Archive for December, 2009

Closing The Door on 2009

By Gino Blefari | December 29th, 2009 0 Comments

The Holiday Season is approaching its end. Hopefully, you’ve been able to relax a bit and spend time with family, friends and the people whom you love most. The end of this season signals the rapidly-approaching end to yet another year. A year that most of us are more than ready to put behind us. We’re all looking forward to the promises of the new year. A fresh start. New possibilities. To 2010.

But let’s take a moment to reflect on the year that was 2009, and how it shaped us and our industry.

2009 was a year of change. A change in the way people shop for homes. A change in the way real estate professionals do business. A change in the way we look at things.

Certainly, the economy and its woes played a major role. While there are glimmers of light and signs of improvement on the horizon, rising unemployment (that will likely worsen a bit more before it gets better) and more stringent lending standards continued their stranglehold on the real estate industry.

Mortgage rates found themselves at all-time lows in 2009, but with underwriting restrictions and tightening standards, including tougher rules from places FHA, typically thought more “understanding”, very few people were able to qualify. With the Federal Government’s loan modification program, short sales and a flood of foreclosures with which to deal, banks are not likely to loosen these standards anytime soon.

Of course, the news wasn’t all bad.

With those foreclosures and short sales came some incredible opportunities for those looking to buy a home. For those with open minds and who were willing to exercise a little bit of patience, deals, the likes of which hadn’t been seen in decades, were ripe for the picking.

For those who were really lucky, those deals could be combined with what was (and will likely continue to be) one of the biggest stories in real estate: the Homebuyer Tax Credit. Recently expanded to include a far broader pool of buyers, the HBTC, in 2009, gave first-time homebuyers a credit of up to $8000 when they purchased a new home. For many, this credit was just the boost necessary to get them toward their share of the American Dream.

While 2009 saw nowhere near the panic and angst that riddled Wall Street and the entire real estate industry in 2008, it was a year of sobering news. A year of goodbyes to the old way of doing business. It was a year for real estate professionals to reevaluate their priorities. To rethink how they did things. It was a year of separating the wheat from the chaff, as many Realtors left the profession altogether. Those who dug in their heels, who opened their minds to new practices, who opted to help, rather than hinder, will rise to the top. They will reap the fruits of their labor.

As you’re making your resolutions for the New Year, think about where we’ve been. About how far we’ve come. Think about how you’ll do things differently. Think about the possibilities before you.

Yes, 2009 was a hard year.  But remember our theme for 2009 – “Adversity is your asset. Things turn out BEST for those who make the BEST of how things turn out.”…AND WE DID! So rather than looking back at 2009 as just a “tough year” let’s make it a year in which we have learned. A year that strengthened our resolve, and our collective character. 2010 is OUR time, now let’s go out and TAKE IT!

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Intero Insider: Sweeping Changes Coming to the HVCC

By Gino Blefari | December 23rd, 2009 0 Comments

While we’ve all been focused on the Homebuyer Tax Credit and the effect that foreclosures have had on the real estate market, Congress has been hard at work, trying to right some unintended wrongs.

For some time now, the home buying process, already strained by the desperate straits of our nation’s economy, has been made more difficult than necessary as a result of unofficial “rules” put in place by Fannie Mae & Freddie Mac. These “rules”, known as the Home Valuation Code of Conduct, were put in place to reduce abuse by appraisers, who’d been under pressure from lenders, real estate professionals, sellers … you name it, to make sure that a particular house appraised for a certain amount (whether that amount had any basis in reality or not).

But while paved with good intentions, the HVCC’s road was littered with potholes.

The HVCC put the onus on lenders to order appraisals. It also required that lenders stay out of the process; that they not exert any influence over the appraisal. This has led to the use of appraisal management companies, which, for lack of a better description, are like brokers for individual appraisers. The AMC (appraisal management companies) gets an order for an appraiser, then assigns someone to take care of the job. The big problems here are that, more often than not, appraisers are being assigned to value homes in communities and neighborhoods with which they are wholly unfamiliar. Also, the use of the management companies requires the splitting of appraisal fees, causing appraisers to cut their rates and putting many experienced appraisers out of business.

