Bay Area housing market cooling as buyers dig in heels

Is the Bay Area housing market losing steam? Could be.

With more buyers saying “no” to mile-high prices, September sales of single-family homes were up a modest 2.3 percent — a far cry from the red-hot market of the last several years. And even more revealing, June-through-September sales for the nine-county region were down 5.1 percent from the same period of 2015.

That’s the upshot of a new report from CoreLogic, the real estate information service. The numbers mirrored the observations of brokers and agents, who cited push-back from buyers after years of bidding wars and spiraling prices.

“Buyers are kind of digging their feet in and saying, ‘We’ve hit a threshold of pain in terms of affordability and you’ve got to say no,’ ” said Jennifer Branchini, past president of the East Bay Association of Realtors. “It’s going to be a big issue going forward. It’s not going away.”

In Santa Clara County — the heart of Silicon Valley — the median price was frozen in place from the year before, at $910,000, and the number of sales declined a hair, by 0.3 percent. September sales dipped 4.7 percent in San Mateo County, while rising just 0.2 percent in Contra Costa County and 2.9 percent in Alameda County.

The market was more robust in some of the more affordable inland areas, including Solano County, where sales were up 19.1 percent and the typical home cost $349,000, up 5.4 percent.

Looking at the nine Bay Area counties as a whole, the median price rose 2.3 percent to $675,000. The typical house cost $498,000 in Contra Costa County, up 3.8 percent from a year earlier; $718,500 in Alameda County, up 7.5 percent; and $1.14 million in San Mateo County, up 7.1 percent.

Those still are hefty prices, to be sure. But the rate of appreciation is well off the double-digit clip of the old runaway market.

“The market’s sort of correcting itself, given how high prices had gone,” said Andrew LePage, research analyst for CoreLogic. “Given that the job market is healthy and mortgage rates are low, it suggests that the affordability problem has worsened and we still have inventory constraints in a lot of markets.”

As always, lack of inventory — housing supply, in the vernacular — is the crux of the region’s crisis.

Chris Trapani, founder and CEO of the Sereno Group, did some additional data-crunching to show just how scant the supply has become in Santa Clara County.

“January of 2000, right before the NASDAQ peak, was known as the all-time low” for inventory in the county, he said. “We didn’t actually eclipse that low until January of 2014, and then 2015 was even lower. And then the start of 2016 was a little click up — a nominal increase.

“We’re running on three to four years now of the lowest consecutive starts for inventory that we have on record.”

Trapani’s analysis of the Multiple Listings Service shows 1,510 active listings for single-family homes in September — down from 1,750 in September 2015 and down even further from 1,804 in September 2014. On top of that, his September data show a 7.6 percent year-over-year decline in closed deals. “It makes you wonder” whether prices “have gotten out of reach for an increasing number of buyers,” he said.

Prices remain high, Trapani, said, “but that’s because the inventory is so low. It doesn’t take that many buyers to buoy that kind of market.”

And the supply is stagnant, in his estimation, often because so many owners fear paying capital gains taxes on houses that have wildly appreciated, sometimes by millions of dollars. “They consider the taxes and say, ‘I’m not going to make that move.’ ”

Given the nature of the market, it can take some maneuvering to close a deal.

Nicole and Murray Dennon moved in 2012 from Seattle, where they owned a 3,500-square-foot Craftsman-style home, to Los Gatos, where they bought a house from friends — a 1,350-square-foot bungalow for the couple and their two children. A year ago, they began looking for a bigger place and were repeatedly frustrated by the prices, to the point that they feared they would have to leave the area even though they have a respectable income.



Murray works in the tech sector. Nicole is from a successful farming family. Yet “there were moments when we went, ‘Wow, did we make the right move, coming here?’ ” Nicole said.

Meanwhile, their agent, Kim Richman of the Sereno Group, spotted a house in Los Gatos last spring: a 2,500-square-foot fixer-upper with four bedrooms that listed for $2.4 million.

The Dennons — who built their house in Seattle — were willing to put in the sweat equity. But the house was owned by a family whose members couldn’t decide whether to sell and pulled the property off the market. Richman kept negotiating, quietly. The owners were stop-and-go, but in the end, after rounds of offers and counter-offers, agreed to sell — for $1.95 million. However, they put multiple contingencies into the contract, including that the Dennons sell their bungalow within two weeks of signing.

