Before the Super Bowl XLIV gets started we thought we’d take a look at what happened in Belmont in January 2010.
We’re including two spreadsheets—one for this last January and to help put in perspective, the one from last January.
Most statistics across the country point to January of 2009 as the low point for the real estate market. But what are they saying? The lowest point for sales, median price or what?
Many pundits are saying that home values hit bottom in January of 2009 and in fact in many of the hardest hit areas like Phoenix that may well hold to be true. But for areas that initially fared better, indications are that the price erosion is continuing.
January 2010
January 2009
(Clicking on either chart will deliver a larger picture.)
Looking at these two data samples, it’s easy to see that sales in Belmont are indeed up—way up. January of 2009 was simply dismal with only four sales and reflected that overall uncertainty of the future as buyers chose to sit on the sidelines and wait to see how much more prices will tumble.
SALES
This January’s sales reflect more buyers entering the market and buying homes. In January of 2009 there were 31% more listings available yet sales increased this year by 175%!
What accounted for the huge increase in homes sales? Part of it appears to be the resignation by sellers that they must take less for their homes than they had hoped for a year earlier. Note that all but five homes which sold this January not only had a price reduction but on average all received only 94% of their already reduced price.
MEDIAN PRICE
Most sellers had to lower their initial asking price by $50,000 and then accepted offers another $50,000 less than that. On a median home price of $850,000 that represents a huge disparity between what sellers (or their agents) think their home is worth, and what buyers are willing to pay.
Sales were up indeed but at deeply discounted prices. The Median home price in Belmont was $850, 000 which is about 4.7% less than January of last year. But not only can you get a home for 4.7% less than last January the home you get will be 6% larger. Another way to look at it of course is that prices have really dropped closer to 11% year-over-year.
DOM
Have the price reductions and lower asking prices helped sell homes faster? Just the opposite turns out to be true. The days it takes a seller to seller their home has almost tripled from 42 to 125.
Enjoy the game!
Data provided from the Mulitple LIsting Service.
The information contained in this blog is educational and intended for informational purposes only. It does not constitute legal, real estate or tax advice, nor does it substitute for profesional advice.
With the real estate landscape changing almost daily it’s admittedly hard for Real Estate Agents and Lenders to keep up with all of the new programs and limitations. Recently, you may have heard on the news or read in the media about the $8,000 tax credit extension for first-time homebuyers. But are you aware you may easily qualify for it and not even know?
Our guess is probably not. That’s because there hasn’t been a great deal of quality reporting on what the income threshold is to qualify; and even if you knew that, what does that translate to in terms of purchase price?
The terms and conditions are too lengthy to cover in a blog and we’d lose half of our readers if we attempted, so here’s the stuff you need to know to see if you’re in the ballpark:
First, did you know that the income threshold nearly doubled last November? You may have heard that the program was extended, but a few other goodies were also thrown in including adding a $6,500 tax credit for recurring homeowners.
Who is eligible to claim the $8,000 tax credit? First-time home buyers purchasing any kind of home—new or resale—are eligible for the tax credit. To qualify for the tax credit, a home purchase must occur on or after January 1, 2009 and on or before April 30, 2010. For the purposes of the tax credit, the purchase date is the date when closing occurs and the title to the property transfers to the home owner. However, the law also allows home sales occurring by June 30, 2010 to qualify, provided they are due to a binding sales contract in force on or before April 30, 2010.
What is the definition of a first-time home buyer? The law defines “first-time home buyer” as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse.
How is the amount of the tax credit determined? The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000.
Are there any income limits for claiming the tax credit? Yes. For sales occurring after November 6, 2009, the income limit for single taxpayers is $125,000; the limit is $225,000 for married taxpayers filing a joint return.
So how much home could I buy at the maximum income levels?
The maximum purchase price would be $1.45M for a couple making $225K per year. Here is how we came up with this figure:
Income is $225K per year / 12 is $18,750 per month x 45% (maximum debt-to-income ratio) = $8,437 maximum monthly debt.
Let us assume the borrowers have no debt beyond this mortgage. The maximum purchase price would be:
Purchase price $1,450,000
20% Down payment $ 290,000
Loan amount $ 1,160,000
Loan payment $6,769
Property taxes $1,510
Homeowner’s insurance $100
Total house payment $8,379 which equates to 44.7% debt-to-income ratio
The same calculations apply for a single borrower with an income of $125K which equates to a maximum purchase price of $843K.
If you’ve been looking to get into the housing market or are interested in a change in your current housing these tax incentives—a credit that does not have to be repaid and comes right off the top of your tax bill—along with historically low interest rates and home values that have dropped to levels seen back in 2000 may be just the incentive to get you to take action sooner rather than later. The government has been artificially keeping interest rates low and that along with the tax credit will soon end.