Complaints about the HVCC have run the gamut from inaccuracy in valuation, “lowball” appraisals, to inexperienced appraisers (not to mention a host of other complaints). As a result, many sales have been adversely affected.

It looks like that may be about to change.

The US House of Representatives has been hard at work on its financial and mortgage industry reform bill. It has voted to terminate use of the HVCC, pending the initiation of a new Consumer Financial Protection Agency. The House’s bill, now on its way to the Senate, requires the director of this agency to implement national sales rules and standards that will cover all transactions.

Once the new standards are in place, Fannie Mae & Freddie Mac will be barred from using their much-maligned rules.

How the Senate will handle the creation of this new agency (if it goes along with it at all) remains to be seen, but the House bill is a clear signal that the HVCC is all but dead in the water.

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Urban Legend Hits the Real Estate World

By Ed Gory | December 21st, 2009 0 Comments

Be forewarned — no, this is not about kidney harvesting, Nigerian Lottery winnings, or Bill Gates giving everyone lots of money for forwarding an email — there is an email making the rounds titled “HR 2454: CAP AND TRADE ENERGY BILL”, which purports that new legislation will require all homes to retroactively pass new energy standards before they are sold.

Some even say that all homes will now be required to get a “label” for your house every year, proving that your home meets new energy standards.

This is all patently and unequivocally FALSE. (and you can even check Snopes.com here to doublecheck)

Bottom line, our government is not going to do anything – ANYTHING – that will adversely affect the real estate market, which is absolutely one of the key elements in our ongoing, slow economic recovery. Why do you think they recently overwhelmingly voted to extend the first time buyer $8K tax credit bill, as well as extend the $729K conforming loan limit? They want to encourage people to have more confidence in home ownership.

I also consulted our National Association of Realtors (NAR) position on this, and below is what it said. The most revealing statement, which contradicts this email is that this bill  ”Does not create a federal energy audit requirement for real property”

“The U.S. House of Representatives approved H.R. 2454, the American Clean Energy and Security Act by Reps. Waxman (D-CA) and Markey (D-MA). Following NAR’s long-standing policy to only take a position on legislation, or provisions within legislation that have a direct affect on real estate, NAR worked with our Congressional allies to strip the Energy Bill of provisions that would have adversely affected our industry.

After multiple consultations with the NAR Climate Presidential Advisory Group, the NAR Land Use, Property Rights and Environment Committee, and state associations who had dealt with energy audit legislation at the state level, the Land Use, Property Rights and Environment Committee directed NAR staff to concentrate on the real estate provisions in the bill.  As a result, NAR issued calls for action and made this a talking point for Capitol Hill visits during its recent Midyear meeting.

Overall, REALTORS® succeeded in making a number of positive changes affecting the real estate provisions of the bill. The House-approved bill:

  • Does not create a federal energy audit requirement for real property;
  • Exempts existing homes and buildings from any federal guidelines for new construction energy efficiency information labels.
  • Prohibits the implementation of any labeling during a sales transaction.
  • Leaves the decision to states as to whether to require energy audits, disclosures, etc.
  • Provides property owners with significant financial incentives, matching grants and tools to make property improvements and reduce their energy bills;
  • Prohibits the Environmental Protection Agency from regulating residential and commercial buildings under the Clean Air Act;
  • Eliminated an early proposal to allow citizens to sue over minor climate risks under the Clean Air Act; and Establishes green building incentives for HUD housing, including a loan program for renewable energy, block grants and credit for upgrades in mortgage underwriting.”

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Top 10 Silicon Valley Real Estate Trends for 2009

By Dawn Thomas | December 16th, 2009 0 Comments

As 2009 draws to a close – you’ll soon be reading lots of  top 10 lists for the movers, shakers, and trends of the year and the decade!   In the spirit of being just a little ahead of the crowd, here’s our list of the top Silicon Valley Real Estate trends of 2009:

1. Low Interest Rates – with More Strings –  Interest rates have been low this year, with periodic dips into historic record  ”low” territory.   These great rates, though, come with seemingly ever-changing requirements and conditions.  Selecting a great financing source who can get you great rates AND help you navigate through the process has never been more important.

