Brandon Knapp's Market Update 5/18/10

Last Week in Review: Events in Europe continue to dominate the economic headlines. Find out what it means for our economy and home loan rates.

Forecast for the Week: A double dose of inflation data is on the way, and more news from the Eurozone is sure to be in store...plus updates on housing, manufacturing and jobless claims.

View: Learn what great project could help you increase the value of your home...and will bring you enjoyment, too!

http://www.mmgweekly.com/w/index.html?SID=89e3b2c88ef35d68afff6abeb34bec4c

A Good Time to Buy? Yes, But No Need to Rush

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• MARCH 27, 2010, 12:47 AM ET

Wall Street Journal

By Nick Timiraos

Today’s look at the high-end housing market reveals how more sellers are beginning to get more realistic about home prices and cut deals on million-dollar homes.

Many housing economists say that for borrowers who can get a mortgage and who have stable incomes, pulling the trigger on a house they like makes a lot of sense right now. (Of course, they also note that the days of buying high-end properties as high-yield investments are history, at least for the time being).

But while there are certainly opportunities at the high end, buyers shouldn’t feel a need to rush because the market is still oversupplied. And those who do make purchases need to be realistic about the potential for some future price declines. “There’s still going to be more pressure on this market for the next couple of years,” says T.J. Culbertson, a real-estate agent in Beverly Hills, Calif.

On the other hand, as mortgage rates are low for those who can get financing. “If you’re waiting because you think the price might get better, well, the mortgage rate could go in the wrong direction,” says John Burns, a real-estate consultant based in Irvine, Calif. He says it could be a good time to buy generally speaking in markets where values have returned to 2003 levels.

While some borrowers are worried that they’ll buy a new house only to see it decline in value, that’s a much bigger concern primarily for first-time buyers. Those who already have homes could also see the price of their current home fall in value.

The high end of the housing market didn’t see nearly the same spectacular appreciation as the bottom of the market, which has dropped much more sharply and is now showing signs of stabilization. In San Francisco, prices on homes for the bottom third of the market (currently homes under $325,000) have fallen 57% from the peak, returning to levels last seen 10 years ago, while for the top third of the market (currently more than $600,000), prices are down 23% to 2004 levels, according to the Standard & Poor’s/Case-Shiller home price indexes. But prices rose by 4% over the last three months of 2009 at the bottom end, compared to just 0.5% at the high end.

One big headwind facing the high end: it’s harder to qualify for a loan than it used to be, which has reduced the pool of potential buyers. The market for million dollar homes was fueled during the height of the housing bubble by exotic mortgage payments that allowed high leverage. Now that those products are gone, banks are back to requiring much bigger incomes.

But the economic downturn has seen a big drop in the number of high-income earners. The number of households with gross taxable income of more than $200,000 fell to 2.8 million last year, according to estimates by Moody’s Economy.com, down from 4.57 million households in 2007.

Another headwind that faces the market: distressed sales. At the high end, more borrowers who took out exotic mortgages that will adjust to higher payments in the coming year or who have been holding out by living off of reserves begin to capitulate.

One problem is that many homeowners at higher price points aren’t realistic about prices and wait too long to pursue a short sale, where a home is sold for less than the amount owed, says Maggie Navarro, a real-estate agent in Pasadena, Calif. “It’s very, very difficult for these people to believe they’ve had such a severe reversal of fortune,” she says. “The higher-end people are so much less realistic than sellers on the more modest end of the scale.”

Some markets have had relatively few sales, leaving borrowers unsure about how much their property has fallen in value. Many homeowners don’t “have a clear opinion of how far their house is underwater,” says Mr. Burns.

Deniece Watkins Smith's Market Update 10/8/08

I remember when Space Mountain in Disneyland was first introduced. The idea of slowly being pulled up higher and higher to a certain point, then being dropped, unable to see in the dark, speeding through a myriad of twists and turns was exciting. The riders of this coaster were aware of a few things, however. The ride lasted approximately one minute. The riders would be out of the situation soon after that minute. There was some kind of track that helped guide the ride.

Even the X-Scream ride above the Stratosphere in Las Vegas, a huge teeter totter mounted 866 feet above the ground that propels riders 27 feet over the edge of the Stratosphere building with nothing below, has certainty that the economic roller coaster (specifically the stock market) of this week has not been able to provide. So, if one wanted to get off of the blindfolded, stomach turning ride of the stock market, may I suggest they consider investing in our local real estate?

Local real estate has continued to remain relatively strong despite such volatility. The report below will show you that more than 30% of available homes in cities like Palo Alto and Sunnyvale are under contract, also known as "pending" sale.

