Silicon Valley real estate market trend report/April 2010 |
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Inside this issue:
Sales Price to List Price Ratio Stays over 100%
Mortgage Rate Outlook
Pending Home Sales Show Healthy Gain, Hint at Spring Surge
Monthly real estate report Archive
Sales Price to List Price Ratio Stays over 100%
The sales price to list price ratio, a good indicator of demand, for single-family, re-sale homes in Santa Clara County was 100.8% in March.
This is the ninth month in a row the indicator has been over 100%.
The local market has split into three parts: the lower-end, under about $600,000, where multiple offers are common; the mid-range, between $600,000 and $1.5MM where the market is more balanced; and the upper end where, if you can afford it, there seems to be a plethora of bargains.
Home sales bounced back last month, up 40% from February and 15.1% year-over-year.
Inventory also increased in March from February: up 11.4%, but was off 20.7% compared to March 2009.
Pending sales continues to show strength, up 55.5% year-over-year, which is a good thing as a higher proportion of escrows have been falling out due to low appraisals and problems obtaining loans.
New State Tax Credit
A new state tax credit goes into effect on May 1, 2010 for first-time home buyers and buyers of new, never-occupied homes. The state has allocated a total of $200,000,000 to be split evenly between both groups.
The tax credit applies to escrows that close on or after May 1, 2010. and before January 1, 2011. Additionally, if escrow is entered prior to December 31, 2010, you have until August 1, 2011 to close escrow.
These tax credits are limited to the lesser of 5% of the purchase price or $10,000. The tax credit must be applied over three years in amounts beginning in the year the home was purchased.
The tax credit is not refundable, meaning if your total tax is less than $10,000, you will not be getting a check for the difference.
In any event, please do not construe this as legal or financial advice. Please contact your lawyer or financial advisor if you intend to use the credit.
For full information, go to: http://www.ftb.ca.gov/individuals/New_Home_Credit.shtml
P.S. If you open escrow before April 30th, you can take advantage of the state and the federal tax credits.
Remember, the real estate market is a matter of neighborhoods and houses. No two are the same. For complete information on a particular neighborhood or property, call me.
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Mortgage Rate Outlook
Apr. 2, 2010 -- Mortgage rates skyrocketed this week.
The 30-year fixed-rate mortgage soared 12 basis points this week, to 5.23%, according to the Bankrate.com national survey of large lenders. A year ago, the mortgage index was 5.13%; four weeks ago, it was 5.12%.
The benchmark 15-year fixed-rate mortgage rose 6 basis points, to 4.53%. The benchmark 5/1 adjustable-rate mortgage climbed 2 basis points, to 4.51%.
Credit mystery
Where did all the home sales go?
The expansion of the federal homebuyer tax credit last fall has failed to produce the expected surge of home purchases thus far.
Instead, sales of new homes have fallen four straight months, while existing home sales have declined in each of the past three months.
But reports suggest sales activity recently has picked up in some markets. If true, the uptick is occurring just in the nick of time. Homebuyers must have a home under contract by April 30 to qualify for the tax break.
Mortgage professionals offer mixed reports of the credit's impact in their markets. Dick Lepre, loan officer at Residential Pacific Mortgage in San Francisco, says the tax credit's lure has waned since last fall.
"From what I see, the tax credit has had little effect on purchases in the past five months," Lepre says. "The effects of this program largely occurred last year."
The Fed withdraws
This week, the Federal Reserve ended a nearly 15-month-long, $1.25 trillion campaign of buying up mortgage-backed securities. The program's goal was to reduce borrowing costs for homebuyers.
The Fed's efforts appear to have paid off. When the Fed announced its campaign in November 2008, the average 30-year fixed-rate mortgage stood at 6.33%.
Rates have fallen steadily ever since, hovering near historic lows for many months. Now that the Federal Reserve is suspending its purchases, what will happen to mortgage rates?
Lepre says his "best guess" is that rates will rise a half-percent in the wake of the Fed's absence.
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Pending Home Sales Show Healthy Gain, Hint at Spring Surge
Pending home sales rose in February, potentially signaling a second surge of home sales in response to the home buyer tax credit, according to the National Association of Realtors®.
The Pending Home Sales Index,* a forward-looking indicator based on contracts signed in February, rose 8.2% to 97.6 from a downwardly revised 90.2 in January, and remains 17.3% above February 2009 when it was 83.2. The data reflects contracts and not closings, which usually occur with a lag time of one or two months.
Lawrence Yun, NAR chief economist, said the improvement is another hopeful sign. “The rise in buyer contact activity may signal the early stages of a second surge of home sales this spring. The healthy gain hints home prices are continuing to flatten,” he said. “We need a second surge to meaningfully draw down inventory and definitively stabilize home values.”
The PHSI in the Northeast rose 9.0% to 77.7 in February and is 18.9% higher than February 2009. In the Midwest the index jumped 21.8% to 97.9 and is 18.7% above a year ago. Pending home sales in the South increased 9.2% to an index of 107.0, and the index is 17.5% higher than February 2009. In the West the index fell 4.8% to 98.0 but is 14.6% above a year ago.
“Anecdotally, we’re hearing about a rise of activity in recent weeks with ongoing reports of multiple offers in more markets, so the March data could demonstrate additional improvement from buyers responding to the tax credit,” Yun said.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.
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*The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.
The index is based on a large national sample, typically representing about 20% of transactions for existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity parallels the level of closed existing-home sales in the following two months. There is a closer relationship between annual index changes (from the same month a year earlier) and year-ago changes in sales performance than with month-to-month comparisons.
An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined as well as the first of five consecutive record years for existing-home sales.
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