The bungalow went in less than a week for $1.42 million — $30,000 under the asking price — and the Dennons will soon move into their fixer-upper.

“We’re here for life,” Nicole said, “back in a big ol’ house.”

Source: San Jose Mercury News, Richard Scheinin
http://www.mercurynews.com/2016/10/27/bay-area-home-sales-and-prices-inch-up-in-september/

7 Reasons Fall Might Just Be the Best Time to Buy a Home

Spring and summer usually get all the real estate glory with lofty accolades as the best time to buy a home—and, of course, the busiest. Meanwhile, their seasonal sibling, fall, often gets tossed to the leaf pile by potential buyers who might think autumn is just about haunted houses and turkey dinners rather than house hunting.

But surprise! Fall is not only a great time to buy a home, it might also be the best season to find the perfect property (and not just because you can browse the listings while cupping a pumpkin latte).

Read on to discover the many reasons.

Reason No. 1: Lower home prices

The best month to snag a deal when buying a home? October. This isn’t just some random guess; it’s based on RealtyTrac’s analysis of more than 32 million home sales over 15 years. The resulting data showed that on average, October buyers paid 2.6% below estimated market value at the time for their homes.

For a house that would normally be $300,000, 2.6% translates into a $7,800 discount. Those savings are nothing to sneeze at, so bargain hunters should get hopping once autumn rolls around. (For an even better deal, aim for Oct. 8, when buyers get a home, on average, at 10.8% below estimated market value.)

“For buyers looking for a better deal, fall is a great time to make offers,” says New York City Realtor® Joanne R. Douglas. (In case you’re wondering, the worst month for buyers is April, when homes sell for 1.2% above estimated market value. The worst single day is Jan. 19, with an average 9.6% premium.)

Reason No. 2: Less competition

Like a beach after Labor Day, the realty market clears out as the days turn crisp. Most summer buyers have already found a home, meaning a fall buyer will have way less competition for the available houses on the market, says Bill Golden of Re/Max Metro Atlanta Cityside. And don’t worry about those buyers who didn’t close before August, either.

“Many folks will drop out of the market until after the new year,” says Golden, giving a fall buyer even greater room to roam at open houses. There may not be as many properties to choose from, but as Golden says, “a little patience and perseverance could reap big rewards.”

Reason No. 3: Worn-out home sellers

Say hello to your little friend, leverage. Sellers who have their homes on the market in the fall “are generally people who need to sell, which can make for better negotiations for the buyer,” says Golden. And if a home you have your eye on has been on the market all summer, you’re really in the driver’s seat as far as making an offer the seller can’t refuse. The longer a home sits on the market, the more negotiating power the buyer wields.

Reason No. 4: The holidays are around the corner

Not only are most home sellers worn out after the summer selling season, they’re also caught between a real estate rock and a hard place in that the holidays are barreling down on them. If they want to move and settle down in time to host Thanksgiving and put up their Christmas lights, they’ll have to close, fast. So use this preholiday window to your advantage by offering to help them vacate fast if they cut you a deal.

Reason No. 5: Year-end tax credits

No one wants to buy a home purely to make their accountant happy. But there’s a sweet added incentive to closing on a home at the end of the fiscal year. Come the following April 15, you might be able to take some nice tax deductions, including closing costs, property tax, and mortgage interest, to offset your taxable earnings.

Reason No. 6: More quality time with your real estate team

As the year comes to an end, fewer buyers also means you should have the full attention of your real estate agent, mortgage broker, real estate lawyer, and everyone else on your house hunting team. You can take your time to ask all those questions you have about earnest money, due diligence, title transfers, and more without feeling like you’re horning in their busiest season to turn a buck.

Reason No. 7: Home improvement bargains

Once you close on that home you found in the fall, you may want to upgrade your appliances. Luckily, December is when major appliances—refrigerators, stoves, washers, and dryers—are at their very cheapest, according to Consumer Reports. It’s also the best time of year to buy cookware and TVs.

So once you’re settled in (and provided you have any money left), get ready to renovate!

