• Home
• About
• Properties For Sale By City
  • Atherton
  • Los Altos
  • Menlo Park
  • Mountain View
  • Palo Alto
  • Other Cities
• Housing Price Trends

Subscribe

The Silicon Valley Market Report for February 2010

So far 2010 is off to a roaring start, with multiple offers again becoming commonplace, and highly qualified buyers lining up in some cases to present strong offers for well-priced, desirable properties.

As a couple of data points, our listing for a three bedroom home at 842 Sycamore Drive in Palo Alto, an entry-level home priced at $949,000, received 14 offers and sold for over $1,100,000. A similar property nearby on Greer received 12 offers the same week and sold for just under $1,100,000 vs. a list price of $979,000.

This market imbalance of large demand chasing limited supply isn’t limited to the entry level, homes in Los Altos and Palo Alto listed between $1.5M and $2M are receiving multiple offers as well, and even our office listing at 75 Coronado in Los Altos priced at $3,995,000 has been getting more interest lately.

As we begin to see more homes coming on the market as we move through the spring, I expect to see the market cool as the supply of homes for sale catches up with demand, and buyers have more choices. In the meantime, the Sellers seem to have the advantage if they have homes that are attractive to mainstream buyers.

That $45,000,000 estate on Stonebrook Drive in Los Altos Hills is a great example, as it is now an $28,000,000 estate. Do I hear $15,000,000?

In summary our current market continues to be driven by the following conditions:

• Low inventory of desirable homes for sale that are well priced
• Buyers motivated & feeling like they will miss out with limited selection
• Fears of rising interest rates are driving motivation to buy now
• Realization by buyers that they can’t buy for 20% below list now. Most sales in $1M – $2M are 10% under to 10% over list.

Opportunities:

• Interest rates are currently at historic lows
• The government is buying down conforming rates under $729,750 through March 2010, which holds down jumbo rates as well
• Consumer confidence is picking up – I’m seeing new cars more often, and new car sales are an indicator of increasing consumer confidence which leads to a strengthening economy, as consumer spending is the largest component of our economy

Threats:

• Government buydowns of conforming loans are scheduled to end in March which will lead to rising interest rates on conforming and jumbo loans
• Forecasted loan resets on commercial property in 2011. You can’t refi empty office buildings and vacancies are up
• Lots of buyers rushed to purchase before the tax credit expired December 1,2009 – Will this leave a hole in demand in early 2010? Not so far . . .
• Unemployment is 10% locally, and there is limited job growth forecasted for the next year.

In the threat department, I’ll refer again to this report from Bloomberg last month, which is especially relevant in our area:

Homeowners with mortgages of more than $1 million are defaulting at almost twice the U.S. rate. This brings the rate of default for these considerable loans up to a skyrocketing level of 12 percent as of September, compared with 6.3 percent on loans less than $250,000 and 7.4 percent on all U.S. mortgages. This is quite a jump from the year prior where the rate for default on the $1 million dollar plus mortgages as only 4.7 percent.

In contrast to these ominous reports and Threats, we are seeing strong upwards trends across our area in our Market Action Index, that catch all indicator based on prices, inventory, and time on the market. We are even seeing the MAI climb toward parity in the lower price ranges in markets like Palo Alto and Mountain View.

On to the numbers:

Atherton:

The Average Price of a Single Family Home in Atherton is $6,124,821 with a range of $1,150,000 to $14,900,000. 25% (versus 33% last month) of the homes in Atherton have had price reductions, and the average number of Days on Market is 270 days versus 272 last month. It remains a Strong Buyer’s Market in Atherton, although the Market Action Index has been trending upward over the last quarter.

Los Altos:

Currently, the Average Price of a Single Family Home in Los Altos is $2,165,536, with a range of $995,000 to $4,995,000. 25% (down from 39% last month) of the homes in Los Altos have had price reductions, and the average number of Days on Market has fallen to 165 days versus 172 last month.

Los Altos Hills:

In Los Altos Hills, the Average Price of a Single Family Home is $4,983,866, with a range of $944,900 to $28,500,000. 30% (down from 33% last month) of the homes in Los Altos Hills have had price reductions, as Sellers are learning that the market has shifted, and the average number of Days on Market has declined to 247 days from 261 days last month.