2. We’ve Got to Keep It Together For Longer – With the changing lending guidelines, it’s been taking longer for properties to close escrow and having a signed purchase contract did not automatically mean a closed escrow in 2009.   Having a black belt negotiator on your real estate team has been critical this year.

3. “Turn Key” is Hotter than Ever – A few years ago – buyers could purchase a property & count on some quick appreciation to pay for a remodel in just a little time.  Now – buyers can’t count on home appreciation to finance a remodel in the near term & are looking for great condition, move-in ready homes to buy  (as if location and condition ever go out of style in the world of real estate!).  On the other hand – for buyers seeking to purchase a property in a high-demand area like Palo Alto or Cupertino – it may pay to look for properties needing some work.  If you can see the potential in a fixer – you may have fewer competing bids from other potential buyers.

4. Buying a Silicon Valley Foreclosure is not as Easy As It Sounds - Some of the busiest agents in any real estate office are the ones listing “Real Estate Owned” or REO properties for the banks.    Buying one of these properties means navigating a maze of bank-specific requirements for making the offer, competing against multiple offers (some properties are getting 20, 30 or even 50 offers), and positioning your offer against “all cash” investors.  Finding a deal & making sure it stays a “good deal” through the process is not for the faint-of-heart!

5. No Shortage of Short Sales – over the course of 2009 – we continued to see properties listed for less than what is owed to the lender(s) – resulting in a short sale requiring lender(s) approval to go through.   We’re starting to see short sale listings where the lender has approved a short listing price – allowing the whole process to go smoother and quicker.

6. The Year of the First-Time Buyer – with more affordable home prices, the First Time Home Buyer Tax Credit, and sweet interest rates – many of the homes sold in 2009 went to first time home buyers.   In the final months of the year – we are starting to see more and more “move up” buyers rousing the mid and higher-end price points.  Welcome!  Please bring friends!   This is a trend we want to see continue & grow in 2010!

7. Deal Hunting in Palo Alto – Where’s the deal on a single family home in Palo Alto for less than $300,000?  The media in 2009 did a fantastic job of painting the picture of real estate in free fall, and we went through a period in the spring where every day brought Internet inquiries looking for the extraordinary deal in Palo Alto.  According to the MLS – the least expensive Palo Alto single family home sold so far in 2009 went for $703,000 for a 67 year old, 703 square foot cottage with foundation issues.

8. Your Home May Have a Bigger Electronic Footprint than You Do - Social media sites like Facebook and Twitter are 2009 Trendsetters above and beyond the world of buying and selling dirt.  In real estate, though,  the savvy home seller now ensures that their Real Estate agent is marketing  their property through multiple Internet channels.    Wouldn’t  you want 30 million visitors at your open house – especially the ones who can’t leave foot prints on your new carpet?

9. Welcome to California! – We are working with an increasing number of clients who are relocating to Silicon Valley for a new job.  It looks like both our job market and our real estate market are picking up!   Welcome!

10. Less to Pick From, More Competition – And finally, in many areas of Silicon Valley – we are seeing fewer homes on the market.    In fact, for Silicon Valley overall – more homes are “pending sale” than are actively for sale.  For buyers – this means that there are fewer homes to consider and more competition to get  your offer accepted. For sellers – it means that there are fewer competing properties.  This sets the stage for an even brighter 2010!

We wish you the best holiday season & look forward to serving you and your referrals in 2010!

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Intero Insider: Bringing the American Dream Home With 203k Loans

By Gino Blefari | December 16th, 2009 0 Comments

The American Dream. Own a home. Provide for your family. Be part of a community. These are things that each of us want. For many, however, achieving that dream has become harder over the past couple of years.

There are lots of homes for sale. There are lots of homes that are priced incredibly well. More and more of these homes, however, are in desperate need of repair and renovation. Whether the result of age and general neglect, or whether the homes have been gutted by previous owners, the result is the same: the cost of renovations almost immediately puts the reasonably-priced home suddenly out of reach.

But there is a solution: the FHA 203k mortgage loan.

The 203k mortgage offers all of the great benefits of FHA financing, but also covers the costs of renovation. Imagine! The possibilities have tremendous implications for homeowners and their sense of pride, not to mention the benefits to our nation’s economy.