Source: Realtor.com, Margaret Heidenry
http://www.realtor.com/advice/buy/reasons-fall-is-the-best-time-to-buy-a-home/?is_wp_site=1

'Tis the Season: Holiday Home Buying & Selling Tips

This time of year, if a seller has not sold their home, they will typically withdraw it from the market. Activity is often slower than normal between now and the first week of January. Many sellers also want a break from showings, the pressure of keeping their home clean, and feeling like they are always on.

But for the serious seller or buyer, deals still happen between now and early January. If you’re a seller who means business, know that buyers are out there through the holidays. If you’re a buyer on a mission, pound the pavement to find the most motivated sellers, and try to make a holiday miracle happen.

Tips for sellers

• Get your price in line with the market. If your home has been on the market for months without any offers, chances are your price is off. Once December rolls around, the competition (that is, other homes for sale) goes off the market, leaving you with potentially the only game in town. Now is the time to get serious. If you drop your home to the right price now, you have a captive audience, and you might even get more than one buyer. If you’re ready to move your home, this could be your chance to negotiate the best deal.
• Make your motivations known. If you want to take advantage of the holiday selling season, let agents and buyers know. In addition to dropping your price, you might want to offer an incentive to buyers, like a credit for closing costs or some furniture included, if they sign a contract before the end of the year. Or offer buyers’ agents a bonus if they make a deal happen. The point is, a motivated seller should take advantage of the timeframe, and that means making sure everyone knows you’re ready to bargain. Additionally, your agent should communicate to other agents, and the marketing remarks on your listing should demonstrate your motivations.

Best practices for buyers

• Don’t assume the market comes to a dead stop. Understand that some sellers have conversations with their agents about trying to make a deal during the holiday. These sellers are looking for you. Their list price might seem high, but they are probably willing to negotiate. Some sellers don’t want to advertise that they will take less, but once they get a buyer, they are ready to wheel and deal. Imagine yourself in the shoes of a seller who needs to unload their home. They may be willing to close even at the stroke of midnight on Christmas Eve. Deals happen if you put yourself out there. If you’re a serious buyer, leverage these last few weeks of the year to find a home.
• Do a once-over of all listings in and around your price point. Been ignoring a home or two because they seemed overpriced, or not as thoroughly renovated as you would like? Did you make an offer earlier in the year that wasn’t as great as it could have been? Circle back to every listing in and around your price point and target area that is currently on the market. Scour these listings, because they indicate motivated sellers. Go have a second look, and keep an open mind. An overlooked home can easily become your dream home at the right price.

Though conventional wisdom may state otherwise, market-ready buyers and sellers have consummated successful deals through the holidays. But don’t be a conventional buyer or seller. We live in an era of access anywhere and anytime. Information flows 24/7 and buyers, especially, use smartphones and tablets to stay connected to real estate listings at all times. Motivated buyers and sellers should open themselves to the possibilities this time of year.

Source: Zillow Blog, Brendon Desimone
http://www.zillow.com/blog/holiday-buying-selling-tips-189621/

Should You List in January Or Wait for the Spring Selling Season?

Thousands of homeowners speak to their real estate agent this time of year to consider their sale options — typically for the spring. It takes a few months for the agent and seller to plan and prep to list the home, so starting now makes sense.

Over the years, I’ve asked sellers if they would consider listing their home in January, right after the first of the year. At first, they look at me like I’m crazy. “Who sells a home in the dead of winter?” they ask.

As it turns out, many sellers not only successfully make it happen, but actually end up better off. Here’s why.

Buyers are out 24/7/365

In the past, buyers waited for spring to start their shopping because that’s when the majority of listings hit the market for the spring selling season.

Today’s buyers look at listings all day, every day. They have apps on their phone, get listings texted and emailed to them, and don’t care about the time of year.

They’re looking for inventory, and will buy homes well before the spring. List your home in January, and you will have a captive audience.

Bonuses, inheritances and tax implications

Each year, real estate agents’ phones ring come January. Previously active buyers want to re-engage, and new buyers come out of the woodwork. What causes this yearly phenomenon?

The end of the year often brings family events, financial activities and discussions about gifting for tax implications. Conversations about inheritances and taxes, money and homeownership seem to occur at many families’ holiday dinners.

Additionally, at year’s end, people take stock of their incomes, find out about work bonuses, and start thinking about whether they want to spend another year renting. Buyers start to take a second look at the tax implications of homeownership, too.

