Cities Plagued by Shrinking Inventory - and guess which one is #1. . . .

Low inventory means higher home prices and buyers competing with each other with multiple offers. It's a reality going on here for awhile in the silicon valley, which is why many agents prefer working with sellers and getting a listing (home for sale) rather than work with buyers. It's not that those agents refuse to work with a buyer because they will, it's just that when you're working with a buyer, it's harder in this market to get them into a home, which means no commission if they don't succeed. 

If you are a buyer looking to get into a home in this market, you must be very serious, pre-approved for a home loan and willing to listen to the advice of your Realtor if you want to stand a chance of getting into the home. Be prepared to compete with other buyers, some of whom will be making All Cash offers. Also be prepared to make an offer possibly well over the asking price (depending on the neighborhood, school districts and some other factors your Realtor will discuss with you). 

The article cites San Jose California as the #1 city with the lowest inventory. San Jose is the heart of the Silicon Valley, and the story is the pretty much the same for the surrounding cities here in the valley. The tech giants here in the valley, such as Google, Apple, Facebook and Intel, keep bringing in more and more workers thus putting strain on housing market. Evidence for this can be seen with low inventory and developers coming in and building mega apartment blocks and charging sky high rents.


Cities Plagued by Shrinking Inventory


More than 1.3 million – or 1.6 percent of the nation’s nearly 85 million residential properties – are vacant. That’s down 9.3 percent from the third quarter of 2015, according to RealtyTrac’s first quarter 2015 Residential Property Vacancy Analysis.

“With several notable exceptions, the challenge facing most U.S. real estate markets is not too many vacant homes but too few,” says Daren Blomquist, vice president at RealtyTrac. “The razor-thin vacancy rates in many markets are placing upward pressure on home prices and rents. While that may be good news for sellers and landlords, it is bad news for buyers and renters and could be bad news for all if prices and rents are inflated above tolerable affordability thresholds.”

RealtyTrac analyzed 147 metro areas with at least 100,000 residential properties and found that the following cities had the fewest number of vacant properties in the first quarter:

1. San Jose, California: 0.2%
2. Fort Collins, Colo: 0.2%
3. Manchester, N.H.: 0.3%
4. Provo, Utah: 0.3%
5. Lancaster, Pa.: 0.3%
6. San Francisco: 0.3%
7. Los Angeles: 0.4%
8. Boston: 0.5%
9. Denver: 0.5%
10. Washington, D.C.: 0.5%

Meanwhile, vacancies were highest in the first quarter in these cities:

1. Flint, Mich.: 7.5%
2. Detroit: 5.3%
3. Youngstown, Ohio: 4.4%
4. Beaumont-Port Arthur, Texas: 3.8%
5. Atlantic City, N.J.: 3.7%
6. Indianapolis: 3%
7. Tampa, Fla.: 2.9%
8. Miami: 2.8%
9. Cleveland: 2.8%
10. St. Louis, Mo.: 2.6%

Source: Realtor Magazine Online from RealtyTrac
http://realtormag.realtor.org/daily-news/2016/02/16/cities-plagued-shrinking-inventory?om_rid=AAFmZk&om_mid=_BWw4bMB9Ku34LR&om_ntype=RMODaily

Can the Mortgage Process Really Be 100% Digital?

As any Realtor whose been in the business for a while knows, all cash deals close ALLOT quicker as opposed to one where there is a loan/mortgage. The major reason for this is the lender and all the docs they require from the borrower, the underwriting process, etc. Being here in the heart of the Silicon Valley myself, I can't help but think about how technology can used to speed up this process. The mortgage industry is slowly moving in that direction, but it still will be many years before you have a truly all digital, all automated mortgage process.


Technology advances have reinvented mobile phones, music, TV, and many other industries in the past decade. And now technology is finally beginning to overhaul the mortgage process.

But is it really possible to have a 100-percent digital mortgage? Let’s take a look.

Clarifying the digital mortgage process

The two biggest misconceptions of digital mortgages are that you can get a mortgage with the push of a button, and that you won’t have to provide as much documentation.

When you make a video call or stream a song or movie, you’re literally pushing a button or two. But a mortgage is still a major financial transaction requiring documentation and analysis of your full financial life, so you’ll need to put in some effort — even when it’s sped up by a digital process.

