Market Update - Stephanie Witt's Blog on Marin County Real Estate

Real Estate Roundup: Soaring Rents Push Bay Area Home-Affordability Rates Higher

Stephanie Witt - Tuesday, October 21, 2014

October 20, 2014 by Pacific Union • Posted in Weekly Real Estate News Roundups

With news that Bay Area apartment rental prices have rocketed to record highs comes more word that buying a home is still cheaper than renting in parts of our region. And the situation for would-be buyers has only improved since last year, with homes becoming even more affordable when compared with rents.

According to a new Trulia study, it was 25 percent more affordable to purchase a home in San Francisco in the third quarter than it was to rent, up from 9 percent last summer. In San Jose it was 23 percent cheaper to buy than rent, up from 4 percent in the summer of 2013.

Mortgage rates — currently at 3.97 percent for a 30-year, fixed-rate loan — would have to increase significantly in order to tip the scales in favor of renting in the Bay Area, Trulia says. That wouldn’t happen until rates hit 7 percent in San Francisco and 6.8 percent in San Jose.

House hunters across the inventory-starved Bay Area got a bit of relief in September, with our two largest cities posting the biggest monthly increases in the number of homes for sale in the nation.

According to a recent Redfin report, the number of homes on the market in the San Jose metro area grew by 25.4 percent from August to September, the biggest gains of the regions included in the study. The San Francisco area ranked a close second, with listings increasing by 22.9 percent month over month.

The company’s data also shows that both regions are far outpacing the national market when it comes to home price appreciation. The median sale price rose 19.4 percent in San Jose and 17.8 percent in San Francisco from last September, compared with the combined U.S. average of 3.9 percent.

San Francisco and San Jose also held the top two spots for highest median sale price, $950,000 and $800,000 respectively.

Some luxury homeowners are putting a new spin on the old-school wine cellar, moving their collections from underground to more visible locations.

An article in The Wall Street Journal discusses the trend, highlighting several homeowners who have constructed high-tech, high-end wine rooms. Since wine is traditionally stored underground to take advantage of cool temperatures, such rooms are usually climate controlled around the clock. The article notes that many newer wine rooms are being built using materials such as acrylic, glass and stainless steel rather than the more traditional wood.

While a top-shelf wine room can cost up to $500,000 to build, the article says that many real estate professionals feel that they are solid investments that add value when the homeowner decides to sell.

Homebuyers on a budget may find that their options in San Francisco are limited, to say the least. One potential solution is to go small, although you’ll still pay a handsome price per square foot.

Curbed SF blog post says that the smallest property currently for sale in the city is a 282-square-foot studio apartment with a Murphy bed in South Beach. If the asking price of $395,000 is met, the buyer will shell out $1,401 per square foot.

Curbed SF compiled a list of the 10 smallest homes for sale in San Francisco, half of which are studio apartments and the majority of which are priced at more than $1,000 per square foot. Two single-family homes – one in Noe Valley and one in the Excelsior District – made the list, though neither is larger than 600 square feet.

 (Image: Flickr/Tom Magliery)

    Marin County Quarterly Real Estate Report Q3 2014

    Stephanie Witt - Saturday, October 18, 2014

    Read the report HERE

    Bay Area Sees Busiest September for Home Sales in 5 Years

    Stephanie Witt - Friday, October 17, 2014
    October 16, 2014 by Pacific Union • Posted in Home Sales Volume & Inventory Conditions

    Homebuyers across the Bay Area were in the game as the usually brisk fall real estate season began, propelling September sales-volume numbers to the highest level since 2009.Toy houses

    According to a new report from CoreLogic DataQuick, Bay Area buyers scooped up a total of 7,443 single-family homes and condominiums across the nine-county region in September, a year-over-year gain of 4.2 percent. It was the busiest September for our local real estate markets in five years, when 7,879 properties changed hands.The company says that both overflow activity from the summer and the Bay Area’s vigorous economy helped to spur sales.

    On an annual basis, the number of home sales increased in five Bay Area counties, with San Mateoseeing the largest gain, 16.9 percent. Of the four local counties where home sales dropped since last September, Napa and Marin saw the most substantial decreases – 17.6 and 10 percent respectively.

