Greg's Blog

Bay Area Real Estate Market Turns in Strong Performance in Marc

Greg Stange (Coldwell Banker) — Mon, 07 May 2012 14:06:30 -0700

From entry-level homes to the luxury estates, the Bay Area's housing market gained more momentum in March, according to a number of recently released industry reports.

March home sales in the region were at their highest level for that month in five years, the result of lower prices, low interest rates and an improving economy, according to DataQuick, the La Jolla-based real estate research firm.

Some 7,694 new and existing houses and condos sold in the nine-county Bay Area in March, up 34.9 percent from February and 9.1 percent from March 2011, DataQuick reported. Last month’s sales total was the highest for the month of March since 8,317 homes were sold in 2007.

The strongest sales gains were in Solano, Sonoma, San Mateo and San Francisco counties with 13.2 percent, 12.1 percent, 11.4 percent and 11.3 percent increases, respectively, from March 2011.

“This is the time of year when buying patterns usually start to normalize," said John Walsh, president of the research firm. "And while the changes we’re seeing are incremental, they’re incremental in a positive direction."

Having said that, DataQuick cautioned that there continue to be potential bumps along the road to a normalized market. Walsh said he's watching closely the number of distressed properties coming onto the market, as well as the ready availability of mortgage financing - or a lack thereof.

The median price paid for all new and resale houses and condos sold in the Bay Area last month was $358,000, according to DataQuick. That's up 10.2 percent from February, and down fractionally from $360,000 in March 2011. The decline on a year over year basis was the smallest since October 2010.

The luxury end of the market also turned in a strong performance in March:

· In Marin County, both sales and the median sale price of million-dollar homes rose. A total of 48 high-end properties changed hands, up from 44 in February and 33 in January. The median sale price of a luxury home also soared 15.3 percent from the previous month to $1,525,000.

· In Silicon Valley, 110 homes sold for more than $1.5 million in March, nearly double the 58 transactions in February and up from 86 in March 2011. Of the total sales, there were 50 multi-million-dollar transactions compared to 36 sales over $2 million during the same period a year ago.

· In the East Bay, luxury sales soared 23 percent from a year ago and more than doubled February's totals. Some 111 million-dollar properties changed hands, up from 49 in February and 90 in March 2011.

· And in San Francisco, a total of 55 homes sold for more than $2 million during the first quarter of 2012 compared to 50 sales during the same period a year ago. At the same time, the median sale price rose 2.7 percent from last year to $2.8 million.

The market will continue to face some headwinds in terms of the economy, distressed properties and even mortgage financing. And it's likely that the economies of Europe and China will continue to factor in to our recovery. But it’s clear that locally, we are headed in the right direction regarding housing. Our biggest challenge isn't a lack of demand; it's not enough homes to sell. So if you've been thinking about listing your home, there couldn't be a better time than now.

Below is a market-by-market report from our local offices:

North Bay– In Marin County, the high-end of the market in Central and Southern Marin is going strong with buyers stepping up and sellers willing to negotiate. Inventory continues to be an issue. Homes coming on the market are getting LOTS of attention, our local manager reports. One agent put in an offer for $200K over a $1 million property, free three month rent back and all cash. Sadly, they didn't get the house! Buyers are starting to panic a bit and there does seem to be a bit of a “frenzy” at the moment. In Sebastopol, the entry-level market remains exceedingly competitive with multiple offers being the norm. There is a lot of cash, which is beating the low down FHA buyers every time. Agents there are also seeing improved activity in the Previews high-end market with more buyers in the marketplace then good quality homes for sale.

San Francisco– Our Lakeside office manager says the news from agents is very consistent: "I wrote an offer but there were XX other offers and I didn’t get it." Some agents are writing five or six offers in a week with buyers who are anxious to settle down and get themselves out of the buying fury. Occasionally, an agent says, “I dug up a listing for my buyer and we got it.” It is definitely a time for a buyer to have a close working relationship with their agent and work hard to get the deal done. Similarly, our Lombard manager reports lots of activity, and high open house traffic. Most deals are multiple offers and over asking price – some 25% over. No appraisal problems with this yet, but lot of winners are all cash. The Sunset office also says open houses are extremely busy. A new Sunset listing priced at $890,000 had approximately 200 people during a three-hour open house. More than 50% of ratified offers were multiple offer situations. There is plenty of non-contingent cash offers out there trying to beat out the competition.

SF Peninsula— Huge turnouts at open homes are common, our Burlingame manager reports. Multiple offers are pretty much the norm on the Peninsula. We have seen 20-40 offers fairly frequently and buyers are finding that it takes three-five tries before they succeed in getting an offer accepted. Everybody is pretty tired! There are currently 52 active and 18 pending sales in Hillsborough. The amount of inventory is pretty consistent over the last several months. Inventory overall is starting to increase but sellers are now becoming a bit unrealistic on price, according to our North Burlingame manager. Well-priced, well-marketed homes are generating multiple offers. Atherton lots are in high demand. Lots from 1 to 2.2 acres have sold up to $9.5 million. Any central Menlo Park house goes out the door with multiple offers or it takes a very big number to buy it off market in a 'preemptive' sale. It is an extremely competitive marketplace. Inventory remains extraordinarily low in Palo Alto and the demand high. Our local office got into contract on a property that had 19 offers. The high end of Woodside is still dormant but agents are seeing movement in Portola Valley. In Redwood City and San Carlos, there still definitely is a lack of inventory. Open houses are busy and well-priced properties are getting multiple offer.