Menlo Park:

This month, the Average Price of a Single Family Home in Menlo Park is $1,491,797 with a range of $190,000 to $6,495,000 (The $225,225 is in East Menlo Park, the bottom of the Menlo Park market is about $800,000). 27% (up from 24% last month) of the homes in Menlo Park have had price reductions, and the average number of Days on Market has risen to 163 days versus 150 last month.

Palo Alto:

In Palo Alto the Average Price of a Single Family Home is $2,270,343, with a range of $750,000 to $23,950,000. 20% (versus 34% last month) of the homes in Palo Alto have had price reductions, and the average number of Days on Market has fallen to 158 from 179 last month.

If you know of anyone who would appreciate having this market information delivered to them monthly, please forward this message to them, or CLICK HERE to send an email with your cities of interest. If you are a data junkie, you can receive these reports weekly, just register at: www.REMarketReports.com to select the markets and reports you would like to receive.

If I can answer any questions for you regarding the market, please contact me directly at: 650-450-0450.

Thanks for reading . . .

Tales From the Front 1/31/2010 – The Return of the Tulips

I have been patting myself on the back over the results of my contrarian marketing of 842 Sycamore Drive in Palo Alto.

It sold in a week with 14 offers, when the average Days on Market for a home in that area and price range is about 100.

Part of my contrarian marketing was to put it on the market during January, before the “traditional” beginning of the spring market, which is the week after SuperBowl Sunday. With the recent sales activity, I’m expecting a number of homes to come on the market starting in mid-February, as most agent “hold” listings until then. I have confirmed this with a number of my colleagues who are big “listing agents” meaning they hang signs in front of a lot of houses. (Most of my work is with Buyers).

Another house on Greer in the same neighborhood on and price range (listed at $979,000), received 12 offers and sold for very near what Sycamore did. Both homes had over 100 visitors to the open houses and the offers landed in the same ranges.

One question that came up immediately was “These are so similar, I wonder how many buyers are writing offers on both homes?” I haven’t been able to confirm anything, but I have a sneaking suspicion that the same 12 – 15 people were writing offers on both of these homes.

If this is the case, then the entry level market in Palo Alto is like a game of musical chairs. The same 12 – 15 people are going around writing offers on homes, and with every sale one drops out. After 12 rounds or so, they all have homes and the market stops.

So, when the conventional wisdom listings hit the market in February, there will be a flood of inventory, and choices, so the number of offers per home will likely drop off as buyers have more choices and less of a feeling of scarcity. In the case of the homes mentioned above, that would have resulted in a loss of thousands of dollars in proceeds to the sellers, but great news for the buyers of those homes.

This is all speculation now, but worth keeping an eye on over the coming months as we wait to see if the market is returning, or if we are seeing a short-term blip driven by a very limited supply in shortage to a relatively limited demand.

Thanks for reading . . .

Tax Credit Extended, Markets Further Stabilizing and Real Estate Ideal Hedge

Tax Credit and Conforming/FHA Loan Limit Extended

Made official on Friday, the tax credit for home purchases was extended through July 1, 2010 and the important details are exactly as they were in my post on Friday the 30th of October, which was summarized as follows:

· Effective on binding real estate contracts from December 1, 2009 through April 30, 2010, The tax credit would be $8,000 for first time home buyers and $6,500 for move-up buyers who have owned their current home for at least five years

· The tax credit expires on April 30, 2010; however, if a binding contract is reached by April 30, 2010, buyers have an additional 60 days to close the deal and still be eligible for the tax credit

· For purchases made in 2010, taxpayers would be able to claim the credit on their 2009 income tax return

· The income limits for both first time home buyers and move-up buyers would be $125,000 for single return and $225,000 joint return.

· Cost of the home may not exceed $800,000 to be eligible.

Remember that a tax credit has about THREE TIMES the impact of a tax deduction, which allows someone earning $125,000 per year to be taxed on about $102,000*. And since other items like interest and property taxes are also deductible*, that same individual may be looking at less than half of their earnings being fully taxable..!*

Add the above news to the fact HUD also extended the conforming loan limit of $729,750 in the Bay Area to December 31, 2010, and you have a “perfect storm” for every qualified first-time buyer in the Bay Area.

S&P Case-Shiller Confirming Further Improvement of Housing Prices

Released last week, the S&P Case-Shiller index confirms that housing prices continue to improve, especially in areas like San Francisco where the index moved another 2.8% in August to 132.47. This marks the seventh straight month of improvement.

