Beautiful Mountain Blog of Belmont

Just Listed! 1532 Altura Way, Belmont

How Property Boundary Line Disputes Arrise

Assessing property boundaries is both an art and a science.

Disputes regarding property boundaries can arise for a number of reasons. Properties can be difficult to survey. Rough terrain and human error may lead to miscalculation. Older boundaries may have been determined with poor instrumentation.

One common boundary-related problem occurs when a gap of land — known in the surveying industry as a hiatus — is found between properties and does not belong to either party. These gaps, as well as boundary overlaps, tend to occur when properties are resurveyed and discrepancies are found in either a subsequent survey (the junior survey) or with the original survey (the senior survey).

The federal courts have settled many property boundary disputes. Over time, established procedures have evolved for resolving these discrepancies.

In U.S. v. Weyerhaeuser Company (1967), the 9th Circuit Court decided that discrepancies in surveys did not matter and that the original monuments — the permanently placed survey markers in the ground — marked the boundary, and any resulting hiatus was deemed public land. The courts have consistently determined that hiatus land shall remain in the public domain.

Cases regarding overlaps are more complicated. Courts have consistently said that when two officially accepted surveys conflict, and the result is an overlap, the survey that is senior in time takes precedent.

When it comes to court cases involving property rights, the concept of "first in time, first in right" is firmly established. In Wirth v. Branson (1878), the U.S. Supreme Court made it clear that once a property had been patented — title of ownership confirmed by the government — the government cannot convey that land to any second party.

The information contained in this article is educational and intended for informational purposes only. It does not constitute real estate, tax or legal advice, nor does it substitute for advice specific to your situation. Always consult an appropriate professional familiar with your scenario.

 

Best Bay Area Values - Shiny Penny Tour 2.8.2012

There was some debate today amongst my collegues as to which home we saw was the shiny penny on tour.

I liked the home at 221 Grand Street in Redwood City listed for $899,000 and several others also liked the home on 262 East Oakwood Boulevard in Redwood City listed for $799,000.

I preferred the Grand Street property for the superior location and the stunning craftsman character and attention to detail.

 

221 GRAND STREET, Redwood City 94062				Status:	Active	MLS #:	81204479
Class:	Single Family Residential			Orig Price:	$899,000	List:	02/06/2012
Area:	High School Acres Etc. (334)			List Price:	$899,000	Original:	02/06/2012
County:	SAN MATEO COUNTY					Sale:
Complex:						COE:
Beds:	3	Baths:	2 (2/0)			Expires:
Approx SqFt:	1,680 (Assessor)					Off Mrkt:
Approx Lot:	6,500 Sqft (Assessor)					DOM:	1
Built/Age:	1922(Assessor)/90					Green doc:	No
Parcel #:	052-242-240					Walk Score:	65 Listed by Alain Pinel Realtors

This home on East Oakwood [who’s circular street used to be a dog race course BTW] is a very nice home handsomely updated with an awesome yard too (offers a week from today).

 

 

262 EAST OAKWOOD BOULEVARD, Redwood City 94061				Status:	Active	MLS #:	81204449
Class:	Single Family Residential			Orig Price:	$799,000	List:	02/06/2012
Area:	Horgan Ranch Etc. (332)			List Price:	$799,000	Original:	02/06/2012
County:	SAN MATEO COUNTY					Sale:
Complex:						COE:
Beds:	3	Baths:	1 (1/0)			Expires:	06/30/2012
Approx SqFt:	1,336 (Seller)					Off Mrkt:
Approx Lot:	10,146 Sqft (Assessor)					DOM:	1
Built/Age:	1940(Assessor)/72					Green doc:	No
Parcel #:	059-132-020					Walk Score:	69
						Trnsf Tx:	No
						Cur Rent: Listed by Alain Pinel Realtors

 

Call us if you are interested in either of these homes as neither will probably last very long.

Drew & Christine Morgan, RELATORS with RE/MAX Star-Carlmont

1940 Ralston Avenue Belmont, CA 94002 (650) 508-1441 info@morganhomes.com

 

 

 

 

PROFILE of a BELMONT HOME SALE

What was the profile of the average home that sold in Belmont last year?

• The average home which sold had three bedrooms, two baths was 1,925 square feet in size and was located on a 6,430 square foot lot

• It sold for $879,450 in 44 days

BELMONT STATISTICS for 2011

 

• There were 186 single family home sales in 2011

• The average time a home was on the market before the seller received an offer was 44 days

• 32% of Belmont homes sold over the asking price in just 19 days

• 11% sold at the seller’s asking price in 29 days

• 57% sold under the asking price and took 60 days to do so

• 103% was the percent of the asking price the sellers received who sold their homes in 19 days

• 96% was the percent of asking the sellers whose homes were overpriced received in 60 days

It becomes abundantly clear that the last thing any seller should want to do is overprice their home, yet more than half of the homes sold in 2011 were overpriced. These sellers also had to lower their asking price by on average $61,000 and then received 7% less for their homes than ones priced correctly.

If you are considering selling your home this year, choosing a local agent who knows the values in Belmont and then of course listening to what they tell you will go a long way towards putting more money in your pocket.

The information contained in this article is educational and intended for informational purposes only. It does not constitute real estate, tax or legal advice, nor does it substitute for advice specific to your situation. Always consult an appropriate professional familiar with your scenario.

 

 

Best Bay Area Home Deals --Shiny Penny Tour 1.24.2012

Undeniably the best deal today was this home on Hamlet in San Mateo offered by Patriott Properties. It's a bank owned home and they are ready to deal. Listed for only $439,900 we suspect it won't last until the weekend.

On a side note, the Best of Tour home from our Shiny Penny Tour last week that is hearing offers tomorrow, is up to 27 interested parties. We'll post the actual sale price as soon as we find out--stay tuned...

1787 HAMLET STREET, San Mateo 94403				Status:	Active	MLS #:	81202667
Class:	Single Family Residential			Orig Price:	$439,900	List:	01/23/2012
Area:	Parkside (413)			List Price:	$439,900	Original:	01/23/2012
County:	SAN MATEO COUNTY					Sale:
Complex:						COE:
Beds:	3	Baths:	1 (1/0)			Expires:	04/23/2012
Approx SqFt:	1,030 (Assessor)					Off Mrkt:
Approx Lot:	5,150 Sqft (Assessor)					DOM:	1
Built/Age:	1954(Assessor)/58					Green doc:	No
Parcel #:	035-364-160
Zone:	R106	Units/Bldgs:	--/--			Trnsf Tx:
Unincorp:	No	City Limits:				Cur Rent:

The information contained in this article is educational and intended for informational purposes only. It does not constitute real estate, tax or legal advice, nor does it substitute for advice specific to your situation. Always consult an appropriate professional familiar with your scenario. 

 

Shiny Penny Tour Day - Our Best Homes of the Week

Tuesday’s Best of Tour

Today’s best of tour goes to two homes this week. The first one is 899 Crestview in San Carlos. This home is an amazing deal and perhaps that’s why it went pending before we even returned from tour today. Good deals don’t last that’s for sure.

 

 

 

This second home they seller is waiting until January 25^th for offers. It’s an updated three bedroom one bath home in Belmont at 913 Ruth Avenue. It resides on a 5,500 square foot lot and enyoys 1,260 square feet of living space. Priced at $559,000 it’s a steal for a west-side Belmont home.

 

 

If you are interested in these “Best of Tour” deals or any other home for that matter, contact us and we’ll guide you through the process of getting the home you want.

 

 

 

The information contained in this article is educational and intended for informational purposes only. It does not constitute real estate, tax or legal advice, nor does it substitute for advice specific to your situation. Always consult an appropriate professional familiar with your scenario.

Listings courtesy Alain Pinel Realtors

 

 

Time To Look Back At The Peninsula Housing Market for 2011

Time to look back at the Peninsula housing market in 2011.

Being in the trenches we know well ahead of the reported statistics how the housing market performed but it’s always interesting to look back and see what the numbers bear.

These two charts below represent the median home price for the past three years in Belmont and Palo Alto. We chose Palo Alto because that city enjoys leaded edge price stability and recovery. Belmont is less insulated from market volatility and is probably more typical of the average Peninsula city housing trend.

[Click on the images for a full-size graph]

As denoted by the red trend lines in both of these graphs, Peninsula housing prices, while suffering from typical seasonal fluctuations, are overall showing signs of a steady but slow increase in the median home price.

If this doesn’t seem to jive with the media reports of continual home price erosion it’s probably because the reports you’re hearing are for cities such as the one in our third chart below which represents a continual decline in home values in highly affected areas to our the north such as South San Francisco, Daly City and Colma.

This story is part of our monthly newsletter. If you would like receive our newsletter you may email us at Newsletter@morganhomes.com and you’ll be added to the list. Note—we never share our email list with anyone for any reason without your express permission.

The information contained in this article is educational and intended for informational purposes only. It does not constitute real estate, tax or legal advice, nor does it substitute for advice specific to your situation. Always consult an appropriate professional familiar with your scenario.

 

 

 

 

Home Affordability Rises as Interest Rates and Home Values Decline

There may be a beneficial convergence for buyers in the housing sector as declining interest rates and home values are occurring at the same time resulting in a boost to the housing affordability index.

The percentage of home buyers who could afford to purchase a median-priced, existing single-family home in California rose to 52 percent in the third quarter of 2011, up from 51 percent in second-quarter 2011 and was up from 46 percent in the third quarter of 2010.[i]

Regionally, housing affordability rose in most counties in the San Francisco Bay Area but was down in Los Angeles County and Fresno County.  At 77 percent, San Bernardino County was the most affordable, while San Mateo County was the least affordable, with only 25 percent of households able to purchase the county’s median-priced home.[ii]

But that could be changing—not that San Mateo County will ever be more affordable than most of the counties in the state (due to the high home values)—but with the interest rates hovering around their lowest point in recorded history, and home values reverting to levels not seen since 2002, it may be the perfect accelerant to fuel a recovery.

In Palo Alto for example, well known for its resiliency during housing downturns, more homes sold last month in November of 2011 for over asking than did for less. That’s a stunning example of market elasticity. Also interesting on an anecdotal note is that when Palo Alto values rise they carry surrounding communities along like a surging tide.

It’s possible that home values decline further. And it’s possible that one might time the market perfectly at the trough but the longer buyers wait to enter the market at this phase of the recovery, the more risk they take that they will miss the perfect storm and either rates will rise, home values, or both.

Note that while home values have reverted to 2002 levels[iii], interest rates were more than two points higher in 2002 than they are today making the same price home in 2002 far less affordable than today.

Data current to November of 2011.

Click on the image for a full sized graph.

---

[i] C.A.R.’s Traditional Housing Affordability Index (HAI).

[ii] C.A.R. releases Q3 Housing Affordability Index, November 10, 2011

[iii] Case-Shiller, QTR III, 2011 Bay Area MSA

The information contained in this article is educational and intended for informational purposes only. It does not constitute real estate, tax or legal advice, nor does it substitute for advice specific to your situation. Always consult an appropriate professional familiar with your scenario. 