Intero is committed to helping rebuild The American Dream. Intero is committed to rebuilding communities. We’re committed to helping create jobs. We’re committed to YOU.

The financial crisis with which our country is dealing has left many homes distressed. These homes often stand empty, causing neighborhoods and communities to degenerate. The 203k mortgage loan gives homebuyers the opportunity to buy these homes and take advantages of their remarkably low prices, and then pour into them the TLC that they so desperately need. Through this program, they’ll infuse new life into these neighborhoods. They’ll stimulate the economy. And they’ll achieve pride in ownership.

With RE-buildUSA, a program designed to raise consumer awareness and help Americans enjoy the benefits of this incredible opportunity and Lowe’s home improvement centers, we will be able to educate consumers about possibilities that are out there.

Each of our real estate professionals is going through training to become certified 203k mortgage specialists. We will be the experts. As is our goal in everything, we will be mounting the charge head-on to help RE-build our nation’s economy, one homeowner at a time.

The American Dream. It’s out there. With Intero & the 203k mortgage loan, you can achieve it.

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Intero Insider: How Will The New FHA Guidelines Affect YOU?

By Gino Blefari | December 10th, 2009 0 Comments

For many years, the Federal Housing Administration, by virtue of its policies designed to help people with lower incomes or those just starting out, made it possible for millions of Americans to purchase their own homes. They made it possible for these people to take part in the American Dream.

Fast-forward to 2006, at the height of the “boom” real estate market, and the FHA found itself backing just 3 out of 100 home loans, as “non-conforming” loans were being given to, pretty much, whoever asked for them, and their requirements were virtually hassle-free when compared to those that the FHA had in place.

Today, the FHA backs 3 out of every 10 new home loans, because, as other lenders have tightened restrictions, FHA has followed the status quo, keeping things fairly liberal.

The result of all of this? Problems. Big ones.

On December 2, 2009, the Secretary of Health & Urban Development, Shaun Donovan, stood before Congress and announced that the FHA’s cash reserves have fallen well below the Federally-mandated level of 2%, to a staggering .53%.

To try to alleviate the FHA’s problems and raise reserves to their legally-required levels, Mr. Donovan indicated sweeping changes would be coming to the FHA’s loan process. Here’s some of what you should expect:

More Money Down. One of the big reasons that FHA loans have been so popular over the years was low down-payment requirements — just 3.5%. FHA’s withering balance sheet, however has the agency requiring that buyers put more money down. The new down-payment requirement? As high as five percent.

Higher Fees. Fees for FHA loans have always been high. There are upfront and annual fees that borrowers must pay, which the agency uses to reimburse lenders in the event of default. The fees are already as high as the law will allow, but the agency is considering asking for increases.

Better Credit. Mr. Donovan said that the agency would, at least for now, increase the minimum credit score for new borrowers. The FHA’s current low-limit is a score of 500, though it’s important to note that most of the lenders funding FHA loans won’t accept a score of below 620, even now.

Lower Debt-to-Income Ratios. FHA has been lenient in the past, making exceptions with people with higher debt-to-income ratios (DTI) in the event of extenuating circumstances or those with longer credit histories. No more. The maximum allowable DTI will be 45%. This means that if your debt is more than 45% of your total income, you won’t be approved.

These changes will likely be implemented in early 2010, with the first kicking in during the first week of January.

The bottom line is that with the new FHA guidelines, a borrower’s bottom line will have to be straight, narrow, and raised much higher.

On a related note – the FHA Section 203K home loan is becoming an increasingly popular mortgage loan choice for home buyers purchasing a distressed property. This unique mortgage loan offers all the benefits of FHA financing along with the ability to provide funds for both the purchase and the renovation of a new home. Think about the possibilities – a single loan to buy and fix your home up!

As mentioned in last week’s Insider, Intero recognizes the need to educate our agents to keep them informed and up-to-date with the latest programs aimed at helping those within the distressed home market. With the help of the Re-buildUSA program Intero agents will now become FHA 203K experts helping our communities rebuild and grow.

We are excited to share more on this opportunity – so look forward to more detailed information in next week’s Intero Insider.