Whether it’s a new buyer who moves quickly or a previously active buyer who re-engages, these house hunters are around in January and will look at your home if it’s for sale.

Where’s the competition?

Typical sellers wait until spring to list. There’s no doubt that visible grass, blooming flowerbeds, and a spotlight on outdoor areas make houses more inviting.

But that also means that there might be two or three similar houses for sale in your neighborhood or school district, in your price range. Thus, it changes the supply-and-demand balance.

You’re better off being the only game in town when it’s time to sell. The more homes on the market, the more the buyers spread out.

Buyers shopping in January understand that the home won’t show as well as it does in the spring and summer months. Many of them don’t care. Having photos of your home during these times of year will help them envision it in the warmer seasons.

If you’re a flexible seller — meaning that you aren’t under any time restrictions or time frames to sell, and your home is already in showing condition — consider listing in mid- to late January. You can always control and negotiate your closing deadline with a buyer. If someone falls in love with the home, they may not mind waiting until April to close.

Also, many buyers have been at it for many months (sometimes years). So, come January, they are tired of open houses Sundays and the real estate hunt. This is your target buyer and, in part, they’re why it’s better to list in January than to wait until spring.

Source: Zillow Blog, Brendon Desimone
http://www.zillow.com/blog/list-in-january-or-wait-for-spring-187414/

4 Reasons to Buy BEFORE Winter Hits

It's that time of year; the seasons are changing and with them bring thoughts of the upcoming holidays, family get-togethers, and planning for a new year. Those who are on the fence about whether now is the right time to buy don't have to look much farther to find four great reasons to consider buying a home now, instead of waiting.

1. Prices Will Continue to Rise

The Home Price Expectation Survey polls a distinguished panel of over 100 economists, investment strategists, and housing market analysts. Their most recent report released recently projects appreciation in home values over the next five years to be between 10.5% (most pessimistic) and 25.5% (most optimistic).

The bottom in home prices has come and gone. Home values will continue to appreciate for years. Waiting no longer makes sense.

2. Mortgage Interest Rates Are Projected to Increase

Although Freddie Mac’s Primary Mortgage Market Survey shows that interest rates for a 30-year mortgage have softened recently, most experts predict that they will begin to rise later this year. The Mortgage Bankers Association, Fannie Mae, Freddie Mac and the National Association of Realtors are in unison projecting that rates will be up almost a full percentage point by the end of next year.

An increase in rates will impact YOUR monthly mortgage payment. Your housing expense will be more a year from now if a mortgage is necessary to purchase your next home.

3. Either Way You are Paying a Mortgage

As a recent paper from the Joint Center for Housing Studies at Harvard University explains:

“Households must consume housing whether they own or rent. Not even accounting for more favorable tax treatment of owning, homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord plus a rate of return. That’s yet another reason owning often does—as Americans intuit—end up making more financial sense than renting.”

4. It’s Time to Move On with Your Life

The ‘cost’ of a home is determined by two major components: the price of the home and the current mortgage rate. It appears that both are on the rise.

But, what if they weren’t? Would you wait?

Look at the actual reason you are buying and decide whether it is worth waiting. Whether you want to have a great place for your children to grow up, you want your family to be safer or you just want to have control over renovations, maybe it is time to buy.

Bottom Line

If the right thing for you and your family is to purchase a home this year, buying sooner rather than later could lead to substantial savings.

Source: Keep Current Matters

It's No Real Estate Myth: Fall Is The Best Time To Buy A Home

NEW YORK (MainStreet) – When's the best time to buy a house? You're closing in on it, even if there never seems to be an ideal time.

The folks at real-estate data firm RealtyTrac analyzed more than 32 million sales of single-family homes and condos since 2000 and found that buyers have gotten the best deal, on average, in October. Of the 2.7 million sales closed in October over the last 15 years, the average sales price was 2.6% below the average estimated full market value at the time of sale. That should make it a great bet for this year, but some aren't so sure.

"Despite the strong growth in sales since this spring, declining affordability could begin to slowly dampen demand," says Lawrence Yun, chief economist for the National Association of Realtors.. "Realtors in some markets reported slower foot traffic in July in part because of low inventory and concerns about the continued rise in home prices without commensurate income gains."

