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Category Archive: ‘Market Conditions’

Homebuyer Tips 2014

808 Minnesota St UNIT 354, San Francisco, CA 94107

The son of a past client scored a good job in San Francisco a few years back, and is looking at 1-bedroom condos going for $700,000 – $800,000.

They wondered if I had any tips.

Good golly, at that rate I better come up with something!


1.  Get a good realtor.  These high-dollar areas pay big commissions and thus, attract plenty of real estate licensees.  But you need a great agent who knows more than you do, and brings extra value to the equation.  Ask how many times they’ve talked someone out of buying a home recently.

Not only will a great agent make you feel comfortable about the price/value equation, but their market cred will help too – because good agents want to work with good agents.  It happens regularly that my personal relationship with the other agent makes a difference in the outcome.

How do you find a good agent? The best luck I’ve had is searching for agents at Zillow, but you have to read through sales histories and testimonials (in that order) of each agent to find the right fit.  Also check their recent sales history to see if they have been selling similar homes and/or working your area.

I don’t care what company an agent works for, because real estate is an individual sport.  I’m not impressed by the big realtor teams either – I want individual attention.  I reviewed the first two pages on Zillow for San Francisco agents, and found this one:

An agent’s recent sales is the best measure, and not only is she selling 3-4 per month but she also lists her annual production too – and she was consistent during the downturn.  She has been a realtor for 20 years, and has over 300 closings submitted to Zillow.

She has three listings, which, in this market, is about right – if you are good, they should be selling, not sitting.  Plus she has a 1-bedroom listing for $735,000!  I don’t know if she  passes you off to an assistant, but if not, she’s a qualified possibility.

The agents input their own listings and sales history, and Zillow provides a form for them to email to past clients to solicit their testimonials.  But all of her client ratings were the full five stars, which is exceptional.

2.  Buy For the Long-Term.  You may get stuck with this one for a while, so make sure you get what you want and need.  Keep exploring other areas for alternatives you haven’t thought of yet.

3.  Know the Inventory.  You may only have minutes to make decisions, be prepared.  Get auto-notifications of new listings to stay up on the market, and go to open houses – not just to find a home to buy, but also to study the market patterns.  You may not buy this one, but when you see it go pending, know why somebody else found it attractive.  If nothing else, at least be an online expert that follows the data closely – and don’t be surprised if you keep seeing crazy sales; they are almost always attributed to buyer frustration and lousy representation.

4.  Get Pre-Qualified.  Once you select a realtor, get pre-qualified for a mortgage using their recommended lender - they might bring some street cred too.  You either use a 20% down payment or you don’t, and either is fine.  If you don’t want to use a 20% down payment, you can do an 80/10/10 (1st and 2nd loans) that will at least lock you in to a low-rate 1st mortgage for the duration.  If you end up with less than 20% down and only want a first mortgage, you need PMI – private mortgage insurance. But if you get lucky, you can have the seller pay the entire premium up front (around 3%), so it won’t cost you anything monthly.

5.  Know the Contract. With Docusign, the electronic-signature process, signing a contract goes a little too fast.  Instead of reading the contract together with your agent in the corner booth at the local coffee shop, today you just rapid-click on your phone or PC to imprint your initials and signatures and whoosh, off it goes.  Know what you are signing!  The two most important paragraphs are 3K and 14.

6.  Time is of the Essence.  It is likely that most buyers will lose at least one property because they don’t react fast enough.  I just had a case where I called the listing agent of a house that my clients had just decided to buy.  The listing agent told me that she had been working back-and-forth with a buyer and other agent, and had just received a counter-offer that was acceptable to her sellers – and she was about to send it to them for final signature!

In these moments, your agent has to say the right thing.  In this case, not only did I stop the agent from signing a cash offer, I got her to accept my financed buyers’ offer instead!

This is a fast-moving environment and each day the best deals get picked up – if you like a home, chances are somebody else does too.

7.  Consider Fixers.  Be picky about location and floor plan, because you can’t change those.  But most buyers shy away from homes that need work, which can open up opportunities.  Get comfortable with the costs of fixing in advance, and know what you are looking at.  You can get a full evaluation and cost estimate during your contingency period.

8.  Make Offers.  Once your first salvo goes over the bow, the comfort level improves greatly.  Include a love letter that tugs at the sellers’ heartstrings.

