San Jose Real Estate * REALTOR ® * Richard Gonzalez

San Jose Mercury News recently reported on the level of homeowners who are underwater in the third quarter of this year. What I do like about this Zillow.com map is that it accurately reflects not only the the bad news, but as you can see the good news for buyers interested in purchasing in Santa Clara County. Buyers should review this map as a guide for areas where they can find a great deal and areas that have sustained their value in this market.

Read San Jose Mercury article here

I was fortunate enough to attend the Santa Clara County Association of REALTORS® toys for tots luncheon and had the pleasure of listening to one of our industry’s longest REALTOR® member who had been a member of the association for 45 years.

Incredible to say the lease by today’s licensee standards. Many Licensees who passed their test in the last 8 years have moved on to somewhat greener pastures (not many green pastures in this economy), while speaking to the attendees of the event the elderly REALTOR® stated that he was surprised to see such a low interest rate followed by the fact that the interest rate had come back full circle to his early days in his real estate career of 4.5% .

The reason I think this is important to you is that we sometimes take things for granted because we don’t have the luxury of experiencing the interest rates of the 80′s(the rate was in upwards of 18+%), a fact that has been overlooked by people who are looking to time the market and waiting for a bottom.

After listening to this veteran REALTOR® I decided to do my own homework and found an article that I hope will put things into PERSPECTIVE for you too.

Article:
Proposal could drop mortgage rates to 4.5 percent

If I told you I could wave a magic wand and teleport you into the past you would think I was crazy but ladies and gentlemen its true!

As of October 2008 I can now say that we have all been teleported back to November of 1999, that’s because the affordable areas in Silicon valley have returned to 1999 levels. I recently previewed homes in a San Jose neighborhood and was astonished to see the REO(Bank Owned Properties) activity, to my surprise there were homes selling in the $210,000 to $250,000 range. 80% of activity in this area was REO sales, California is averaging an 80% REO close ratio. Unbelievable to see these prices but so surreal. Investors who have been waiting for an opportunity to jump in are now trying to time the market. I’d say not to wait much longer because at these prices its hard to argue the feasibility of having a positive cash flow property at this point.

The Median home price for Silicon valley has catapulted us back to April 2000 levels and as such reflects what we are seeing from the economic downturn. For some this means not only a loss of their 401k net worth but a loss of equity in their homes, for others its an open invitation to pay attention and get ready for a bottom that may come as early as Q3 of 2009. Silicon Valley and the bay area in general have always been the leading indicator for California. Historically speaking we can count on the Bay Area to rebound first.

The bad news is that we have had an average of a $50,000 loss in the Median sold price month over month where the median Sales price went from $719,500 in July to $550,000 in October.

Median days of unsold inventory for the Silicon valley have creped up to 90 days. We are heading into a historically slow time of the year and as such the number of new listing drop off until we get past the Valentines Day Holiday.

With all the negative news the bright spot is that if you price the property right and can be aggressive then the averages are in your favor. Sales price vs list price average shows a 99% average, great news for those who can be aggressive in their list price. Likewise if you manage to get an offer in the first 42 days you have an 19.3% chance of it closing.