If you’d like more information were here to help. Call at (650) 508-1441 or e-mail us at infro@morganhomes.com today.
Next BlogPart 2. A look at interest rates and how they are your best friend—for now…
The information contained in this newsletter is educational and intended for informational and entertainment purposes only. It does not constitute tax or legal advice, nor does it substitute for tax or legal advice.
What happened in 2009 and what might be in store for 2010?
THE PAST
The median price in San Mateo County ended the year at $678,750 which is a dramatic drop from 2008’s year-end median price of $795,000. It continued to drop precipitously throughout the beginning of 2009, though it appears that January of 2009 was its lowest level when the median price reached $553,750—the median price has not been that low since 2000.
It wasn’t until April of 2009 that the median price reached the $600,000’s and the last four month have seen small but steady increases culminating in December’s median price of $750,000. But don’t read too much into these increases. Much of the median price increase is a result of larger homes selling do to the low interest rates and higher conforming limits.
Belmont and much of the mid-peninsula were less affected by the declines. The median price in Belmont dropped from $920,000 in 2008 to $833,725 in 2009 (9.4%). There are several factors which contributed to mid-peninsula cities faring better in declining markets.
THE BACK STORY
Beginning around 2001, many first time buyers entered the market with very little cash and qualified for adjustable teaser rate loans at an artificially low interest rate. Zero down financing meant that that if prices were to drop, they’d be in a negative equity position, making it impossible to refinance out of their adjustable loan. When the banks allowed people to qualify for a loan based at the artificially low teaser rate, when rates adjusted many could no longer make the minimum payment. Without the ability to refinance into a new loan, they were forced into foreclosure.
There are far fewer entry level homes in many of the mid-peninsula communities (Redwood City excepted). Therefore, these cities were spared the bulk of the foreclosures and resulting price declines. Furthermore, many people in these communities have ample equity from previous home sales and were able to refinance, or sit on the sidelines and avoid a distress sale.
THE FUTURE
We won’t pretend to have a crystal ball, so we’re not going out on a limb to try and predict the future. The real estate landscape has changed dramatically in the last several years and how it will shake out is anyone’s guess. But what we imagine could be a probability is that in 2010 will see much more of the same. We expect the record number of foreclosures which have been temporarily withheld from the market to be released and continue to put downward pressure on prices—especially in areas which have yet to be affected. Interest rates are sure to climb above their historical low levels making the cost of home ownership rise. This could easily offset any momentum which could otherwise spur normal home sales. Investors will continue to snap up good deals on distressed properties causing the number of sales to increase, but the median price to decrease, or stay flat. In fact, we wouldn’t be surprised to see a period of flat home prices for many years before any appreciable increase. People will first have to return to the job market before they will consider buying a home. Frustratingly, home sales have a huge effect on creating jobs so it’s easy to see why the government wants so desperately to have people buy a home (and extended the $8,000 tax credit). Once more people are being hired than fired consumer confidence will begin to slowly return. Folks will invariably reenter the housing market but at a less frenetic pace. Lasting memories of the “Great Recession” will haunt many homebuyers; and with higher interest rates and the days of easy money gone, it will be harder for prices to climb at rates seen in the first decade of the new millennium.
We thought we'd update this graph depicting the median price in several peninsula cities. Note that while in Q4 of 2007 the median price in Menlo Park was still rising, it had started to fall off dramatically in Daly City. Prices appear to have hit bottom--for now. The real estate landscape has changed so dramatically in the last few years that everything we knew about home values (and recoveries) needs to be reexamined. Could we be in for another double dip? Knowbody knows for for sure--one way of the other. It's safe to say that at some point a recovery will happen and next time it might pay to watch what is going on in other cities. Daly City seems to ge a good barometer as to where the market may he headed...
We’re posting the sales for Belmont from back in July at the insistence of one of our readers (thanks for being so patient). We skipped that month since we were so busy ourselves. Quite a few buyers came out of the woodwork in July and we noticed it on one of our listings in San Carlos that had multiple offers. In our estimation, the Peninsula real estate market has not recovered significantly enough to warrant such activity but the low interest rates probably spurred people into action—all at once.
At 24, July had the most sales and of any month this year.The median price was also the highest it has been all year at $926,500. But just look at how many homes sold over a million dollars! There were some very large homes selling which definitely propped up the median price temporarily. We’ll go out on a limb and say that will probably hold for the remainder of the year—and well into the next; mostly because of the seasonal nature of real estate.
The prices that the sellers accepted were far under what their homes were listed for, indicating some tough negotiations by buyers and capitulating by sellers. Fifteen of the 24 homes sold under asking for on average of $ 43,000 less.
