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

SV150: Current tech boom is no dot-com bubble, experts say

I touched on this a little bit yesterday when I was talking about the current expansion going on at the Valley Fair Shopping mall and how that relates to real estate. The below article from the Mercury News talks about how the current economic boom in the Silicon Valley is not the bubble like we saw in the late 90s and early 2000s. Though I do strongly believe there will be a correction in this real estate market, it won't be a big one by comparison with other parts of the US. Big employers like Google, Apple, Facebook and Intel have their corporate headquarters here, and they know this area is rich with the tech talent they need. Also, as far as housing is concerned, there is not allot more places left in this valley to build. This area is hedged in by to foothills to the east and west and the waters of the bay to the north. So, anyhow, as long as those factors continue to hold true, they will always keep the economy more robust as compared to other parts of the country and home values stable. But that's just my two cents worth.



SV150: Current tech boom is no dot-com bubble, experts say

Silicon Valley's tech cup runneth over. Job growth is humming, coders are being lionized on HBO, Uber and its shared-economy cohorts are on fire, disrupted innovation is unfolding on every corner. And everyone from downtown San Jose to Oakland's Uptown to San Francisco's South of Market is partying like it's 1999.

Luckily, it's not -- at least according to those who say today's boom and the exuberance of the dot-com craze are like night and day.

"Back around 2000, the IPOs were characterized by having only a few years' track record and little in the way of profits," says Brett Trueman, professor of accounting at the UCLA Anderson School of Management. "What's happening today is much different, because a lot of these companies have been around for longer periods of time, and they're more likely to be earning money than the startups during the dot-com boom. That's a clear indication that the froth isn't there now like it was in 2000."

Still, Silicon Valley knows froth. And the urge to compare the current craziness with the heady days of the past and fret about another bubble is understandable. You want froth? The SV 150, this newspaper's ranking of the largest companies in Silicon Valley based on revenue, shows the region lately has been a veritable cash machine: 2014 was the most profitable year since the SV150 began 29 years ago, with a 23.8-percent jump in overall profits, an 11.7-percent rise in sales, and a 7.1-percent increase in job growth.

So is it sustainable?

In a nutshell -- yes, says Beacon Economics founding partner Chris Thornberg, albeit with a small caveat.

"We're seeing record profits today, unlike in the '90s when you had huge valuations but nobody making the money to justify them," he said. "Back then, people were selling the IT and investors were buying it, but it wasn't being integrated into our lives very well."

Economists point to Uber, valued at more than $40 billion, as a prime example of the paradigm shift underway in tech, where an innovative service is changing the way we think about everything from car ownership to insurance to urban planning.

"Today," said Thornberg, information technology, or IT, "is something companies invest in and then make a lot of money off of it. So the guys now selling that IT are also making tons of money."

And the caveat? "The only place you might get into trouble," said Thornberg, "is if the labor markets heat up and corporate profits start going to the employees (for salaries). But it's way too early to call that."

A large chorus of Silicon Valley pundits insist that despite the heat of the moment, what's happening in the today is not "Pets.com, The Sequel."

Yes, the tech-heavy Nasdaq is finally approaching its dot-com high of 5,048. But it's been a long, slow -- and some would say healthy -- ascent that suggests its tech components remain on relatively solid footing. And sure, the "weighting" of IT companies in the S&P 500 index has grown from 6.3 percent in 1990 to nearly 20 percent today, perhaps suggesting a troubling dominance on tech. But consider that IT's share of that index hit more than 29 percent in 1999, just before things went bust so today's share is relatively modest.

While it's true that the SV150 now has the highest market-cap-to-sales ratio (3.8) since the dot-com bubble, meaning that it is valued by investors at nearly four times the annual revenue of those 150 firms, that's still less than half of the 8.1 sales ratio in 1999.

And then there's the Apple effect. The world's most-valuable company recently joined the Dow Jones Industrial Average, becoming one of five tech companies on the Dow 30, three of them based in Silicon Valley. Its inclusion confirms the Cupertino tech giant's crucial role in keeping the tech-boom momentum going. And the price-earnings, or PE, ratios for today's tech giants, which sit in the midteens, are seemingly conservative when viewed beside the 100-plus numbers of AOL and others back before the bottom fell out.

Despite all the comforting news, there's no way a rising tech-boom tide can lift all boats.

"Are there too many tech startups chasing too few things? Yes," says Brent Thill, managing director and senior analyst at the research division of USB Investment Bank. "Not all of them will survive, and you'll start to see the leaders in each category taking more commanding leads.

"This tech boom is sustainable for select companies," said Thill, pointing to Uber. "I don't guarantee Uber's numbers, but I personally use Uber every single day and for me it's become as common as sending a text or making a phone call; Uber has changed the way I view transportation."

But Thill cautions that even while today's boom seems to have legs, that's not to suggest there could still be the occasional stumble.

"There are too many companies out there that think they deserve a billion-dollar valuation, but it's not logical," he said. "They shouldn't assume that, because there can only be so many."



Source: The San Jose Mercury News, Patrick May
http://www.mercurynews.com/news/ci_27942064/sv150:-current-tech-boom-is-no-dotcom-bubble-experts-say