New study shows profound impact of tech industry on Bay Area real estate

To say that the tech sector has an effect on the real estate market here in the Silicon Valley would be a huge understatement, but still a good article though.


The tech industry. Over and over in recent years, this economic sector has been targeted as the cause of dramatic upticks in both home prices and rents in the Bay Area.

But is this a fair accusation? Apparently so, according to a new Zillow study. “[This analysis] highlights the widening wealth gap between tech company employees and other U.S. workers – a gap that is putting increasing pressure on housing markets where tech companies are booming,” said Zillow chief economist Dr. Svenja Gudell.

Facebook, Apple, Google and home ownership

First off, home values: Data show that Google, Facebook and Apple employees live in pricier homes than other Bay Area workers and have faster home value growth as well. In fact, the average Apple worker now lives in a home that is more than five times more valuable than the average U.S. home, according to Zillow.

Using census data, Zillow found the “typical worker at Apple’s Cupertino, Calif., headquarters lives in a home that is worth about $1.14 million, about $241,000 (27 percent) more than the median home in the already-pricey San Jose metro area and $380,000 (50 percent) above the median home value in the San Francisco metro area.”

Apple’s not alone. Workers at Google and Facebook headquarters — in Mountain View and Menlo Park respectively – live in more valuable homes as well. The median home value among Facebook workers is $1.25 million; among Google workers, it’s $1.28 million.

Zillow used data from the U.S. Census Bureau tracking where workers live and work across the Bay Area, then combined that data with Zillow’s Living Database of All Homes to compute a median home value for workers at the Apple, Google, and Facebook campuses in the Silicon Valley. Boiled down, the information shows:

• On average, employees of Google, Facebook and Apple live in homes with a median value of well over $1 million.
• Homes rented or owned by employees of these three tech companies are worth more than surrounding homes and are appreciating more quickly than surrounding homes

The gap, just like the iPhone, is getting bigger: 

The gap between tech employee home values and those of surrounding areas has grown larger. Apple workers’ home values took off after the first iPhone was released in June 2007. Apple’s stock price rose, increasing the wealth of many employees and cementing the company as one of the most successful in the world. Prior to summer 2007, the typical Apple worker lived in a home that was 13 percent more expensive than the typical San Jose home; since summer 2007, that gap has widened  to 20 percent.

As recently as 2010, homes in the neighborhoods where Apple workers lived were worth only three times the national median. Now they are worth five times that median.

Apple’s gains are the most dramatic, likely thanks to the iPhone. In the same period, the typical Google employee went from living in a home that was 37 percent more expensive than the average San Jose home in 2007 to living in one that is now 39 percent more expensive. For Facebook employees, the gap went from 31 percent to 33 percent.

San Francisco metro highlights

Other interesting (and possibly troubling) local findings point to recently inflated housing prices in all areas in the San Francisco metro, including rent:

• Condos have appreciated 13.5 percent over the past year
• Single-family homes have appreciated 12 percent over the past year
• Rent has gone up 13.3 percent over the past year

The takeway

Probably the only thing we didn’t already know here is just how much and how deeply the tech boom has impacted local real estate. If you’re qualified to work for these companies, you’re likely qualified to buy and/or rent homes nearby. Other people, however, may be thoroughly priced out.

Anna theOnThe Block blog, Marie Erwert
http://blog.sfgate.com/ontheblock/2015/11/02/new-study-shows-profound-impact-of-tech-industry-on-bay-area-real-estate/

The Perils of Taking Possession Before Closing

Timing your move out of one house and into another is a delicate feat that might seem as tricky as determining the next GOP presidential nominee. Trickier, even! In addition to the usual stress of packing and arranging to have your things transported (we’re talking about housing again), you also need to coordinate with the current owners of your new home and the incoming residents of your current home. And since no one wants to pay another month’s rent or mortgage, it’s awfully tempting to move into your new place even if the closing isn’t quite final yet.

But taking possession of a home before your name is on the title could open a Pandora’s box of problems—for buyers and sellers.

Why buyers should move in with caution

Buyers who move into a house before closing lose some of their bargaining power, says Daniel C. Price, president and CEO of OneTitle National Guaranty Co. in New York City.

“Any unresolved title issues could be problematic for buyers moving in before closing,” he says. “Buyers might lose the leverage necessary to clear issues like judgments, liens, and even old mortgages, since they will have a much harder time walking away once their possessions are in the house if these title issues are not resolved.”