Zillow also reported that their index reflected further stabilization for the third quarter, with over 26% of the metropolitan statistical areas showing signs of improvement.

Real Estate as an Ideal Hedge to Both the “W” Concern and Inflation

You may recall from my last post that we are seeing far more application activity for purchases in the $1mm+ range, especially the $1.5mm to $4mm range. These applications have been coming from our more financially-minded clients, as they not only see tremendous opportunity to obtain a more valuable home, but they are very concerned about a “W”-shaped economic recovery and subsequent inflation. As such, obtaining an upgraded home for less, cheap financing and hedging against inflation make buying a larger home an ideal move. All things being relative, the reality is that the S&P 500 currently has a rather high price-to-earnings ratio at about 19.52 versus the historical average of 15.7. As such, if we were in average economic circumstances, it’s arguable that the stock market is overvalued by about 25%. Given the fact that our current economy is FAR from being in average condition, it’s anyone’s guess just how overvalued the stock market is. All I know is that my savviest, financially-minded clients think that the stock market is due a correction and that real estate is a great asset to have as a hedge against both a market correction and inevitable inflation.

Fannie’s New Program: Deed for Lease

Announced on November 5, Fannie Mae is helping those qualified applicants to essentially sell and lease back their current home. This program is also applicable to investment-property owners who are facing foreclosure and wish to deed the property over to the lender and allow the renters to continue renting at market levels.

Rates and Activity

• Rates continue to run as low as 3.75%, depending on a number of different factors, with the conforming 30-year at just under 5% and the jumbo 30-year at about 4.75%
• 71% of our transactions last month were purchases, and the average loan was in the $500k range.
• As mentioned above, we’re seeing a heavy trend in purchase applications for the move-up market, but inventory is turning off a majority of those buyers
• We closed a deal in TWO weeks, but we still recommend a 30-day closing period
• If you or someone you know prefers to pay cash for a purchase, then finance that purchase within 90 days to protect valuable tax advantages, we can help, as we have programs that DO NOT require 6 months seasoning and pricing is based on purchase money, NOT a cash-out refinance

* Does not constitute tax advice.  Please seek any qualified tax professional for proper guidance.

Economic Forecast, Extending the Tax Credit and the Golden Window for Buyers

On October 12, I attended a SILVAR sponsored economic update and forecasting presentation by CAR EVP Joel Singer, and I thought you might find the following summary and comments beneficial:

• As we all know financing is the primary key to housing stability, and Singer is 100% confident that both tax credits and the $729,750 conforming limits will be extended into 2010—both of which are keys to continued recovery
  • 40% of first-time buyers for 2009 bought because of the tax credit
  • The Feds are on track to extend the credit, maybe even improve it, so let’s keep our fingers’ crossed
  • The CA State Senate already approved the extension of the state $10,000 tax credit, and it should pass Assembly this week—yeah!
  • Food for thought: before the competition increases due to formalizing the tax credits, first-timers should make their move sooner than later
• The move-up market here is the most impacted, but will improve as financing does; as such, he feels as though there will be some level of government involvement to stimulate the secondary market for non-conforming loans
  • Right now, inventory levels for $750k-$1mm are at 6.1 months, which is healthy; inventory levels for $1mm+ are at 12.8 months, which signals a clear buyers’ market
  • With government support, non-conforming lending will ease, but not necessarily cause rates to be lower—current margins are already at all-time highs primarily due to risk—by stabilizing the system and improving liquidity, risk is reduced, savings rates increase and rates remain about the same
• Futures point to a Fed funds rate rise of .500% to .750% and conforming 30-year fixed mortgages at 5.6% in Q2 2010
  • As such, this gives anyone needing a conforming loan about 5 months before both rates and prices are up significantly
  • And if you missed the headline on September 24th about the Fed easing their policy of keeping mortgage rates low, you’ll want to know that they are almost cutting in HALF the  the effort– $14B versus $25B
• The overall number of homes/units sold next year will be down, but that’s only because we had a record number of units sell already this year—foreclosures will be DOWN relatively significantly
  • Activity will still be high and it’s likely the $1mm+ segment that will provide buyers with the best value
  • The “second wave” of foreclosures due to rate adjustments is a farce—many people, like myself, are looking forward to loans adjusting at lower rates, which is precisely what the majority of those loans will do
• 2010 will be a growth year with GDP expected at about 1.9%
  • Great news for the economy, but growth causes higher prices and higher rates—
• The population of CA will grow another 1.1%, so that’s about $370,000
  • We’ve added about 600k people per year since 2000, and about 500k babies are born in CA each year, so I guess that means there will be more demand on housing, which is also good news
• Unemployment may be 12% in CA, but that number is tied mostly to construction-related industries. 
  • With High Tech, Finance, Exports and Travel all on the rise for the Bay Area, our property values and local economy should benefit significantly

