Francis Rolland's Blog

By Francis Rolland | Agent in Los Altos, CA

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Price increase in the Silicon Valley

Posted Under: Market Conditions in Los Altos Hills, Home Buying in Los Altos Hills, Home Selling in Los Altos Hills | July 10, 2013 6:14 PM | 213 views | 2 comments

To piggy up on my last blog (is the market slowing down?) here is the evolution of sales prices of houses and CID's (common interest development = condos and townhouses).

These graphs that I just pulled show the amount of increase in average prices in a year and a half, and illustrate how indeed this is a factor in a possible slow-down of the activity.

They also show something that is unusual: prices did not really go down a lot at the end of 2012. On previous studies I showed how prices really adjusted towards the end of the year, in 2011 and 2010. But the market stayed strong at the end of 2012.

Finally these graphs show that indeed prices are (somewhat) flattening at this point, at least in the case of the County of Santa Clara.

If you have any area of interest, very local or at the City level, let me know and I will publish it for you.

Thanks for reading, as always!,

Francis

Silicon Valley real estate
Local market trends
Current Mortgage rates

Non-profit organization worth noting: Partners for New Generations.
Is the market slowing down right now?

Posted Under: Market Conditions in Los Altos, Home Buying in Los Altos, Home Selling in Los Altos | July 10, 2013 6:13 PM | 209 views | No comments
Is the market slowing down right now?

Ask an agent who is full-time involved in the market, on the buy and on the sell side, and you will probably hear that it looks that way.

About a year and a half ago, in the middle of January 2012, suddenly in just a matter of a week or two you could tell if you were actively involved in sales that something was changing: properties were not available any longer to place an offer on, or offers were just going to be heard that evening with 2 or 3 offers expected, or it was too late by a day etc... So we would go to the next best one, and it was gone too, with multiple offers.

In a similar way today little signs appear here and there: a property comes back on the market a few days after being in contract, or we see "offer dates" pass with no offers brought in. Also the inventory (finally!) increases a bit so that there is actually some choice for potential buyers. I also hear sometimes that after a few days on the market very few people have actually looked at the disclosures online. A month ago you would already have had by the start of the week-end most interested buyers checking out the disclosures.

So yes, it seems to me that the market is slowing down. Sales figures in a month or two will tell us if this is correct. I would attribute this slight slow-down to factors like:
- Buyers are jaded by so many unsuccessful bids they may have placed,
- Prices have gone up significantly for the same type of house, certainly so in the eyes of buyers, and if the asking price is too close to the last comparable sale, another 10 or 15% jump from that high becomes too intimidating,
- With higher values have also come on the market properties which may not be the same high quality as those who just commended such high prices,
- A sense, at least for some would-be buyers, that they just do not know where prices should be any longer, after the many extreme bids that all can see in the MLS (hence the need for a good Realtor...),
- .. And last but not least, the rise in mortgage interest rates that have shot up in the past 2 to 3 weeks, effectively pricing out those buyers who were at the top of their borrowing power.
Let’s qualify those remarks though: in the areas with good schools, for properties priced lower than the last sales, there are still multiple offers, no doubt. For areas with very little inventory, the demand which has gone unsatisfied for so long is still there, and even only one offer will often bring a much higher price than the asking price. The market is still very much a sellers’ market. But in areas where inventory is larger, the new prices coupled with more choices will give a break to buyers who can still qualify.

The future will depend a lot on:

- The inventory (going up, going down again??)

- The interest rates

- Seasonality to a certain degree. There are fewer people around during summer.

If I had a guess I would say that in general, going forward, we should expect prices to reach somewhat of a plateau, a market of muted price increase. .. well, so there is my crystal ball. Do you want to try yours out in a comment?

Thank you for reading,
Francis

Local real estate
updated loan rates Rates are up mostly, except for the 1-yr adjustable
Not enough money for your downpayment?

Posted Under: Home Buying in Mountain View, Financing in Mountain View, Home Ownership in Mountain View | July 10, 2013 6:09 PM | 214 views | No comments

Not enough money for a downpayment?

Let’s imagine that you really, really want to purchase a home, you have the income to do it, and you’re ready, willing and able (all 3 conditions that as Realtors we always check for). But there is a little problem: you do not have enough money for the downpayment.

The typical options are: - to get some gift money (it’s got to be from a relative to be acceptable by the bank making the big loan), - or get a second, in the form of an equity line of credit (just making their come back now), - or win at the lotto...

