t sell their homes and move-up. So, the move-up market is also suffering.

For the year, home sales were down 7.5%.

Sales momentum…
continued to fall last month and is now at –8%.

Our momentum stats are calculated using a 12-month moving average to eliminate seasonality. By comparing this year’s 12-month moving average to last year’s, we get a percentage showing market momentum.

Pending momentum…
a harbinger of future sales, while still positive, has also been trending downward. Last month the number was +21%.

In the condo market…
the median price was up from November, but off 5.9% compared to last December. The average price was also up from November, but down 7.8% year-over-year. For the year, the median price gained 7.8%.

Condos sales increased sharply from November, but were down 3.3% year-over-year. For the year, condo sales were off 1.9%.

Pending sales were down for the fifth month in a row: 11.1%.

Inventory, on the other hand, increased for the seventh month in a row: up 75.5% year-over-year.

More statistics…
Year-over-year, home inventory was up for the sixth month in a row: 27.1%.

The sales price to list price ratio continued slipping last month, down 0.3 of a point to 98.5%. This is the eighth month in a row the ratio has dropped. Since January 2000, the median ratio has been 99.8%, which is incredibly high. A falling ratio also indicates that momentum is faltering.

C.A.R.’s 2011 Forecast…
The California Association of REALTORS® expects the median home price to increase 2% in 2011. They forecast sales to increase by 2% also.

“California’s housing market will see small increases in both home sales and the median price in 2011 as the housing market and general economy struggle to find their sea legs,” said C.A.R. President Steve Goddard. “The minor improvement in the housing market next year will be driven by the slow pace of recovery in the economy and modest job growth. Distressed properties will figure prominently in the market next year, but we also expect to see discretionary sellers play a larger role,” he said.

“As the U.S. economy continues its tepid recovery, we’ll see some improvement in California’s economy,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. “We expect a net jobs increase of approximately 1.4 million jobs in California for the year to come and an improvement in unemployment figures,” she said.

“The situation in the California housing market continues to be a tale of two housing markets,” said Goddard. The segment of the market under $500,000 has been driven by distressed sales, while higher-priced areas of the state have been constrained by restricted financing options, and increasingly have experienced an increase in the number of distressed properties. Sales in the low end have been constrained by a lack of inventory, putting upward pressure on prices. Multiple offers on lower-end homes have been very common, according to Goddard.

“A lean supply of available homes for sale will drive prices up at the low end, but larger inventories and limited, less attractive financing will cause continued softness at the high end,” said Appleton-Young. “There’s some indication that lenders will accelerate the number of foreclosures coming on market, further adding to the housing supply, but we do not anticipate that lenders will flood the market with distressed properties,” she said.

“The wild cards for 2011 include federal housing policies, actions of underwater homeowners, and the strength of the economic recovery,” said Appleton-Young. “What is certain is that favorable home prices and historically low interest rates will continue to make owning a home in California attractive for those who are in a position to buy,” she said.

- Sales momentum faltering.

- Median price up year-over-year for the third month in a row.

- Plus, Statistics: Tracking Momentum

Sales momentum for single-family, re-sale homes in Santa Clara County continued to drop in November: down 5%.

WE CALCULATE…
sales momentum by using a 12-month moving average to eliminate seasonality. By comparing this year’s 12-month moving average to last year’s, we get a percentage showing market momentum.

PRICING MOMENTUM…
after peaking in September at +16%, has also started to drop, and is now down to +14%.

PENDING MOMENTUM…
while still positive, has also been trending downward. This is due, in large part, to investors leaving the market because of concerns over who actually holds, and can produce, the original mortgage note.

MORE STATISTICS…
The median sales price for single-family, re-sale homes reversed course in November, after gaining 1.8% in October. The median price plummeted 7.7% from October and went below $600,000 for the first time since February. After thirteen months in a row of being higher than the year before, the median price was down 2.9% year-over-year.

Inventory of single-family homes continued dropping: down 12.4% from October. Year-over-year, inventory was up for the fifth month in a row: 31.8%.