Belmont Homes Sales Show Continued Improvement

Welcome to the new norm. As you know if you have been following us for any length of time we provide a detailed analysis of the local housing market and Belmont’s housing market in particular. We’ve been gathering data since 1998 and have used it to contrast and compare varying market cycles over the years. However, comparing the reality of the new housing market to a market that was artificially inflated with substandard lending practices will provide for endless disappointment if a new base-line is not established.

Today’s market seems to reflect the new reality of stricter lending practices leading to fewer sales and more cautious buyers. This environment will undoubtedly continue for some time until the devastation in the housing industry which wiped out so many people’s equity is a distant memory. Just as the Consumer Confidence index was set at 100% in 1985 because it was neither a peak nor trough in the business cycle, we submit that at least for Belmont, after years of price and sales declines, that the more stable 2011 might become the new baseline by which future years are compared.

(click on the image to enlarge) *Data from the San Mateo Board of REALTORS MLS system.

Looking at the numbers…

Belmont homes sales for October 2011 were strong compared with last year.

BELMONT HOME SALES

Although two fewer homes traded hands this year in Belmont compared with last October, there are signs that the housing market may be stabilizing, as we anticipated.

MEDIAN PRICE

The median price, while falling from last October’s $864,200 to $806,000 this year, does not reflect the size homes which sold last October were 13.5 percent larger, with a median price drop of only 7.2%. This helps us better understand that the median price while reported lower is probably higher than in October of last year.

DOM (days on market)

In October of 2011 it took on average 22 days to sell a home while last year that number was 46, more than double.

PRICE REDUCTIONS

Forty-six percent of Belmont homes selling in October of 2010 had price reductions of on average $92,000 compared with this October where the seller had to lower their price by on average only $58,000 to attract a buyer.

SELLING vs. ASKING PRICE

This October 27% of the homes sold over the seller’s asking price by on average $64,000. Last October the 23% of homes sold for over the asking price receiving on average only $29,000 more.

In 2010 nearly 70% of the homes which sold went for less—by on average $33,000. This year 63% of the homes sold for on average $32,000 less.

INVENTORY

The number of homes available for sale impacts the price a seller might achieve based on the familiar principle of supply vs. demand. But an increase in supply can be the result of several factors which may in turn be the result of very different market forces. For example, if supply is increasing because homes are not selling, or home owners are out of work, or upside down in their mortgage, that negative environment might mean that buyers will also be concerned about their future and demand will drop.

But if supply increases because sellers are taking advantage of favorable move-up market conditions or perhaps they view the current strength of the local market as being in their favor, and demand remains constant, it could be an indication on a strengthening market.

There are currently 57 single family homes on the market in Belmont as compared with last October when there were 63 during the same period.  In Belmont, if we look at peak housing markets prior to the housing market collapse in 2007, we find that in October the typical inventory levels hovered around 35-40 homes for sale. Yet in periods of uncertainty—such as the October after September 11^th and the following year which was a landmark presidential election year, inventory level rose to 93 homes for sale in 2001 and 79 in 2002.

Does the market seem stronger than last year? Yes. Are seller’s lowering their expectations (asking price) to accommodate the reality of the new market conditions, yes. Hey interest rates don’t hurt either. Buyers are slowly dipping their toes into the icy waters of real estate as rates plummet and Bay Area job cuts seem to have waned.

We’re seeing more sellers and buyers out later in the year than ever before and we predict next spring will bring many new buyers to the purchase table along with many new homes to choose from.

All the best,

MorganHomes.com

The information contained in this article is educational and intended for informational purposes only. It does not constitute real estate, tax or legal advice, nor does it substitute for advice specific to your situation. Always consult an appropriate professional familiar with your scenario. 

3514 Winway Circle, San Mateo CA 94002 JUST LISTED!

With so many mash-up companies grabbing the attention of buyers searching for homes we thought we'd post our own listing since as the agents for the sellers we are actually familiar with the home and can answer your questions. 

 

Just listed and open Sunday, September 25th from 2:00-4:00

Shh...My Home's for Sale

If you’ve ever seen a moving van in your neighborhood but never saw a for sale sign you might just have experienced a “pocket listing”.

What is a pocket listing?

In short a pocket listing is a home that was not release to the public, but nevertheless was for sale.

The reasons that a seller would choose not to list their home on the open market—and not enter their home into the MLS (Multiple Listing Service) with a REALTOR^® —are varied. Some sellers do not want strangers traipsing through their home. We bought our home in the Hallmark area of Belmont in just such a fashion. The seller of our home was interested in moving, but not interested in having anyone he did not know in his home due to his vast collection of Civil War memorabilia—some including one of General Sherman’s desks in the living room were quite valuable. Lucky for him we had a buyer and he was spared the discomfort of hiding all of his valuables and disrupting his life.

In other cases it might be a lack of clear motivation that keeps a seller from committing to the open market. In instances like this agents might take a listing with the seller’s caveat that “If you can find a buyer for me great, I’ll sell’ otherwise I might just stay put”; it’s a form of testing the waters if you will.

Clearly marketing a home in the MLS to thousands of potential buyers offers the best opportunity to reach as large an audience as possible. Will it always net the seller the highest price? Perhaps; there’s no definitive study to prove otherwise. That said we have seen cases where the right buyer came along and paid a handsome sum to the seller in order to secure a particular home and avoid the risk of losing out to another buyer in a multiple bid situation.

How often do “pocket listings” occur?

The answer is probably more than you would imagine. In high-end marketplaces where the seller might be a celebrity, or where the seller feels for security reasons they’d rather sell off market it occurs quite frequently. For example, in Atherton over 20% of all homes sold last year never hit the open market.

How does one find out about these secret listings?

Your best chance at learning about pocket listing is through your REALTOR^®. There are several sites that only an agent can access where they discretely share their most treasured listings. Unless as a buyer you have been vetted by your agent and are well qualified you stand virtually no chance of viewing one of these prize properties—that would defeat the point of the seller’s confidentiality.

We would be remiss if we did not mention that this is always done with full disclosure and at the seller’s request. Unless expressly requested by the seller, MLS rules state that all listings must be input into the Multiple Listing Service within 48 hours or the agent faces a fine.

Next time you see new neighbors and wonder where the last ones went, you might inquire and find out they bought another pocket listing in your neighborhood.

Drew and Christine Morgan are REALTORS® in Belmont, CA employed by RE/MAX Star-Carlmont.

MorganHomes.com

            (650) 508-1441      

The information contained in this feature is educational and intended for informational purposes only. It does not constitute real estate, tax or legal advice, nor does it substitute for advice specific to your situation. Always consult an appropriate professional familiar with your scenario.

 

 

Home Prices Head Up in Belmont - Belmont Home Sales - June 2011

Belmont homes sales in June 2011 appear to be holding steady, while home values may be climbing.

We’ve said it before but it’s hard to compare June of 2010 to June 2011 since June of 2010 was the last month of home closings that qualified for the $8,000 tax stimulus. Looking at last year’s home sales for the month of May and June when the program was phasing out it’s easy to see that the stimulus had an effect on the number of homes selling.

This June Belmont had 15 home sales—the same as last month, but down considerably from last June’s 25.

The time it took to sell a home dropped this June from 46 says to 36 and while last year only 48% of the homes sold for less than the seller’s asking price, this June 60% sold for less but with the seller receiving 99.25% of the asking price compared to with 98.91% of their asking price in June of 2010.

The months of inventory—or the time it would take to sell all of the remaining homes in Belmont at the current rate of sales—dropped from 3.86 in June 2010 to 2.83 in this June—nationwide, less than 3 months typically indicates a seller’s market. In Belmont we tend to notice that a bullish seller’s market occurs when we fewer than 40 homes are on the market at a given time; Belmont currently has 60—last June the inventory level was 66.

Where are Belmont home values today?

That’s the million dollar question which is on the mind of many homebuyers; Will home values continue their five year slide or have we neared the bottom?

Belmont’s median home price fell from $944,694 last June to $876,525 in June 2011 which on paper looks like a 7.2% decline.

However, looking at the median size of homes which sold in the two periods, a different story emerges. In June of last year the median size home sold was 2,170 square feet in size. Compare that with this June when the median size home was only 1769 square feet. So while the median Belmont home price appears to have declined 7.2%, the square foot differential in homes is much greater. Effectively buyers bought homes 18% smaller home this June but only got a 7.8% price break over last year—losing purchasing power to the tune of 10.2%.

Another way to look at the numbers is the median size home sold for $449 per square foot in June of 2011. If we adjust for the 401 square feet difference between last June’s homes and this year’s it could explain part of the discrepancy and account for perhaps as much as $180,049—bringing the adjusted median price this June to $1,056,574, or 12% higher than last June.

We also looked at whether last year’s June stimulus program may have artificially skewed the median home price lower with qualifying homes—those under $800,000—accounting for a greater percentage of home sales as a change in the “mix” in the size/price of homes selling could artificially alter the median home price; In fact we found the opposite to be true. Last June 24% of the homes sold were under the qualifying $800,000 price threshold while this June 33% of the homes sold were under $800,000.

Any way you slice it if you delve deeper into the statistics it’s fairly apparent that conditions are improving. We expect over the next several years to see home value fluctuations due to seasonal buying and selling patterns as well as economic conditions including job growth, consumer confidence and even the media’s focus on negative reporting—but the overall trend should remain upward—three steps forward two steps back type of progress.

Disclaimer: This information is for entertainment purposes only and includes no legal, accounting or real estate advice nor is this response in tended to be specific to your situation-consult a specialist for your specific situation.

 

The Pitfalls of Over Pricing A Home

Why is that home still on the market?

That’s a question many people ask as they drive by the same for sale sign in their neighborhood week after week and sometimes month after month. Why do some homes fly off of the shelf and others languish for months?

Whether or not a particular home sells quickly or not has often little to do with the market and more to do with the presentation of the home—including the pricing.

In today’s tech savvy real estate world, home buyers have nearly unfettered access to listing information. With all of the tools available it’s hard for buyers to miss out on seeing a home and equally difficult for buyers to not have a good idea what a home is worth.

The first issue for homes which languish on the market is often that the promotion is at times lackadaisical. A newly listed home without photos is often overlooked by many buyers.

Knowing how to promote and price a home are key ingredients in selling a home quickly.

But why is selling a home quickly important? First and foremost it’s about price. Most sellers want to get the most amount of money they can for their home. Statistics demonstrate that selling a home in the first several weeks will accomplish that goal.

Looking at all the single family home sales in Belmont for 2010*, homes that sold in the first 14 days—an adequate time to market a home to an eager audience—accounted for 36% of the total sales. These homes on average sold for $10,000 over the seller’s asking price—often with multiple offers.

Homes which sold between 14 and 21 days on the market accounted for only 9% of the homes sold in 2010 and they sold for on average $20,000 less than what the sellers were asking.