EastBay– The Berkeley market has turned on a dime, but homeowners still seem unaware that it's a HOT seller’s market. Hopeful buyers know it and some are writing three to five offers before they get an acceptance. Most buyers are stepping up to the plate after enough disappointments, even writing pre-emptive offers. Our Danville manager says local inventory is less than one month in some areas. One home in Pleasant Hill garnered 23 offers. The market is in dire need of listings. Our Oakland manager says that the heat is on to get offers accepted. Agents are running up against multiple offers in every community and at every price point. Buyers have started writing offers without contingencies again. So far we’ve not run in to any appraisal issues but based on the amount of dollars over asking that she's seen written it is probably only a matter of time. Some sellers are holding their properties from going on market because they have not been able to purchase another home. The Lamorinda market continues to be strong and buyers are submitting offers. Homes that are appropriately priced go into contract quickly. While inventory is increasing they are still in short supply. The story is echoed in San Mateo - low inventory, plenty of buyers.

Silicon Valley– The market is highly competitive, says our Cupertino manager. There continues to be one winner and 10 losers for most homes. Hopefully the slight uptick in inventory is not an anomaly. Our Los Altos manager reports that the local market is very good in Los Altos, Palo Alto, Mountain View and Sunnyvale. The Previews end of the market is strengthening above $2.5 million. In Los Gatos, our local manager says agents are spending most of their time writing offers, presenting offers and counseling their buyers on creative ways to make their offers shine when competing in multiple offer situations against other buyers. Our San Jose Almaden manager reports that there continues to be multiple offers on everything. Typical sales prices are 10% over list price. Both inventory and sales activity is also increasing in the Willow Glen area. The Saratoga market is still hot with listings selling very quickly. Our local office just closed a $4.1 million sale.

Home sales, economy and job market show signs of improvemen

Greg Stange (Coldwell Banker) — Thu, 23 Feb 2012 14:25:39 -0800

2012 has certainly started off on the right foot. Home sales in the Bay Area were up in January. Several key economic reports showed surprising gains. And even the long beleaguered job market turned in positive numbers in the initial weeks of the new year.

Bay Area home sales in January jumped to their highest level for the month in five full years, according to DataQuick, the La Jolla-based real estate research firm. A total of 5,479 new and resale houses and condos sold in the nine-county region during the month, up 10.3 percent from January 2011. This marked the seventh straight month of year-over-year sales gains.

DataQuick attributed the improvement to lower home prices, record-low mortgage interest rates, a surge in investor purchases and an improving economy.

While the jump in sales is encouraging, the firm cautioned that activity was still tilted heavily toward distressed sales in many Bay Area markets. As a result, the median sale price dipped 2.8 percent from the previous month and 3.6 percent from a year ago.

Meanwhile, the U.S. economy finally appears to be gaining some traction. The government reported that the GDP grew at a 2.8 percent annual rate in the final quarter of last year, up sharply from the third quarter's 1.8 percent rate. And there are indications that the latest GDP figure could actually be revised higher due to wholesale inventories rising in December.

Even more encouraging for the housing market, the labor market is steadily improving. Initial weekly unemployment claims fell 15,000 to 358,000 in a new report by the Labor Department. And the four-week average fell to its lowest level since April 2008, the period before the financial crisis. Finally, the unemployment rate has dropped to a three-year low of 8.3 percent.

Most analysts agree that in order to have a self-sustaining recovery in the housing market we first must have a significant turnaround in the job market. There are indications with improvements in recent months that could be happening at long last.

While all of these economic and employment reports give us reason for optimism, we can’t ignore the fact that the housing market still faces some challenges before returning to normalcy.

Sales have rallied in the new year, but we’d like to see the mix of homes selling move more towards the center of the market and become less reliant on distressed sales. That’s happening in many communities, but far from all.

Additionally, while buyers have gotten the message that things are turning around and they’re jumping back into the market with both feet, the same can’t be said of sellers. In many communities there still is a drastic shortage of homes for sale, which is frustrating buyers and leading to multiple offers in many cases.

Things are out of balance right now and that needs to change for us to have a healthy market. I suspect it will as the spring selling season comes along and homeowners realize that the market and economy have both turned the corner.

Buyers are out there and willing to pay fair prices for attractive, well-priced and well-maintained properties. Now we just need sellers to join the party.

Below is a market-by-market report from our local offices:

North Bay – Our Greenbrae manager is hearing from his agents that the market is extremely active. This comment from one agent who just had an open house typifies the feedback: We’ve had great turnout--100 agents, some with their clients. I sense there is a lot of pent up buyer demand and there's very little inventory right now, at many price points. This may be a good sign--that demand is outweighing the supply. Is it sort of a bottom?? Distressed sales seem to be slowing, and sellers who are "sitting out the market until it gets better" may be willing to bring their homes on the market now at realistic prices. Pricing's critical as always, and homes that are price slightly below market value seem to be getting multiple offers. Our Southern Marin manager concurs, noting there is an extreme lack of inventory versus the number of motivated buyers. The effect is multiple offers on good properties in every price range, from short sales/REO’s to Previews properties. There is an energy that we haven’t seen since the beginning of the financial crisis, as record number of buyers are showing up at open houses, and buyers are much more eager to step up to the plate with offers on what they perceive to be well priced properties that offer a good value. In Sebastopol, we are seeing a lot of multiple offers in the sub $400k range. One new listing had over 17 offers with three of them written by this office. We have buyers stacked up like cord wood and not enough inventory.

