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Category Archive: ‘Market Buzz’

San Diego in June

Rich does a great job every month documenting our local market trends:

http://piggington.com/june_2014_housing_data_rodeo

Here is one of his 16 graphs for June, showing how the San Diego active inventory is 55% above last year’s pace:

jun_2014_housing_data-10

He also noted that pricing increased but sales dropped, which is natural when every seller is asking more, but fewer get/deserve it.

Another interesting point is how the active inventory didn’t drop off the second half of last year, when normally it does. Will more sellers hang around longer this year hoping for the lucky sale?  Probably.

It will look and feel like a stagnant or waning market, unless sellers and their agents reduce expectations.  You may not be far off!  Just keep lowering the price until showings and offers start happening!

See all of Rich’s great analysis here:

http://piggington.com/june_2014_housing_data_rodeo

Posted by on Jul 17, 2014 in Market Buzz, Market Conditions | 12 comments

Student Loans vs. Homeownership

A more-detailed investigation into comparing student debt and homeownership among young people.  If you don’t have a lot of extra debt, the student-loan payment – which would be like having an extra car payment – wouldn’t prevent you from qualifying.

http://www.nytimes.com/2014/07/06/realestate/college-debt-and-home-buying.html?_r=0

An excerpt:

But Beth Akers, a fellow at the Brookings Institution’s Brown Center on Education Policy, says these findings do not prove a causal relationship. In fact, they could be misleading.

She said she has looked at young-adult homeownership rates over a longer period, and found that the reversal cited by the Fed is “a return to a longstanding trend that existed prior to 2004.” For most of the last 20 years, homeownership rates among young households with student loan debt have been lower, not higher, than rates among households with no debt, she said.

Her research, co-authored with Matthew M. Chingos, a senior fellow at the Brown Center, also disputes the notion that the payment burden is higher on today’s young adults. While the level of education debt has risen over all among young households (ages 20 to 40), the monthly burden of student loan repayment has not increased greatly over the last two decades. From 1988 to 2010, the typical household spent 3 to 4 percent of its monthly income on student loan payments. The monthly burden has remained fairly flat because of offsetting increases in income and longer repayment terms.

Extremely high burdens are still rare. In 2010, about 75 percent of households with people ages 20 to 40 who have education debt owed $20,000 or less, Ms. Akers said. Only 2 percent were carrying more than $100,000.

Perhaps the declining number of young homeowners has more to do with the weak economy and tight lending conditions. Mr. Dyer predicts that mortgage lenders will gradually ease credit standards over the next five years to open up the “buy box” to more young adults.

But what and when they will buy will likely be different from the choices of generations past. “This generation has what some would label a fear of debt,” he said. “They try to be very conscious and pragmatic about what they buy and how much they agree to borrow.”

studentdebt

Posted by on Jul 5, 2014 in Market Buzz, Market Conditions | 6 comments

Zillow Is Everywhere

zillow

Last week I thought that Zillow will probably have preferred agents by the end of the year. Yesterday they rolled out a partnership with Douglas Elliman, which could be a prototype of things to come:

http://www.bloomberg.com/video/u-s-home-sales-growth-is-sustainable-herman-says-HWfqFzrkTOCihNmt9NFIwQ.html

http://zillow.mediaroom.com/2014-06-24-Zillow-and-Douglas-Elliman-Real-Estate-Company-Launch-Strategic-Marketing-Partnership

P.S. Realtors are done fighting it, and instead are jumping on the Zillow train. With direct uploads from realtors to Zillow, who needs the MLS?

P.S.S. Did she say ‘substaining’?

Posted by on Jun 25, 2014 in Jim's Take on the Market, Market Buzz, Market Conditions | 0 comments

Chinese and CA Real Estate

An article discussing the Chinese demand in San Francisco, which has also been seen in other desirable areas of California:

http://sanfrancisco.cbslocal.com/2014/06/01/real-estate-expert-says-china-cash-driving-up-san-francisco-housing/

MATIER: What is driving the capital here … what’s [causing] people from China to invest this kind of money in San Francisco?

McLAUGHLIN: I think we’re seeing three different phenomena. One is asset diversification, people trying to move money out of China. Two would be education for their families. And three would be lifestyle, this is a beautiful place to live.

MATIER: Are they actually living here or are they just buying houses here the way we might be puttting money in a safety deposit box — it would be safe here, it’s free from any government moves in China and the value would be appreciating?

McLAUGHLIN: It’s difficult to generalize on that but I’d say that probably fifty percent of them are living here. Whether they’re living here to get their education or whether they’re living here for a change in lifestyle.

MATIER: And they’re able to amass this much cash in China, get it to Hong Kong and get it to San Francisco before [other] people can get their loan papers in?

McLAUGHLIN: Well, yeah. A lot of all-cash. We’ve seen tremendous wealth created in China in the last 20 years through the diversification of their government into private industry. At Pacific Union we’re seeing an awful lot of that capital generated put into [the] purchase [of] homes here in the San Francisco Bay Area.