Homes which languished on the market after 21 days accounted for a whopping 55% of the total homes sold and the sellers received on average $90,000 less than their initial asking price while averaging a painful 88 days on the market.

These numbers are actually very understandable. When a home is first on the market a buyer who may be interested in the property cannot affix an absolute value to the home. If there are multiple offers from multiple buyers the price is often bid above the asking price and the winning bidder is usually the highest bidder and thus has paid more for the home than any other willing and able buyer on that particular day.

Once a home is on the market for several weeks, buyers still might not know exactly what the home’s value is but they know it’s not what the seller is asking or the home would have sold. And that is where the damage begins. Time will do more than anything to hurt the sale of a home. After weeks of marketing buyers assume there must be a reason why nobody has selected that home and they invariably infer that there is something wrong with the home itself.

Counteracting this misimpression is difficult since your agent can’t proclaim “there’s nothing wrong with the house except the price” since most surely there is always something wrong with every home.

Agents Don’t Create Value.

It’s the listing agent's job to inform the seller of comparable values in the area by reporting on what homes have been selling for and what their competition is but agents do not create value, although they can add value. A good agent will typically give the seller a range at which point they can expect to attract a reasonable number of willing and able buyers in a reasonable amount of time.

This is why it’s difficult to under price a home and easy to miss the mark by pricing too high. A home underpriced and allowed sufficient marketing time can and almost always will be bid up and often above what might be considered fair market value at the time. While an overpriced home will most surely garner less than what it would have had it been initially priced in the sweet spot.

If you’ve missed this spot it’s not too late. Making a price reduction quickly can thwart the dreaded doomed house syndrome tip the scales your way and bring a fresh batch of buyers to the bargaining table.

Drew and Christine Morgan are REALTORS® in Belmont, CA employed by RE/MAX Star-Carlmont.

MorganHomes.com

(650) 508-1441      

The information contained in this feature is educational and intended for informational purposes only. It does not constitute real estate, tax or legal advice, nor does it substitute for advice specific to your situation. Always consult an appropriate professional familiar with your scenario.

*Data derived from the San Mateo County Multiple Listing Service for single family homes which closed escrow in Belmont in 2010. Homes excluded from the analysis included homes which were not an arm’s length transaction, short sales or bank owned properties. The reason for excluding these homes is that often a bank for example, will under price a home to attract multiple offers but take weeks to ratify the offer thus increasing the days on the market and skewing the results.

 

Drew and Christine Morgan are REALTORS® in Belmont, CA employed by RE/MAX Star-Carlmont.

MorganHomes.com

            (650) 508-1441      

The information contained in this feature is educational and intended for informational purposes only. It does not constitute real estate, tax or legal advice, nor does it substitute for advice specific to your situation. Always consult an appropriate professional familiar with your scenario.

 

*Data derived from the San Mateo County Multiple Listing Service for single family homes which closed escrow in Belmont in 2010. Homes excluded from the analysis included homes which were not an arm’s length transaction, short sales or bank owned properties. The reason for excluding these homes is that often a bank for example, will under price a home to attract multiple offers but take weeks to ratify the offer thus increasing the days on the market and skewing the results.

 

If you’ve ever sold a home and been told your fist offer is usually the best offer, here’s why.

 

 

Light at the end of the Tunnel?

Light at the end of the tunnel?


The Standard & Poor's/Experian consumer default composite index fell to 2.43% in March from 2.54% in February. All the major sectors, such as bank cards, auto loans, and first and second mortgages, reported declines. As for U.S. housing, sales of existing homes increased 3.7% in March following a significant decline of 8.9% February.

Shiny Penny Tour Day - Our Best Homes of the Week

Shiny Penny Tour Wrap

 Our Tuesday tour day produced a few shiny pennies this week. In fact, two made our list for Best Deal of the Week.

The first is a short sale on Lyon in Belmont. It’s listed for only $759,000 and to be in the west-side hills location for that price is a good buy. Of course the banks still need to sign off on the offered price but if you can hang around for awhile you may be able to get that home. FYI—most lots on Monroe and Lyon are only 4,000 square feet rather than the usually 5,000.

 Here are some details:

Beds, Baths:	4, 2|1
SqFt:	1980 (Assessor)
Lot Size:	4,000 sq ft (Assessor)
Yr Built:	1962 (Assessor)
Age:	49 years

 

 

 

Our next home is a favorite of mine on Eaton in San Carlos. It’s sold before, in fact my old manager used to own it. I love the feeling—it’s like you are in your own private resort with a pool and palm trees. The rear landscaping is great and it backs up to the creek for even more privacy.

 

Don’t be fooled by the two bedroom listing. This home was a three bedroom with one room being converted to a den.

 

Beds, Baths:	2, 1|0
SqFt:	1620 (Assessor)
Lot Size:	8,476 sq ft (Assessor)
Yr Built:	1948 (Assessor)
Age:	63 years
Parcel #:	051-294-050
Zone:	R100
Tract:	White Oaks

 

Don't forget. If you would like to see one of our Best of Tour homes give us a call at (650) 508-1441

Best Home Deals March 22, 2011

We’re excited to announce three “Best of Tour” homes from our Broker’s tour on Tuesday.

These homes represent homes we think offer a good value and should get snapped up quickly.

 BELMONT

There were two in Belmont we thought we’re an excellent value. The first one was at 3484 Lodge but since it already has three offers since Sunday’s open house we may as well skip that one. It was listed at $799,000 which is an ex excellent value for the West side.

 
 

The second Belmont home at 2223 Thurm listed by Better Homes and Gardens M. Smith. It’s located right on the border of San Mateo on a pastoral 13,000 square foot lot. The four bedroom three and one-half bath home is nicely appointed and at 2,714 square feet it’s a very good value too.

 

SAN CARLOS

 

We liked 132 Arundel. Looks like a nice move-in condition home with three bedrooms, two baths with 1, 390 square feet of living space on a nice sized 8,500 square foot lot. Listed by RE/MAX D. Roberts

 

1362 Geneva in the White Oaks is a three bedroom three bath home of 1,860 square feet on a tad bit small 4,040 square foot lot but this home looks great and should fly off the shelf. Listed by Coldwell Banker R. Jabeen

 

As always, if you want us to look specifically for the best of tour home for you drop us an email or connect with us and let us know what you’re looking for. We’ll be your eyes and ears on the peninsula.

 

How to Pay Less Property Tax

If you’ve thought of moving but are frightened at the prospect of your property taxes increasing we have a few propositions for you—60, 90 and 110. You may already be aware of these but we have some new information which might make them more attractive.

Most homeowner’s are keenly aware that buying a new home means having their property tax base increased to 1% of the purchase price. For those of you who have owned a home for many years this alone can make a move financially impossible; for many, it means they couldn’t afford to buy the home they already own.

A BRIEF HISTORY

Proposition 60 enacted into law in 1986 allowed for the one-time transfer of your current home’s tax base to a replacement property of equal or lesser value after the age of 55 of either spouse, providing that the replacement property was located within the same county.

Proposition 90 passed by the legislature in 1989 allowed counties to voluntarily extend the transfer into their county to all 58 California Counties.

Proposition 110 passed in 1996 extends this relief to permanently disabled people, whether 55 or not.

The problem for most people wishing to benefit from this tax base transfer is they are limited to moving within the county in which they currently reside, or moving to one of only a handful of reciprocal counties (Alameda, Los Angeles, Orange, San Diego, Ventura, San Mateo, and Santa Clara).

Fortunately, another very desirable county in the Sierra foothills was added to the list—El Dorado. Their legislature passed a resolution into law on December 10^th 2009 taking effect February 15^th of 2010 allowing anyone in the 58 California counties to transfer their tax base to El Dorado County.

There are rules you must follow or your transfer will be denied so before you consider a move you will want to read several of the helpful publications which exist, and/or consult with your tax or legal advisor. The State Board of Equalization offers some easy to understand “Question and Answer” publications as well as a pdf containing many test case scenarios.

If you’ve been holding back on making a move to retain your home’s current tax base it’s nice to know you now have some great options. And if you’re not familiar with this Gold Rush era county, you owe it to yourself to check it out.

There are many cities within El Dorado County which offer a great quality with life. Located around Folsom Lake with its endless water activities, El Dorado County extends all of the way to South Lake Tahoe. The many towns in between including Placerville,  offer affordable housing options—from award winning retirement communities to cities catering to the first time buyer and neighborhoods that rival homes the Peninsula has to offer—including Hillsborough—all at a fraction of what it costs to live in the Bay Area.

Visit the on-line version of this newsletter at MorganHomes.com and use the underlined links in this article to read more.  If you are not comfortable with the internet, simply give us a call and we’ll mail you out some more information.

 

 

Disclaimer: This information is for entertainment purposes only and includes no legal, accounting or real estate advice nor is this response in tended to be specific to your situation-consult a specialist for your specific situation.

 

 

 

 

 

 

 

 

 

 

Can San Mateo Survive a Tidal Wave?

San Mateo County Market Snapshot--Are We Treading Water?   

Those of you who follow our market updates know we put our hometown, Belmont, under a market microscope every month to get a glimpse as to where the market appears to be headed.

Of course that really is living in a Petri dish when it comes to the real estate market as a whole.

Real estate is very local—what goes on in even one part of a city could be entirely different from another. That said eventually positive market trends trickle down and negative ones up.

As evidence of this phenomenon one can go back and look at our charts from 2007 when Palo Alto was still doing famously yet Daly City may as well have slid into the ocean (many homeowners probably wish it had).

 

Today we visit the numbers—year over year—for San Mateo County as a whole, hoping to see some trends that will give us an inkling as to where consumer sentiment is, as reflected in sales, median price, etc.

SALES

New Listings	Current Inventory	Closed Sales	Average DOM	Average Sales Price	Median Sales Price	% LP Rec'd	Total $ Vol
2011   545	1400	233	74	786,509	587,500	96.48	182,470,145
2010   484	1156	229	82	840,235	650,000	97.17	192,413,866
2009   530	1452	163	74	683,900	553,750	97.20	110,791,806

It’s easy to see that the ripples of consumer uncertainty could easily capsize the boat of recovery if the tides of low interest rates come in too fast.

Sales are certainly better than the low of 2009 and remain steady as they did in our Belmont example. But as in the Belmont report the median price showed a decline in home values since last January. That’s not necessarily a bad thing, especially if you are a potential home buyer and it doesn’t mean values are still dropping, just that they did drop year over year.

Interest rates are going up, and have done so rapidly in the last few months—around ¾ of a point. That hurts the ability for people to qualify for a home and with less demand there’s a potential for prices to decrease further.

But as we cautioned ourselves, we are comparing 2010--a year of government sponsored tax rebates to 2011 without. Let's see if our minnow of a recovery can weather the storm without a life raft.

Thanks for checking back in with us. 

*Data San Mateo County MLS.