The Latest on Rates and Activity

Even with the incredible rates that continue to drive the refinance market, over 50% of the transactions that we closed in September were purchase transactions.  Also of importance is the fact that of those purchase transactions, 35% were financed using “JUMBO” loans!   Jumbo 30-year fixed loans are running about 5.75% and that jumbo 5/1’s are around 4.50%.  And if you have a $417k conforming loan, 5/1’s are available at 3.75%!!

According to the MBAA, last week’s applications were down, but the four week moving average is up, along with interest rates (albeit slightly).  We’re seeing the opposite effect locally, but it’s likely due to the many move-up buyers looking to take advantage of the $1mm+ market through Winter.

Is it just me, or does it genuinely feel like the golden window of opportunity for buyers right now..?

A great success story for us lately included funding a loan for a borrower who had a 63% debt-to-income ratio.  We have also bridged three separate transactions that allowed buyers to move up without having to sell their current home first.  And finally, we improved a client’s credit score by 100 points and saved them over $8,000 by having an erroneous collection removed from their credit record.  So even with all the news headlining the challenges in the mortgage world, at least some great success stories continue to be made.

900 University Ave, Palo Alto: Attention, Madam Secretary Rice: We Have The Perfect Home For You After January 20, 2008

Ms. Condoleezza Rice
Secretary of State

Kevin Boer, 3 Oceans Real Estate
Chris Iverson, Ventoux Real Estate

Dear Madam Secretary,

We understand based on recent news events (include Mr. Obama’s pre-emptive European victory lap), and on the harsh constitutional reality that your present employer will soon no longer be needing your services, that you may soon be looking for a new residence, perhaps near to your past employer Stanford University.

It seems, in fact, that Mr. Bush has already begun his own search, so there may be some urgency to this matter.

Allow us to suggest a residence suitable for a person of your experience and discerning taste: the Squire House at 900 University Ave in Palo Alto. This property is currently on the market, listed by the local Alain Pinel triumvirate Carol, Rosemary, and Nicole, for only $12.5M.

First of all, this home is a leisurely 20 minute walk down University Ave straight into the heart of the Stanford Campus:

Secondly, the facade of the home may well remind you of a similar grand mansion on the East Coast, one in which you have spent a considerable amount of time in the last 8 years:

(Image courtesy of 900UniversityAvenue.com)

Thirdly, the home is over 6000 square feet, and has a lot size of nearly one acre. This will provide ample room for all your entertainment, parking, and security needs.

Should you wish to view this property, have your people call our people, and we’ll make it happen.

Best regards,

Mssrs. Boer & Iverson

P.S. Some of your colleagues may be in a similar situation. We are happy to provide them with good references for real estate professionals in their home towns.

Mr. Paulson, for instance, may return to Manhattan to work for Goldman Sachs. May I recommend Mr. Noah Rosenblatt as the ideal discrete broker to assist him.

Should Mr. Gates return to his former employer, I recommend he contact Ms. Lani Anglin, who, though based in Austin, not College Station, would be a stellar pick.

If Mr. Gutierrez finds the siren song of Miami irresistible, I highly recommend Mr. Kevin Tomlinson.

Perhaps you could also relay to Senator McCain that, should he decide to retire, the right person to contact is Mr. James Wexler, one of the best real estate brokers in the Phoenix area. We understand this move might happen this year, or in 2012 or even 2016; Mr. Wexler is patient and will be awaiting his call.

Update:

Curtis Van Carter, who sells real estate in Napa Valley, claims he’s trying to nab another high-profile soon-to-be-unemployed individual, none other than “W” himself. Apparently, said individual, while in Napa Valley on a fund-raising expedition, took a little side trip to see a certain castle. Alas, it’s not even for sale, and spouse Laura found it cold and uninviting.

