Mark 's Blog

Housing markets never stay down

Mark Jongsma, Realtor (Intero Real Estate Services) — Wed, 30 Jul 2008 17:13:19 -0500

Great piece of information!




Housing markets never stay down, they come back. Is now the time to buy? By Carole Rodoni Yes, right now the housing market is battered and bruised. Loans are harder to get, some areas are still in decline, sellers are stressed and buyers are hesitant. So how did we get to this point? Post 9/11 the housing market enjoyed robust appreciation, almost 46% - perhaps too much, too soon, too fast. Thousands of first time buyers found access to easy financing and many should or would have never qualified in a saner world. Meanwhile, the global thirst for yield and the creativity of Wall Street pushed the demand to buy riskier loans. So investors demanded, Wall Street created, bankers loosened, brokers complied, buyers signed and we all roared with praise and approval. But alas, most commodities including houses are prone to cycles. Yet a boom is not a bubble, land is permanent, limited and in demand - we can live without stock (the tech bubble) but we all need a place to live. So rapid rates of appreciation are great but they're not perpetually sustainable. The history of real estate proves this. At the same time, declines of great magnitude are limited and largely constrained to where foreclosures and short sales are the majority of the current market. And remember, not all areas are in decline. So what direction is up? There is nothing wrong with getting on the train at the station; just make sure it takes you where you want to go. Remember, the statistics you see are all one year versus the prior year and they take on big generalities (whole states, whole counties). Instead, you must look at specifics to get a real feel for the market: the area you are in or looking to buy in, the inventory, the sales, how prices are holding, is lending available, etc. By the numbers - they tell the Real Story No one can truthfully say housing has appreciated at an average annual number of "X" then say this month is off by 8% compared to last year. Why? Housing numbers are not only cyclical, they are seasonal to boot. And statistics need to compare "like periods" to be realistic. As for foreclosures; yes, there may be close to 2 million homes going into foreclosure but there are 110 million homes in this country and 46% of those homes are owned free and clear. Also, in the San Francisco Bay Area, annual appreciation has been 8.4% adjusted for inflation taking into account good markets and bad. Lastly, real estate has the "power of zero." Every 30 years history has added a zero. Example: Year Home Cost 1906 $200 1936 $2,000 1966 $20,000 1996 $200,000 2020 $2,000,000 projected Example: Rentals in San Francisco Bay Area Year Rent 1906 $10 1936 $100 1996 $1,000 2026 $10,000 projected So, as far as real estate is concerned, the key is to "get in" and let it start building wealth for you. Rents are up in San Francisco Bay Area â^TM¦ Average rents climbed to $1,578.00 up 8.8% â^TM¦ Occupancy rates rose to 95.8% â^TM¦ Since 2004, rents have risen 23.7% â^TM¦ Some examples: â-º South San Francisco 31.6% to $1,867 â-º San Francisco 14.4% to $2,326 â-º Oakland 4% to $1,435 â-º San Jose 9.3% to $1,568 Source: San Francisco Chronicle Foreclosures: Yes we have them here but they are very specific by area. The percentage of homes sold that were foreclosed on April 2008: Alameda 24.2% Contra Costa 44.7% Marin 8.9% Santa Clara 14.4% Napa 28.7% San Francisco 5.9% San Mateo 13.2% Solano 54.2% Sonoma 29.7% Monterey 28.7% Source: Dataguide Information Systems A Glimmer of Hope Sales results for the San Francisco Bay Area show an increase in sales in April 2008 over March 2008. Sales were up 33.3%. This is the first increase we have seen in six months for the area and might be the first sign that the market is beginning to stabilize. Yes, sales year over year were still down 14.2% and the median prices are still declining, down 26.4% to $530,000 year over year. The first step in any turn around is that buyers have to come back into the market and sales month over month have to increase. So finally some good news - stay tuned! Entry level affordability gets better - more households in California and the San Francisco Bay Area could afford an entry level home in the first quarter 2008 according to the California Association of Realtors. Region: CA Housing Affordability: Q1/2007: 26% Q1/2008: 44% Entry: $356,000 Qualifying Income: $68,000 Region: SF Bay Area Housing Affordability: Q1/2007: 24% Q1/2008: 30% Entry: $596,000 Qualifying Income: $113,000 Source: California Association of Realtors The Bottom Line Let's just look at the facts. Prices have fallen in many areas, home sellers are abundant, interest rates are still low, the vast majority of foreclosures are concentrated in 5 states, fear and panic can drive the market but at this point, is it driving us in the right direction? Remember, there are two sides to every transaction - one selling, one buying. And right now the market favors the buying side. So while many will avoid the market, some will realize the time is right. Why? Get in; get all the tax benefits, give it time to appreciate (at 3-5 years) and you'll do fine. Others will look back and say "if only we had bought back then."