San Francisco – Open houses are going wild, our San Francisco Lakeside manager says. One agent reported 400 attended a weekend of open houses and other agents are generally reporting very busy traffic. Agents report that our regular Tuesday Broker's tour is populated with homes that have already received offers - sometimes before the Broker tour and after a single weekend of open houses. Inventory remains a fraction of levels from a year ago. The same is true in the Lombard area, according to our local manager. There has been good recent activity but the listing shortage is getting critical. Many multiple offers. Our Market Street manager says the local market is very heated. He recently sat in on a multiple bid situation where the seller was presented with 7 offers within a week of being on the market. All 7 offers were at ask or above, with two top offers to be considered. One buyer had well over 50% down, the other waived all contingencies. Offers are very competitive, so in addition to price, buyers are tightening up the terms of their offers to be considered. 70% of our offers over the last two weeks saw multiple bids, as inventory is down roughly 45% from a year ago the same period. Our Sunset manager says he’s seen very active open houses - a lot of buyers looking for the right property. Problem is, there is no inventory. Many of the agents are saying they are working with many buyers but there is nothing to sell. Listings that have been on the market for months are getting into contract.

SF Peninsula — Generally we are back to multiple offers for anything new, well priced and well presented, our Burlingame manager says. They recently had 9 offers after 6 days on the market for a San Bruno property. There were 5 offers in 6 days in Burlingame etc. The pool of wonderfully prepared buyers is continuing to grow and they are all moving from property to property as each multiple offer goes down. Many sellers are of the opinion that it may be in their best interest to wait for Facebook to create new “millionaires” as they foresee (and hope for) higher prices in the wake of that big IPO. There are 46 active and 11 pending listings in Hillsborough. There is a lot of new inventory in the pipeline being readied to come on in the next 3-4 weeks. There is very scarce inventory in San Mateo Park with only 3 active and 2 pending listings. Multi-million dollar homes are starting to move, but there is still a lack of inventory. There were 10 offers on a property listed in San Mateo $1.2m range. An old listing on the coast is finally selling, our Half Moon Bay manager reports. Agents are starting to get calls on their expired listings asking if the seller would be interested in seeing an offer. Our Menlo Park manager has seen lots of moving around but very, very low inventory. This happens every year (more buyers than sellers) but this year it is extremely unbalanced. The same is true according to our Redwood City manager, and its driving multiple offers on many homes. One property in San Carlos listed at $965,000 had four offers and went over $1,000,000. Another property in Woodside listed at $1,295,000 had 6 offers and went over asking. Low interest rates and lack of inventory have buyers making offers. Our San Mateo manager is seeing a market that is "Shades of 2006.” The lack of inventory currently is causing more multiple offers on those properties.

East Bay – Listings remain a scarce commodity, our Berkeley manager reports. Buyers are attending open houses, even some properties that have had more than a few open houses, and we just received 22 offers on a fixer in Oakland, but there is not enough inventory. The agents report that sellers are hesitating, still expecting a boost in the housing market. At least buyers are getting the message that this is a great time to buy. Active inventory in Livermore remains very low. We have had 56 new pending sales in February, as of 2/14/2012. This is exceeding the daily sales that occurred in January 2012. 82% of the new pending sales were listed at $600,000 or less. Almost 68% of the new pending sales were distressed properties. Multiple offers are very common in this market. The lack of inventory currently on the market is driving the number of multiple offers, our Oakland-Piedmont manager says. While we are ratifying offers that have been in competition we are also losing out in competition as well. Agents bringing on listings currently are being contacted for showings within a short time of the property going up on the MLS. On the open house front there was a low count of 60 people to a high of 200+. Our Princeton Cap rep received 3 new applications between 6:30 one evening and the next morning. Orinda agents are reporting that buyers are ready to purchase. However, because inventory is so low, most good quality listings are snapped up, many with multiple offers. Even homes that languished last year with no offers, once back on market are selling quickly. At last inventory is coming on to the market, our Walnut Creek manager has observed. Buyers are out there looking and buying. Inventory is selling as fast as it appears, often times with multiple offers. Could this be signs of Spring? Or are they true signs of an improving market. Another good indication is that more than half of our sales are “equity sales”. And those tough “short sale” transactions are closing much easier and faster.