Likewise, digital mortgages speed you up, but typically don’t reduce the documentation required.

Reduced documentation mortgages played a major role in setting off the financial crisis in 2008 as lenders required less and less income, asset, and employment verification to approve mortgages.

Then the reverse happened for years after the crisis: lenders would provide seemingly never-ending checklists of required documentation to approve and close your mortgage.

Today, you’re still providing the same amount of documentation, but the efficiencies of technology make the process much easier.

For example, today you’re answering questions about credit, residence, and employment history in an online form, whereas just two years ago you would have had to write, sign, and send letters to answer acceptably.

And today you can authorize your lender to obtain pay stubs, bank statements, and tax returns from the sources rather than assembling and sending all of this documentation yourself.

What you can do digitally vs. what you can’t

The federal laws created after the crisis require lenders to prove (with your full documentation) that they’ve verified your ability to repay your mortgage before you take it out.

To do this, lenders must follow eight federally required loan approval factors. So if a digital process doesn’t satisfy these parameters for any reason whatsoever, you can be sure your lender will send you follow-up checklists requesting more documentation.

If you applied online originally, follow-up checklists and documentation may be requested and provided online, or the old-fashioned email way. Each lender’s process is different, and your lender will instruct you.

Processes are also different depending on loan size and type.

For example, if you’re applying for a conforming mortgage up to $417,000; you’ve been a straight salary employee (that is, receiving no bonus or commission) at a large company for more than two years; you file your taxes using an online service; and you have online accounts with all of the financial institutions that have your money, then the digital mortgage process will likely be very easy. You apply online; authorize your lender to directly obtain pay stubs, bank statements, and tax returns on your behalf; and run a credit report. Then the digital process will analyze this documentation, and run an automated loan approval. For a profile like this, you could be approved in 10 to 30 minutes.

Conversely, if you’re applying for a jumbo mortgage above $417,000; you’re self employed with multiple sources of income; you have a tax adviser manually prepare your taxes; and you don’t have online accounts with all of the financial institutions that have your money, then the digital mortgage process will require more human intervention by you and your lender. You apply online and provide the same authorizations as above, but you’ll need to assemble and submit a lot of documentation yourself, and you’ll likely see follow-up checklists as your lender manually reviews and approves your file — because loans above $417,000 are often ineligible for automated approval. The process could take hours or days.

How many lenders offer digital mortgages?

Today, the digital revolution is still working its way through the mortgage industry. You might get amazing technology or outstanding service and advice, but not all lenders have married both so far.

As more lenders adopt the digital processes described above, your decision as a mortgage shopper will come down to whether you want to run the whole process yourself online, or you want an adviser to help you in person along the way.

Because home buying is a large — and often intimidating — financial decision, good advice is likely to remain at the forefront of the mortgage offering. So if you want great advice plus the efficiencies of a digital process, it’s best to start by finding a great local lender, then interviewing them about their digital offerings.

Source: Zillow Blog, Julie Hebron
http://www.zillow.com/blog/can-mortgage-process-be-digital-191267/

These Are the 20 Richest Cities in America

This article is really no huge surprise to me. San Jose is the heart of the Silicon Valley and allot of tech giants reside in or around the San Jose area. According to this article from Bloomberg Business, San Jose is the #1 wealthiest city in America! No wonder why rents are high and the housing market is still hot. It just goes to show another good reason to own real estate here.

San Jose, San Francisco, Seattle: These cities house more than the headquarters of the world's largest technology companies. They are also some of the most productive hubs in the U.S. economy.

The San Jose, California metro area had the highest output per resident for 2014, according to a Bloomberg analysis of U.S. Bureau of Economic Analysis data for the 100 largest metropolitan areas. Gross metropolitan product (GMP) per capita in the Silicon Valley epicenter was $105,482, more than double the national average. Bridgeport, Connecticut ranked second at $94,349. San Francisco, Seattle and Boston followed.


These GMP per capita figures help uncover underlying economic trends, which are often masked by the population inflows and outflows that affect unadjusted output statistics. The 2014 rankings highlight a surge in tech centers since the recession, with San Jose now producing about $11,000 more per person than No. 2 Bridgeport. Until 2011, the Connecticut suburb for New York bankers held the top spot.