The median price for an existing home in July was $234,000, or 5.6% higher than it was a year earlier, while housing inventory fell 4.7% over the same span to 2.24 million. That's a 4.8-month supply, with a six-month supply considered normal.

However, the start of the school year, the drop in temperature, the return of rain and the loss of sunlight hours all conspire to make it more difficult for homebuyers to get out and look around this time of year.

“As we enter the rainy winter months in Seattle, things usually start to slow down," said O.B. Jacobi, president of Windermere Real Estate, covering the Seattle market where the best day to buy at a discount is April 1. "But it’s not just inclement weather; the days also get significantly shorter, making it challenging for sellers to present their homes in the best possible light. We often advise our sellers to take their homes off the market until spring. On the flip side, we tell our buyers that this can be a very opportune time for them because sellers, who keep their homes on the market through the holidays, are often very motivated to sell. There are also typically fewer buyers in the marketplace, so there is less competition for homes.”

For much of the country outside of Seattle, the worst month of the year to close on the purchase of a home is April, when buyers over the last 15 years have purchased at an average premium of 1.2 % above estimated market value at the time of sale. In fact, following October , the best months to buy were February, July, December and January. Out of 109 metro areas analyzed, 37 had their best day to buy in the fall months of September, October and November, and 44 had their best day to buy in the winter months of December, January and February.

But why October, which accounts for three of the top five days to buy at a bargain price? It isn't the coldest or warmest month out there, with the Environmental Protection Agency noting that the average temperature in October among all counties nationwide is 56 degrees. That's sixth highest among all, which puts October firmly in the middle of the pack. RealtyTrac observes, however, that October is the only month where all four major professional sports are in season or at least pre-season. Meanwhile, early February -- which accounts for two of the five lowest-priced days to buy -- is typically Super Bowl territory.

“Historically, winter months are slower and often a more advantageous time for buyers,” says Craig King, COO at Chase International brokerage, which covers the Lake Tahoe and Reno, Nevada markets, where the best day to buy is November 25. “Sellers are motivated in October, because many do not want their homes on the market for the holiday season.”
But what's the absolute best day to buy a home? Well, RealtyTrac removed all days with fewer than 50,000 sales over the last 15 years (the average among all days was 88,501), which took out New Year’s Day, Veteran’s Day, July 4, December 24, 25 and 26 and Leap Day, which has fewer sales because it only occurs once every four years.

Of the remaining days, the best day to close on a home purchase at a bargain price was October 8, when on average buyers have purchased 10.8% below estimated market value at the time of the sale. That was followed by November 26 (10.1% below market value), December 31 (9.7% below market value), Octobet 22 (9.6% below market value), and October 15 (9.1% below market value). However, that does vary by market. Notable exceptions include San Diego (August 20), Pittsburgh (March 17), and Cleveland (June 13).

What are the worst days, you ask? It doesn't get worse than January 19, when buyers paid an average 9.6% premium above estimated market value at time of sale. That's followed by February 16 (9.5% premium for those post-Valentines buyers), April 20 (9.5%), April 6 (8.4%) and April 27 (8.2%).

If you're just looking for the best weekday, for buying, you can't go wrong with a Monday. Out of 5.5 million single family home and condo sales over the last 15 years that closed on a Monday, buyers got an average discount of 2.3% below full estimated market value at the time of sale. Friday came in a close second with a 2% average discount. Thursday clocked in with the lowest discount of all at 1%.

While rising interest rates could make sellers even more motivated this year, the lack of first-time buyers in the marketplace could make this a more interesting October than most. The percent share of first-time buyers declined in July for the second consecutive month, falling from 30% in June to 28%, the lowest share since January of this year (also 28%). A year ago, first-time buyers represented 29% of all buyers.

"The fact that first-time buyers represented a lower share of the market compared to a year ago even though sales are considerably higher is indicative of the challenges many young adults continue to face," adds NAR's Yun. "Rising rents and flat wage growth make it difficult for many to save for a downpayment, and the dearth of supply in affordable price ranges is limiting their options."

This article is commentary by an independent contributor. At the time of publication, the author held TK positions in the stocks mentioned.

Source: TheStreet, Jason Notte
http://www.thestreet.com/story/13296731/4/it-s-no-real-estate-myth-fall-is-the-best-time-to-buy-a-home.html