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Intero Insider – Mission: Distressed Properties

By Gino Blefari | December 9th, 2009 0 Comments

No one can deny the economic challenges we face as a country. They are the most challenging we have seen in generations. This environment demands more from brokers and Realtors than ever before; especially when dealing with those caught up in the epidemic of distressed and foreclosed properties.

Planning. Organization. Training. Execution. Leadership.

Let’s take a lesson from our own military, the Marines. Their reputation as hardened fighters is well documented. Their success stems from their organization and the precise training that enables the unit to understand and execute the mission of the unit leader. Their order consists of these five elements:

  • Situation
  • Mission
  • Execution
  • Administration
  • Command and Communication

Simple. Direct. Concise. Effective. And I believe this order can be implemented in real estate and guide us through and out of this current market situation. I’ll break it down as follows:

Situation – This is the background to your problem or the events leading up to where we are now. We have been facing incredible pressures and fluctuations in the housing market for over 24 months. Starting with the stricter lending requirements and plummeting home values during the sub-prime mortgage crisis that started in 2007. Two years into this foreclosure crisis we see unemployment, the traditional driver for foreclosures, come into play. While the focus has been primarily on Wall Street and the individual homeowner we recognize the tremendous pressures that have been placed on the individual agent and brokerages.

Mission – This is what we do about it. As I assess this new environment, it becomes painfully apparent that in order to respond to the needs of a distressed marketplace, we had to first and foremost ensure that our own company did not become distressed.

Secondly, we recognize that for our neighbors and prospective clients the immediate goal is saving their home. Granted, this appears counter-intuitive to our core mission of selling homes, but the underlying situation called for this. As Realtors, our mission is to get up to speed quickly, briefed on issues and expand our network of strategic business partners like never before. Therefore it became our mission to train our agents to do just that.

Execution – This describes how our mission is to be achieved. In a distressed market like the one we face today, the solutions we offer and the unique obstacles associated with delivering those solutions are changing rapidly. That is why we have created a department that specifically addressed the problems, opportunities and solutions in the distressed markets. We provide internal loss mitigation training through our Short Sales Division. We also encourage our agents to become Certified Default Resolution Specialists, to better connect and guide distressed homeowners through all of the options available to them. In addition, we are reaching out to servicers, local government agencies, non-profits and to the community to work collaboratively to address the issues and to help jumpstart neighborhood stabilization.

Administration – This regards the resources required to accomplish your mission.  A brokerage’s most important resource is its agents and empowering them was the most important thing we could administer.  Everyone is working frantically to create new processes, new technologies, new laws to help homeowners, but they are all fruitless if there is not a trusted source to help the homeowners engage in the process. This is where our agents come into play. Servicers are overwhelmed by the number of defaults and homeowners not able to make contact with their servicer, thus never realizing they have options to avoid foreclosure, who better to address and administer to their problems than the Realtor.

Command and Communication – Who’s in charge? Who do you report to? How do you communicate with each other?

With all other forms of loss mitigation, making initial borrower contact is still the key. The fact remains that in a great number of foreclosures, estimates are between 50-60% of all REO properties, there was never any contact between the homeowner and the servicer. Obtaining accurate borrower and property data is challenging to say the least. There are many moving parts and players, which can easily lead to loss of communication.

At Intero, it is the individual agent that remains the most viable solution to engage the distressed market and affect the greatest change in the housing recovery in the years to come.

Semper Fi

The challenges we face are daunting. The road is neither short nor straightforward. It is littered with obstacles, both old and new. But it is the road we must travel in our chosen profession and the road we choose to improve for the well being of the communities we serve.

Take inspiration from my Dad, a decorated WWII Veteran awarded with two Purple Hearts, and the Bronze Star of valor (just to name a few,) quoted often, “Courage is not the absence of fear, it is forging ahead in spite of it.”

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Ten Reasons To Love Mountain View

By Marcy Moyer | December 3rd, 2009 0 Comments

Schools, Schools, Schools! – Like Palo Alto, Mountain View has excellent schools. The Whisman School District is renowned for challenging academics that encourage students to reach their highest potential. Several magnet programs are offered throughout the district, including opportunities for dual language immersion. All schools are equipped with cutting-edge technology. Students consistently achieve some of the highest average test scores in the nation. Making the choice to raise your child in Mountain View guarantees a they’ll get a good education, and it also reinforces the property value of your home–houses in good school districts are always better investments.