Save Money on Energy Bills

Mark Jongsma, Realtor (Intero Real Estate Services) — Fri, 19 Oct 2007 14:01:19 -0500

No matter how hot or cold it is outside, you can apply some simple tips to reduce your energy bills year round:

* In hot weather, cover up windows to keep cool indoor air in and hot outdoor air out. When it's cold outside, covering the windows does just the opposite--keeps warm air in and cold air out.
* Change the filters on your heating and/or air conditioning units once a month. A dirty filter forces the equipment to work less efficiently.
* Make sure you have sufficient insulation in your attic space.
* Caulk and weather-strip your doors and windows. Experts say this can cut your energy bills by as much as 30%!
* Conserve water and save money on your bill by making sure your faucets don't drip or leak.

These small changes can add up to significant savings on your energy and utility bills during the year. If you have any real estate-related questions, please call or email me. I would be happy to help you.

Pricing Your Home 'Right' Can Bring Offers...

Mark Jongsma, Realtor (Intero Real Estate Services) — Tue, 09 Oct 2007 14:55:40 -0500

In today's market, the key for sellers is to price their home 'at market' or even slightly below. You need to remember that buyers today are taking on the risk of a slowing market in their offering price.

If your home is not selling, you might wonder how long you should wait to reduce your list price. The answer to this is this simple: as soon as the market response (lots of showing, but no offers) tells you your price is too high.

In a transitional market, the 'right' price can also be tricky. Buyers tend to be cautious and tentative about their home buying decisions. It is never wise to 'test the market' in this kind of market environment.

An effective pricing strategy is to undercut your competition. So, for example, if a neighboring home is listed at $535,000, bring yours in at under $535,000 at say $529,000.

Also consider psychological price barriers. Buyers perceive a huge difference between a home listed at $500,000 and one at $495,000.

Aggressive pricing or a quick price reduction can sometimes stimulate multiple offers. We know of one home recently that was priced by the sellers $25,000 below anyone else. The result - 7 offers and it sold over listed price by $50,000.

So think carefully before you set your price. Remember, if you are purchasing another home you become a buyer, too, and will get the benefit of this market on that side of your transaction.

So price your home to sell. After all, that is why you put your home on the market in the first place!!

Factors That Drive Home Values

Mark Jongsma, Realtor (Intero Real Estate Services) — Wed, 03 Oct 2007 15:19:07 -0500

Household incomes, mortgage rates, the job market, and affordability are all factors that help determine a home's value. Yet another factor is a home's amenities.

Of course buyers look at the number of bedrooms and baths and whether they have been updated or remodeled. They also look for an updated or remodeled kitchen, a family room or "great room," two- or three-car garages, and an outdoor living area, such as a patio or deck.

With many people working longer hours, another factor that affects value is the condition of the property. Most people want a home that they can move into easily. Keeping your home in good repair is important to obtaining top dollar when it is time to sell, as well as for your own enjoyment in the meantime.

Maintaining your home consistently is the most efficient way to keep it in good repair. Seasonal chores such as checking the gutters and downspouts in the fall and checking the roof for weather damage in the spring can maximize their effectiveness and minimize the time it takes to keep them maintained.