Real Estate Prices in the San Lorenzo Valley – October 2012

San Lorenzo Valley Home Sales through Oct 31, 2012

As tendrils of wood smoke curl lazily above homes in San Lorenzo Valley this chilly November morning, the day after the election, it’s time for me to share my reflections on our real estate market.   Rising home prices in the Silicon Valley continue to boost our local housing recovery.  Recently I helped some first time buyers secure a home in Felton, after being beaten out over and over by 20-30 offers on homes “over the hill” as we say.

Santa Cruz Mountains

We are just loving the beautiful weather here this fall: chilly in the morning, warm and sunny in the afternoons, with the promise of rains right around the corner.   We are so close to wonderful beach towns like Santa Cruz and Capitola, and within commute range to Silicon Valley jobs.   These factors combine with still relatively affordable prices to support continuing stability with hints of growth in the San LorenzoValley housing market.

A new home listing, positioned properly in the under $300,000 segment, is likely to get multiple offers, often over asking price.    There still aren’t enough homes on the market to match buyer demand.

Chart showing low inventory of homes in the San Lorenzo Valley

Days on the market (before sale) – another measure of demand –  are shorter: anything below 6 months inventory is considered a sellers’ market.

One of our biggest challenges as the market recovers is appraisals.    I think the lending risk pendulum has swung too conservative, too late.    Government intervention into the appraisal process inserted a middleman into the system, increasing the cost for borrowers and taking money from the appraisers.   Consequently, many experienced appraisers left the business; those that are left are working harder for less money.    Some are not spending the necessary time to research for suitable comparable properties, resulting in appraisals not coming in at the market value negotiated between multiple buyers’ offers and the seller.

Mortgage rates for a 30 year fixed loan continue to average well below 4%, allowing people to secure their future housing costs.   First time buyers are a big portion of the market, as rental costs continue to increase.   Investor buyers are a big factor as well, often defeating first time buyers in competition, because they are putting down a lot of cash – often buying homes without any loan at all.   Understanding the difficulties in lending, many sellers will choose a cash buyer over one needing a loan if they have multiple offers.

2012 –year to date

241 homes have sold in the San Lorenzo Valley – from Boulder Creek to the town of Felton – so far this year (according to the Multiple Listing Service, areas 34-37).    The volume of sales is up about 15% this year compared to last, and the average sales price is up about 4% to $341,868.

Single Family Home Prices in the San Lorenzo Valley – 2012

35 homes sold in October, and the average home price for the month of October rose to $386,269.    (June’s average was $371,714).   The average sales price for the month of October rose nearly $100,000 from October of last year at $288,982.   It’s critical to understand this increase in average prices is due to a much higher proportion of sales occurring in the upper price ranges in this last month….It’s not as if all homes have increased that dramatically in value!

So far this year, 38 homes sold for over $500,000, compared to last year when only 26 homes had sold for over $500,000.

At the high end of the spectrum, two homes this year sold for $875,000 – one in a good Boulder Creek neighborhood and one in Felton – both were on acreage.

Are we out of the woods yet?  No.   Right now I’m working on escrows for 3 short sellers, a buyer of a foreclosure, and one traditional sale on acreage.   In the first ten months of 2012, of the 241 San LorenzoValley closed escrows,  56  were short sales, and 63 foreclosures (REOs).     The percentage of distressed property sales was 49.3% (compared to 50% in June).

At the bottom end of the spectrum, 6 homes sold this year for less than $100,000 – all had serious deficiencies and would not qualify for a loan.

2011 –year to date  (January 1st through October 31st)

By October of last year, 209 homes had sold in the San Lorenzo Valley.     The average home price was $328,790 for the first ten months, and 129 of the homes sold were distressed sales, or 62%.   26 homes sold for over $500,000, while  9 homes sold for less than $100,000 by this time last year; again none were habitable and had to be sold for all cash, since no lender would touch them. 

To find out more about San Lorenzo Valley homes, click here


CNN Money reports – Buying a Home may Never get any Cheaper

Buying a home won’t get much cheaper

By Les Christie @CNNMoney May 3, 2012: 11:48 AM EST

Several housing experts are predicting that this year will be the last chance for homebuyers to cash in on the weak housing market.