MATIER: And how has it affected the market?

McLAUGHLIN: Well, in certain areas like Silicon Valley — Palo Alto, Menlo Park and the city of San Francisco — it’s added a demographic of buyers who, generally, take a long-term view. They’re not sellers in the next five to seven years. So it is going to drive housing prices up.

http://sanfrancisco.cbslocal.com/2014/06/01/real-estate-expert-says-china-cash-driving-up-san-francisco-housing/

chinese buyers

NAR’s ranking of the cities that international buyers are considering:

from realtor.org

http://www.realtor.org/articles/where-are-global-buyers-searching-in-the-united-states

Posted by on Jun 2, 2014 in Market Buzz, Market Conditions | 3 comments

Move-Up Tips

not for sale

Hat tip to Susie for sending this in from CNNMoney:

http://money.cnn.com/2014/05/20/real_estate/home-sales-fear/index.html?iid=s_mpm

An excerpt:

Tim Trampedach, a 36-year-old business owner who lives in San Francisco, has seen his home’s value soar from $1.2 million to $1.6 million in the past three years. He and his wife want to move into a bigger place, but there are simply no homes within their price range in their Portrero Hill neighborhood.

“My wife and I are effectively locked into the house,” he said. “We can’t sell because we can’t afford anything else nearby.”

They would probably struggle to buy their existing home at its current value of $1.6 million, let alone buy a more-expensive home that would make it worth it to move.  If you just bought at $1.2M, jumping up to $2,000,000 or more is a big stretch.

But if you can make the jump financially, then how do you pull it off?

Here are more excerpts from the article:

In fact, demand is so high that real estate agents are actively seeking people who are willing to sell. “You get letters in the mail asking if you’re interested in selling,” said Jackson. “People knock on your doors.”

In mid-April she got an enticing, unsolicited offer on the house, which Zillow estimates to be worth $420,000.

“My husband and I talked it over,” she said. “We hemmed and hawed. It was too good to be true, but we worried: Would we find a house we wanted?”

The buyer agreed to give the couple until October to find a new place, so they took the offer.

One way sellers can protect themselves is to make the sale of their home contingent upon their ability to find another one to move into.

Patrick Matson and his fiance, Margarita Munoz, insisted on such a clause when they put their Anaheim, Calif. home up for sale. Up until last Friday they had an offer on their home, but their own search did not go well.

The couple had made offers on two homes in La Mirada, where they liked the school district for their four-year-old son. But both offers were rejected.

The homes they looked at were between $430,000 and $480,000, but were no bigger or better than their current place, which they listed for $415,000.

Discouraged, the couple decided to reject the offer and take their home off the market.

“It was not an easy decision to make, provided that we knew the folks who had an offer in on our home were going to be disappointed and it wasn’t what we wanted either,” said Matson.

The couple plans to make some upgrades to their current place and will try again in a year or two, he said. “Hopefully the market won’t be so competitive by then.”

You have to be able to buy high enough to make it worth it – my rule of thumb is 50% higher than the old house - AND be able to convince the seller that you aren’t submitting an offer contingent upon finding a buyer for your old house.  Having your buyers do their inspection and appraisal and then release their contingencies would go a long way to making your offer look non-contingent.

You may have to help your buyer with some costs to get to that stage, but to pull it off the move-up, you have to make bold and decisive moves, work with a great agent, and hope for some luck!

Posted by on May 20, 2014 in Jim's Take on the Market, Market Buzz, Market Conditions, Tips, Advice & Links, Why You Should List With Jim | 2 comments

Off-Market-Listing Clubs

From the San Jose Mercury News:

http://www.mercurynews.com/my-town/ci_25718492/off-mls-listings-debated-at-silicon-valley-realtors

An excerpt:

off-marketAccording to MLS Listings, off-MLS activity in the counties of San Mateo, Santa Clara, Santa Cruz, San Benito and Monterey, the five-county area the MLS serves, represented 21 percent of total home sales in 2013, up from 15 percent in 2012, and 12 percent in 2011. By sales volume, this accounted for $4.8 billion of the 2013 market share in the five-county area.

Harrison noted MLS Listings Inc. is, in fact, “the largest private listings club in Northern California,” with more than 16,000 subscribers/members who are qualified licensed brokers/agents and abide by rules of the National Association of Realtors and the California Association of Realtors. The MLS has agreements with other California MLSes to share property and listing information representing about 21 counties and more than 65,000 subscribers, so agents’ listings get the best exposure.

Read More

Posted by on May 8, 2014 in Ethics, Listing Agent Practices, Market Buzz | 0 comments

Glass Half Full

Let’s stay on this topic because a break-through may be close.

scumbagThe media’s guesses about the real estate market keep coming, and most are just the same regurgitation of negativity – unaffordability, winter weather, tight credit, underwaters, and fewer investors.