Silicon Valley – Lots of competition for well-priced homes in the popular areas, our Cupertino manager says. The Previews market is picking up, especially under $2 million. In Los Altos, more buyers are getting ready to move, trying to beat the Facebook crowd. Multiple offers are happening in half of the sales. Creating inventory continues to be the biggest challenge in Los Gatos. The same story is echoed by our Palo Alto manager, who says inventory is almost as low as in 2005 – with extreme demand. Lots of activity at open houses, reports our San Jose Almaden manager. Buyers are competing for homes under 500K. Sellers who feel the market has improved and now they can ask more don’t sell. However, buyers are willing to pay top dollar for “turn key remodeling.” In Saratoga, even though we’re experiencing multiple offers below the $2.5 million level, the inventory remains very low. Our manager is encouraging agents to tell their sellers that this is the time to place their homes on the market. We’re experiencing many multiple offer situations. Anything below $3,000,000, if priced correctly, seems to be selling fast. Buyer’s agents seem to be frustrated as there are 5 to 15 offers on each property. This is the time for agents to concentrate on getting listings as they are gold in a market like this.

South County – Morgan Hill agents who are doing open houses keep commenting on the number of potential (and well qualified) buyers who visit their properties. Demand is high and inventory is very, very low. In fact, the low inventory is reflected in every price range, from entry-level homes to those priced over one million dollars. There is just not a large selection to choose from. And of course well-priced properties are receiving multiple offers. In January of 2009 Morgan Hill had 15 months of unsold inventory. In January of 2012, that figure was down to only 6.9 months of unsold inventory. Obtaining listings is still a difficult task for agents, as many potential sellers have negative equity. With new optimism about the economy, however, the laws of supply and demand should help restore value, thus allowing more sellers to put their homes on the market.

Santa Cruz County – January came in with a bang, according to our Santa Cruz area manager. Our three offices opened twice as many new escrows as the same timeframe last year. The agent's phones were ringing off the hook! This generated a lot of excitement for the agents and they are busy. Our average company price in January 2012 vs. 2011 was up $100K. It is not evident if that is a sustainable number. Sales were up significantly the 4th quarter of ‘11 and we seemed to be seeing that same trend moving into the new year. The biggest challenge we are facing now like other markets is an extreme lack of inventory and finding properties for buyers. The $500K and under market is hot, and if the home is perceived as a good value, there have up to 15 offers on a home. The Previews Market continues to lag and prices are way down, but there are some incredible ocean front properties that can be purchased in great neighborhoods for $2 million or less, depending. We are starting to see more short sales in the upper end. Recently our office sold one of our listings that was originally on the market for over $4 million, with multiple price reductions over a 2-year period. The property in one of the best beach neighborhoods sold short for $2.4 million. Property is on the bluff with the best ocean views.

Monterey Peninsula – The Monterey Peninsula real estate market continues to be very active. The pace has just continued on through holidays, January and now into February, in which we opened 20 new escrows the first week. Our sales associates are holding lots of open houses and reporting good attendance especially in Carmel and Pacific Grove. The number of multiple offers are increasing, even in properties over $1 million, in last few weeks—spurred on by these very low mortgage rates and, it seems, some renewed confidence in investing in real estate of late.

Bay Area Housing Market Heating up Along with Summer Temps

Greg Stange (Coldwell Banker) — Mon, 19 Sep 2011 13:21:11 -0700

After a modest spring, the local housing market has been heating up this summer with strong sales in June and even into July in many areas. Sales activity has been especially robust in the higher end of our markets – over $1 million in much of the Bay Area and $2 million and up in San Francisco. But even the mid-level market was surprisingly active

As I was combing through last month’s sales figures, I noticed an interesting trend: In most of our Bay Area markets in June we had the highest level of million-dollar home sales since the summer of 2008. You might recall that was just weeks before the collapse of Lehman Brothers sent the financial markets into a tailspin and pushed our economy into the “Great Recession.” Now, three full years later, we’re seeing a much brighter picture for the local housing market.

The high-end of the market is not the only segment doing well. The entry level and mid-level markets have shown solid signs of improvement as summer rolls along. Bay Area home sales overall rose sharply last month to the highest level for any month since June 2010, when expiring tax credits gave housing a final boost, according to DataQuick, the La Jolla-based research firm.

The only thing holding back the lower end of the Bay Area market in many cases has been a lack of inventory. Because of the shortage of good, well-priced homes, multiple offers are picking up in many communities. In nearly every one of our regional markets, you can almost be assured of multiple offers for a well-priced, well-located, and nicely staged home in the entry price level for that market.

Clearly, the Bay Area’s relatively strong economy – especially the robust tech sector – is playing a key role in our housing market. As Inman News put it in a Friday article, “Tech is back -- and tiptoeing along behind it, at least by some measures, is the San Francisco-area real estate market.”

The Inman story recounted what a lot of the local media have discovered in recent weeks: That the tech sector is giving new life to housing in many parts of the Bay Area. "Tech jobs are on the rise, and with the increase in high-paying jobs, we are seeing more and more younger, first-time homebuyers.

“Indeed, technology-based industry -- which drove Bay Area home prices to fabled levels during the headiest days of the housing boom -- seems to have found its legs,” Inman reported. At the end of 2010, San Francisco had an estimated 30,700 tech jobs, compared with the 32,800 at the peak of its tech boom in 2001, according to an analysis by real estate firm Jones Lang LaSalle.

This all is not to suggest the housing market is completely out of the woods. Real estate is very much a local business. And while many of our markets are on the mend, others are still softer than they were a few years ago. And there still is an overhang of distressed properties that will continue to come on the market as bank owned REO sales in the months ahead.