NEW YORK (CNNMoney) — Buying a home may never get any cheaper than this. Several housing experts are predicting that this year will be the last chance for bargain hunters to cash in on the best deals of the weak housing market.

With home prices down 34% nationally since 2006 and mortgage rates at historic lows, homes have never been more affordable — but it won’t stay this way for much longer.

Stuart Hoffman, chief economist for PNC Financial Services (PNC,Fortune 500), said he expects home prices to flatten out by the third quarter and start climbing by next year.

A number of factors will help bolster the housing market, he said, including a decline in the number of foreclosures and continued job growth. In addition, homebuyers will have better access to mortgages as they get their finances in order and improve their credit scores.

Some economists, like Trulia’s Jed Kolko, expect home prices to pick up even more quickly. Trulia’s data shows that the national average for asking prices already increased 1.4% in the first quarter of 2012, compared with the last three months of 2011.

“This is a strong indicator that we will start seeing home price indexes, like the S&P/Case-Shiller, start to report home price increases this summer,” he said.

Prospective homebuyers who’ve been sitting on the fence shouldn’t worry if they aren’t quite ready to make the leap. Analysts are predicting that the initial price gains will be modest, at least, in most markets.

Hoffman, for example, is forecasting a 2% increase in 2013 compared with 2012. Meanwhile David Stiff, chief economist for Fiserv, predicts that prices will turn in the last quarter of 2012 and will rise 4.2% for the 12 months through September 2013.

Foreclosures start to fade. One major factor that will drive the trend is the cooling of the foreclosure crisis. Stan Humphries, chief economist for Zillow, said that the percentage of mortgage loans 90 days or more late, a good predictor of future foreclosures, is “falling fast.”

That percentage dropped 15% year-over-year to 3.1% through the end of 2011, according to the Mortgage Bankers Association. And the decline is accelerating: More than 70% of the decline came in the last three months of the year.

Before things slow down, however, buyers should brace themselves for a temporary spike in the number of foreclosures as banks start expediting the processing of hundreds of thousands foreclosures that were stuck in the system following the robo-signing scandal. That backlog should move more quickly now that new guidelines for processing foreclosures have been outlined in the $26 billion foreclosure settlement.

Many of the bank-owned properties currently coming out of the foreclosure pipeline are being snapped up by investors who are fixing them up and renting them out — often to those who were displaced by the foreclosure of their own home. That has helped to lift prices on foreclosed properties, according to Alex Villacorte, the director of analytics for Clear Capital, which specializes in housing market valuations.

“That could have a significant impact on the market overall in terms of providing a rising floor to home values,” he said.

In some markets hit hard by foreclosures, the turnaround in prices is already underway. Phoenix recorded an 8.4% jump in home prices during the three months ended April 30, compared with the three months ended January 31, according to Clear Capital.

“It’s crazy,” said Tanya Marchiol, founder of Team Investments, a Phoenix real estate investing firm. “Stuff I was selling six months ago for $60,000 to $80,000 is now $90,000 to $110,000.”

Miami saw a 4.6% increase quarter-over-quarter through April, andTampa, Fla., was up 4.4%, according to Clear Capital.

Goodbye 3.8% mortgage. In addition to home prices, mortgages could also move higher.

Mortgage rates have been at or near historic lows for much of the past six months. The average interest rate for a 30-year, fixed-rate mortgage has not topped 4.5% since July 2011 and this week, it hit 3.84%, a new low.

But rates aren’t expected to remain at these record-low levels much longer. As the economy continues to recover, rates will move higher, said Doug Lebda, CEO of LendingTree, the online lending site. Although, he said, they will “stay very reasonable.”

The Mortgage Bankers Association is forecasting that the 30-year fixed will hit 4.5% by the end of the year.

Greater demand for loans will help fuel the increase, according to Lebda.