    Year-over-year home price changes were more consistent, with all nine counties reporting increases and seven seeing upticks in the double-digit percentage range. The regional median home price was $604,000 in September, up 14 percent from a year ago but short of levels observed earlier in the year. According to CoreLogic DataQuick, the median home price in the Bay Area has been steadily dropping since June.

    Annual sales price gains ranged from 17.3 percent in Marin County to 8.5 percent in Santa Clara County. San Francisco had the highest median sales price in the region at $938,000.

    CoeLogic DataQuick says that the Bay Area’s overall real estate market is continuing to stabilize, noting that foreclosure activity is down significantly from both annual and peak levels. In September, foreclosures accounted for 2.8 percent of sales, down from 3.6 percent one year ago. Bay Area foreclosures topped out in February 2009, when they made up more than half of all transactions.

    All-cash offers and investor activity were both down slightly from a year ago, taking a bit of heat off Bay Area home shoppers who have been struggling to compete in one of the nation’s tightest residential real estate markets.

    Absentee buyers, which CoreLogic DataQuick classifies as mostly investors, bought 19.1 percent of Bay Area homes in September, down from 20.9 percent one year ago. The company says that 20.9 percent of sales across the region were all-cash deals, a year-over-year decrease of 2.4 percentage points.

    (Photo: Flickr/Woodleywonderworks)

    Where Does California Rank on a List of Property-Tax Rates? You May Be Surprised.

    Stephanie Witt - Saturday, October 11, 2014
    October 10, 2014 by Pacific Union • Posted in Industry Surveys & Studies

    We love it when facts runs totally contrary to conventional wisdom.

    Case in point: The National Association of Home Builders (NAHB) this week released a report on state real estate taxes across the nation, citing data from the U.S. Census Bureau’s latest American Community Survey. Living in high-tax California, we would absolutely expect to see the Golden State way up on the list of largest real estate taxes paid.

    And sure enough, California had the 11th highest annual median real estate tax bill among the 50 states and Washington, D.C. in 2013 — $3,015.

    Northeast states tended to have the highest tax bills, with New Jersey No. 1 in the nation at $7,331. The lowest taxes paid were in the South — Alabamans (they ranked 51st) paid $532. So California was solidly on the side of big-tax states.

    But wait. Number-crunchers at the NAHB went on to note that it would also be useful to compare real estate tax rates. Most counties sets their own real estate tax rates, but dividing taxes paid statewide by the aggregate value of homes within a state reveals an effective real estate tax rate for each state.

    By that calculation, the picture changes dramatically.

    California, it turns out, has an effective tax rate of 0.77 percent, owing to its expensive real estate. It ranked 34th among the states.

    To be sure, New Jersey is still No. 1 when it comes to real estate tax rates, at 2.09 percent, and Alabama was only one step above the bottom, at 0.39 percent. (Hawaii’s rate was 0.29 percent.) But California, in fact, sits quite comfortably among the low-tax-rate states.

    Of course, this may be scant consolation for Bay Area homeowners who still pay hefty taxes for their high-value homes, but it’s worth noting a more accurate source of the pain.

    The link at the top of this article will take you to the NAHB’s real estate tax report. For a look at the complete state rankings, including median home values, click here

    (Image: Flickr/Colin Harris ADE)

    Failing to Refinance at Low Rates Could Cost You Thousands of Dollars

    Stephanie Witt - Thursday, October 09, 2014

    October 3, 2014 by Pacific Union

    File this story under “Woulda, coulda, shoulda.”

    In December 2010, 20 percent of U.S. homeowners could have refinanced their mortgages and saved an average of $45,000 each over the life of their loans, but they failed to do so.

    The National Bureau of Economic Research analyzed 1 million fixed-rate mortgages from that month and estimated that, in all, millions of Americans with fixed-rate mortgages failed to take advantage of money-saving refinancing opportunities that month, when interest rates hovered near record lows. 

    Some homeowners later said they were unaware of the potential savings from refinancing or were unwilling to follow through on the necessary paperwork, according to an article in The Washington Post. Some said they simply failed to open mail that offered once-in-a-lifetime refinacing deals.