There is however an other option, that I have personally never seen used, but that I just read about and is worth mentioning:

REX HomeBuyer, a form of shared appreciation (or depreciation).

The principle of this option is that a group of investors get together, and loan you money to help with the downpayment on our purchase.

If the property has appreciated when you sell it, they share in the profit.
If the property has depreciated when you sell it, they share in the loss.

This is a good option for people who need some help with a downpayment, and feel shy going it alone on their purchase; it is reassuring in a way to have someone else share in the risks of the market variations. And all the while you own the house the advantage is that you have used the downpayment money to actually buy a home and live in it, - and for a lot cheaper than if you had to borrow the whole amount. (remember that when you borrow a 90% amount on a house, you have to pay PMI –Private Mortgage insurance – and this is not cheap: about 1 to 1.5% of the amount you pay, every time you pay anything it seems).

In that option, you do not pay interest on the money that made the rest of the downpayment. It is like having a friend co-buy with you but without the hassle to draw a complicated “separation agreement” for when you want to be on your own later. Here it is done from the start, in a clear way.

More on this interesting idea on this Los Angeles times article by Lew Sichelman.
As always with financial arrangements, run this by an advisor or an attorney if you are considering trying it...

Francis

Silicon Valley real estate

Trends: Local prices and graphs.
A noteworthy local non-profit: Our Brothers' Home
Tax break disappears as housing values rise

Posted Under: General Area in Palo Alto, Home Selling in Palo Alto, Home Ownership in Palo Alto | June 18, 2013 4:09 PM | 344 views | No comments

Tax break disappears as housing values rise

As property values have been going up sharply in the Silicon Valley, so are the assessors' values of our houses, throughout the area. We can expect therefore to pay more in property taxes, come November and December of 2013.

During the past 4 years I have prepared updated market analysis for several of my clients, in order to justify a lower value to be sent to the tax assessor's office. The goal of course was to pay a lot less in property tax, and I am glad to have been incidental to huge tax reductions in several instances. It is very unlikely that this is going to be possible going forward, as for most of the local area values have gone back to the highs of 2007, and sometimes higher yet. There are some small pockets in the County which would still be lower but there are fewer and fewer of them.

Nonetheless, if you feel that you are being assessed too much, do not hesitate to call on me to double check on it!

An article on the subject was recently published in the Mercury News, stating that "tens of thousands of homeowners will see their property taxes go up significantly this year as rising home values

restore some or all of their homes’ lost equity".

Do you feel you are being assessed unfairly this year? Let me know.

Thanks for reading,
Francis

Local real estate
updated loan rates Rates are up mostly, except for the 1-yr adjustable
Week ending 6/6/2013 (Source: Freddie Mac)
30-yr. fixed: 3.91% fees/points: 0.7%
15-yr. fixed: 3.03% fees/points: 0.7%
1-yr. adjustable: 2.58% Fees/points: 0.4%
Bay Area real estate values...

Posted Under: Market Conditions in Los Altos, Home Buying in Los Altos, Home Selling in Los Altos | June 18, 2013 4:07 PM | 346 views | No comments

Bay Area real estate values...

As seen on Thursday's front page of the San Jose Mercury News (and also in the SF Chronicle of today Friday), property values in the Bay Area as a whole are definitely picking up. Typically when it gets in the paper, it is already a few months old, but the information is organized in a way that shows updates in some communities that are not obviously visible to us here in the Silicon Valley.

Some of the East Bay Cities are doing fantastic, showing some real improvement in 1st quarter 2013 over the first quarter of last year. For instance:
Oakley is 16% higher in median values than in the first quarter of 2012,
Antioch is 28% higher,
Union City is 34 % higher,
Pittsburg is 9 % higher.

The article is also interesting because it touches on a subject I touched on earlier in this blog: why are there so few homes on the market? They are showing that there are still a lot of houses either underwater, or with not enough equity for people to move:
according to Zillow there are still about 25% of homeowners who are in that situation in the Counties of Santa Clara and San Mateo, and a whopping 46% in the Contra Costa County.

That would include:
- people who bought when prices were higher,
- people who borrowed too much on their home equity over the years,
- prices that are slightly higher than when property was purchased, but would not break even with the costs of the sale.

Francis Rolland

Silicon Valley real estate

Trends: Local prices and graphs.