Disclaimer: This information is for entertainment purposes only and includes no legal, accounting or real estate advice nor is this response in tended to be specific to your situation-consult a specialist for your specific situation.

 

 

Best Home of the Week - 1-18-2011

Whenever a holiday falls on a Monday, many homes are not toured on our usual Tuesday tour day. Simply put they miss the tour sheet since the deadline is moved to the Friday preceding the holiday, instead of the usual Monday deadline.

So there weren’t a lot of homes to choose from but we did find this home in Redwood Shores which stood apart from the rest for the value it offers.

Redwood Shores 94065 (Redwood Shores) $840,000 Beds: 3 beds Baths: 3|0 baths   DOM: 4   MLS: 81101788  Property Overview Redwood Shores (Redwood Shores) 94065 Detached Single Family (Class 1) Beds, Baths: 3, 3|0 SqFt: 1,520 Lot: 2,828 sq ft Yr Built / Age: 1998 / 13 years Assoc Fee: $166 List Price: $840,000 Sale Price:   Sale Date:   COE Date:   Remarks Open Sunday 1/23 2-4PM. 13 yr old. High ceiling, fireplace & TV niche. Surround sound ready. Gleaming pecan hardwood floors downstairs. Separate dining room next to open kitchen w/ breakfast bar, Corian counters & ample maple cabinets. 1 br 1 ba down. Low maintenance garden. Roomy landing upstairs-home office space. 2 spacious master suites upstairs. Walk to playground, lagoon, new RWS school Schools/Districts Elem: - -/ Belmont-Redwood Shores Elementary Middle: - - High: - -/ Sequoia Union High Property Features Familyroom No Family Room Informal Dining Area Breakfast Bar Formal Dining Area Separate Dining Room Other Rooms Utility Room Bedroom Descriptions 2 or More Master Suites Shower And Tub 2 or More Showers over Tubs Shower 1 Stall Shower Other Areas Laundry Area - Inside Amenities Cable TV Available Double Pane Windows Gas Hookup in Kitchen High Ceilings Satellite Dish Fireplace Location Fireplace in Living Room Floor Covering(S) Hardwood Linoleum or Vinyl Tile Wall to Wall Carpeting Energy Features     - - Listing Includes 1 Dishwasher 1 Refrigerator Disposal Microwave Oven Window Coverings Garage/Parking 2 Car Garage Attached Lot Description Level Lot View Neighborhood View Yards/Grounds Patio Sprinklers - Front Sprinklers - Rear Has Pool No Pool Pool Description     - - Pool Options     - - Style     - - Horse Property No Horse Property Description     - - Listed By Anna Ow, Coldwell Banker Presented by Drew L. Morgan, RE/MAX Star Properties, dmorgan@morganhomes.com ** Information contained on this report is designed for accuracy but is not guaranteed **

Interested in this home? Why not give us a call. We here to answer any questions you have and help you on your way to home ownership. (650) 508-1441

 

 

Sales of Existing Homes Double in Belmont for December 2010.

For Belmont homeowners there appears to be some stability creeping into the market. Home sales were brisk this December—double what they were in 2009. Those of you who may remember the home buyer tax credit was due to end in November last year which pulled a lot of buyers from December sales into November—all across the country. Not so much in Belmont since the qualifying purchase price had to be less than $800,000. Nevertheless we went back to compare previous December sales and they normally fall in the area of 12 for the month of December. One has to go back to 2005 when the housing market was red hot to see sales figures this high.

These first two graphs illustrate the housing activity in Belmont for the Month of December 2010 and the year end averages for the entire year.

 

 

 

If we run we run down the usual list of market indicators, across the board there are some positive signs for homeowners.

*Highlighted homes were sold by Drew & Christine Morgan. Click on the graph for a full-sized image.

DOM

The time it took for a seller in Belmont to get a contract on their home was at 58, up only slightly from last year’s 50 and is pretty well mitigated with the doubling of sales.

PERCENT RECEIVED

Belmont sellers received 98.1% of their asking price in December 2010 as compared to 97.22 in December of 2009.

Half of the homes in December 2010 underwent price reductions for on average $58,000 before they sold. Last year 42% of sellers reduced their price by on average $69,000.

Of the 24 sales this last December two sold at the seller’s asking price, 16 sold for less than asking (by on average ($33,488), and six homes sold over the seller’s asking price by on average $17,183.

Homes which sold over asking did so on average in 26 days while homes which sold for less took more than 65 days to sell.*

MEDIAN SALE PRICE

If you’ve followed this blog for any length of time you’ve heard us talk about how deceiving the median price can be in any small sample size. Once again the median home price is a bit misleading as it has the median home price in Belmont in December of 2010 at $912,500. That’s $102,750 (12.7%) more than last year’s $809,750.

So the answer lies somewhere in the numbers but ferreting out a more accurate sense of value is difficult. The size homes which sold in 2009 were on average 277 square feet smaller than the homes which sold in December of 2010, which accounts for most of the perceived median price increase. It just so happens that the size home you could get this year was also around 13% larger than last year—effectively whipping out any gain.

Using the year-end totals helps even out some of the distortion inherent in median price figures as the graph above demonstrates. If you take an average of each month’s median home price in Belmont for 2009, the average median home price was $847,604 and for 2010 it was $908,159—an increase of 7.1%. The average size of the home which sold in the two periods also increased from 1730 in 2009 to 2000 in 2020, a 15.6% increase. So was there any home appreciation in Belmont in 2010? Probably not. It appeared that in the first quarter of 2010 homes might increase in value but as quarters two and three came to a close (immediately following the conclusion of the homebuyer incentive programs) it was clear that would not be the case. The fourth quarter managed to salvage some of the losses in the two previous quarters as you shall probably hear soon n the media.

If you are considering selling your home this year be sure and contact us for a valuation of your home. We are experts in selling peninsula properties and our record of selling every home we list for sale is unparalleled in our industry.

 Note: We throw out homes we know were re-listed or underwent huge price reductions only to sell for slightly higher than their greatly reduced price.

Disclaimer: The information contained in this newsletter is educational and intended for informational purposes only. It does not constitute real estate, tax or legal advice, nor does it substitute for advice specific to your situation. Always consult an appropriate professional familiar with your scenario. 

Case-Shiller Reports Measureable Home Price decline in October 2010

I was awakened from my long winter nap by the predictable sensational reporting of the latest Case-Shiller home price indices.

The latest press release by Standard and Poor’s states:

New York, December 28, 2010 – Data through October 2010, released today by Standard & Poor’s for

Home Price Indices, the leading measure of U.S. home prices, show a deceleration

in the annual growth rates in 18 of the 20 MSAs and the 10- and 20-City Composites in October

compared to what was reported for September 2010.  The 10-City Composite was up only 0.2% and the

20-City Composite fell 0.8% from their levels in October 2009. Home prices decreased in all 20 MSAs

and both Composites in October from their September levels. In October, only the 10-City Composite

and four MSAs – Los Angeles, San Diego, San Francisco and Washington DC – showed year-over-year

gains. While the composite housing prices are still above their spring 2009 lows, six markets – Atlanta,

Charlotte, Miami, Portland (OR), Seattle and Tampa – hit their lowest levels since home prices started to

Fall in 2006 and 2007, meaning that average home prices in those markets have fallen beyond the recent

lows seen in most other markets in the spring of 2009.

The index showed a decline in the Bay Area from October to September’s numbers but a year-over-year increase for the same period.

What does this mean? It means that compared to last year home values are up in the San Francisco MSA (metropolitan statistical area) which includes San Francisco down to Redwood City. It also means that the values dropped from September to October. How much? 1.9% to be exact. Not what I would call earth shattering  and I certainly wouldn’t describe it as one of our local TV stations did as “Bay Area Prices Plummet”.

Later in the evening a competing station had the headline “Bay Area Prices up”, referring to the year over year statistic.

Neither news headline tells the whole story.

The much ballyhooed double dip in fact did occur but it was much more pronounced in other parts of the country and more akin to a glitch than a dip—and likely it was caused by the cessation of government subsidies which helped to prop up home values in 2009.

 

SF MSA

 

The information contained in this newsletter is educational and intended for informational purposes only. It does not constitute real estate, tax or legal advice, nor does it substitute for advice specific to your situation. Always consult an appropriate professional familiar with your scenario. 

 

Belmont Home Sales - November 2010

We love the holidays as much as anyone, but a little less red in the chart would be nice too.

Belmont home sales for November of 2010 continued the trend of the last two quarters with fewer sales and declining home values as compared to the same period in 2009. 

(Click on the chart to see a full-sized image)

Clearly consumer confidence is woefully short of normal. While consumer confidence does not in and of itself control the direction of the economy it does reflect consumer sentiment. Consumer sentiment is well represented by consumer spending—when consumers are comfortable with their view of the future they tend to spend more. Considering that some estimate consumer spending to represent 2/3rds of our nation’s domestic product (GDP) suffice to say that consumer confidence is necessary for a sustained recovery. For consumer confidence to rebound there needs to be more jobs and of course the feeling that the job one has won’t go away soon either. On a positive note the consumer confidence index rose to 54.1 in November from a revised 49.9 in October. It was the highest level in five months. The index was benchmarked at 100 in 1985, a year chosen because it was neither a peak nor a trough in consumer confidence.

How does this affect the housing market? The tenuous job market is taking its toll on nervous home buyers. Buyers are still purchasing homes but fewer can qualify for a loan and when they do it’s usually for less home than before. Those who are willing to purchase a home seem to want only exceptional deals—building into their offer price a buffer against further price declines.

SALES

Home sales in Belmont remained fairly strong considering the aporetic feelings among buyers.

This November we saw 16 homes trade hands in Belmont as compared to 22 in 2009.

Of the 16 sales, six sold for on average $21,350 more than the seller’s asking price in 17 days, one sold at the asking price, and nine sold for on average $16,500 less and took 82 days to sell.

Six sellers also reduced the price they were originally asking  for their home by on average by $149,342, while last year there were only three homes which had price reductions during the same period and for on average only $13,590.

MEDIAN PRICE

The median price (on paper) went up 5.4% to $843,475 from November 2009 when it was $800,000. However, in 2009 the median size home which sold was only 1,558 square feet as compared to this November when the median size home sold was 1,920 square feet—a difference of 352 square feet. At the median price per square foot that homes sold for during November, $466 and the difference in the size home sold, 352 sq. ft. one could make an argument that if all things were equal (the same size home selling in the two periods) the adjusted price for 2009 would be closer to $964,032 ((352 Sq. Ft. x $466 per sq. ft. = $164,032) + $800,000) =$964,032. This allows us to estimate that home values dropped around 12.5% year over year in the month of November. How much the median price changed for the year as a whole is yet to be determined. Remember, just because homes dropped 12.5% in the month of November, earlier increases in the year can mean at year's end the median price could be up for down from the previous year.

It’s also interesting to note that although the median size home which sold in November of 2010 was much larger, only one home sold over the one million dollar mark as compared to three in 2009.