It's no surprise that these high-output cities also have some of the densest concentrations of educated workers, reflecting the soaring returns to schooling in today's job market. Harvard University professor Edward Glaeser says the diverging fates of high-skilled and low-skilled regions has been one of the most significant trends in the U.S. economy as well as other developed economies over the last three decades.

There's an ''ongoing trend towards skilled places being far more compensated than non-skilled places," said Glaeser, whose research focuses on what causes cities to grow.  "The poster-child of this in the data is the San Jose metropolitan area, which is off the charts in terms of income growth.''

Tech cities outside the Bay Area have also benefited from the industry's boom. Helped by not only Amazon Inc. but also newer Internet companies like Zulily Inc., Seattle's GMP per capita grew by a cumulative 7.9 percent since 2009, when the economic recovery began. (The cumulative growth since 2008 is a much more tempered 2.5 percent because of the dramatic drop in the financial crisis.) That helped the Washington city catapult to No. 4 from its No. 6 spot in 2008 through 2011. Biotech hotbed Boston also jumped two places since 2008, while Portland, Oregon (sometimes called Silicon Forest) climbed six spots.

These emerging tech hubs will probably expand even more in coming years, according to Luis Torres, a research economist specializing in regional economies at the Texas A&M Real Estate Center. Sky-high rents in northern California force workers and businesses to look elsewhere, Torres said.

Methodology: Bloomberg ranked the 100 biggest metropolitan statistical areas (MSA) in the U.S. according to their gross metropolitan product per resident from 2008 to 2014, calculated with data from the U.S. Bureau of Economic Analysis and the U.S. Census Bureau. Data for 2014 were advance statistics and subject to future revision. Previous years' data were revised from previous releases. The map above only displays the primary city in each MSA.

Source: Bloomberg Business, Ali Donaldson
http://www.bloomberg.com/news/articles/2015-11-05/these-are-the-20-richest-cities-in-america

Analyst: Housing bubble not a question of if but when

It's got to go down at some point folks. While I am extremly happy for the sellers out there who are selling their home way over asking, I also feel bad for some of the home buyers out there that are getting priced out of the market. I know this bubble we're in here in the Silicon Valley is fueled by both tech sector growth and cash buyer investors, it can't last forever. Every real estate market hits a peak at some point before the decline. Of course WHEN this market will hit its peak is debatable. Anyhow, it won't be a happy time for homeowners, but it will bring many new and eager buyers into the market who were waiting on the sidelines. Remember, it cyclical folks.


Charles Hughes Smith at oftwominds.com warns that the industry may be just two years from an implosion of the bubble we’re in. Also, if you didn’t know, he argues we’re already in an echo bubble from the last bubble.

The last housing bubble took about 3 years from peak to trough, and this provides a baseline projection for the decline of the current housing bubble, which is shaping up as a classic echo-bubble: very much like the previous bubble, but of slightly lower magnitude.

The projected decline over the next three years to the 110 level is the best-case scenario. Analyst Mark Hanson made a very persuasive case for a much sharper drop when the current housing bubble pops: Mark Hanson Is In "Full-Blown, Black-Swan Lookout Mode" For Housing Bubble 2.0.

In essence, Hanson suggests that the narrow base of the current bubble expansion--all cash buyers (speculators, private-equity funds, overseas oligarchs and corrupt officials, etc.) and marginal borrowers relying on highly leveraged FHA and VA mortgages--will collapse much quicker than the previous bubble, which was inflated by a much larger base of market participants.

Bubbles also have a habit of overshooting when they finally burst. the Federal Reserve acted quickly to re-inflate the housing bubble by lowering interest rates to near-zero and buying over $1 trillion of mortgage-backed securities. Given the narrow base of the current bubble, these tricks will not work should the Fed attempt to inflate Housing Bubble 3.0

In general, bubbles are followed by echo-bubbles, and the bursting of the second bubble ends the speculative cycle. There is no fundamental reason why housing could not round-trip to levels well below 100 on the Case-Shiller Index when the current bubble finally bursts.