Buyers also lose the ability to voice concern or negotiate over any last-minute issues with a home’s condition.

“A final walk-through prior to moving in should always be conducted,” says Price.

The question of who pays for what also comes into play. If you move in early, the seller might expect you to fork over cash for utilities used before the closing. Even if that doesn’t amount to much, the squabble could delay closing.

Another concern: coverage in the event of theft, fire, or other calamities.

A home insurance policy on a new home doesn’t take effect until closing, and a property is legally in the possession of the buyer, says Ken Davidson, principal at Eagle Independent Insurance Agency in Dallas.

So any damage that happens to the structure is covered by the seller’s home insurance, he says—but that doesn’t include damage to, or loss of, your personal property.

However, such damage or loss could be covered if you have a homeowners insurance policy on your current home that has “off premises” property coverage. The coverage limit, however, is usually 10% of the total personal property limit.

Why sellers face risk, too

Price says sellers who hand over the keys before closing could also be in trouble if the deal falls through.

“If something happens and a buyer backs out last minute, sellers could face the costly and lengthy process of eviction proceedings. Not only is that a hassle, it will delay the ability to relist the home.”

Sellers also run the risk of having their home insurance claim history dented.

If the buyer’s movers damage the house, or if their buddy slips down the stairs while helping out, you as the seller are liable. Your insurance covers this kind of damage and injury (to the extent dictated by your policy), but the fact that you’ve had to file a claim could jack up the premium for the policy on your new home.

Davidson recommends talking to an insurance agent and the real estate agent and attorney, if applicable, handling the sale before shaking hands on any preclosing deals.

“One five-minute phone call could prevent a huge headache.”

Source: Realtor.com, Gina Roberts-Grey
http://www.realtor.com/advice/buy/risks-of-moving-in-before-closing/

9 hidden costs that come with buying a home

Buying a home isn't just a 20% down payment and a monthly check for the mortgage.

There are a mountain of hidden costs — from closing fees to taxes — that can add up to more than $9,000 each year, real estate marketplace Zillow estimates — and that number will only jump if you live in a major US city.

Business Insider spoke to Zillow's chief economist, Svenja Gudell, about the three big unavoidable costs — homeowners' insurance, property taxes, and utilities — and other common costs that are often overlooked.

If you're considering buying a home, be mindful of these expenses when establishing your budget, Gudell says:

Source: Business Insider, Dylan Roach and Kathleen Elkins

http://www.businessinsider.com/hidden-costs-of-buying-a-home-2015-10 

5 Tips for Renting in a Pricey Market

As you know I am a Realtor and I will of course encourage people to BUY a home instead of renting. I won't go into the benefits of owning here in this blog post, but I do know that for some, renting is the best or only option for them. If you're one of these people, you may find the blow post from the Zillow blog helpful. It gives some helpful tips for renting in hot rental markets like San Francisco and the Silicon Valley where I work.


Recent data shows that U.S. renters can now expect to pay more than the suggested 30 percent of their income on their monthly housing payment. With vacancies decreasing and the growing popularity of renting in booming tech cities such as San Francisco, Seattle and Denver, finding a rental can be particularly hard hitting on the wallet.

Whether you’re dead set on living in your dream city or just landed a job in an area with sky-high rents, here are some tips for finding a home in a pricey market:

Be prepared to jump quickly

If you’re renting in an expensive market, that usually means a low number of vacancies. Fewer vacancies creates more competition for the units that are available. When you see something you like, be prepared to call or email the property management or landlord immediately. You should also keep your application paperwork — recent paystubs or a letter confirming that you’ve accepted employment, bank statements, contact info for current and past landlords — on hand to ensure that you’re ready to act quickly when you find a place you love.

Expect to compromise

When you picture your dream apartment, you might envision hardwood floors, a fireplace, two spacious bedrooms and of course, the ability to bring Fido with you so you can explore your new city together. While this type of place does exist, it may come at a pretty penny (or if it does exist in your price range, it’s gone about two hours after the ad is posted).

Don’t get discouraged. Know what’s most important to you in your home and then stick with that. Is location more important than aesthetics? Or can you not live without a charming vintage place to call your own? If you answered yes to the second question, you might have to prepare yourself for a long commute from the suburbs. Also, having a pet may automatically limit your options, as landlords can be picky in a tight market.