 

DAYS ON MARKET (DOM)

Not surprisingly it took more time to sell a home this year than last--on average 62 days—up dramatically from 38.5 days in November of 2009. One also must be cognizant that last November the first-time buyer tax credit was in effect which skewed the numbers in favor of more sales, selling faster, and for more.

When home values are dropping, the time it takes to sell a home typically increases as sellers often price their home based on recent past sales. But when home values are falling, recent sales were worth more. Eventually most sellers get the idea that they must get ahead of the pricing curve and lower their home more than the market suggests it might be worth. This has an ancillary effect of lowering home values rapidly and perhaps more than they would otherwise drop.

Noting the huge difference in not only the number of homes which had price reductions, but the steep adjustments that were made, illustrates the difficulty in pricing a home in a declining market and underscores the importance of introducing your home to the market at the right price.

Summary

There’s always some danger in looking at a small market sample such as Belmont with only 16 sales in a given month. Seasonal factors play heavily in the statistics which is why we choose to compare each month we examine to the same month a year before. However, it’s important to note that other factors can effect comparing these two periods. For example, last November the first-time buyer tax credit was expiring, causing many buyers to rush to the bargaining table. This increased competition for homes undoubtedly buoying the prices while increasing sales.

Our leading indicators of future market conditions indicate a gradual recovery in the housing sector.

• The Institute for Supply Management reported that the monthly composite index of manufacturing activity fell slightly to 56.6 in November after reaching 56.9 in October. A reading above 50 signals expansion. It was the 16th straight month of expansion.
• Total construction spending rose 0.7% to $802.3 billion in October, following a revised 0.7% increase in September. Economists had anticipated a drop of 0.4% in October.
• The National Association of Realtors reported that its pending home sales index, a forward-looking indicator based on signed contracts, rose 10.4% in October after a 1.8% decrease in September.
• The Institute for Supply Management reported that the monthly composite index of non-manufacturing activity rose to 55 in November from 54.3 in October. A reading above 50 signals expansion. It was the 11th straight month of expansion.

On a local level our professional staging company has reported to us that their orders for staged homes are booking up fast for January, indicating that Sellers are interested in getting a jump on the spring market.

If you are considering selling your home next year you may want to consider doing it sooner rather than later before inventory rises to levels which make price reductions necessary to attract Buyers.

If you are considering selling your current home and/or purchasing a new one be sure and contact us for your real estate needs.

Now for the inevitable disclaimer: The information contained in this newsletter is educational and intended for informational purposes only. It does not constitute real estate, tax or legal advice, nor does it substitute for advice specific to your situation. Always consult an appropriate professional familiar with your scenario. 

 

 

 

 

Carlmont Associates Partners with Re/Max Star Properties

Most of you know we’ve been operating out of the Carlmont Associates office in Belmont. Effective today, Carlmont Associates has joined a partnership with Re/Max Star properties.  

Our level of service and commitment to our clients will be unaffected except that we'll have access to the benefits the number one real estate franchise in the world can offer.

FOR IMMEDIATE RELEASE:

(Redwood City, CA Nov. 20, 2010)—Re/Max Star Properties, a real estate leader in San Mateo County with projected sales of over 200 million dollars for 2010 announced today that it has added the premier Carlmont Associates team and premium location in central Belmont to its local group of Peninsula offices.  “Carlmont Associates is a well established, centrally located real estate firm serving the Belmont area for over 50 years and we’re proud they’ve chosen to join forces with us”.

“We are both pleased and excited by this merger”, said Tom Diridon, one of the principals of Carlmont Associates. He, his wife Eda Diridon and partner Gary Rossetto couldn’t be happier”. Mr. Rossetto mentioned, “It will bring state of the art systems, services and global name brand recognition and lead generation systems of RE/MAX to Carlmont Associates allowing us t better serve our clients.”

“This move will bring major benefits to the local consumers and its agents by the ability to offer more marketing solutions, exceptional financing opportunities and unmatched after the sale protection”.

New 3.8% "Real Estate Sales Tax" gets a lot of play

You may have already heard through an errant email or co-worker that hidden in the health care bill was a provision for adding a 3.8% sales tax on the sale of your home.

We’ve even been forwarded emails with the story contained in a newspaper article. So is there any truth to it? Well, sort of.

The much ballyhooed 3.8% tax in the health care bill which takes effect in 2013 is actually a Medicare tax on investment income—not a real estate tax per se. That alone might not make you feel any better but read on.

According to factcheck.org , which did extensive research, there are very limited circumstances in which this tax would be levied.

As it would apply to real estate, first your income would need to be over $200,000 a year ($250,000 for married couples filing jointly).

 Now if you’re selling your principle residence, the first $250,000 of gain for single tax filers and $500,000 for those who file jointly would be exempt from taxation—as it currently stands for capital gain taxation.

The 3.8% tax would, as we understand it, apply only to the portion which might exceed this threshold. It’s also important to note that this tax is on the gain, not the sale price. So if you were to sell a home you and your spouse bought for $500,000 several years later (you need to have lived in the home two of the past five years) for $800,000, you would have a gain of $300,000. This is of course is further diminished by any capital improvements you made to the property and selling costs but to keep it simple we’ll use the higher figure of $300,000. Based on this you would still owe no capital gain tax nor would you owe the new Medicare Tax even if your income was over the $250,000 threshold because your gain was only $300,000—less than the allowable first $500,000 which is forgiven.

So several things need to happen before you would be subject to the tax:

• Your income must exceed the thresholds mentioned above.
• Your gain on the sale of your home must exceed the allowable forgiven limits.

Note that this capital gain exclusion is for your principle residence only so high wage earners who sell their investment properties would be subject to this new tax on that gain—assuming they had gain to tax.

As far as we can tell the viral nature of this email succeeded in part because it resonates with what many readers feared about the health care bill—that it would be caulk full of special interest groups’ and hidden agendas. Further exacerbating this was that many email authors added their own spin by including miscalculated and outrageous examples of how the tax would be applied. Their agenda was then further picked up by those who wish to freighted people into voting the way they would want by saying, as the email I received said, “People have the right to know the truth because an election is coming in November!”

I couldn’t agree more and we hope this explanation is closer to that truth.

Now for the inevitable disclaimer: The information contained in this newsletter is educational and intended for informational purposes only. It does not constitute real estate, tax or legal advice, nor does it substitute for advice specific to your situation. Always consult an appropriate professional familiar with your scenario.

Bay Area Housing Prices Rise-- Case-Shiller Report June 2010

We’re thinking we should simply name this series after our last post, “There you go again”, in honor of the media whenever it manages to make a mountain out of a molehill.

Typically, bad news is negative news since that’s what sells, but sometimes when the media get scooped by another outlet, they will try and dig up an opposing opinion in order to get a piece of the attention; further managing to confuse (or mislead) their audience.

We see it over the spectrum of issues, but one common theme is they are typically issues that are “hot buttons” with their audience, like the economy, housing, jobs etc.

It’s not hard to point out their lack of diligence—to dig a little deeper and ask “why”. So why don’t they do it? In today’s sound-bite media world it’s not about accurate reporting so much as getting the story out there fast and first.

We tend catch slanted real estate reporting since it is what can easily spot, but it’s prevalent in many other areas as well.

Take our last post pointing out the misleading report on housing sales decline. Almost simultaneous with that report was a report on the median price increasing. So they managed to exaggerate the report on the sales decline and overstate the median price increase. What’s a person to do?

If you’re like us we’re sure you’d like to reply on the news you hear as accurate, but unfortunately, that’s not always the case. Sometimes you have to dig deeper. Of course we’ll try and take some of that burden off of you. If you check in here regularly we try and ferret out the real stuff from the fluff.

What was wrong with their story about the median price increase in the Bay Area? On the surface nothing—the median price did increase in the Bay Area. But they are insinuating by the context in which they issue the report  that the median price increase is representative of home values going up. In fact, often times the median price changes have more to do with the mix of larger or smaller homes selling than it has to do with varying prices.

As in when the media reported that the sales of homes had decreased in San Mateo County by the highest margin in 15 years, but failed to mention that the data they were basing their story on had yet to be released and was only estimated. They also reported that the median price in San Mateo had increased without mentioning that is was in all likelihood a result of larger homes selling rather than prices increasing, as reported by the California Association of Realtors who provided the information they relied on.

This is from the California Association of Realtor press release. The same one cited in articles discussing the Bay Area median price gain.

“Note: Large changes in local median home prices typically indicate both local home price appreciation, and often, large shifts in the composition of housing market activity. Some of the variations in median home prices for July may be exaggerated due to compositional changes in housing demand…”

And indeed if one digs deeper they find that foreclosures, which pulled the median prices down, and which accounted for nearly 50 %of all sales had dwindled significantly.

Did the values of homes in the Bay Area rise? In some areas in fact they did, just not as much as reported. The case-shriller report which looks at the same house selling repeated times, and thus considerably a more reliable source, shows that indeed values have been rising steadily since April of 2009.

As with the report on declining sales, in the end is their report wrong? No. just not as accurate as it could be.

Suppressing Consumer Confidence--It's all in the headlines

There you go again…

That line was made famous by Ronald Reagan when he was running for office against President Jimmy Carter in 1980. It was used by then Mr. Reagan as a way to diffuse opponents who harped upon the same issues over and over.

Well the media is at it again. The media loves its headlines and of course they need to sell papers so it’s not put past them to choose a sensational attention grabbing headline and find data to support it.

Take the August 19, 2010 report on home sales in the Bay Area. The headline in the San Jose Mercury read “Peninsula home sales plunge in July”. Define plunge?

They reported, “After steadily rising for several months, Peninsula home sales plummeted to near-historic lows in July as demand remained tepid and the federal homebuyer tax credits that had helped caffeinate the marketplace in the past year finally went away".

When were these “near historic lows”? How near and how low were they?

Clearly the article is saying sales are down, and they are, but they fail the test of balanced journalism when they neglect to add the caveat “as expected”.

The accuracy of their article is subject to scrutiny as well. I reviewed our own analysis which we do every month since I didn’t recall being impressed by the large discrepancy in year-over-year sales mentioned in their article.

Our data is mined from the Multiple Listing Service. It doesn't contain all home sales—just ones which were listed with real estate agents. The percentage of homes which transfer ownership without the involvement of a real estate professional remains consistently a small percentage of all the homes which transfer—consistent being the operative word since the delta from one month to another is negligible.

Our statistics showed 385 single family homes closed escrow in July 2010, down from 393 in July 2009. According to our data the number of fewer sales this July compared to last were just eight, or 2%.

The San Jose Mercury claimed it was the lowest month for home sales in 20 years. But how many fewer homes sold? They don’t say. They also don’t mention that Dataquick, the source cited in their article as the resource for their reporting, issued a statement on August 19^th, 2010 (the date cited as being used by the San Jose Mercury) saying that they only estimated the sales for San Mateo County:

“San Diego-based MDA DataQuick is a division of MDA Lending Solutions, a subsidiary of Vancouver-based MacDonald Dettwiler and Associates. MDA DataQuick monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts. Because of late data availability, sales were estimated in Alameda and San Mateo counties.”