Even more shocking to the news watcher who hears of all gloom and doom in the real estate market, will be the fact that four cities of the six that I report on show properties continuing to sell OVER the asking price. Specifically, the percentage of properties which have closed escrow in the past two weeks over the asking price are: Mountain View - 30%; Los Altos - 13%, Palo Alto - 36%, Sunnyvale - 43%! Yes, to repeat, those are the percentages of homes that have closed escrow in the past two weeks OVER the asking price in each city respectively.

It is still extremely important to be ready when you look for your home in our area. Have yourself qualified by an experienced lender, and work with a Realtor who knows your local market so you can make your purchase and selling decisions based on FACTS. You can find many more closed sales facts on my website.

Here is the October 2, 2008 version of the Deniece Watkins Smith's market update: (You may need to scroll down a little way)

Change since
Los Altos	10/6/2008	9/12/2008	Lowest Price	Highest Price
Active	78	8	$ 1,145,000	$ 19,900,000
Pending Show	4	-2	$ 1,298,000	$ 2,595,000
Pending Release	2	1	$ 1,795,000	$ 1,828,000
Pending	15	2	$ 1,149,000	$ 4,259,000
Total Pending	21	1
Total Listings	99	9
Percent Pending	21%
		Change since
Los Altos Hills	10/6/2008	9/12/2008	Lowest Price	Highest Price
Active	51	6	$ 1,579,000	$38,000,000
Pending Show	2	-1	$ 2,098,000	$ 2,150,000
Pending Release	1	0	$ 2,295,000
Pending	4	2	$ 1,749,000	$ 1,895,000
Total Pending	7	1
Total Listings	58	7
Percent Pending	12%
		Change since
Menlo Park	10/6/2008	9/12/2008	Lowest Price	Highest Price
Active	120	10	$ 299,900	$ 5,450,000
Pending Show	3	0	$ 399,999	$ 3,245,000
Pending Release	3	-1	$ 349,000	$ 1,200,000
Pending	18	-5	$ 299,000	$ 4,495,000
Total Pending	24	-6
Total Listings	144	4
Percent Pending	17%
		Change since
Mtn View	10/6/2008	9/12/2008	Lowest Price	Highest Price
Active	64	2	$ 599,000	$ 4,400,000
Pending Show	9	-1	$ 809,000	$ 3,298,000
Pending Release	3	0	$ 639,000	$ 897,000
Pending	12	-5	$ 599,000	$ 1,399,000
Total Pending	24	-6
Total Listings	88	-4
Percent Pending	27%
		Change since
MV Townhomes	10/6/2008	9/12/2008	Lowest Price	Highest Price
Active	72	-1	$ 184,500	$ 1,245,000
Pending Show	9	-3	$ 339,000	$ 1,129,000
Pending Release	3	0	$ 295,000	$ 599,000
Pending	16	0	$ 309,000	$ 1,055,000
Total Pending	28	-3
Total Listings	100	-4
Percent Pending	28%
		Change since
Palo Alto	10/6/2008	9/12/2008	Lowest Price	Highest Price
Active	79	4	$ 899,000	$ 12,500,000
Pending Show	9	5	$ 799,950	$ 2,995,000
Pending Release	4	2	$ 899,000	$ 1,280,000
Pending	25	7	$ 849,000	$ 2,999,800
Total Pending	38	14
Total Listings	117	18
Percent Pending	32%
		Change since
Portola Valley	10/6/2008	9/12/2008	Lowest Price	Highest Price
Active	24	-2	$ 975,000	$ 8,395,000
Pending Show	3	2	$ 1,299,000	$ 1,795,000
Pending Release	0	0
Pending	0	0
Total Pending	3	2
Total Listings	27	0
Percent Pending	11%
		Change since
Sunnyvale	10/6/2008	9/12/2008	Lowest Price	Highest Price
Active	139	18	$ 399,900	$ 1,988,888
Pending Show	27	-7	$ 429,900	$ 999,888
Pending Release	9	-4	$ 400,000	$ 1,015,000
Pending	25	-15	$ 400,000	$ 1,350,000
Total Pending	61	-26
Total Listings	200	-8
Percent Pending	31%
		Change since
SV Townhomes	10/6/2008	9/12/2008	Lowest Price	Highest Price
Active	91	3	$ 295,000	$ 849,950
Pending Show	10	-8	$ 319,900	$ 685,000
Pending Release	3	-2	$ 309,900	$ 375,000
Pending	9	-10	$ 307,000	$ 765,000
Total Pending	22	-20
Total Listings	113	-17
Percent Pending	19%

Information extrapolated from reil.com deemed reliable, not guaranteed.

More information about Deniece Watkins Smith can be found on her website www.DSoldIt.com. References can be found here. You can also call her directly at 650-483-2055.