Sales in July were still less than half of what they were just a few years ago when homes were flying off the shelves. Still, it’s nice to see a momentary blip—unless you are a buyer. Speaking of that, if you are a buyer, the best time to buy a home is coming up soon. Don’t start your winter hibernation too soon and miss out on what we expect will be some great deals in December and January.
We’re closing in on the year end home sales statistics, and for that matter the decade end as well. We’ll take a look at the past ten years as compared to 2009 to see how it all stacks up. For now, we’ll leave you with wishes for a prosperous, healthy and happy New Year!
It’s official. Belmont’s median home price dropped 9.4% last year from $920,000 in 2009 to $833,827 in 2009.
(click on the graph to enlarge)
There’s not much good news in the way of these numbers which would hint that the market is improving anytime soon with the exception of the “months of inventory” (*see below).
There seems to be a pervasive attitude within the real estate community to spin statistics any way possible to portray a happy healthy market but in reality real estate is experiencing some of the most volatile years in our nation’s history. And things are not stabilizing at any appreciable rate; in fact, many indicators point to just the opposite. That doesn’t mean you should no longer consider real estate a viable investment. It just means that you need to go in with eyes wide open. The recent market corrections (and even over corrections as in the case of many areas) has opened up some opportunities which may not be seen again for years.
The government is spending millions of dollars to keep interest rates low and offering tax incentives to spur homeownership. These conditions are temporary and indeed the end of special incentives may mean things get worse before they get significantly better.
Looking at the year-end numbers for Belmont, CA we see several statistics which put in perspective the tumultuous year real estate had in 2009.
The time it takes to sell a home in Belmont increased this year from 39 days in 2008 to 56 in 2009.
The amount a seller received of their asking price dropped from 98% in 2008 to 97% in 2009.
The median sale price dropped 9.4% in 2009.
*Month’s Inventory seems to be one bright spot in a rather dark spreadsheet.
The months of inventory refers to the time it would take to sell the remaining homes listed for sale at the current sales pace. Two major factors in this are how many homes are selling each month and how many new listings are coming on the market. The lower the months inventory the fewer homes there are to choose from and price stability invariably creeps back into the market.
Last December the three month moving average for Belmont stood at 5.47 months and this December that had fallen to only 3.61 months.
There were slightly fewer listings this year (10) and 18 more sales which accounted for this favorable statistic.
If you are considering buying a home in the near future you need to understand today’s market and how the real estate landscape may have forever changed.
Read our next post on the buying opportunity window which is closing fast.
Well it's another one of those tricky months where the numbers tell an inaccurate story when it comes to the value of Belmont homes.
(Click on the graphic fo a full size view)
MEDIAN HOME PRICE
Looking at the raw numbers, the median home value in Belmont dropped from $912,500 last November to $784,000 this year. That's a whopping 14% decrease but wait-let's look at what really happened.
This November Belmont had three short sales which greatly impacted the results. More importantly was that the majority of the homes sold were much smaller than they were last year. Larger homes sell for less per square foot (since land is a constant). Therefore if many smaller homes sell in a given period the price per square foot statistic will rise while the median home price will fall. Watch for this inversely proportional relationship to guess when there might be more to the story than meets the eye.
The median size Belmont home which sold in 2008 was 2095 Sq. Ft. and only 1568 in 2009. The difference of 342 square feet multiplied by the smaller price per square foot median of $488 last year means the adjusted median home value in Belmont this November would be $950,000, or an increase of 4%.
NUMBER OF SALES
The most impressive statistic is the number of sales which at 22 almost tripled from 2008. That speaks volumes as to consumer confidence in the local market. If sales were up because values were dramatically depressed, that would not be nearly as impressive. Of course the artificial interest rates people are enjoying right now are no doubt a contributing factor in the number of buyers who see an opportunity to lock in a home with a 30 year mortgage for under 5%--better move soon if that's an important factor in your home buying decision.
DOM
The time it took to sell a home is virtually unchanged but it's interesting to note, after much analysis, that the actual DOM this November was 121, not 39. This is because several of the short sales which took FOREVER to sell (usually because the banks are really bad at getting around to looking at offers) skewed the numbers (see the lower row of adjusted sales).
% Received
The percent a seller received of asking remains as a statistic, virtually unchanged; however this number varies dramatically from home to home.
What's our take on this?
The Belmont market appears to be stabilizing in a comfort zone where buyers can still get reasonable deals and most sellers still have ample equity.
What a great time to be appreciative of all that you have; your health, happiness, friends and family. Our Thanksgivings are typically not typical at all. The family descends upon our home with the enthusiasm eclipsed only by a FREE four star resort vacation, which is close to what they have come to expect. Somehow, we wouldn't have it any other way.
We both love to cook so cook we do. Drew owned his own food service company and is an accomplished cook in his own right, and in another lifetime I worked for Bill Graham Presents and helped run the catering operations to feed the bands. Needless to say our experience cooking for the masses comes in handy when the troops are home for the holidays.