But more to the point, industry experts predicted that home sales would drop after the expiration of the housing stimulus tax credit on May 1, 2010. Last year—the year used for comparing sales—the tax credit was still available in July.  One only has to go back to 2007 to see sales as low as they were this July, not 20 years.

In Santa Clara county they report: “1,159 single-family resale homes that closed escrow represented a drop of 24.3 percent from the 1,531 sold a year earlier, making this the second-slowest July since 1990, according to figures released Thursday by the real estate information service MDA DataQuick.

I didn’t bother to verify any of this information. But let’s assume it’s more accurate than what they reported about San Mateo County. Sales haven’t been this low since…1990. Why does that date ring a bell? It’s the date of the last housing downturn. So what their report tells us is home sales drop when the housing market drops, and sales have not started to pick up yet, because they no doubt will someday.

But what the report does is continue to fan the flames of consumer skepticism. Unless and until the housing market recovers, the rest of the country will suffer. Responsible reporting might help us get back on track sooner rather than later. We expect the facts—the news—good or bad. Just don’t skew what you choose to report to further your own agenda.

California state first-time buyers tax credit deadline Aug. 15

State first-time buyers tax credit deadline Aug. 15
The Franchise Tax Board (FTB) recently announced it will accept applications for the California first-time home buyer tax credit through midnight on Sunday, Aug. 15, 2010.  The FTB believes it will have received more than enough applications to cover the $100 million allocated for eligible first-time home buyers.  It will continue to accept applications for the new-home portion of the state tax credit.

Due to the high volume of faxes, consumers may experience some delays and difficulties in connecting to the FTB fax number during normal business hours.  It can take several minutes or possibly up to an hour to connect and transmit the fax.  Buyers who receive a busy signal are advised to try again later. The fax number is open 24 hours a day, so consumers may fax applications during non-business hours when the line is not as busy.

More info.

Don't forget, for a limited time we're offering a 1% credit to any first-time homebuyers who use our services. Check our web site for details.

Bay Area Housing Affordability Index 2010 (HAI)

 
The California Association of Realtors tracks the "HAI" which is the Home Affordability Index. Their methodology can be found here, but in a nut shell they take into consideration the median home price for a particular area, the median income, the current interest rates and mash it into an index which essentially says what percentage of the population can qualify for the median price home assuming they put 20% down and have 30% (which is conservative) income to debt ratios. The higher the index the more home people can afford to buy a home. Since there are three variables which could affect this outcome, a dramatic shift in any one could influence the affordability trend. In the case of today's market two of the three variables are in favor of home affordability-low interest rates and lower median home prices. The third-income-has impacted these number to some degree and kept the index from being even higher as wages have remained stagnate and unemployment is high.

What this means to you is if you are considering whether to buy a home in the Bay Area, unless you are concerned over your job security this is one of the best times to purchase a home in the Bay Area in decades. 

 

THE ASSUMPTIONS AND METHODOLOGY USED TO CALCULATE C.A.R.'S TRADITIONAL HOUSING AFFORDABILITY INDEX (HAI)THE ASSUMPTIONS AND METHODOLOGY USED TO CALCULATE C.A.R.'S TRADITIONAL HOUSING AFFORDABILITY INDEX (HAI)

Step 1. MEDIAN PRICE: C.A.R.'s housing affordability index is based on the median price of existing single-family homes sold from C.A.R.'s monthly existing home sales survey. Starting in 1987, this survey is based on reports of closed escrow sales from 80 Boards or more of REALTORS® and multiple listing services around the state. Prior to 1987, the survey was based on reports from 45 Boards.

Step 2. DOWNPAYMENT: It is assumed that a household can make a 20 percent downpayment on the median-priced home. Therefore, the loan amount needed to purchase a home would be 80 percent of the median home sales price.

Step 3. INTEREST RATE: Using the national average effective mortgage interest rate on all fixed and adjustable rate mortgages. This is represented by the effective composite rate for previously occupied homes, which is reported monthly by the Federal Housing Finance Board.

Step 4.The monthly payment for PRINCIPAL, INTEREST, TAXES AND INSURANCE (PITI) is computed as the sum of three parts: -Monthly mortgage payment, based on the terms of the mortgage in Steps 2 & 3. -Monthly PROPERTY TAXES are assumed to be 1 percent of the median home sales price divided by 12. -Monthly INSURANCE PAYMENTS on the house are assumed to be 0.38 percent of the median home sales price divided by 12. The results of these three calculations are added together to find the PITI or total monthly payment for a household that buys the median priced home.

Step 5. It is then assumed that the monthly PITI can be no more than 30 percent of a household's income. Thus, the monthly housing payment is divided by .3 to come up with the MINIMUM INCOME NEEDED TO QUALIFY FOR A LOAN on the median-priced home.

Step 6. Starting in 1988, data for the distribution of households by various income ranges was obtained from Claritas. INCOME DISTRIBUTION figures were developed based on the projected percent change in the annual median household income. Prior to 1988, household income utilized in the housing affordability index was based on projections by C.A.R. using the 1980 census data as a base. (I wonder who "projects" incomes-my emphasis and what criteria is used for that)

Step 7. The minimum income amount calculated in Step 5 is multiplied by 12 to determine the minimum annual income needed to qualify. This amount is compared to the income distribution of households. The percent of the households with incomes greater than or equal to the minimum income becomes the HOUSING AFFORDABILITY INDEX (HAI). NOTE: The quarterly HAI series begins in 2006, prior to that the series was monthly. The quarterly HAI for a given geographic area in a particular quarter is based upon the quarterly median price for that area as well as the quarterly income distribution for that area.

What if I get lousy neighbors?

Finding a home with great neighbors can be the luck of the draw.

When we help Buyers find a home many are concerned about who their new neighbors might be, I’m reminded of my childhood experiences trying to lay claim to the perfect campsite.

When I was a young, like so many of our generation, our parents took us on summer camping trips as a frugal way to enjoy a vacation. As we entered the campground, finding the perfect campsite was always a moment of great anticipation. Competition was fierce for the great sites; as with most people who want to get away for the weekend they also want to get away from other people—being a social society, we want to be close, but not too close. We’d drive through the entire campground before selecting the perfect spot—one with seclusion, beauty and because we had a camper, it had to be level. Of course we’d check out who our nearest neighbors would be too. My parents wanted to avoid parking in a spot near a bunch of rowdy kids, which was where the interests of my parents and I parted.

Settled in on the perfect spot, we began to enjoy our week-long vacation. As would often happen, we’d wake up Monday morning and see that our weekend neighbors had vacated to return home. That left us with a new dilemma—who would be our new neighbors? We knew we had no control over who might choose to park next to us and wondered if they would evaluate us as we did our neighbors, (looking back I’m sure many seniors chose to drive on past our campsite after spotting three active kids playing around).

I was always interested in who would we get as our new band of travelers. Of course we had no control over who our camp fellows might be, and often provisionally contemplated moving to a new campground should our new nomadic neighbors prove too loud.

Finding a home with great neighbors is reminiscent of these camping expeditions. Like finding the perfect site, you quickly learn that the neighbors you have today may not be the ones you get tomorrow as like you, they too can move. Sometimes you’re lucky enough to get the quietest neighbors in the world and then they decide that Johnny needs a companion and the next thing you know you’re waking up during the night to Rex’s midnight pangs of loneliness.

While it’s prudent to pay attention to a neighborhood and who your new neighbors might be, keep in mind that you should not rely on today as a constant —good or bad. Your neighbors could easily be here today and gone tomorrow.

 

Home Sales Decline As Tax Credits Expire - WSJ.com

"Some 60% of the 109 economists and other analysts surveyed by MacroMarkets LLC expect home prices to decline this year, up from 40% in May."

via online.wsj.com

I found this amusing. If their numbers are right, at 66% the economists are no better than the Supreme Court Justices at arriving at a consensus, and probably no more accurate than our local weather announcer when they do.

Why Are Interest Rates So Low and What Does it Mean to Me?

Whether you are thinking of buying or already own a home the current historically low interest rates may help you save thousands of dollars.

Rates in the last week have averaged the lowest point since records were first kept over 30 years ago. Refinancing today may help you save hundreds of dollars in monthly interest payments but even more important are the long term savings.

Rates are low right now because the financial crisis in Europe is driving the appetite for U.S. bonds which in turn raises the price and lowers the yield (interest) payment. And since mortgage rates roughly track the 10 Year Treasury Bond you can see where rates are headed and why. Rates are the lowest they’ve been—period.

If you think about the past 30 year trend of interest rates, which have averaged around 9%, it’s easy to guesstimate that the odds are good rates will be higher in the future rather than lower. What does that mean to you? If you are considering a purchase it means that there are two ways to look at it: if you buy a home at today’s rates either your monthly payment will be substantially lower or you can buy a considerably larger home for the same amount of money. In fact a payment on a $1,000,000 home ($800,000 loan) would be around $4,234 per month as opposed to $6,437 at the average historic 9% rate. But that doesn’t even begin to tell the whole story.

Not everyone stays in their home for 30 years but this offers up a substantial savings in interest payments. Most people aren’t aware of the long term costs of homeownership so you’ll be interested to note that at today’s rate your total interest payments over 30 years would total $725,000 and at the historical 9% rate it would be as high as $1,517,000—over double the interest payment for the same home. What could you do with an extra $793,000?

Perhaps rates will never be as high as they were back in the late 70’s and early 80’s but rates have still averaged 6.7% over the last 15 years during a time of historically low rates.

Now combine this with the recent decrease in home values and it’s hard to argue that waiting to buy a home will significantly benefit you.

 

$8,000 Tax Credit Extended to September 30, 2010

Missed out on the $8,000 first-time homebuyer tax credit?

 You'll be glad to know you can still receive $8,000 when you buy your first home through us.

 How do we do it? Simple. If you buy a home through us between now and September 30th, 2010 we will credit you 1% of the purchase price up to $8,000 in escrow for your closing costs.

 What's the difference between our credit and the government tax credit?

Well for starters you won't have to wait until next year's tax filing to get the refund-we credit it to you at closing so you can really put it to work.*

 Call us for details.

 

 Drew & Christine Morgan

"Helping People Make Good Decisions"^sm

 

Carlmont Associates

1940 Ralston Ave.

Belmont, CA 94002

01124318 & 01174047

Office: 650-508-1441

Fax:    650-591-4329

 

*Some restrictions apply.