At the other end of the spectrum, Los Altos Realtor Joanne Fraser suggests Condi may have to settle for a $1.6M Los Altos home because Stanford profs only make $175K per year. I completely disagree. First, she’d be the Provost, not a mere professor, which means her salary would easily be $250K. Secondly, I’ve heard she may be getting help for the down payment. Finally, there are rumors of a book deal in the works!

Geeks Of The World Rejoice! Behold The First-Ever Twitter-MLS!

I’ve been accused — rightly, I might add — of being a geek. I also happen to be in real estate. You put the two together, plus a keen interest in using new social media tools like Twitter, and what do you get? The Twitter-MLS!

For a long time, MLS searches have been available via email. Recently, some real estate search providers — like our friends at Trulia and at Diverse Solutions — have enabled MLS searches via RSS feeds. (That’s actually the technology I use on the sidebar to provide the link searches.)

As the latest new big online thing, Twitter has attracted a massive cult following, and as a permission-based communication tool, it’s ideal for sending out news snippets such as new listings.

Here’s how it works:

1. Sign up for an account at Twitter if you haven’t done so already.
2. Head thither and “follow” my Twitter “Menlo Park MLS” account. Other towns in the Bay Area will follow shortly.
3. Sit back and enjoy the “tweets” that will come your way by cell phone, email, Twhirl, online (depending on how you configure Twitter). These “tweets” will be little news snippets about new homes to hit the market. Want more details? Click on the link in the tweet and you’ll see pictures, details, and much much more.

If you’re more of a FriendFeed type, I have the same offering available in FriendFeed room format. Find your way yonder, select your favorite city, and click “Join This Room.” And, as our British cousins would say, “Bob’s your uncle!”

FriendFeed room example for Burlingame:

Twitter example for Menlo Park:

Right Along With the Grunge Look, the Housing Crisis is Over

Yes, for those of you gents who still may be holding on to the rather relaxed “grunge” look from the 1990’s, I’ve got a newsflash for you: grunge, along with the current housing crisis, is over.  

Articles about the housing crisis ending have been few and buried in their respective periodical, my favorite of which was in TIME magazine back in February titled, “Ignore the Headlines“.  But now we have the Wall Street Journal. claiming that the trough was reached in April with an article from May 6, “The Housing Crisis is Over“.

I agreed with Peter Lynch back in February.., and it’s becoming more an more apparent that the longer prospective home-buyers sit on the fence, the more expensive that home purchase will become.  And this is not just because I believe that home prices will rise, it’s also because I believe that both long and short term interest rates will rise.  The 10-year Treasury Note, for example, is up over 1/2% since the middle of March, and the 10-year Treasury Note is a decent barometer to use when you want to know what the trend in long term mortgage rates have been.

That written, if you really want to continue with the grunge look, might I suggest saving it for your next camping trip?

As always, kindly consult with your trusted real estate, tax and mortgage professional before seriously considering any home purchase.

Sorry, If You Build It, They Are Not Coming

(photo credit: mop squad)

Kevin Costner was hot 20 years ago in Field of Dreams. So was that comment “If you build it, they will come.” I received a fantastic comment from a home buyer today for my previous post How Listing Agents Unintentionally Sabotage Their Own Staged Listings:

1. Danica Says:
   May 12th, 2008 at 10:51 am That is so true. As a potential buyer, I have been frustrated many times by Craigslist ads that have no picture. There are a ton of houses out there, and I’m trying to weed out the ones I don’t want to look at – it’s really impossible without a picture.I’ve seen so many places, staged or unstaged, that sounded great on paper and then turned out to be hideous-to-unlivable in person.More importantly, even though online listings at a place like Craigslist are free and offer almost unlimited space, a lot of sellers just put up one or two sentences and no pictures – and to me that says “I don’t have it together enough to actually market this house.”

   And my experience has been that often, that means they don’t know how to deal with the paperwork, or with my questions, or even with basic social skills.I guess in a way it’s helpful to see a boring, picture-less, one-line house ad – because it tells me I don’t want to deal with that seller. But it’s still hilariously frustrating to see an ad online that says something like, “2 BR 1.5 BA NICE!!! MUST SEE CALL JAMES SMITH REALTOR 555-1414!”