What's on our menu?
What's not? We tend to view Thanksgiving as traditionalists and stick to dishes that conjure up fond memories of comfort foods prepared by our mothers with all of the love (if not creativity) imparted to the meal. But we also add one or two extra dishes that help keep the whole preparation less perfunctory and more fun.
This year we're doing Oysters Rockefeller but reverting to the original recipe from Antoine's in New Orleans, rather than the typical oysters with spinach and hollandaise so prevalent at today's seafood houses. We've actually made these once before-just not at Thanksgiving-and they are amazing! Here's the recipe we used and the key ingredient is fresh Chervil & Taragon so forget going to Safeway. BTW-The Blue Point Oysters at the Crystal Springs Fish and Poultry at the Crystal Springs Shopping center looked awesome when I was there yesterday (11/25/2009).
Now well pass along a few tips for this year's Thanksgiving for those of you who cook a traditional Turkey.
To brine or not to brine?
Brining a Turkey helps it retain moisture. We're not here to discuss whether or how to brine; some good recipes and the basics behind brining can be read here. But here are several brining tricks:
•· Put your turkey in the vessel you will use for brining and cover it with enough water to submerge the bird completely. Now take the Turkey out of the brine and measure how much water was needed. That will determine how much water you need for your brine recipe.
•· Only use half of the water required for the brine recipe to dissolve the sugar and salt. Once your brine has been cooked-bringing out all of the bouquet and dissolving all of the salt and sugar-remove the pot from the stove and add the remaining amount of water in the form of ice cubes. That will enable you to quickly submerge your bird without first having to chill the brine. How many ice cubes do you need? Remember if you need a half gallon more of water that's 64 ounces. Simply keep filling a plastic bag with ice cubes until you reach 64 ounces in weight.
•· If possible, store your brined bird in the refrigerator being sure it remains completely submerged. If you're like most and don't have the room, you can line an ice chest with a clean plastic bag (be sure it's not made from recycled materials), and place the bird in the bag and cover with brine, then pack around it with bags of ice.
Give your bird plenty of rest.
By the time it comes down to cooking everything you and your bird probably need some rest. This is just the time to get out your iced-down bird and let it begin to come up in temperature. If you are deep frying your bird, this is a critical step. Once submerged in hot oil a cold bird can drop the temperature of your oil by over 100 degrees. Equally important though is allowing your bird to air dry. You can even point a fan at your bird to expedite the process of removing water from the bird's skin which will ultimately produce a crisp outer skin.
Cooking Tips:
If you are deep frying your Turkey be sure and start the oil at a higher temperature than the recipe calls for. Most recipes call for cooking a bird at around 350 degrees so starting your oil at around 400 will help the oil recover faster from your cold bird taking the plunge. Alton Brown, who I respect immensely, has a recipe that calls for starting the bird at 250 and slowly bringing it up to 350. Personally, we believe cooking it faster allows for less absorption of the oil and produces a crisp skin. Our 15 pound bird last year needed only 45 minutes and it was cooked perfectly. Be careful though, plopping a cold bird in hot oil can cause oil to spill over the top and risk a fire. One way to avoid this is to dip your bird in the oil for about 3 minutes when the oil is only around 290. Then pull it back out and allow the oil to reach temperature. Now you've successfully removed some of the surface water from the bird that could overreact with hotter oil. If you want to remove the risk of a flash fire always turn off the fire when lifting your bird in and out of the oil.
And for anyone who thinks deep frying a Turkey is sacrilege, we thought so too until we tried it. It actually produced a bird with less fat than the traditional roasting method. That was quickly demonstrated when we went to skim off the Turkey fat from the pot of Turkey stock the next day and there was none! Think about it...the leanest piece of bacon you will ever eat is one that has been deep fried-the process renders all of the fat form the meat. That said, we're opting for a rotisserie version this year; brined and with a hint of Lavender smoke.
Belmont closed out the month of September with less than a stellar performance. There were 18 sales which is respectable--a couple more than last month--but still shy of even a normal market.
Is this still a Buyer’s market? We think so.
(Click on thechart to see an enlarged version).
Look at the percent a seller receives of their asking price. Few homes are selling over the asking price and if they are it's usually because the home is deeply discounted in the first place.
Another sign is the time a home languishes on the market, as expressed in Realtor speak as D.O.M. or Days on Market. Currently it stands at 45 days with six of the sales being listed for 3/4 of a year or more. One sale had to of broken the all time record when it finally closed after being on the market 700 days!
The median price took another beating in Belmont as the raw numbers show another 5% decrease over July values. Adjusted for smaller or larger homes selling, that percent is halved, but still, a 2.5% decrease is a downward trend that we hope will soon slow.
Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.
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