If Mark Hanson's analysis is prescient, it may not require 3 years for the current housing bubble to implode; 2 years (2017) might be more than enough time for the speculative excesses to evaporate.


Source: HousingWire, Trey Garrison
http://www.housingwire.com/articles/33970-analyst-housing-bubble-not-a-question-of-if-but-when

San Francisco leads the nation in property bidding wars

Great article from HousingWire about the bidding wars going on in many real estate markets across the nation. 

As a nation, bidding wars gained steam heading into the spring home-buying, with 61% of offers written by Redfin agents facing competition from other buyers in March.

While this is up 57% from February, it is down slightly from 63% in March 2014.

Then compare this to two of California’s, and the nation's, hottest housing markets.

Both San Francisco and Ventura County not only fail to follow the trend but also are surging higher.

San Francisco’s bidding wars are nearly at 100%, rising from 88% last year to 94%, with 32% of homes selling over the asking price.

Although, Ventura’s bidding war percentage is one of the lowest in California, it is one of the fastest growing, moving from 33% last year to 54%.

Also, 19% of houses sell for more than the asking price.

Dwight Johnston, chief economist for the California Credit Union League, previously spoke with HousingWire on how the solution for first time homebuyers, while maybe obvious, is to save. The California market is not changing anytime soon, and rather than hope for a change, buyers need to play to the system.

“The Bay area has a vast amount of money that is driving a lot of the competition, and there is no supply in the market at all,” Johnston said about these new numbers. “The more desirable areas are built out, and they are all competing for the same houses at the same time. They have so much money that they don’t have to worry about being rational.”

“In Ventura, except for the fact it is one of the coastal communities, it usually doesn’t get quite that amount of traction. Anything that is coastal or has any special allure to it, you will see some bidding wars. This is what California has become,” he continued.

So what’s fueling the San Francisco’s housing market?

The tech bubble.

Since the tech industry continues to grow, Johnston explained that people can afford the expensive houses there, and as a result, builders will keep constructing nicer homes.

“In the coast areas of California, builders want to get the maximum square reach because it is so expensive to build here,” he said. “And you can’t blame them.”

Johnston explained it’s only if and when the tech bubble starts to stop being inflated that market might cool down.


Source: HousingWire, Brena Swanson
http://www.housingwire.com/articles/33790-san-francisco-leads-the-nation-in-property-bidding-wars

America’s Most Innovative Tech Hubs

Happy Monday folks!

It's no secret that one of the reasons why the Silicon Valley has such a hot real estate market is all the high tech companies that are here. These companies not only create jobs, but higher paying jobs. And generally speaking, where there are high paying job, there is a robust real estate market.

America’s Most Innovative Tech Hubs

It’s no surprise when San Jose and San Francisco — the engines that power the tech industry in Silicon Valley and the San Francisco Bay Area — dominate a list of innovative U.S. cities. But what about bucolic Corvallis, Oregon? Or quaint Burlington, Vermont, population 42,284?

These cities also made the cut for America’s Most Innovative Cities, NerdWallet’s guide for understanding where the impact of tech funding, innovation and startup activity is the strongest. Resident for resident and startup for startup, these cities have an outsize impact.

Key takeaways

Silicon Valley is by far the leader. With a high number of patents per capita and venture capital funding figures that no other place comes close to, the metro area that includes the cities of San Jose, Sunnyvale and Santa Clara leads all in tech innovation.

The West dominates. Only two East Coast places made our top 10 list — Burlington, Vermont, and Boston, Massachusetts.

Universities are key. Every area in our top 10 is located near a major university, suggesting that higher education and innovation are closely linked.

Factors we considered

Number of patents per 1,000 residents. We looked at the number of patents granted in the technology class by the U.S. Patent and Trademark Office in each metro area from 2009 to 2013 to find the areas with the most inventive residents.

Financial support for innovation. We examined the amount of venture capital funding an area received per capita in 2014 to understand if entrepreneurs have access to the capital they need.

Economies of agglomeration. Agglomeration — nearness of location — is used here to describe the benefits when companies, like startups, cluster together. The higher the density of startups, the more innovators can benefit from common labor pools and idea sharing.

Source: NerdWallet | Courtney Miller

http://www.nerdwallet.com/blog/cities/americas-most-innovative-tech-hubs/