Diana Olick did mention in the video that we should compare to the market in 2000, when we had the same credit standards as today.  She claimed that today’s payments are 50% to 60% higher today, than in 2000.  In San Diego they are about 33% higher, which is just under the rate of inflation.

But at the end of the video, Diana says that she refinanced her own home onto a 15-year mortgage and hopes to pay it off in 10 years!

People across the country are doing what she did – hunkering down and staying put.  It is the cause for low inventory (getting worse around here), and the sellers’ hyper-optimism, which leads to over-priced listings.

Between the fewer listings overall, and those that do hit the market being at the top of their range or higher price-wise, there is no wonder that sales are slower – especially when they insist on comparing to last year’s super-frenzy.

If Diana would just look at her own state of affairs and apply the same reasoning to other Americans, maybe it will open other possibilities for her.

Here are links to the media’s latest guesses:

http://www.nytimes.com/2014/05/02/upshot/theories-on-why-housing-is-still-stalled.html?partner=rss&emc=rss&_r=0

http://www.cnbc.com/id/101633197

Residential sales in San Diego County between Jan. 1st and Apr 15th are down 12% compared to 2013, and that’s with average pricing up 18%, and mortgage rates up 24%.  We should be celebrating how well the market has endured those changes!

Posted by on May 2, 2014 in Jim's Take on the Market, Market Buzz, Market Conditions | 10 comments

San Diego is #1

Of the top 25 metro areas in America, San Diego is the least affordable, according to this report from Zach Fox at SNL (and formerly of the North County Times):

http://www.snl.com/InteractiveX/Article.aspx?cdid=A-27562902-13864

An excerpt:

sandiego1Housing prices have enjoyed substantial, double-digit growth over the past year, leading to affordability issues in some major metro markets that could cap prospects for future growth.

From a renter’s perspective, San Diego might be even less affordable than San Francisco, which famously boasts the nation’s most expensive real estate.

Prices in San Diego shot up 19.4% year over year in January, according to the latest data available from the S&P/Case-Shiller home price indexes. With prices so high, real estate agents said first-time homebuyers need to adjust their expectations.

Young renters can only make the leap to homeownership in San Diego with help from a government down-payment assistance program or their families, said Leslie Kilpatrick, president of the Greater San Diego Association of Realtors.

“I think we’re seeing more and more of that,” Kilpatrick told SNL. “This generation of parents is realizing the difficulties their children are facing in buying a home.”

A recent study by HSH, a provider of mortgage interest rate data, details how much income a household needs to afford the typical home in a given market. HSH calculated the minimum income needed to purchase a median-priced home in a given market. The study assumed a 28% front-end debt-to-income ratio and a 20% down payment and only covered principal and interest.

The results of this study raise an interesting question: How many renters in each market could afford to buy the typical home?

While it may not be possible to come up with a definitive answer, SNL explored the question using the HSH study, recently released U.S. Census Bureau data detailing renter incomes and corresponding Census data on housing units.

By one measure, San Diego had the lowest ratio of income-eligible renters — meaning they earned enough to buy a median-priced home — to housing units among 25 major metropolitan areas.

In San Diego, real estate agents think the market might be stabilizing, but prices are so high that first-time buyers are struggling to find entry. But that does not necessarily mean the market is in a bubble again.

Rich Toscano, a financial adviser with Pacific Capital Associates in San Diego, launched a blog in 2004 presciently predicting a housing crash based on overvaluation. He maintains a graph that compares home prices to a blended value of rent and per capita income. The index is now at the peaks seen in 1979 and 1990, but it is still well-below the most recent bubble.

“People say to me, ‘Are you worried about it?’ And I think, ‘It’s expensive, but it’s always been that way,’” Toscano told SNL. At the same time, he does not think there is much more room for prices to sustainably rise.

“I wouldn’t say there couldn’t be more upside, but what I would say is that whatever upside there is, I would expect to be given back eventually, at least in relative terms,” he said.

Real estate agents in the San Diego metro area seem to agree with Toscano that prices are starting to stabilize and that the days of double-digit annual growth have likely passed. Still, for buyers interested in the lower end of the market where homes are more affordable, bidding wars remain fairly common.

“Most people miss a few before they understand that when they see something they like, they have to act boldly and put in a strong offer,” said Kilpatrick, president of the local association.

Jim Klinge, a real estate broker in the metro area, similarly told SNL via email that the most recent low-end buyers he represented lost several bidding wars before nabbing a home. On Klinge’s blog, which gained national fame during the housing crisis for its candor and brash style, the agent reports hyper-local statistics on supply and demand. For now, the fundamentals suggest San Diego’s housing market is strong.

“What really matters is wondering if/when we will run out of rich people,” Klinge wrote.

Posted by on Apr 18, 2014 in About the author, Jim's Take on the Market, Market Buzz, Market Conditions | 10 comments