While we take quite serious the nation’s fragile economy, and most recently the stalled talks to come to terms with our national debt limit, we can be thankful for the Bay Area real estate activity that continues to move forward. We are fortunate to live and work where we do. The limited housing stock, diverse job base, incredible universities, and great weather are all factors that help homebuyers focus on these terrific home values and low mortgage rates.

Why the Mortgage Interest Deduction Must Be Saved

Greg Stange (Coldwell Banker) — Mon, 15 Nov 2010 12:04:26 -0800

The leaders of a White House commission charged with reducing the federal budget deficit this week laid out a sweeping proposal that would, among other things, scrap tax deductions on mortgages over $500,000, according to the Wall Street Journal and other news media outlets. Opponents of the mortgage deduction argue that ending the tax break would not only create a deep source of money for reducing the U.S. budget deficit, but in the aftermath of the mortgage crisis, the country needs to rethink its favored tax treatment of homeownership.

owever, Lawrence Yun, the chief economist for the National Association of Realtors, says this argument downplays two critical facts. First, homeowners already pay 80 to 90 percent of the income tax in our country, and among those who claim the mortgage interest deduction, almost two-thirds are middle-income earners.

"When we talk about the beneficiaries of this tax benefit, we're talking about households who are the pillars of federal income tax revenue," Yun said in a recent column. "We would now be asking them to shoulder an additional tax burden, and also to brace for a 15 percent drop in home values-that's how much we can expect values to fall as buyers discount the value of the deduction in their purchase offers."

Secondly, those who blame the mortgage meltdown on our nation's support of homeownership are ignoring the origins of the crisis, Yun argues. The real culprit was unprecedented laxity in underwriting and faulty ratings by credit rating agencies of the securities backed by those mortgages.

Critics of the mortgage deduction fail to understand the tremendous benefits to our country, including higher student achievement among children of homeowners, improved stability of neighborhoods, and a better quality of life for residents and communities.

"Whatever deficit reduction might be realized by taking a carving knife to the mortgage interest deduction would come at an intolerably steep price: trillions of dollars in wealth destruction and a new uncertainty in what has long been recognized as a bedrock of our economy," Yun writes.

Nowhere in the country would the issue have more of an impact than here in the Bay Area, where high housing prices mean mortgages routinely run in excess of $500,000. While the highest priced markets in San Francisco, the Peninsula, Silicon Valley and Marin would be hit hardest, all of our cities would be affected should home valuations drop and housing markets become further destabilized.

Talk of scrapping the deduction could not come at a worse time, just as the housing market is starting to recover. Mortgage interest rates just hit a new record low this week with 30-year fixed mortgages at 4.17 percent, according to Freddie Mac. This is a unique time in all of our lifetimes where interest rates, affordability, and available inventory have never been so attractive. Hopefully, these elements will combine to ensure our nascent housing recovery gains momentum. We can't afford to have federal policies that send the market in reverse again.

SF Bay Area Market Watch

Greg Stange (Coldwell Banker) — Sat, 04 Sep 2010 18:23:21 -0700

With the Labor Day weekend upon us, summer is finally drawing to a close. And as consumers return home from the last of their summer vacations, market watchers are anxious to see if fall brings renewed interest in the housing market.

Most of our offices around the Bay report a fairly quiet market in the last two weeks of August, which isn't unusual. Buyers seem to be waiting to see what new inventory comes on the market after the holiday weekend, while sellers are busy preparing their homes to go on the market in hopes that buyers will come.

With mixed news on the economic front, buyers continue to be understandably cautious. It's been a roller coaster of emotions for anyone who's been following the economic news lately. One day we're encouraged by a promising new government report on economic growth, the next day discouraged when another study says the economy is slowing.

This week at least brought some positive news on the economic front. First, manufacturing activity here in the U.S. and elsewhere in the world accelerated faster than expected last month, according to the Institute of Supply Management, which surveys purchasing managers. The news was seen as an encouraging indicator that the global economy is not stalling out.

A day later, the National Association of Realtors reported that the number buyers who signed contracts to purchase homes rose 5.2 percent in July after hitting a record low in June. Sales nationally had fallen sharply in the months following the expiration of the government's home buyer tax credit in April, and economists were expecting that trend to continue for a third straight month.

Finally, we received good news on the job front. The Labor Department said first-time claims for unemployment benefits fell slightly last week, declining for the second straight week. And on Friday, we learned from the Labor Department that private employers hired more workers over the past three months than first thought, lifting hopes for the weak economy ahead of the Labor Day weekend.

As we've said before, job growth will be critical to the housing market's continued recovery. Consumers who land new jobs or become more confident they will hold onto the one they have are much more likely to move forward with home purchases in the months ahead. But with unemployment still hovering at 9.6 percent, we have a long way to go before consumers regain their confidence in the job market.

While the economic recovery has been sluggish, it's important to keep the news in perspective: all signs indicate that the economy is indeed improving, albeit slower than we'd like. Sometimes we lose sight of that fact with the constant, 24-hour-a-day business news coverage on CNBC or CNN and the talking heads giving us minute-by-minute commentary on the economy.

The Bay Area market continues to face economic headwinds as do markets across the country. But we are faring better than most regions in the country. Additionally, our market is considerably stronger today than it was during the depths of the recession. We've come a long way over the past two or three years.