Even though mortgage rates have been cheap, borrowing for home purchases has been sluggish. The Mortgage Bankers Association estimates that homebuyers will take out mortgage loans totaling about $415 billion this year, an increase of less than 3% compared with 2011. Next year, however, it forecasts that amount will almost double to $706 billion.

As housing markets stabilize and prices stop falling, homebuyers will be even more confident about buying, said Humphries.

“People can now see the light at the end of the tunnel,” he said. “And that can be enough to get them off the fence.” To top of page


Bright signs in the economy

Unemployment falls to 2008 level

As more people find jobs, consumer confidence will increase.    Employment, in my opinion, is one of the key factors that can lend strength to the housing market, so I’ve been watching this closely.   While I don’t see any point in talking about weekly numbers announced, the four week moving average looks good when the new claims for unemployment insurance fall to the lowest level seen since April 2008.

The US has created more than 200,000 new jobs for the last 2 months in a row – and our unemployment rate in January fell to a 3 year low of 8.3%.

During the last quarter of 2011, the economy grew overall at a 2.8% pace, which is respectable.    We’re not out of the woods – there are still a staggering 23 million people without work.   Read more at Reuters:

Meanwhile, the stock market is up about 7% so far this year.    Since about 20% of home buyers in this market are investors; this is indirectly another good sign for housing.

Amazingly, the weekly average 30 year mortgage interest rate last week was below 3.75%!

Finally, 2/3 of Californians have an optimistic outlook – believing their own financial situation will improve during 2012.    Since  our state is equivalent to the 8th largest country in the world, this is significant.     The San Francisco Bay Area and Silicon Valley Areas are the most optimistic about the future (versus southern Californians where economic conditions are worse.)

Traditionally, the Santa Cruz real estate market follows the Silicon Valley.Image


It’s a great time to refinance! 30 Year Mortgage Rates below 4%

For the 6th consecutive week, average rates for the 30 year mortgage were at all time historical lows of below 4%, according to an article published on RIS Media based on Freddie Mac Research

So it’s worth repeating a segment of a blog I published last year, under the headline of

New laws affecting CA homeowners…

…because enough time has passed so the regulators and the bankers have gotten their game plan together to help underwater homeowners refinance their homes.

I’ve discovered many people aren’t aware that, if their home mortgage was a Fannie Mae or Freddie Mac, they may be able to refinance into today’s ultra low interest rates, even if their home is underwater!

HARP – the federal government’s “Home Affordable Refinance Plan” – was criticized for not helping enough people, so they’ve improved it.     There are some conditions—for example, you have to be current on your mortgage payments, and the mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009.       Check the links below to see if your loan is eligible:

or call 800-7FANNIE (8 am to 8 pm ET)

or call 800-FREDDIE (8 am to 8 pm ET)

Or, you can always contact me for help.

Are you aware that the state of Californiahas funds for homeowners at risk of losing their homes?    The federal government gave the state $2 Billion for the “Keep your Home California” program to help people make their payments, but only $150 million has been granted.   Here’s an article about it, and the phone number: 888-954-KEEP (5337).

Finally, from the Ca Association of Realtors, come these “Fast Facts:” – Check out the Pending Home Sales!

Fast Facts
Calif. median home price: December 2011: $285,920 (Source: C.A.R.)
Calif. highest median home price by region/county December  2011: Marin: $693,880 (Source: C.A.R.)
Calif. lowest median home price by region/county December 2011: Madera: $106,000 (Source: C.A.R.)

Calif. Pending Home Sales IndexNovember 2011: 109.8, an increase of 11 percent compared with the prior year.

Calif. Traditional Housing Affordability Index: Third quarter 2011: 52 percent (Source: C.A.R.)

Mortgage rates: Week ending 1/12/2012 30-yr. fixed: 3.89% fees/points: 0.7% 15-yr. fixed: 3.16 fees/points: 0.8% 1-yr. adjustable: 2.76% Fees/points: 0.6% (Source: Freddie Mac)

Building A Bridge to Your Future

M.C. Dwyer, MBA, REALTOR, Century 21 Showcase REALTORS

(831) 419-9759 copyright 2012