9.  What to Offer.  The price to offer is directly related to the time on market.  If it is the first week of the listing and you recognize it to be a good value, you will probably have to pay all the money. But I hate to offer full price, because in the first week the sellers want to dicker, and full price doesn’t give them anywhere to go.  If you know there aren’t any other offers, then come in $20,000, $30,000 or $40,000 under the list price so the math is easy for the seller to split the difference.  If you hear subsequently that there are other offers, re-submit your offer with a higher price so you don’t get forgotten.

10.  Use as a Resource - You may not get any local-SF specific data but general information is available by using the Search feature at the top of the front page here.  For example, I typed in ‘Bidding Wars’ and got this link to a wide-ranging set of blog posts about winning a bidding war:

You and your agent need to be bidding-war experts.  The low-end is what’s moving the fastest, and though $700,000-$800,000 sounds insane for one-bedroom condos, it is what it is.

Plan on devoting time and energy to this project.  The more invested, the better the results!

Posted by on Aug 3, 2014 in Jim's Buyer Representation, Jim's Take on the Market, Market Conditions, Tips, Advice & Links, Why You Should Hire Jim as your Buyer's Agent | 2 comments

Jumbo Rates Still Better

Last June we had the big panic due to the Fed suggesting they were thinking about possibly raising rates.  Within a month, the conforming-mortgage rates jumped from the mid-3%s to the mid-4%s.

We noted here on how the 30-year-fixed jumbo rates dropped below conforming rates, which I don’t think has ever happened before.

From June 30, 2013:

June 30 2013

A year later and the Fed says they are going to end the quantitive easing in October, and start raising rates in 2015. From the

Those projections, which Ms. Yellen noted as an indication of their recent intentions, show officials expect to raise their benchmark rate to 1% by the end of next year. Many officials have affirmed investors’ belief that the Fed won’t start rate increases until about the middle of 2015.

What happened to mortgage rates this time?

Not only was there NO panic, but rates are actually LOWER today then they were last summer – and jumbo still below conforming:

July 18 2014

While the real estate market feels like it is heading for an off-season malaise, there is going to be some real opportunity for buyers who stay in the game.

The motivated sellers who held out with a too-high price hoping to snag a springtime buyer are starting to realize that summer is going to be over before you know it.  August is only 2 weeks away!

If they can live with less – and some of them can – buyers could reap a double benefit of lower home price AND a 30-year-fixed jumbo rate at all-time lows.

Pay a point, and borrow $1,000,000 with a jumbo fixed rate in the high-3%s!

Work with Jim the Realtor:

Posted by on Jul 19, 2014 in Interest Rates/Loan Limits, Jim's Take on the Market, Market Conditions | 0 comments

Pent-Up Normal

A good description of the new normal, without asking too many questions, like: Why did foreclosures dry up?  Shouldn’t we accept 640 credit scores as a minimum standard?   Wouldn’t there be more sales if sellers were more reasonable on price?

While he has written about some of the elements in the past, Mark Fleming neatly summed up the current state of housing’s supply and demand constraints in the latest edition of CoreLogic’s Market Pulse. That issue, the company’s chief economist said, is one of the factors underlying the current faltering housing recovery and contributing to what he calls the new housing normal.

First there is a pent-up supply of housing – that is homes that might be but aren’t available for sale. The shadow inventory, homes in the process of foreclosure (some definitions include homes with the potential of foreclosure) has worried economists since the start of the foreclosure crisis. While the fear has been that these homes, once they become bank owned, might overwhelm the market they have instead come on the market at a fairly measured pace as foreclosure time-lines stretched into years and have provided a source of low-cost homes for both first-time buyers and investors. The inventory is now becoming concentrated in a few judicial foreclosure states and REO (bank-owned homes) are available for sale.

Read More

Posted by on Jul 18, 2014 in Market Conditions | 0 comments

San Diego in June

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

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


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:

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

Foreign Buyers

Wealthy Chinese home buyers boost suburban L.A. housing markets

For those wondering about the factors that have kept the market rolling, consider this article from the – hat tip to daytrip:

Real estate sales to foreign buyers and new immigrants surged to new highs in the last year, according to a study released Tuesday by the National Assn. of Realtors, with the Southland being a prime destination.

