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Sales activity lighter than 2009

Santana Row area neighborhoods continue to show lower activity after the homebuyer tax credit expired in April. Buyers continue to pay list price on homes sold in these neighborhoods but the activity has been half of 2009 levels. In 2009 there were 114 sales compared to 54 in May – July 2010.

Conventional is king

Conventional sales were the predominant financing method used to purchase homes following the same pattern of 2009. FHA continues to be in the least used or accepted financing method by sellers when reviewing offers. Buyers should consider conventional loan products to increase their chances of getting an accepted offer.

Median rises in 2010

2010 median sales prices was $610,000 compared to $533,500 in 2010. Buyers also had more negotiating power in 2009 to 97% of original list. 2010 buyers are having to pay slightly more to 102% of original list making it 5% more expensive to buy a home in these neighborhoods.

Incredible as it may seem the $8,000 Federal tax credit can be combined in April 2010 for a credit up to $1,800 as a result of the recent California legislation.

Window of opportunity

• Open to home buyers in the state of California.
• Must be in contract before May 1st 2010
• Must close between May 1st and June 30th 2010
• Non-First time home buyers will still be eligible to receive up to $16,500

“The new California law applies to certain purchases that close escrow on or after May 1, 2010 (see Cal. Rev. & Tax Code section 17059.1(a)(4)).  California law generally allows buyers of never-occupied properties to reserve their credits before closing escrow, but buyers seeking to combine the federal and state tax credits will not be able to satisfy the timing requirements for such reservations (see Cal. Rev. & Tax Code section 17059.1(c)(1)(A)).  Other terms and restrictions apply to both tax credits.”

~ California Association of REALTORS Legal Department

Even though you may have already submitted your taxes for 2009 you may be able to save even more on your California state taxes if you received a 1099 as a result of a Short Sale.

Yet another positive effort by California legislators to help the housing market with this new bill. The Sacramento Bee reports on this effort to get this bill into law before April 15th deadline.

“The bill being considered this week, Senate Bill 401, would cancel state tax obligations for forgiven mortgage debt through the 2012 tax year. The Assembly planned Monday to rewrite SB 401 from a bill regarding tax shelters to one that aligns much of California’s tax law with that of the IRS. That includes canceling taxes on forgiven mortgage debt and on recipients of federal renewable energy grants.”

Read more: http://www.sacbee.com/2010/04/06/2657410/california-expected-to-cancel.html#ixzz0kMw5Xs6U

Just when most buyers face the end of the $8,000 tax credit Governor Schwarzenegger has revealed a new incentive planned for May 1st that would give buyers up to $10,000.

The day after the federal government credit expires this new state credit would pick up where the federal one left off.
Details of the credit qualifications have not been finalized but the funding is coming from a $100 million dollar program crafted last year as reported by the Wall Street Journal.

Read article here

January 2010 sales data for Santa Clara County.

Limited inventory equals less sales activity

The article also attributes this to various factors including tax credit, financing and lack of inventory. I know this already but in our case  our clients are experiencing very limited inventory as the main factor.

Trend should continue in 2010

While sales have fallen in recent months we are going to continue to see this trend in the Silicon Valley mostly because of HAFA and as the demand for housing continues to remain high. Another contributing factor is that sellers not in foreclosure who would normally consider selling are staying put as the economy continues to recover.

The chart below shows in increase in sales volume for Santa Clara County and an improvement in the Median sales price.

source dqnews.com

Click here to read the DQNews article

Buying a Silicon Valley home in 2010 can be a challenge but if it’s on your list of resolutions then here are a few tips that you should know to prevent you from falling off the wagon during the process.

Short Sales

The buzz of the 2010 real estate industry is Short Sales. I attended a hand full of conferences last year and short sales were the topic of discussion on everyone’s mind including all the major banks and asset managers of REO properties.

In November Bank of America / Countrywide for instance partnered with equator.com a REO management tool used by REALTORS and asset managers to handle the sales of foreclosed properties. The management system is a task based system that helps to speed the processing of REO’s and now short sales beginning with Bank of America.

Equator.com has now begun to reduce B of A’s timeline for short sale approvals from six months to 45 days. Lightning fast by our experience negotiating short sales with Bank of America over the past two years. This trend will continue as investors look for ways to streamline the slow daunting process we have grown accustomed to in a short sale.

TIP: Short sale buyers should always investigate who the note holder is before making an offer. Knowing who the note holder is will help set your expected timeline for a successful close of escrow. Wachovia short sales are lightning fast because they own the loans and have decision makers in every county. Others like WAMU can be a challenge to say the least and are currently taking up to 5 months for a short sale approval once you are in contract.

REO

Inventory levels are very low but there may be a significant influx of REO properties from shadow inventory that banks are apparently holding. Some even continue to speculate that we will have a tsunami of inventory hit the market based on data from the Royal Bank of Scotland that shows over 3 million home owners 90 days past due and half of them are in foreclosure.

The reality is that the Silicon Valley will not likely see a large influx as a result of this inventory. Most of it is centered around the conforming $417,000 and lower price range. Waiting for REO’s to fill the void in Silicon Valley may keep a buyer on the sidelines for most of if not all of 2010.

TIP: A FHA 203k loan is an excellent loan that includes the cost to repair and remodel a REO home. It really is a great product and should be your primary loan option if you are intent on purchasing an REO home. 203k loans are great negotiation tools because the seller only has to repair health and safety issues leaving you room to negotiate while most other buyers are unable to participate.

Presentation of your offer

I recently listed and sold a home in Gilroy and received 40 offers on the home. During the process of evaluating the offers with the sellers I did my best to help the buyers agents in presenting their offers in hopes of giving every buyer an opportunity . What I realized is that merly making an offer is not enough and helped me make important adjustments in the way I submit offers.

Your offer should always have the following additional information:

• Pre-Approval letter – Preferably from a well known financial institution or an approval from your mortgage broker with the lenders name that you intend to use. If possible a conditional approval would be better but some lenders will not provide that unless you are in contract.
• Proof of funds to close – It’s critical to show the seller and the listing agent that you have the financial means to close escrow.
• A cover letter to the sellers – A letter with a picture of your family introducing yourself and telling them how much you love their home and will continue to give it the love they did. Provide details about your appreciation of the sellers upgrades and if possible any similarities that you may have with the sellers(kids, job industry, neighbor relationships, ect.)
• Comparable sales - Have  your REALTOR provide a list of three sold and pending comparables to make your case why your offer should be considered. Firing off low ball or high offers to a seller will most likely put your offer on the rejected pile because you submitted an offer with a purchase price that will not appraise.

TIP: Communication between your REALTOR and the listing agent is essential. Establishing a relationship with the listing agent is critical and can increase your chances of successfully negotiating with a seller.

Most buyers are taking up to a year to get into a home. Don’t be discouraged if you are still looking in September, the persistent buyer always finds a home.

Happy New Year and happy hunting for your home in 2010.