The sales price to list price ratio continued slipping last month, down another 0.2 of a point to 98.8%. This is the seventh month in a row the ratio has dropped. Since January 2000, the median ratio has been 99.8%, which is incredibly high. A falling ratio also indicates that momentum is faltering.

IN THE CONDO MARKET…
The median price was off 9.9% compared to last November, while the average price was down 5.4%.

Condos sales were down 16.7% year-over-year. Pending sales, a harbinger of future sales, were down for the fourth month in a row: 10.8%. Inventory, on the other hand, increased for the sixth month in a row: up 72.1% 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.

We calculate…

sales momentum by using a 12-month moving average to eliminate seasonality. By comparing this year’s 12-month moving average to last year’s, we get a percentage showing market momentum.

In the chart on my on-line site…

are two of the most important statistics determining market momentum. The blue shows momentum for home sales while the red line shows momentum for pending home sales.

Sales momentum peaked last July and has been trending down ever since. Pending sales, which normally track closed sales closely, have jumped out of the norm due to the large number of foreclosure and short sales in the past two years.

In a normal market…

pending sales close within 60 days. In today’s market, pending sales are taking much longer due to the high number of foreclosure and short sales, which require lender approval. This has pumped up the number of pending sales, which, in a normal market would indicate increasing sales in the coming two months. But, because a majority of pending sales are foreclosure or short sales, a greater potion of these sales never close.

Pricing momentum…

on the other hand, generally lags the buying and selling indicators provided by the sales momentum trend. In the chart below, the purple line shows the median price momentum indicator.

As you can see, when the sales momentum indicator changed to a sell signal in June 2005, prices didn’t peak until November, when they started a gradual decline. The median price indicator really started falling when it crossed the 0 axis in August 2008.

The sales momentum indicator turned up in December 2008 and the price indicator kept falling until sales momentum peaked in July 2009, when pricing momentum started picking up.

More statistics…

The median sales price for single-family, re-sale homes, after falling for the previous three months, turned upward in October by 1.8% from September. Year-over-year, the median price was up 7.4%. This is the thirteenth month in a row the median price has been higher than the year before.

Inventory turned downward, as is its wont this time of year, dropping 8.4% from September. Year-over-year, inventory was up for the fourth month in a row: 30.7%.

The sales price to list price ratio continued slipping last month, down 0.2 of a point to 99%. This is the sixth month in a row the ratio has dropped. Since January 2000, the median ratio has been 99.8%, which is incredibly high. A falling ratio also indicates that momentum is faltering.

Statistics: Tracking Momentum

As we mentioned last month, the Internet is strewn with statistics, some good, some bad, and some downright ugly. So, what are statistics for?

Statistics are for…

determining the best time to buy or sell real estate. If the statistics you are tracking do that, they’re good. If they don’t, they’re misleading, at best.

Tracking momentum…

is the best way to determine when to buy or sell real estate. The question becomes which statistics to track.

Robert Campbell, a San Diego based real estate investor, in his 2004 book “Timing the Real Estate Market”, lists five “vital signs” he tracks to time the market, in order from strongest to weakest:

1.  Existing home sales

2.  New home building permits

3.  Mortgage loan defaults

4.  Foreclosure sales, and

5.  Interest rates

He uses the same basic formula for all five: (current 12-month moving average—previous 12-month moving)/current 12-month moving average.

Finding the data…

means tapping into a variety of sources.

Sales data is the easiest to track. Local newspapers publish this data each month. If you want historical sales data, you can call us and we’ll provide it for you.

In California, new home building permits are tracked by the Construction Industry Research Board. The board charges for their data. (http://cirbdata.com)

There are a variety of sources for mortgage loan default and foreclosure sales data starting with the county recorder’s office. Other sources, for which you will have to pay are: http://dataquick.com, and http://foreclosureradar.com.

Interest rate data can be had at a number of different sites: http://hsh.com, http://bankrate.com, or http://federalreserve.gov. While Campbell tracks 1-year t-bills, monthly mortgage rates can also be used.

Next month, we will review the timing method Craig Hall uses in his 2003 book, “Timing the Real Estate Market: How to Buy Low and Sell High in Real Estate.”

This author identifies seven trends to track to determine when real estate cycles are about to turn.

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