Mortgage rates fall to record lows while consumer confidence moves higher

Greg Stange (Coldwell Banker) — Thu, 08 Jul 2010 19:18:12 -0700

With the expiration of the federal tax credit, the housing market is facing a key inflexion point as we head into the summer vacation season. The government stimulus has certainly helped spur a rebound in the real estate market, but the recovery is fragile and observers are watching closely to see if the market can grow without the support of government aid.

Several key economic announcements out this week could bolster the nascent recovery. On Thursday, mortgage finance giant Freddie Mac announced that U.S. mortgage rates have fallen to a record low. Rates for 30-year fixed loans declined this week to 4.69 percent from 4.75 percent. The previous record was 4.71 percent, set in the week that ended Dec. 3. The average 15-year rate was 4.13 percent.

While the overall level of real estate activity has eased in recent weeks with the expiration of the tax credit deadline, many economists believe that low mortgage rates will spur growth in the market by reducing borrowing costs for home buyers. Mortgage interest rates have tumbled in the past two months as concern that a debt crisis in Europe may spread boosted demand for the safety of bonds, including mortgage-backed securities.

Meanwhile, Reuters reported on Friday that consumer sentiment rose in June to its highest level since January 2008 while reports of job losses were down sharply from a year ago.

The Thomson Reuters/University of Michigan's survey of consumers, a key gauge of consumer sentiment, rose to 76 from 73.6 in May. The figure was above the median forecast of 75.5 among economists polled by Reuters. At the same time, reports of job losses fell by half since last June, from 65 percent of respondents to 29 percent, the survey showed.

"The June 2010 survey recorded the most favorable news heard by consumers about jobs in five years," Richard Curtin, director of the surveys, said in a statement. But he cautioned that consumers "do not anticipate significant declines in unemployment during the year ahead."

Consumer sentiment is seen as a proxy for consumer spending, which fuels around 70 percent of the U.S. economy. Positive consumer sentiment is particularly critical to the housing market. If buyers are more optimistic about their future, they're more likely to take out a mortgage and buy a home.

So where does this all leave us as we look at the Bay Area housing picture? As reports from our local offices indicate, the market continues to be steady in most communities. But the recovery from last year's recessionary lows will likely be a gradual one with its share of fits and starts along the way. Unemployment levels will play a key role in the recovery, as will the health of the stock market and the overall national economy.

While there are certainly economic challenges right now, for buyers with a long-term view the current market provides an attractive opportunity to invest in real estate while mortgage rates are at historic lows and homes are priced very competitively. To put this in perspective, took a look at conditions in the mid-June 2001 market. In many of our Bay Area communities today, we are seeing mid-level homes near 2001 prices. The average June 2001 mortgage interest rate for a 30 yr fixed conforming loan was 7.2% - and today's record low is 4.7%. That's over a $1,000 monthly savings on a $650,000 loan - from $4,412 to $3,371. Savvy buyers are taking advantage of this great combination of home prices and interest rates.

California’s Home Buyer Tax Credit Bill

Greg Stange (Coldwell Banker) — Mon, 26 Apr 2010 15:18:53 -0700

The CALIFORNIA ASSOCIATION OF REALTORS® praised California Governor Arnold Schwarzenegger for his leadership in signing the Homebuyer Tax Credit legislation into law.

"We are pleased that Governor Schwarzenegger recognized the positive impact the tax credit will have for families hoping to buy their first home," said C.A.R. President Steve Goddard. "Successful passage of this legislation was the result of our efforts in Sacramento over the last several weeks as REALTORS® and our team in the capital worked for the bill's passage before it landed on the governor's desk earlier this week."

California's previous homebuyer tax credit program was so successful that it ran out of tax credits by the end of June 2009, eight months before it was set to expire and just as housing markets appeared to be turning a corner. Unlike last year's legislation, the Homebuyer Tax Credit signed into law today adds a tax credit for the purchase of an existing home by a first-time homebuyer.

"The positive impact of the home buyer tax credit at the federal level is clear," Goddard said. "Nearly 40 percent of first-time home buyers said they would not have purchased a home if the federal tax credit for first-time home buyers was not offered, according to C.A.R. research conducted last year. We expect the state tax credit for home buyers to have the same impact."

AB 183 will provide $200 million for homebuyer tax credits, allocating $100 million for qualified first-time homebuyers of existing homes and $100 million for purchasers of new, or previously unoccupied, homes. The eligible taxpayer who purchases a qualified personal residence on and after May 1, 2010, and on or before Dec. 31, 2010, or who purchases a qualified principal residence on and after Dec. 31, 2010, and before Aug. 1, 2011, pursuant to an enforceable contract executed on or before Dec. 31, 2010, will be able to take the allowed tax credit. The credit is equal to the lesser of 5 percent of the purchase price or $10,000, in equal installments over three consecutive years. Under AB 183, purchasers will be required to live in the home for at least two years or forfeit the credit (i.e., repay it to the state).

"AB 183 also will significantly contribute to efforts to stimulate jobs creation within California's housing market by helping to incentivize first-time home buyers to purchase homes that have been abandoned, foreclosed upon, and returned to the lender; or have been sitting on the market for extended periods of time," Goddard said. "It is these homes that will require substantial rehabilitation by the new owners, which will in turn generate a tremendous increase in jobs and accessory purchases connected to home improvement activities."