    Even more amazing than the behavior of homeowners in December 2010 is that fact that interest rates today are lower than they were back then: Freddie Mac reported Thursday that current 30-year fixed-rate mortgages averaged  4.19 percent — lower than the average 4.3 percent in December 2010 and close to the record low of 3.31 percent set in November 2012.

    Still some homeowners today are still nervous about refinancing, even when it can save them thousands of dollars.

    Andrew Celis, who teaches financial literacy classes at Neighborhood Housing Services of Chicago, told the Post that some homeowners don’t refinance because they’re afraid that making changes will jeopardize their mortgage.

    “A lot of homeowners that we communicate with on this issue sort of have just held their eyes to the ground, and have said, ‘I’m going to do whatever I need to do to make my payments monthly,’ ” Celis said.

    Today’s low interest rates won’t last forever, however. It’s worth remembering that the average interest rate on a 30-year, fixed-rate mortgage in the 1990s averaged 8.12 percent, and in October 1981, mortgage rates peaked at more than 18 percent.

    (Image: Flickr/Mark Moz)

      California, Bay Area Housing Markets Nearly Stable, Says Freddie Mac

      Stephanie Witt - Friday, October 03, 2014

      October 2, 2014 by Pacific Union

      Over the past year, the U.S. real estate market has continued to stabilize, a Freddie Mac index says. That’s also true here in California and the Bay Area, with several of our local markets recovering faster than the nation.puzzle_up_arrow

      Freddie Mac’s Multi-Indicator Market Index (MiMi) gauges housing stability by assessing four factors: home-purchase applications, payment-to-income ratios, the number of owners who are current on their mortgage payments, and employment rates. The MiMi then classifies a market as weak, stable, or elevated based on those criteria.

      The latest MiMi data, which covers activity through July, gives the national housing market an index value of 73.4, still shy of the stable range of 80 to 120. The U.S. market  trended up over the previous year, with a gain of 5.4 percent on the MiMi scale. According to the index’s historical data, the U.S. housing market was last in the stable range in November 2008.

      The MiMi gives California’s real estate market an index value of 77.5, up 9.1 percent from a year ago. The statewide market was last in MiMi’s stable range in August 2008. Freddie Mac’s statistics show that payment-to-income ratios and employment levels have both stabilized in California, with respective index values of 98.3 and 95.3.

      Freddie Mac’s index also breaks out data for the 50 largest metro areas in the U.S., including San Francisco-Oakland-Fremont and San Jose-Sunnyvale-Santa Clara.

      With an index value of 78.4, San Francisco is the closest of the California regions still in the index’s weak range to achieving stability. Currently, the only California region that Freddie Mac deems stable is Los Angeles.

      San Francisco’s index value increased 7.8 percent on an annual basis. As is true across the state, San Francisco received stable scores for payment-to-income ratios (100.5) and employment rates (96.8). However, purchase applications were a weak spot, with an index value of 38.9, much lower than the national average.

      The San Jose housing market is also headed toward firmer ground, with an index value of 75.5, up 6.5 percent from a year earlier. San Jose ranked as stable for payment-to-income levels (84.3),  current mortgage payments (80.4), and jobs (99), but still has a weak amount of purchase applications (38.3).

      The MiMi says that San Francisco and San Jose real estate markets were last in the stable range in August 2008.

      (Photo: Flickr/Horla Varlan)

      San Francisco Metro Area Still Posting Double-Digit Percent Annual Home Price Gains

      Stephanie Witt - Thursday, October 02, 2014
      • October 1, 2014 by Pacific Union

        The San Francisco metro area is one of just three major U.S. regions where year-over-year home prices are still growing by double-digit percentage points, according to the latest S&P/Case-Shiller Home Price IndicesHome prices rising

        S&P/Case-Shiller’s data says that annual home prices in the San Francisco region increased by 10.3 percent in July, the third-largest gains of the 20 major U.S. metro areas included in the index. Across the index’s 20-city composite, home prices grew by 6.7 percent from July 2013.