Consider sharing the burden

While you may have been able to live alone in a less expensive city, that may not be the case in an expensive market. Finding a roommate to share costs will lessen the burden. If you are not comfortable with house sharing, then be prepared to live smaller. Be creative when it comes to storage and buy multipurpose furniture.

Anticipate additional costs

Landlords in expensive rental markets typically expect a deposit plus the first month’s rent before you even move. Moving to a large city like New York often means paying a broker’s fee, which you pay at the lease signing for the broker’s help with finding an apartment. While apartment hunting in a less expensive market may just require a quick online search, navigating the New York City rental market can often be overwhelming and more expensive if you go it on your own. According to StreetEasy, broker’s fees are typically around 12-15 percent of the annual rent, which can get pretty expensive when it comes to Manhattan or Brooklyn rent prices.

Know the fair housing laws

Renting in an expensive market can unfortunately lend itself to scams and less-than-law-abiding landlords. While this isn’t the case most of the time, be sure to know your rights as a renter. For example, if you have a disability that requires a service animal, then a building’s no-pet policy doesn’t apply to you. Also, unless a building is specifically set aside for the use of senior citizens, a landlord cannot discriminate against anyone with children. Check your specific state laws on the rules for application fees and security deposits to protect yourself.

Source: Zillow Blog, Jamie Birdwell-Branson
http://www.zillow.com/blog/renting-in-a-pricey-market-186244/


Related: 
'Million Dollar Shack' documentary looks at Bay Area's insane housing market
8 U.S. housing markets where the rent is just too high

INFOGRAPHIC - Luxury Home Sales

Buying A Home Moves Beyond Just “Location, Location, Location”

FIRST-TIME AND MOVE-UP BUYERS: 87% OF THE MARKET

The U.S. housing market is strong.

According to the National Association of REALTORS®, home resales totaled 5.50 million in September on a seasonally-adjusted, annualized basis -- a 9% increase as compared to one year ago.

Plus, as a signal of the housing market's staying power, home sales are no longer fueled by speculative real estate investors. Everyday consumers comprise the majority of this year's action.

First-time buyers and move-up buyers account for 87% of today's home sales.

For most of these buyers, purchasing a home will be the largest asset purchase they make in their life; and it can be tricky, confusing, and frustrating for those who fail to prepare.

In addition to mortgage concerns, such as "Do I have to put 20% down on a home?" and "Which is the best mortgage for me?", buyers should approach the home-selection process with the same level of detail.

There are a number of red flags to consider when buying a home, for example, and a number of signals that all's clear to move ahead.

Recognizing the difference between the two can be the difference between getting a great deal on a home or having regrets about the purchase you've just made.

WILL YOUR HOME SERVE YOU TODAY, AND TOMORROW?

In its most recent profile of home buyers and sellers, the National Association of REALTORS® reports that the typical home buyer lives in their home for a period of approximately 10 years.

Therefore, as a home buyer, you should consider your purchase of a home within the context of "a decade".

It's terrific to be in the school district you want, for example; or, to be near amenities which are important to your household, but it's important to look at your potential purchase and the health of its systems.

Be alert to potential problems and you'll increase the chance that your new home will treat you well for the time you expect to reside in it.

1. What is the condition of the roof?

There are few "replacement costs" higher to a homeowner than the replacement cost of a roof. Depending on the size of your home, replacing a roof can cost tens of thousands of dollars. Sometimes, these costs can be covered by hazard insurance.

Many times, they are not.

When you in the home search process, then, ask current homeowners about the age of their home's roof. Most roofs last 20 years with little maintenance. Some roofs will last longer.

If the current homeowner does not know the age of their home's roof, be on the lookout for missing or curled shingles, which can be a sign that the roof is aging and reaching the end of its useful life.

If you’re unable to uncover the age of a roof and cannot determine its condition via eyesight, consider asking the seller for a formal roof inspection be completed prior to purchase.

2. What is the condition of the HVAC system?

Another expensive item to replace in a home is the HVAC system.

HVAC stands for Heating, Ventilation, and Air Condition. HVAC systems typically last 10-12 years, but with regular, seasonal maintenance, they can last up to 15 years or more.

Therefore, when looking at homes, it's a good idea to ask the current homeowner when their HVAC system was purchased, and how regularly the system gets serviced.

If a home's HVAC system looks "old", similar to with the roof, you can request that an inspection be performed prior to closing. This will help ensure, as a new homeowner, the HVAC system you inherit is in good, safe, and working order.