Tax Credit for Homebuyers Extended!

Greg Stange (Coldwell Banker) — Thu, 12 Nov 2009 15:43:50 -0800

Tax Credit for Homebuyers Extended!

First-Time Homebuyers (FTHBs): First-time homebuyers (that is, people who have not owned a home within the last three years) may be eligible for the tax credit. The credit for FTHBs is 10% of the purchase price of the home, with a maximum available credit of $8,000.

Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

Current Owners: The tax credit program now gives those who already own a residence some additional reasons to move to a new home. This incentive comes in the form of a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.

Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

What are the New Deadlines?

In order to qualify for the credit, all contracts need to be in effect no later than April 30, 2010 and close no later than June 30, 2010.

Tax Credit versus Tax Deduction

It is important to remember that the tax credit is just that... a tax credit. The benefit of a tax credit is that it is a dollar-for-dollar tax reduction, rather than a reduction in a tax liability that would only save you $1,000 to $1,500 when all was said and done. Therefore, if a first-time homebuyer were to owe $8,000 in income taxes and would qualify for a tax credit of $8,000, she would owe nothing.

Better still, the tax credit is refundable, which means the homebuyer can receive a check for the credit if he or she has little income tax liability. For example, if a first-time homebuyer is eligible for a tax credit of $8,000 but is liable for $4,000 in income tax, she can still receive a check for the remaining $4,000!

Higher Income Caps

The amount of income someone can earn and qualify for the full amount of the credit has been increased.

Single tax filers who earn up to $125,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, single filers who earn $145,000 and above are ineligible

Joint filers who earn up to $225,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, joint filers who earn $245,000 and above are ineligible.

Maximum Purchase Price

Qualifying buyers may purchase a property with a maximum sale price of $800,000.

International Buyers - your chance to own California Real Estate at a discount

Greg Stange (Coldwell Banker) — Mon, 27 Oct 2008 12:00:37 -0700

Opportunities for foreign real estate investors have increased over the last few years due to the strength of foreign currencies against the U.S. dollar and no shortage of deals in the market. California still has one of the strongest economies in the world. The quality of life and the warm weather make this state a popular place to buy a vacation home that would previously have been considered out of reach; or an investment property that will translate into savvy investment down the read.

If you're a foreigner, there are many reasons why you should invest in the U.S. real estate market now:

- Weak US dollar has given you a lot of leverage over the bargaining table
- High inventory allows for greater options, better price and more favorable terms and conditions
- Foreign real estate investment in the United States is open to everyone. As long as you can afford to buy the property or at least comply with the mortgage requirements and payments, you can secure for yourself a pretty good property in the U.S.
- U.S. state government supports foreign investments and along this line has formulated various tax breaks to encourage foreign investment on real estate. Many of these tax breaks are not available in many countries.
- Despite the devaluation of the US dollar and the wide foreclosures of a lot of property, the real estate market remains to be stable, though slightly shaky, due to foreign investors' capital appreciation.
- The current economic situation of the United State provides the perfect chance for you to make an investment.
- Mortgage financing is available.

Investing in real properties in the United States can be profitable especially during these times. In fact, it may be the wisest and most perfect investment you can make right now. Contact me for a free consultation.

Greg Stange Realtor ®
Coldwell Banker Real Estate
Top 4% Worldwide
245 Lytton Ave, Suite 100
Palo Alto, CA 94301
Office - 650.752.0815 / Fax - 650.322.3606
Email - greg.stange@camoves.com
Website - www.gregstange.com

Broker believes this information to be correct but has not verified this information and assumes no legal responsibility for its accuracy. Buyers should investigate these issues to their own satisfaction.

Is NOW a good time to buy real estate?

Greg Stange (Coldwell Banker) — Thu, 23 Oct 2008 14:32:28 -0700

I have been hearing this question almost every day for the last couple of months. Let's be honest, there are a lot of people out there who have to make a daily decision whether to buy groceries for their family or put gas in their car. For majority of people a decision to purchase a real estate in these turbulent times is way out of their reach. However, if you believe in the philosophy of Warren Buffet who once said, "Be fearful when others are greedy, and be greedy when others are fearful", NOW is a good time to buy real estate, because:

Inventory is high:

A. you can get a house you have dreamed about in location of your choice

B. you can negotiate better price and terms (homes that have been on the market for an extended period, canceled, expired, and/or foreclosure listings)

C. sellers need to liquidate in order to make ends meet

If you are ready to take advantage of the current situation, have cash reserves, good credit, and money for down-payment, contact me today for your complimentary consultation.

First-time buyers (people that have not owned in the past three years), you may get qualified for low down-payment and low interest rate loan with State and Federal Plans.

Looking forward to hearing from you.

Greg

Is the Bailout the right move?

Greg Stange (Coldwell Banker) — Mon, 06 Oct 2008 18:56:28 -0700

Second time was certainly a charm! With a vote of 263 to 171, the House passed the $700 billion Emergency Economic Stabilization Act of 2008. The Senate had approved the same bill Wednesday night by a vote of 74-25. Soon after, the President signed the bill, officially passing the far-reaching legislation.