This is a brilliant comment, it just goes to show that with that in this fast changing real estate market, our buyers’ behaviors have changed. The old attitude of “If you list it, they will come” no longer works. That worked in the movie Field of Dreams for Kevin Costner but guess what? Kevin Costner is OLD news now. That phrase was coined 20 years ago, so is that attitude. It’s freaking 20 years old. Shouldn’t we move on with the times?

A savvy marketer knows that today’s consumers are so de-sensitized by advertisements that they need more interactive and user-friendly contents [Note: "content," NOT "ads."] to make an educated decision before buying. You can see that through the fast rising numbers of business blogs and web 2.0 services. People want interaction, not sales agenda ramming down their throats.

Also, today’s agents no longer holds monopoly to MLS information. Internet has made today’s buyers more savvy, shrewed, efficient and much more likely to start their buying process without agents. Additionally, if the consumers cannot be satisfied by you, it’s very easy for them to go elsewhere. To be able to work in a competitive market, as a listing agent or FSBO (For Sale By Owners), you will need to get on with the time to provide a comprehensive and user-friendly marketing package.

To do so, here are a few tips as pointed out by Danika, our lovely buyer:

*Online presence is KEY. Staging the property will instantly make the home show-ready online. Once you have staged, having big & high quality photos is a must.

*Don’t just do 1 photo, if you are allowed to post 10, why not do 10?

*Place ONLY good quality photos that will entice buyers’ appetite. Photos like featuring the local eateries or parking lots are not really adding anything to your listing.

*Be creative, not boring and cookie cutter in your listing descriptions. “2Br for sale” is kind of a duh since anyone can read it from the sheet. Why not say something more descriptive that showcase the unique selling points of your listing?

*MOST IMPORTANT: Provide reasonable expectations for buyers. If your listing sounds like the “IT” property to buy and buyers walked into an ill-maintained home, they will turn around and leave immediately because you have wasted their time. If the house is staged, keep it staged while you sell. If you property was already on market then staged, showcase the staged photos online and on flyers and take out the old unstaged photos.

Happy selling!

Cheers,

Cindy

A Perfect Example Of Co-opetition: The Real Estate Industry … Barry Nalebuff Would Be Proud

Maybe it’s the frustrated business school professor in me, or the memories of sitting in Professor Barry Nalebuff’s classes during business school, but what has fascinated me the most about the ongoing debate about Trulia’s no-follow outbound listings links (started here by Galen Ward, then continued here, here, here, and here) is not the arcana of the no-follow tag, not the dissection of SEO intricacies, and not really even the question of what is or is not appropriate to do with listings online.

No, what really fascinates me about this debate is how it accentuates co-opetition in the real estate industry.  Co-opetition is simply the notion that companies compete and co-operate simultaneously.  Arch-rivals Northrup Grumman and Boeing go mano-a-mano to get a lucrative government contract … and the winner often subcontracts part of the project to its rival.  Microsoft and Oracle have competing database platforms but often sell eachother’s products.

In our industry, co-opetition reaches nearly incestuous levels.  For instance:

• Brokers John and Betty compete for the listing at 123 Main Street.  Betty wins and puts the property on the MLS.  The very next week John brings potential buyer clients to the property.  Sure, he would rather have won the listing, but that’s in the past.  Now he’s working with Betty to consummate the transaction.  No hard feelings.
• Realtor Bob hangs his license with ABC Realty.  He puts an ABC Realty sign on the front lawn of all his listings, and the ABC Realty logo is prominent in all his media ads.  He’s co-operating with his real estate brokerage to promote their brand, and he in turn benefits from that brand awareness.  Co-operation.  A phone call from a prospective buyer of one of Bob’s listings, however, may well go through to the agent on “floor duty.”  That agent turns this phone call into a client, who goes on to buy a different listing, not Bob’s.  That’s competition — Bob would have loved to get that phone call and turn it into another client, but his competitor — the other agent, and to some extent his own broker — snagged that client.  Co-operation plus competition = co-opetition.
• A thousand local brokers — each fierce competitors — co-operate to run a local MLS.  They put their competing listings up on the MLS, and they compete to bring buyers to each of the listings.  At the close of each transaction, we again have co-opetition — competing parties co-operating for the sake of the deal.
• Broker Tom snags a listing and puts it on the MLS.  Via the wonders of IDX, that listing spreads its tentacles onto a thousand other sites, including that of arch-rival Broker Sarah.  As long as Broker Sarah indicates that Tom is the broker of record, it’s all good.  Her site is much better than Tom’s, so she gets more traffic and hence more clients online.  The fodder that draws in those visitors?  Listings … not only her own, but also Tom’s.
• Broker Rachel gets the listing at 789 Elm Street and puts it on the MLS.  She also puts it on Trulia, which, like the MLS itself, exposes the listing to a much broader audience than she could reach on her own.  She benefits from the increased exposure, and Trulia gets more inventory to display.  It’s a win-win — co-operation at its finest.  The next day, a prospective homebuyer passes 789 Elm Street and Googles the address to find out more.  Who’s on the top page?  Trulia and Broker Rachel’s listing site.  Now they’re competing — for web traffic.

