- 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

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Printable Report.

- 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/propositions60_90.htm.

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.