        Still, the rate of annual appreciation in the San Francisco metro area has slowed significantly since earlier in the year; as recently as March, home prices in the region were up year over year by more than 20 percent as measured by the index.

        San Francisco was also the only metro area included in the 20-city composite to post a monthly decline from June to July, with home prices falling by 0.4 percent.

        “At the bottom was San Francisco with its first decline this year and the only city in the red,” David M. Blitzer, chairman of the Index Committee at S&P Dow Jones Indices, said in a statement. The report notes that July’s month-over-month price drop was the largest recorded in the region since February 2012.

        A look at MLS data reveals that the median single-family home price increased in every one of Pacific Union’s Bay Area regions year over year in July. Annual home price gains were largest in Sonoma Valley, up 41 percent from July 2013. At $750,000, Sonoma Valley’s July median sales price reached a two-year high.

        Home price growth across our other regions ranged from 25 percent in San Francisco to 4 percent in Marin County.



        (Photo: Flickr/Andrew_Writer)

        Bay Area Homebuyers Get a Break: Lower Interest Rates for Jumbo Loans

        Stephanie Witt - Wednesday, October 01, 2014

        September 30, 2014 by Pacific Union

        We all know that the Bay Area has some of the highest home prices in the nation. But did you also know that the so-called “jumbo loans” needed to buy many of these homes come with interest rates that are less than that of smaller “conforming” loans?Mortgage sign

        It’s true. All summer long, in fact, interest rates on jumbo loans have been lower than what average borrowers pay.

        And in some cases, buyers who take out jumbo loans don’t even have to worry about a large down payment or mortgage insurance, according to a recent CNNMoney report.

        For example, the average rate on jumbo loans last week was 4.30 percent, compared with 4.39 percent for a 30-year, fixed-rate conventional mortgage, the Mortgage Bankers Association reported.

        In some cases, lenders also have reduced their down payment requirements as well, requiring as little as 10 percent, which is about half the normal rate. Some lenders are waiving the private mortgage insurance requirement, too.

        Conforming loans — those guaranteed by Fannie Mae and Freddie Mac — are currently capped at $417,000 across much of the country, although in costlier regions such as the Bay Area the maximum loan amount limits are higher.

        Fannie Mae and Freddie Mac guarantee mortgages up to $625,000 in San FranciscoAlamedaContra CostaMarin, and San Mateo counties and up to $592,250 in Napa County and $520,950 in Sonoma County. Federal Housing Administration loans have higher limits: $729,750 in San Francisco, Alameda, Contra Costa, Marin, San Mateo, and Napa counties and $662,500 in Sonoma County.

        In the Tahoe/Truckee region, all conforming loans are capped at $477,250 in Nevada County and $474,950 in Placer County.

        Banks are on the hunt for jumbo customers in order to win them over as clients for other banking services, such as retirement planning, Malcolm Hollensteiner, head of retail lending for TD Bank, told CNNMoney. Jumbo borrowers tend to have better track records in repaying their loans and have lower default rates, so more banks are willing to take the gamble on them.

        CNNMoney also reported that many banks have lowered their credit standards for jumbo loans in 2014, Many jumbo borrowers used to need at least a 700 credit score to qualify, but some lenders reportedly are considering applicants with credit scores of 650.

        If you are in the market for a mortgage, take a look at these helpful mortgage tips, posted on Pacific Union’s blog earlier this year. 

        And if you plan to buy a home in the Bay Area or the Tahoe/Truckee region, Pacific Union’s mortgage partner, Mortgage Services Professionals, can offer loan advice and consultation to help make your purchase a success.

        (Image: Flickr/401(K) 2012)

        Planning to Sell? Get Cleaning, Get a Stager.

        Stephanie Witt - Saturday, September 27, 2014

        The decision to sell your home may come after many months of deliberation, but once you’ve made the decision and have talked with a real estate professional, give yourself some additional time to prepare the property.

        Spending a few hundred or a few thousand dollars to spruce up your home – from a thorough cleaning to repairs, painting, and staging – can add many times that amount to the final sale price.

        It’s Cleaning Time
        The first and most important task in preparing a home for sale is a top-to-bottom cleaning.