 

 

 

 

 

 

 

 

 

$8,000 Tax Credit Extension to September 30, 2010

What’s the big brouhaha about yet another extension of the $8,000 tax credit for first time homebuyers?  
Senator Harry Reid wants home buyers to have until September 30, 2010 to close escrow and receive the $8,000 tax credit. But before you go out and celebrate, understand that the only buyers this extension will help are people who already were in contract to buy a home by the April 30^th deadline. The proposed extension would allow only those buyers to have until September 30^th to close escrow rather than the looming deadline of June 30^th. Senators Johnny Isakson, R-GA, and Christopher Dodd, D-CT, are joining Senator Reid in support of the amendment. And why not? It’s a good political move and even Senators who said they would never vote for another extension will feel pressured in an election year to get behind this move.

Will it help? Sure, in a few cases where there are delays in the closing of escrow where banks may be overwhelmed or dragging their feet on short sales or where buyers are simply not able to close soon enough.

But don’t look to the government to shore up the housing industry anymore for awhile. The housing market is like a bird flying the nest…at some point you have to find your own wings.

Bay Area Housing Reports Show Some Median Price Stability

Just to bring you up to speed on the Bay Area housing market, we’re bringing to your attention a neat little gadget that allows you to see where values are relative to a prior point in time.

The chart we’ve included is based upon data from the Federal Housing Finance Agency’s web site for the San Francisco MSA (Metropolitan Statistical Area), but you can plug in the area where you live and even compare cities.

You’ve no doubt heard of the Case-Shiller report that uses repeat sales pairs to track the median home value more accurately. Essentially they track the same house selling over a period of years. Their methodology can be read here.

Well the U.S. government also tracks repeat home sales pairs to help Freddie Mac and Fanny Mae follow the markets across the country. On their web page they have this really neat calculator where you can input what you paid for a home and it will calculate what the home should be worth today based upon the median trend.

Note for the San Francisco MSA which incorporates San Francisco down to Redwood City we’re beginning to see a leveling off of the free fall that has befell the Bay Area since June of 2006.

We expect seasonal buying and selling trends to continue to vary home prices on a monthly basis but the overall median home price trend will no doubt be relatively flat for several more years to come. Jobs will drive the housing prices in the future, and we’re still running in double digit (11%) unemployment rates in the Bay Area.

Sellers—if you are going to try and wait for prices to dramatically rise you should be prepared to sit in your home for quite a few more years. In others words, if you want to move on in life, now’s as good a time as you’ll see for awhile.

Buyers—since values will probably be flat there’s no reason to rush out and buy a home if you are worrying about missing the bottom, but remember, if interest rates rise your monthly payment will go up dramatically.

Now for the inevitable disclaimer: The information contained in this newsletter is educational and intended for informational purposes only. It does not constitute real estate, tax or legal advice, nor does it substitute for advice specific to your situation. Always consult an appropriate professional familiar with your scenario.

Case-Shiller study finds Bay Area Home Prices up 11.9% in February 2010

 Case-Shiller released their report on repeat sales pairs for the 20 major MSA’s (Metropolitan Statistical Areas) across the country. San Francisco faired rather well, climbing 11.9% over last year in February. Phoenix lost another 1.64% but faired far better than Tampa Bay, which sank another 6% over last year.

No doubt many of these areas saw sales figures buoyed by the Federal Tax stimulus plan that rebates first time home buyers up to $8,000 and resale buyers up to $6,500. Additionally, the shifting of the majority of sales from lower priced homes to a more even mix has helped raise the median price point substantially.

Limited time $18,000 combined state and federal tax credit for first time buyers!

There’s a lot of misinformation about the federal and California state tax credits which expire soon. This short article from the California Association of Realtors sums up the unique opportunity to qualify for the federal and state tax credit and get up to $18,000 in rebates.

BROUGHT TO YOU BY THE CALIFORNIA ASSOCIATION OF REALTORS

$18,000 IN COMBINED HOMEBUYER TAX CREDITS FOR A LIMITED TIME

Californians have a brief window of opportunity to receive up to $18,000 in combined federal and state homebuyer tax credits.  To take advantage of both tax credits, a first-time homebuyer must enter into a purchase contract for a principal residence before May 1, 2010, and close escrow between May 1, 2010 and June 30, 2010, inclusive.  Buyers who are not first-time homebuyers may use the same timeframes to receive up to $16,500 in combined tax credits if they are long-time residents of their existing homes as permitted under federal law, and they purchase properties that have never been previously occupied as provided under California law.

Under the federal law slated to soon expire, a first-time homebuyer may receive up to $8,000 in tax credits, and a long-time resident may receive up to $6,500, for certain purchase contracts entered into by April 30, 2010 that close escrow by June 30, 2010.  Additionally, under a newly enacted California law, a homebuyer may receive up to $10,000 in tax credits as a first-time homebuyer or buyer of a property that has never been occupied.  The new California law applies to certain purchases that close escrow on or after May 1, 2010 (see Cal. Rev. & Tax Code section 17059.1(a)(4)).  California law generally allows buyers of never-occupied properties to reserve their credits before closing escrow, but buyers seeking to combine the federal and state tax credits will not be able to satisfy the timing requirements for such reservations (see Cal. Rev. & Tax Code section 17059.1(c)(1)(A)).  Other terms and restrictions apply to both tax credits.

For more information, C.A.R. offers a Homebuyer Tax Credit Chart with a side-by-side summary of the federal and California laws.  C.A.R. also offers a legal article entitled Homebuyer Tax Credit Update.

* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *

 

Super Bowl XLIV brings you Belmont Home Sale Stats for January 2010

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.

Buyer Incentive Programs - about to phase out (part 1 of 3)

  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 is always $800k and a couple cannot make more than $225K per year.

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 Blog Part 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.

Belmont - Market Report for December 2009

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.

Read our next post on the buying opportunity window which is closing fast.

Mid Peninsula Housing Trends--2009

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.

Don’t forget you can always check out the stats for a city near you on our web page.

Peninsula home values continue to slide, but slower.

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...

Belmont and the Bay Area Peninsula Housing Downturn

If you’re wondering where the housing market is headed in Belmont you can get a good indication by these two snap shots taken for the month of March 2007 and 2009.

We use 2007 as a benchmark since it was the last year where the impact of the housing crises had not yet been realized in our market.

Here are some startling yet revealing statistics:

The far right column of this chart says it all—every indicator in red illustrates a deterioration of the seller’s market which has prevailed for so long.

You may notice that even though larger homes sold in 2009 the median price still dropped $161,500 in 2009. Adjusting for this, the real median price drop is actually $252,850 or 26%.

Today, on average it will take almost three times as long to sell a home in Belmont; when you do sell you are likely to receive under you asking price. In fact statistically you no longer have any chance of getting over your asking price and the odds of getting less than your asking price has increased by 50%. Sellers now receive on average only 96% of what they ask for their home compared to over 103% in 2007. In real dollars that translates into a swing of $52,000.

In the end, this much anticipated market correction will produce a more stable real estate market. Affordability is increasing and eventually sales will increase as buyers feel more optimistic about the future—including job security and housing stability.

Considering the drop in value we are experiencing, for sellers who are debating a moving out of the area, sooner rather than later will probably produce a better result. In all likelihood it will be many years before inflation drives price points back to levels seen in 2007.

A down market is typically an attractive time for sellers who are thinking of a move up. The logic behind this is a more expensive home is less in real dollars—and also saves you thousands of dollars in property taxes over the life of your ownership. Our current market also includes attractive Interest rates that are at historic lows—though Jumbo loans are not enjoying the full benefit of the government’s intervention.

Buyers who have stable jobs and are planning to live in their first home for five years or more are benefitting the most from the current conditions. Prices are at a low not seen in years, interest rates are at historic lows, the government is paying them $8,000 to buy a home this year, multiple offers are for the most part non-existent and the high inventory levels means there are a lot of homes to choose from.

In every market, there are opportunities. If you would like advice on how to make the most of our current economic climate give us a call at (650) 508-1441.

*Data retreived from the MLS

The information contained in this post is educational and intended for informational purposes only. It does not constitute legal or tax advice, nor does it substitute for legal or tax advice.

HOUSING REFORM-2009 Panacea or Panic?

The news is full of housing reform stores but the shelf life for reform legislation seems shorter than that of freshly baked bread—what made the news just yesterday is often obsolete by today.

We expect 2009 to be a turbulent time in real estate. Knowing how to weather the storm is paramount to the survival of homeownership.

Key Elements

President Obama signed a $787 billion stimulus bill which includes many features to protect homeownership.

These are a few of the incentives targeted to help 4-5 million responsible homeowners stay in their homes:

\\· Provide access to low cost refinancing where borrowers who have less than the required 80% loan-to-value could refinance to lower their monthly payment.

· Seventy-five billion will be spent on homeowner stability initiatives to help struggling homeowners who, because of the recession, are hard pressed to make their mortgage payments and cannot afford to sell or refinance their home due to a drop in value.

· No aide to speculators. The initiative has no provision for assisting investors or speculators.

· Provide support for homeowners who are at imminent risk of default before they miss a payment.

· Provide loan modifications to bring monthly payments to sustainable levels.

· ”Pay For Success”—Initiative for loan servicers to receive $1,000 per month each month a borrow stays current on their loan.

· “Help Borrowers Stay Current”—Provides a $1,000 per month reduction in a home owners’ principle loan balance for five years if the borrower keeps their payments current.

· “Reaching Borrowers Early”—An incentive of $500 to loan servicers and $1,500 to mortgage holders if they modify at-risk loans before the borrow falls behind.

· “Home Price Decline Reserve Payments”—Holders of mortgages modified under the program would be eligible for an additional insurance payment (from a newly formed entity under the Treasury Department) on each modified loan to offset declines in the home price index.

There are quite a few more initiatives to help homeowners. Though many do not apply to the majority of the loans on the Peninsula since they are not held by Fannie Mae or Freddie Mac.

Lenders Are Worried.

Recently, many lenders have been modifying loans without incentives just to keep their head above water. However in contrast to the President's incentive plans, many banks require the homeowner to be months behind in payments before any relief is possible.

►If your mortgage is scheduled for an interest rate increase which you feel you may not be able to afford, we encourage you to contact your mortgage holder immediately and see if they will modify your  existing loan. It’s in everybody's best interest if homeowners can continue to make their monthly payments, even if it takes a loan modification to make it happen.

 

Best Dressed homes in 2008

With a nod to Carlmont High’s class of 2009 starting their first full week after winter break , and real estate just coming out of winter hibernation, we thought we’d take some of our downtime to summarize a few of our sales in 2008 and offer a big thanks to the many clients who hired us to help them get their perfect home this year.

 

Most Likely to Succeed

I guess you could say this Hillsborough home has already succeeded in many ways. At 10,000+ square feet it’s the largest home we’ve ever sold and at $10,990,000 it’s also the most expensive.  

 

 

 

 

What a deal though, our buyer received an offer for over a million dollars more than what they paid for it a month later (they turned it down). LISTED for $10,990,000 SOLD for $10,900,000.

 

Check out the cool backyard with pool, tennis court and guest house!