3. What is the condition of neighboring homes?

"Location, Location, Location" -- it's a common refrain among real estate professionals. And, for good reason.

When you’re buying a home, the location of the home can affect its long-term value and utility than its number of bedrooms or total square footage, as examples.

Some of the information you should seek to includes:

What is the plan for future development near this home?
How do the local schools perform versus the state, and nationally?
How close is this home to public services including fire and police?
You should also consider the home's real estate tax bill, which affects your monthly mortgage payment.

Tax costs are often listed on a home's listing sheet and you can plug them into a mortgage calculator to see the home's true cost.

4. What is the home's efficiency rating?

The cost of heating a home and cooling it is often overlooked as part of the home purchase process. A home with leaky windows or poor insulation, though, can suck thousands of dollars from your annual budget  -- the cost of several months of groceries.

A home with window which fail to seal tightly or which are generally inefficient will yield larger heating and cooling costs as compared to a home with new, efficient windows. Similarly, a poorly insulated home will lose heat during the winter months, adding to energy costs which temperatures are low.

Sometimes, small changes can yield large savings in terms of energy consumption. For example, changing light bulbs and replacing appliances can reduce a home's energy footprint. Other times, large changes are needed -- and this may include replacing windows and roofing.

Ask a home's current owner about its monthly utility costs, or seek more information from your local utility company. Small changes can sometimes be handled prior to closing by the seller.

For larger items, consider using the FHA 203k loan, which is especially suitable for energy-efficiency improvements on a home.

Source: The Mortgage Reports Dan Green Blog, Kyle Hiscock
http://themortgagereports.com/18408/buying-home-location-mortgage-structure

7 Simple Ways to Increase the Value of Your Home

Unless you have a luxury shoe habit that rivals Carrie Bradshaw’s (who needs 400K in shoes?), your home is probably the most valuable thing you own. But just because it’s already worth a lot doesn’t mean you can’t bump up the value a few more notches. Whether you’re planning to sell in the near future – or you just want to grow your investment – these seven easy adjustments will make your home worth more money!

1. Hire the Right Person for the Job
When you're hiring a contractor to care for your home, you're basically putting your biggest asset in the hands of someone else. Make sure it's the right contractor by using Angie's List. By taking the time to find a reputable contractor, you'll ensure that your home is up to snuff, which will save you money in the long run and increase the value of your home.

2. Inspect Early and Often
When prospective buyers get close to pulling the trigger, one of the first things they’ll do is have your home professionally inspected. If any nasty surprises are uncovered – such as mold or water damage – things are going to change. At best, you’ll have to lower your asking price. There’s also the possibility that the buyer will take their business elsewhere and simply disappear in a puff of smoke. Avoid this problem by inspecting your house regularly! A few important areas to check are your basement, attic and bathrooms.

3. Add Extra Seating
This one is so simple that a lot of people don’t even think of it! By adding some chairs and a table to an open part of your house, you instantly create a second dining or seating area. The furniture helps show the potential of the space, which can translate to a higher perceived value to the buyer. This is especially helpful for outdoor areas, such as your deck or patio.

4. Paint Your Cabinets
Replacing your entire kitchen-cabinet setup can be expensive and time-consuming, but a fresh coat of paint can accomplish almost the same thing! Not only will this hide any scratches your cabinets may have picked up over time, it will give your kitchen a new look, too. For more places around the house that can benefit from a coat of paint, read: Paint: It’s Not Just for Walls.

5. Use Potted Plants
A beautiful, lush garden on either side of the front door is great, but it’s not always feasible. If you don’t have the time to let your green thumb thrive, try placing little groups of potted plants on your front porch, instead. Your curb appeal will get an instant upgrade, but you won’t have to hire a part-time gardener to handle the upkeep.

6. When In Doubt, Add Storage
This is less about providing a ton of storage for potential buyers (although that’s important) and more about establishing an organized atmosphere in your home. You don’t need to fill every open spot in your house with cabinets or wardrobes, but there are probably a few simple additions you can make that will tie a room together. Need some ideas? Start in the kitchen!

7. Make It Shine
When you want to make a great impression at a party, you spend some extra time on your makeup, right? The same principle applies to your house. Except instead of perfecting your eyeliner, you can shine some fixtures! Anything that’s stainless steel (like your sinks and faucets) is a perfect place to start, because it’s easy to really make them sparkle.

Source: Brightnest, Brian
https://brightnest.com/posts/7-simple-ways-to-increase-the-value-of-your-home