Castro Street – This downtown Mountain View centerpiece was designed with leisure in mind–the street is clean and well-lit, with thriving trees everywhere and wide stone benches perfect for quick shopping breaks or enjoying an outdoor lunch. There are a number of bookstores and high-end clothing stores, but the essence of Castro Street is really in the food. Indian-Chinese Fusion, healthy (really!) pizza, Greek, Japanese, Mexican–nearly every cuisine imaginable is represented within six blocks. I had the best mulligatawny of my life at Godavri, a small Indian gem with intensely flavorful food and great service. Lovely small town feel that’s especially romantic at night, when the restaurants prop open their doors and the white lights strung through the trees turn on.

The Best Tennis Courts in Santa Clara County – Cuesta Park is a giant neighborhood park in Mountain View, with 16 tennis courts and great family bike trails. The courts stay open until 11PM and feature spectator areas and high judge’s seats. Everything in the park is well-maintained, and there are bocce ball courts and play areas for kids. Patrolling security guards ensure a family atmosphere, and catching a free concert here in the summertime is a must.

Center for the Performing Arts – The place to go for dance performances, TheatreWorks productions, children’s theatre, and other cultural events. The center is cleverly designed and features state of the art technology. Local artists display their works in the Center’s lobby.

Caltrain Station and Light Rail — Great for commuters and anyone looking to get to nearby San Jose, Palo Alto, or Sunnyvale in a flash. The station has tons of amenities–bicycle lockers and shelters, pay phones, station building with meeting room, and newspaper racks. It’s also right in the heart of downtown Mountain View.

San Antonio Shopping Center — Functional plaza with a variety of stores. Target, Craft, Sears, The Milk Pail, Albertson’s, Payless, WalMart, a 24 hour gym, and best of all–Trader Joe’s. It’s the only Trader Joe’s around and it’s a good-sized store, chocked full of reasonably priced food and wine and Trader Joe’s unique products. I love their cookie dough and blueberry museli. The pre-made wraps and sandwiches in the cooler are also a yummy lunchtime option.

Diverse Housing Styles and Options — Walking through the residential streets in Mountain View is a visual pleasure–the houses are stylistically interesting, and there are many new homes, cottages, and contemporary style homes. It’s also a nice area for buyers looking for alternative housing options. There are a lot of rentals, condos, and town homes in the area.

Bridge School Benefit and Other Concerts at Shoreline Ampitheatre – The annual Bridge School Benefit is organized by Neil Young and his wife Pegi. Every year I look forward to this one. All the proceeds from the concert go toward the Bridge School, which aids children with physical impairments. The line-ups of musician are always good and varied–last October I saw Tom Waits give a riveting performance with the Kronos Quartet, and there are always some fresh faces from the music scene kicking off the night. The Shoreline Ampitheatre is perfect for this event and other concerts–if you arrive early enough you can get close the stage, and if you come late the deal is almost better. Just spread out a blanket on the grass, uncork a bottle of wine, and enjoy the show.

Doggie Heaven at Shoreline Dog Park — Two areas–one for big dogs and one for small dogs, and shaded picnic tables for people too! Outside of each area you’ll find Purell hand sanitizer, paper towels, and poop bags. Water fountains for dogs and people, and close walking distance to downtown. This place is always crowded, so you and your dog will leave with a few new friends. The owners who take their dogs here are respectful, and if you go in the morning you’ll see rake marks in the sandy dog areas–they’re cleaned nightly.

Popcorn! Movies! Popcorn! Century Cinemas 16 is a big commercial movie theater that usually plays 13 or so movies at a time. They always run the latest blockbusters and keep some well-reviewed movies around for a while–handy if you miss the opening weekend rush. There’s a Starbucks stand inside and every theater has those comfy wide chairs that lean back. But my favorite thing about Century 16 is the popcorn. It comes from the same standard glass case with the popping thing inside, but it’s exceptionally good. Even if I’m full from dinner I always cave in to the popcorn when I catch a movie here.