Overseas buyers and newcomers to the U.S. accounted for $92 billion in home sales in the 12 months ending in March, NAR said. That’s up 35% from the prior 12-month period, and higher than the previous record of $82.5 billion set in 2012. These buyers made up roughly 7% of all U.S. home sales, by dollar value.

The increase was fueled by a 50% jump in activity from Chinese buyers, who bought $22 billion worth of U.S. real estate last year. Experts say many Chinese buyers see U.S. real estate as a better investment opportunity than is often available in China, and in some cases as a safe haven for cash. Many also buy homes here to put their children in U.S. schools.

And Chinese buyers, in particular, have an eye for Southern California. Los Angeles and Irvine were two of their top three destinations, according to the survey, with San Francisco ranking second. Chinese buyers have long been a factor in some parts of Southern California, particularly the San Gabriel Valley; as more come here, they’re spreading to new areas as well.

Los Angeles is the top choice for buyers of several other nationalities, too, according to data tracking searches of Buyers from India, the United Kingdom, Australia, Ireland and Russia were also most likely to search here. For Mexican buyers, San Diego was the top choice.

The Realtors Assn. said it expects foreign interest in U.S. real estate will continue to grow as the economy grows ever more global.

“We live in an international marketplace, so while all real estate is local, that does not mean that all property buyers are,” said NAR president Steve Brown. “Foreign buyers are being enticed to U.S. real estate because of what they recognize as attractive prices, economic stability and an incredible opportunity for investment in their future.”

Posted by on Jul 9, 2014 in Market Conditions | 10 comments

Inventory Watch – Rising

We hear murmurs of higher or rising inventory, but rarely do you hear any rational explanations, let alone solutions. There have been 3% fewer NSDCC houses listed in the first half of this year, than in 2013 (2,697 vs. 2,790).

But the inventory of active listings is rising, which means one thing.  In spite of the avg. LP/sf being steady, more houses are not selling, than selling.

Sellers should sharpen their pencil if they want to sell in 2014.


North SD County’s Coastal Region (La Jolla-to-Carlsbad)

The UNDER-$800,000 Market:

NSDCC Active Listings
Avg. LP/sf
Avg SF
November 25
December 2
December 9
December 16
December 23
December 30
January 6
January 13
January 20
January 27
February 3
February 10
February 17
February 24
March 3
March 10
March 17
March 24
March 31
April 7
April 14
April 21
April 28
May 5
May 12
May 19
May 26
Jun 2
Jun 9
Jun 16
Jun 23
Jun 30
Jul 7

Read More

Posted by on Jul 7, 2014 in Inventory, Jim's Take on the Market, Market Conditions | 1 comment

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.

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.”


Posted by on Jul 5, 2014 in Market Buzz, Market Conditions | 7 comments

Sell Signs?

2014-06-27 14.38.15-2

A flipper checked in yesterday:

I’m getting really bearish. Nothing makes sense. There’s going to be some flippers without chairs when the music stops. Hopefully we have another 2-3 years in this run. Putting fixers in the MLS has really been eye opening. So many big groups writing offers just to tie them up, impossible for the small guy to pick one off. It used to be that the hard part was the rehab, now the hard part is finding the deal and the rehab seems to be the no brainer, and construction guys are getting cheaper. Hard money getting cheaper too, just paid 1.5 points and 7.99% to buy a house I’m closing on next week.

The market has been logic-free for a while now, and it will come to a halt one day without notice.  Keep an eye on the sales count – it will be the first sign of trouble.

But the June count for detached-homes sold in San Diego County still looks in-line with a healthy-ish market:

SD County Detached-Home Sales, June

2011: 2,061

2012: 2,367

2013: 2,328

2014: 1,980 (-15%)

The late-reporters will add enough to get close to last year’s count.  The final tally will probably be within 7% to 9% of the 2013 count, which is pretty good considering how hot it was last year.

But if you are thinking of selling, there isn’t enough extra upside potential to wait any longer.

Posted by on Jul 3, 2014 in Jim's Take on the Market, Market Conditions, Thinking of Selling? | 2 comments


The millennials who have student-loan debt and low-paying jobs will have to stay home longer – and may never buy.  But there’s still plenty of demand – these guys spend so much time worrying about what might happen that they lose sight of what is happening.

If student loans end up being an issue, home sellers will have to adjust. There’s nothing price won’t fix!

Posted by on Jun 27, 2014 in Market Conditions | 3 comments