There really is nothing new under the sun.   This business has always been a co-opetitive one, and we’ve always simultaneously co-operated with and competed against not only every other broker, but many of the third-party advertisers, aggregators, and media companies.

Eliot Spitzer and Making Sense of the New Conforming Loan Limits

If you’re Eliot Spitzer, probably three feelings come to mind: panic, disorientation and regret.  But if you’re a potential home buyer in the Peninsula region of California, you have good reason to feel excited, encouraged and confident!  Why?  If you read my last post last month, you know that the conforming loan limits for many California Counties are going up and that means cheaper mortgage rates on loan amounts between $417,001 and $729,750.  Now that HUD has made it official that ALL bay Area counties qualify for the revised maximum conforming loan limit, that means potentially big savings on mortgages for qualified applicants looking to purchase single-unit properties up to $810,000 with as little as 10% down!

We’ve all heard the cliche, “the devil’s in the details”, so what are the latest requirements to obtain a conforming loans between $417,001 and $729, 750?  Since I’ll provide you with a link to Fannie Mae website and announcement , I’ll provide you with some highlights that I think are most relevant and let you read further at your leisure:

1. Single-unit properties only

2. Purchase and “limited cash out” transactions only (i.e. no greater than $2,000 going into your pocket upon settlement)

3. If primary residence purchase, up to 90% loan-to-value (”LTV”) allowed if fixed-rate program is selected–700 minimum FICO(R) required; 80% LTV if an adjustable-rate loan is selected–660 minimum FICO(R) required; if refinance

4. If second home or investment property purchase, maximum 60% LTV allowed with minimum 660 FICO(R) regardless of eligible loan program selected

5. If refinance, regardless of type of eligible mortgage program, up to 75% LTV allowed, plus subordinate financing allowed in addition up to 20% LTV–660 minimum FICO(R) required

     a. SPECIAL NOTE, consolidating existing first mortgage and subordinate mortgage into one loan NOT eligible AND six  months of “seasoning” (six payments made on existing mortgage) required to refinance!

6. Loans are eligible for origination NOW 

7. Eligible programs include 30-year fixed, 15-year fixed, LIBOR-based 5/1 ARM (amortized and interest-only payments allowed for this program)– more programs may become available

8. Sufficient employment, income and assets must be verified and each file will require manual underwriting– automated underwriting engines not allowed at this time

Again, I do encourage you to read the Fannie Mae announcement from the 6th of March for all the details, but the above are the top highlights.

So what will pricing look like on these “new” conforming mortgages?  Well, pricing has just recently been released by only a few institutions, but it looks like the 30-year fixed is running at about 6.375% and the 15-year fixed is running at about 6.25%.  The 5/1 ARM pricing is expected to be released next month.  What I do think is that pricing may actually get a little better in the short term as more institutions post pricing and auctions are successful with Fannie Mae and Freddie Mac. 

What’s right for you as a would be home buyer on the Peninsula?  That depends of course on your specific situation, and I do encourage you to consult with your trusted mortgage and financial consultant before placing an offer on a home or refinancing your mortgage.  What I can say is that the majority of our clients who are buying or refinancing today are selecting a jumbo 5-year ARM in the mid-5% range due to its balance of savings, security and flexibility.

Next Page »

• Chat

• Market Stats

Copyright © 2008 3 Oceans Real Estate · Revolution News theme by Brian Gardner · San Francisco Commercial Real Estate · Log in