        Wash the walls and the windows. Clean the bathroom and put out fresh towels. Close the lid on the toilets and make sure the bathroom mirrors sparkle. Open the windows and let fresh air in – few things are less inviting to a prospective homebuyer than the smell of cat litter boxes or old dog beds. Or old dogs.

        If rooms are painted garish colors, repaint them in subdued hues with broad appeal. Replace dirty drapes and window blinds.

        If It’s Broken, Fix It
        If the plumbing or electrical systems need repairs, get it done. Is the doorbell broken? Fix it. Stop toilets from gurgling. Fix leaky faucets.

        Repairs to larger systems, such as a furnace or air conditioning, may be a negotiable point with the buyer, but not minor repairs. Evidence of slipshod upkeep will drive buyers away.

        Control Clutter
        The importance of clearing clutter cannot be emphasized too strongly. Move all unnecessary items into storage. A house or apartment with minimal furniture looks bigger than it really is.

        And put away family photos and personal items. You want a prospective buyer to imagine themselves at home there instead of feeling like they’re intruding in your space.

        Water and mow the grass, trim bushes, remove dead leaves, and plant flowers. A trim and tidy yard adds immeasurably to curb appeal.

        Hire a home stager
        Most real estate professionals recommend home staging. It can be something simple like putting out fresh flowers or rearranging furniture for better sight lines, but consider an outside opinion from someone who makes it their business to make homes more attractive to buyers.

        If you have the time and resources, consider moving to a temporary residence and allow a professional stager to present your home to its best advantage, with furniture and furnishings chosen to complement your home’s design possibilities.

        And talk with your real estate professional. He or she has been through the vagaries of home preparation many times before and is working on your behalf. Together, you’ll make a winning team.

        (Photo by Boulderite, via Flickr.)

          Bay Area’s Dubious Honor: Tightest Real Estate Market in U.S.

          Stephanie Witt - Friday, September 26, 2014
          September 25, 2014 by Pacific Union

          Just how competitive is the Bay Area real estate market? Data released Wednesday shows the San Francisco metropolitan area had the tightest supply of homes for sale of any region in the United States last month.

          Illustration of a person in front of a for-sale signThat dubious distinction comes even as we reported last week that the inventory of Bay Area homes rose slightly in August. Any increase is welcome, of course, but our region needs more than a trickle of additional homes to meet the demand of eager buyers.

          The latest numbers, from the research firm Redfin, show the San Francisco market* with a 1.2-month supply of homes for sale. (Put another way, that’s how long it would take for all the homes now on the market to sell, given the current sales volume.)

          The San Jose metropolitan area has the second-tightest market, according to Redfin’s data, with a 1.3-month supply, and both regions were four times more competitive than the national average of 5 months’ supply.

          The numbers mean the Bay Area remains overwhelmingly a sellers’ market, as it has for two years now. Generally, anything below a four-month supply favors sellers; the market begins to skew toward buyers with a six-month supply or more.

          Other data from Redfin shows the median sales price for homes in the San Francisco metro area was $875,000 in August, down 2.8 percent from July but up 7.9 percent from one year earlier.

          In the San Jose area, the median sales price was $746,000, up 0.7 percent from July and up 10.5 percent from last year.

          The number of homes sold, meanwhile, dropped in both regions. In San Francisco, 1,300 homes sold in August, down 9.5 percent from July and 9.9 percent from August 2013. In San Jose, 1,350 homes sold, down 12.8 percent from the previous month and 16.6 percent on an annual basis.

          Looking ahead, Redfin predicted that home prices will continue to soften in the next few months as investors and all-cash buyers continue to retreat from the market.

          “Strong demand and short supply lay the groundwork for an unusual twist to sales activity in September and October,” Redfin noted. “As the housing market continues to normalize, we anticipate a fall selling season marked by both slower price growth and more transactions than last year in many metro areas across the country.”

          * The San Francisco metropolitan area includes San Francisco, Marin, San Mateo, Alameda, and Contra Costa counties. The San Jose metro area includes Santa Clara and San Benito counties. 

          (Image: Flickr/Scott Maxwell)

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