I know the question we are all asking ourselves right now is how is this going to affect all of us. How will it affect our retirements? How will it affect the mortgage crisis? How will it affect our portfolios? The answers to these and other questions will only be answered over time but what I can tell you is that the legislation is a critical step toward stabilizing our markets. The main goals of the act are to:

•- Shine a new light of scrutiny and accountability on Wall Street including a curb on executive pay for companies selling assets or buying insurance from Uncle Sam. For example, any bonus or incentive paid to a senior executive officer for targets met would have to be repaid if it's later proven that earnings or profit statements were inaccurate. The bill also underlines the Securities and Exchange Commission's power to change accounting rules on how banks and Wall Street firms value securities, and directs the agency to study the issue. Some observers argue that tight accounting rules are a major reason for the credit crisis in the first place. Others contend that changing the so-called mark-to-market rules will just bury problems lurking beneath the surface and could further shake investor confidence in the already battered financial sector.

•- Let financial institutions sell to the government their troubled assets, mostly mortgage related which would allow the Treasury access to the $700 billion in stages, with $250 billion being made available immediately.

•- Provisions that support taxpayers including one that would direct the President to propose a bill requiring the financial industry to reimburse taxpayers for any net losses from the program after five years. And the Treasury would be allowed to take ownership stakes in participating companies.

•- The bill would set up two oversight committees. A Financial Stability Board would include the Federal Reserve chairman, the Securities and Exchange Commission chairman, the Federal Home Finance Agency director, the Housing and Urban Development secretary and the Treasury secretary. A congressional oversight panel, to which the Financial Stability Board would report, would have five members appointed by House and Senate leadership from both parties.

•- The bill calls on federal agencies to encourage loan servicers to modify mortgages by a number of means - including reducing the principal or interest rate. It also extends a temporary provision that exempts from federal income tax any debt forgiven by a bank to a borrower in a foreclosure.

•- Provide tax breaks for the middle class including three key tax elements. It would extend a number of renewable energy tax breaks for individuals and businesses, including a deduction for the purchase of solar panels. The legislation would also continue a host of other expiring tax breaks. Among them: the research and development credit for businesses and the credit that allows individuals to deduct state and local sales taxes on their federal returns. In addition, the bill includes relief for another year from the Alternative Minimum Tax, without which millions of Americans would have to pay the so-called "income tax for the wealthy."

So how long will we take for this to be seen on the proverbial Main Street? According to some analysts, it will take several weeks for us to see credit unfreeze but we should see some almost immediate benefits on Wall Street.

I agree with NAR's stance that we are gratified that the government recognized the importance of passing the Emergency Economic Stabilization Act of 2008. The health of the nation's housing market is critical to the financial well being of every household in the country and that, of course, is front and center here in California. I believe the legislation will help restore the liquidity in the mortgage market, which will stabilize the housing market and protect home owners. People have been, and will be debating for a very long time, the specific causes, who's to blame, who should be paying the price - but ultimately we needed quick action in the credit markets in what was quickly becoming a severe global financial crisis.

Market update for Northern California

Greg Stange (Coldwell Banker) — Wed, 18 Jun 2008 13:44:06 -0700

Northern California regions have experienced a price decline, but overall there is limited inventory. In a recent survey conducted by RealTrends, of the leading Broker/owners of the real estate industry, 69% of respondents said that, as of end of May, they strongly or somewhat agree that their market is showing signs of improvement.

Unfortunately too many buyers right now are relying on data reported by the media that has a three or even four month lag. Their perception may be that nothing is selling, when in fact; the sales rate may be brisk for well-priced property.

Our market continues to be challenged by some buyers who are waiting to see what the market is going to do. As a Realtor, the best thing to do for our client is educate them on why waiting could cost them plenty in terms of higher prices, lower inventory and higher interest rates. It's just a matter of time before we swiftly move from a buyer's market to a more normalized exchange between buyers and sellers and we need to educate our buyers now that if they don't act, they will reduce their purchasing power and may lose out on a bigger and better home!

Opportunity is knocking in Bay Area!

Greg Stange (Coldwell Banker) — Thu, 22 May 2008 13:03:36 -0700

Richard Smith, Chief Executive Officer for Realogy, released a video statement. He advised, "Like all downturns, this too shall pass. It's not a matter of if, but when."

Later on, Freddie Mac and NAR both predicted stabilization of the market towards to the end of 2008 and recovery and following growth in 2009.

Although nobody is a fortune teller, if these highly regarded sources a year from now we would be looking at back and kicking ourselves. Just like in the past... Sounds familiar?

For instance, our Palo Alto office noting that an all time low in inventory with about 80% of offers going into multiples.

Stay cool!

Negotiation Skills and Integrity Make a Huge Difference in Real Estate!

Greg Stange (Coldwell Banker) — Fri, 02 May 2008 17:19:49 -0700

Greg Stange has extensive education and experience in marketing and sales, research and development, operations and financial planning in Real Estate and Consumer Based Industries. Prior to his Real Estate career, Greg worked for over 8 years as an Area Director for a large Corporate Company, hiring, training, and developing a sales and marketing staff of over 300. In addition to his years in the Corporate World, he has also managed and negotiated contracts in surplus to 15 Billion. Greg is a Licensed Realtor with Coldwell Banker and a Registered Securities Representative with Archer Investment Advisors.