Why do you love Mountain View? It doesn’t matter if you live here or just can’t stop visiting, I want your comments! Fill me on the neighborhood’s best and brightest. Post a comment!

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Is the Demise of the “Buyers Market” at Hand?

By Russ Boyd | December 2nd, 2009 0 Comments

With all the information floating around about the health of the real estate market, it is wise to focus on a forward look indicator, the Pending Home Sales Index.

As reported by the National Association of Realtors®, the Pending Home Sales Index posted its 8th consecutive monthly gain in September nationwide.

demise-narpending home sales

The index now stands 21% higher than it did one year ago and Pending Home Sales are now at their highest levels since December 2006.

A Pending Home Sale is a home under contract to sell, but not yet closed.

The following Pending Home Sales Reports are taken from our October Market Metric Reports available at www.bayareamarketmetrics.com.

These graphs cover a two years period and as you can see below, San Mateo County and Santa Clara County Pending Home Sales are at their highest point in the past two years.

demise-san mateo county

demise santa clara county

As seen in these graphs, Alameda and Contra Costa Counties are reporting a steady number of Pending Sales at an elevated level when compared to two years ago.

demise alameda county

denmise-contra costa county

When the Pending Home Sales Index rises, it tells us that market activity has picked up. October’s data confirms what we’ve been noticing since February — the Buyers Market is coming to an end.

With more homes under contract in the marketplace, home buyers typically face one or more of the following:

1. Competitive, multiple-offer situations
2. Reduced purchase price leverage over sellers
3. Few if any seller concessions

Therefore, if you’re planning to buy a home in the next several months, know that the 8-month increase in Pending Sales has lead to an increase in closed sales which in turn results in higher home prices and reduced affordability.

Further evidence can be seen in this recent Case-Schiller Report.

demise case schiller

If you intend to buy while rates are low and affordability factors are still favoring buyers, you should be actively working with an agent now. If you are thinking of selling but have been holding off until the market was showing clear signs of improvement now would be the time to talk with your agent about preparing to list your home.
Whether you are considering buying or selling speak to your agent about ways to get the most of the this evolving market.

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What If The Speculators Go Away?

By Rick Soukoulis | December 1st, 2009 0 Comments

If you’re in real estate or mortgage lending, you’re always getting inundated with data and statistics.  Among the many statistics I’ve seen lately, one kind of jumped out at me.

I read recently that something like 70% of all buyers of foreclosed home are speculators.  Wow.

I had a few quick reactions.  My first one was one of surprise.  I don’t know what I might have expected, but probably something like 30-40% would have been closer.  My second reaction was that we should all be grateful for these speculators, since we need someone to be out there buying real estate.  My third reaction was to wonder what will happen when the speculators all go away.

Let’s look at these assumptions or reactions. 

First, having speculators represent such a large percentage of buyers probably shouldn’t be surprising.  As speculators, they’re prepared to take risk in return for reward, and given how questionable housing values are these days, they’re willing to take great risk for great reward.

It’s speculators who are so key in the price discovery process.  Speculators who get in too early and pay too much will lose money, and that’s precisely how end-users, people buying homes to live in, know whether and when it’s time to buy. The people looking to buy homes to live in are afforded the luxury of standing off to the side where they can watch speculators determine the true value of local homes.

In this sense speculators are as much a part of the recovery process as they are of the discovery process.

But what happens when they go away?  First, we need to remember that the 70% statistic is only for foreclosed homes.  Second, they will go away when the easy profits are no longer there. And why will this happen?  It will happen because supply and demand are getting closer to equilibrium, and this has to happen before housing prices can stop falling and return to normal. 

Speculators thrive when there is a wide disparity between what sellers want and what buyers will pay.  True end-users want a market in which such disparities don’t exist.

The speculator stops playing the game because the easy profits are gone, but that also means that prices have stabilized.  After all, profits are much harder to come by once prices have stabilized.

The speculators will leave precisely when true end-users enter.

The absence of speculators will, by definition, mean that things have returned to normal. 

 And isn’t that what we all truly want?

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