 

 

 

 

 

 

 

Most Creative

Terrance and Patricia have grand plans for this modest home in Redwood Shores. We won this home for them in multiple offers. Plans include a two story addition which will give them views of the San Francisco bay! LISTED for $859,000 SOLD for $ 889,000 in four days. Good luck with your remodel!

 

 

 

 

Class Favorite

Everyone who has seen this home falls in love with it just like Chris and Tracey did when Chris found it online. We’d been looking for the perfect home for several years when lo and behold this estate came up in Los Gatos.  

This has to be one of the neatest homes we’ve ever sold. Check out the outdoor entrainment possibilities with the coolest veranda we’ve seen.  

Oh yeah, did we mention the weather down there makes outdoor dining a summer standard. Great housewarming party BTW. LISTED for $4,500,000 SOLD for $4,250,000

 

 

 

 

 

 

Best Dressed

Hands down for Best Dressed was this home in Redwood Shores. Chris and Tracey had an amazing home which we were happy to sell. Even our stager said she wouldn’t change a thing!  

Check out the rear BBQ area that's the envy of the neighborhood. And thanks to Tracy’s interior design skills, she made this an easy sell and was rewarded with the highest sale ever in their neighborhood. LISTED for $1,428,898 SOLD for $1,400,000.

 

 

 

Most Talkative

Our listing in Hallmark gets the nod for most talkative since the neighborhood was abuzz when we listed it. We’d been prepping it for a month and being that it was on Hallmark Drive, it got quite the visibility. We were absolutely deluged at our open house and when we sold it in one week (in the midst of the financial melt-down) the calls were rolling in asking how we sold it so fast.  

The answer is the seller did everything we asked of him and readied is home with professional staging and enhancements. There’s a neat video if you want to see the before and after pictures. Thanks Eiji—you were a pleasure to work  with and we are still saddened that you lost your cat one day before you moved—we’re always on the lookout for him. LISTED for $1,298,890, SOLD for $1,285,000 in about a week.

 

Thanks again for making 2008 another great year!

Real Estate re-cap--2008

Before we wrote this year’s forecast, we went back and re-read our assessment of where the market might be headed in 2008.

 

Of course very few people could have predicted that the dire real estate woes would drag the entire economy to the brink of collapse and we were no better than most.

 

However, for your enjoyment we’ve clipped a segment out of our 2008 market forecast made on January 4^th 2008—and highlighted some of our more interesting comments:

 

“This is precisely why the Peninsula should fare better than other areas [in 2008]”.

 “However, it’s entirely possible we are on a precipice which could collapse at any time. What is [currently] impacting the Peninsula is the rising cost of energy—especially gasoline.”

“What could have an incalculable impact would be a prolonged recession and loss of local jobs; either of these would undoubtedly bring a decrease in home values to the Peninsula”.

In 2008, Investors eventually began to snap up undervalued properties in the central valley and a few of the nine bay area counties which were hard hit by foreclosures. This had the desired effect of liquidating the tidal wave of inventory but the undesirable effect of sinking the reported median price by skewing the sales mix to smaller homes (since smaller homes and distressed properties sell for less). The media meanwhile continued its relentless reporting of the falling median home price without appreciable application of responsible journalism. Bombarded by the media’s lack of analysis, invariably many buyers were frightened by the reports of falling home values and quite reasonably and expectedly took a “wait and see” attitude. That’s not to say the media’s information was wrong, but they do choose what to report and what to leave out and in many cases they reported numbers without the necessary perspective leading many to believe the housing situation to be far worse than it was in some areas, and far better than it was in others.

Although clearly there were several other factors which inhibited the ability of people to purchase homes—not the least of which was tighter lending standards and higher interest rates—our intrinsic evidence suggests that most credit worthy buyers on the Peninsula withheld from purchasing a home based on the fear of values spiraling down, not because they wanted to wait and “time the absolute market bottom” or couldn't get a loan.

 

Welcome to our 2009 Market Conjecture

Those of you who have been following us for some time know that at the beginning of each year we re-cap the previous year and take a stab at where the market might be headed in the upcoming year.

Of course you expect to read the median price has dropped and in fact it has, just not as much as you may have been anticipating. While the Bay Area nine counties reported a median price drop of over 40%* from 2007, Belmont had only a 5.4% decline and that’s after we factored into our calculations slightly larger homes sold in 2008. The raw numbers, which tend to be the only ones reported, suggest a decline in median price of only 2.6% for the year.

SALES ARE KEY

Sales are key to the survival of Realtors^®, but unless you are selling your home you could probably care less how many homes sell in a given year. However, it gives us a good indication of overall market activity—with the caveat that sometimes sales are down simply because there are fewer homes to sell.

Sales of single family homes (our benchmark for all comparisons) were down from last years’ 219 to a paltry 170 for the entire year in 2008—a decrease of over 22%! Contrasted to a year of more normal market activity, (as recent as 2003 when 343 homes sold), sales are down up to 50%. Clearly we are in a period of slower than normal home sales.

 

HOMES LISTED FOR SALE

But were there fewer homes to sell in 2008? It’s hard to believe but for the entire year, at 309, there were only two fewer listings than in 2007.

What’s in store for 2009?

With the perfunctory disclaimer that past performance does not predict future results, we fear in 2009 it may however be quite true. We wouldn’t be surprised at all to see a continuation of the stagnant real estate market which has had a choke-hold on home sales in 2008. Interestingly, the last major downturn in real estate which began in 1989 was caused by an overall weak economy and most importantly the loss of jobs. In contrast, the current housing downturn has in effect created the recession—a reversal of past cycles.

 

That’s a long way of saying that housing cannot recover until the economy does and the economy won’t recover until housing stabilizes. Sound like a Catch-22? Well it is. And while it appeared in the second quarter of 2008 that the real estate recovery might begin in 2009, we now believe that will be pushed out at least another year. That said, any sign of a recovery will manifest with a leveling off of inventory and declining home values. A period of stagnant home values will invariably last for another year or two following a price plateau as buyers still wary of a volatile market will only reluctantly reenter the market. Most will wait too long and catch prices on the way back up but there’s no telling when that will happen. We’re not telling you to run out and buy a home as part of a fear based campaign, “Hurry or you may miss the bottom”, but in every market there are opportunities which should be examined. We learned long ago to resist trying to explain to people why they should buy a home and rather help those who are already motivated. Like the old saying, “You can lead a horse to water…” but he has to be thirsty. This year’s wild cards? Interest rates, consumer confidence the recessions and jobs, jobs, jobs!.

 

Cheers,

Drew

Real Estate Bidding--Are you a Bidder's Fool?

As part of our Real Estate REVEALED series we answer another Frequently Unasked Question in our latest Podcast—how do you know when a home is priced right? In addition to this latest Podcast, we’ve added a web page that makes finding the entire series of archive issues in one place.

Podcasts Drew & Christine Morgan "Helping People Make Good Decisions"sm (650) 508-1441 Click the mic for the web version of this page. Thanks for visiting our Podcasts. Each week we offer a housing market update podcast on our blog at BeautifulMountainBlog.org as well as our series titled "Frequently Unasked Questions" where we tackle questions buyers and sellers should be asking but frequently aren't, and "Real Estate Revealed" where we discuss industry insider information. Enjoy and don't forget you can subscribe to our podcast stream to be automatically updated with any new releases by clicking on the orange RSS icon. Bidding on a home When NOT to sell your home Pitfalls of Dual Agency Negotiating Real Estate fees The Big Broker Myth Staging your home for sale (opens in a Media Player) Note: For detailed market discussion visit our blog at: BeautifulMountainBlog.org Drew and Christine Morgan (650) 508-1441 dmorgan@morganhomes.com "Helping People Make Good Decisions"sm

Download Overbid

Unveiling our NEW Fusion charts!

We’re very excited to bring you a new animated version of our graphs depicting the various housing market trends in San Mateo County and the cities which lie within.

Each month we download data from our Multiple Listing Service and analyze the market indicators. We provide this in-depth analysis for several of the many cities we serve on the Peninsula.

We’ve also added short audio tags to describe what we are depicting and help put the information in perspective (Click on the play button to hear a brief introduction).

Another feature will be our “Weekly Graph”. We’re not saying it will change each week but when an interesting trend develops you’ll find it under that tab.

We hope you’ll take a moment to check out our new graphical interface on our “How’s the Market?” link and give us some feedback.

August 2008 Housing in Review--San Mateo County

The big news in August was the Government take-over of Freddie Mac and Fannie Mae which has had the desired effect of bolstering mortgage backed securities and lowering interest rates. What it ends up costing us all is yet to be determined but suffice to say it’ll probably be worse than if we suffered through a protracted catastrophic collapse of the United States’ financial markets.

Listen here to the audio version.

Looking at San Mateo County’s housing activity for August you get a glimpse at the impact the housing downturn has had and where it may be headed.

This graph shows the correlation between the number of homes for sale and the median price:

• Median Price is down a statistically insignificant amount--$5K from July to $795,000. Down 16.3% from August 2007
• Belmont and San Carlos down around 4% year over year
• Menlo Park posts a ½ percent increase in the median price.
• Closed sales down from July's 428 to 376 in August--last August there were 366 sales
• Inventory declines again--third month in a row from 1886 in July to 1773 in August. Up 14% over August 2007 at 15544
• Month’s supply of home rises only slightly to 4.7 from 4.4

Download August.mp3

Making Your Home Market Ready For Sale

PODCAST SERIES-VIDEO

You’ve no doubt heard the term “staging” a home but there’s a lot more to getting your home ready for sale than just bringing in plants and re-arranging furniture.

The terms “staging” typically implies a professional designer has been retained to make a house look like a model home, yet there’s a lot more that goes in to “staging” your home. Often times, a home will need a complete facelift, as is often the case with trustee sales. Vacant homes always show better professionally staged, and even homes with modern amenities can use some detailing.

We break down staging into two categories. 1) Vacant homes for whole house staging and 2) Occupied homes for staging augmentation. Professional designers are akin to artists and often prefer a vacant home to an occupied one since they are beginning with a blank canvas, or palate if you will.

But getting a home ready for the final touches of furniture, plants and pictures often requires weeks of renovation. We coordinate with our design consultant to first identify our market segment—the buyer who will likely purchase the home. Then we take instructions as to what color scheme to employ and begin the process of renovation. Some of the typical enhancements include:

·         Fresh Paint

·         Refinished hardwood flooring

·         New carpeting

·         New bathroom or kitchen tile, granite or other contemporary materials

·         Kitchen cabinet re-facing or replacement

·         Bathroom fixture replacement

·         Hall and entry lighting enhancement

·         Landscaping and fresh lawns

There’s no need to be anxious about the renovation process. We coordinate all enhancements with our professional team of property enhancement experts; from tile people to painters, handyman, hardwood floor experts and carpet installers.

The video Podcast you are about to see highlights several homes we’ve staged for sale and shows before and after slides. If ever the saying “A picture is worth a thousand words” rings true it’s in this short video—enjoy.

                              

Download market_ready.m4v