This past Sunday we visited Kara’s Cupcakes located in the Town and Country shopping center in Palo Alto right next door to Sur La Table. It was a beautiful sunny day and patrons were lined up to place their orders. I ordered a Meyer Lemon cupcake that was delicious. I will leave it up to my readers to form their own personal favorites. Definitely worth a visit. Tomorrow’s blog will focus on real time data and the recent upswing in multiple offers on the San Francisco Peninsula.
As we approach the end of the year, many items such as the first-time homebuyer tax credit are receiving a great deal of attention in the press. I recently received this email update which shed some light on the impact of this tax credit on the housing market:
“It’s On The Table!
There’s no question that the government’s first-time homebuyer tax credit has spurred a significant amount of sales this year. Latest estimates show that some 400,000 additional sales occurred this year due to the first time home buyer tax credit, which is about 8% of all sales this year.
In the latest news, The Senate has reached a compromise on extending and expanding the $8,000 tax credit for first-time home buyers. While its passage remains uncertain, this plan would extend the existing credit for first-time homebuyers, worth up to $8,000, while offering a new credit of up to $6,500 for some existing homeowners. The reduced credit would be available to homeowners who have been in their current residence for a consecutive five-year period in the past eight years. Lawmakers in Washington also raised the qualifying income limits to $125,000 for single taxpayers and $250,000 for joint taxpayers, from the current $75,000 and $150,000. Under the Senate compromise, buyers must have sales agreements in hand by April 30, but they will have until June 30 to go to settlement, said the sources. The measure still faces votes in the full Senate and the House.
The U.S. Senate won’t vote until next week at the earliest. As soon as they do we intend to create a piece that will allow you to communicate the news to your clients.
This week, Business Week reported “The broad improvement in the housing indicators in recent months leaves no doubt that the long-awaited housing recovery is finally under way.” The article went on to report: “Policy alone cannot explain the 24% gain in existing home sales since January, nor the 22% increase in new-home purchases, the 40% rise in single-family housing starts, and the recent upturn in home prices. The primary driver is historically high affordability. Fixed 30-year mortgage rates are at 5%, a multi-decade low, and prices have plunged a total of 30% since May 2006, based on the Standard & Poor’s Case-Shiller Home Price Index. By that price gauge, homes are well undervalued relative to both rents and aftertax income.”
Source: Rick Turley, President, San Francisco Bay Area Coldwell Banker Residential Brokerage.
The final vote has yet to take place. More to follow.
Yesterday The San Jose Mercury News ran the following headline: The bidding wars are back. This is not news to buyers attempting to bid on entry level homes only to be outbid numerous times. Our San Francisco peninsula real estate market continues to be very active.
My weekly email update from Rick Turley, President , San Francisco Bay Area Coldwell Banker Residential Brokerage shed furthur light on current market conditions:
“Good Week of News Leads to Another
Last week we had great housing news with the announcement that May home prices posted their first monthly increase since the summer of 2006 (based on the Standard & Poor’s/Case-Schiller 20-city index).
We also learned that sales of newly built and existing homes rose in June for the third consecutive month. New home construction, though still weak, is the best it has been since the fall.
This week the good news continued. As announced by the Mortgage Bankers Association, Mortgage loan application volume increased 4.4 percent compared to the previous week. On an adjusted basis, the Index increased 4.1 percent compared with the previous week and 18 percent compared with the same week one year earlier. In addition, the Refinance Index increased 7.2 percent from the previous week. The Index has climbed about 35 percent above its recent low at the end of June. The seasonally adjusted Purchase Index increased 0.9 percent from one week earlier.
Also interesting to note is this week’s release of the National Association of Realtors’ Pending Home Sales Index revealed an increase of 3.6% during the month. That was 6.7% higher than June 2008. It was the fifth straight month of increases, the first time that has happened since July 2003. The jump was much higher than expected with a consensus of industry experts put together by Briefing.com forecasting an increase of just 0.7%.
NAR’s Chief Economist Lawrence Yun had this to say, “Historically low mortgage interest rates, affordable home prices and large selection are encouraging buyers who’ve been on the sidelines.” It seems all of these incentives, much like the Cash for Clunkers program in the auto industry, is finally pushing people off of the fence. ”
Summer is here and we definitely have a very busy local real estate market.
Today’s post reviews San Francisco Peninsula real estate market activity in the upper end and entry level price points. The entry level market continues to rebound as a result of low interest rates and first time buyers tax credits. The upper end of the market continues to offer opportunity for the move up buyer.
“Memorial Day is Over…but will it be a typical Summer Real Estate Season?
Memorial Day is behind us and the traditionally moderate summer selling season has begun. Some of our offices are saying that it’s feeling more like a late Spring season right now. Activity is fairly brisk – it goes without saying that the entry level is hot – short on listing inventory and high on Buyer demand, but there is also good activity to report in the mid-to- high end in most communities.
This week NAR announced that existing home sales rose in April with strong buyer activity, as expected, in the lower price ranges. Nationally, existing home sales increased 2.9% to a seasonally adjusted annual rate of 4.68 million units in April from a downwardly revised pace of 4.55 million units in March, but were 3.5 percent below that 4.85 million-unit level in April 2008.
While most of the sales are taking place in lower price ranges, we are seeing increased activity in the mid-priced markets. This is a domino effect; a turnaround begins with the lower price range homes and once that sector of the market is stabilized, we begin to see changes in the mid and upper price ranges. The upper end, while most recently seeing increased activity, still is considered a Buyer’s market. This seems to be fairly consistent in major Metros on both coasts.
Across most of our local MLS’s, there is approximately an average of 14+ month’s supply of homes over $2 million. This is about twice the inventory for the same period last year. Just the opposite has occurred in the <$800k market. Estimating the average month’s supply of homes across several MLS’s in this price range, we are seeing about 3 months or less – which is half of what we had this time last year – and is considered to be a Seller’s market. If you look at the same months where inventory has shrunk in the entry level – you’ll see stabilizing prices, and in some areas, increasing home values. And of course the higher end has seen declining median price as inventory has been building. This appears to be the perfect opportunity for the move up Buyer – they have a fairly captive audience for selling, and are coming from a better position to negotiate on the buying side.
It’s also important to note that investors reacted to concerns about the mounting size of our national debt this week. The yield on the 10 year T-bill increased mid-week as stocks took a hit, and interest rates for mortgages were affected by a ½ to full one percent increase. Since purchasing power decreases with a rise in interest rates, some Buyers will have an increased sense of urgency to get a signed contract on their new home.
You’ll find links to some interesting real estate stories from this week below:
(Source: Rick Turley, President Coldwell Banker Residential Brokerage San Francisco Bay Area)