SILICON VALLEY AGENTS
Copyright © Silicon Valley Agents. All rights reserved.
Copyright © Silicon Valley Agents. All rights reserved.
The Housing market in Santa Clara County remains very tight as the available inventory is limited and there is an ample supply of buyers. The final stats are in for 2015. December's robust market was the largest monthly increase ever recorded with total existing home sales up 14.7% from the month of November. This brought total sales for 2015 up to 7.7% above the previous year.
Lawrence Yun, the National Association of Realtors's chief economist, attributes the activity to a strong year in general and also to buyer's concerns that mortgage rates will increase in 2016. Yun also reports that "in addition to
insufficient supply levels of inventory moving forward, sales will be constricted
by tepid economic expansion."
Predictions for moderate growth at a slower pace can be heard from other
leaders too. Redfin released a "Housing Trends Report" saying more
homeowners will stay put this year with a total rise of 3.5 to 4.5% for 2016.
Upcoming rate hikes may lesson the appeal of selling and getting a new loan
on the next home.
Nevertheless, consumer confidence is high as they are feeling more positive
about the economy, business conditions and the job market. This is for good
reason: The U.S. economy added nearly 2.9 million jobs in the private sector in 2015. The more confident people feel about their economic future, the more likely they are to buy a home. Home demand is on the rise too. Nationally, more than 30% of 18 to 34-year-olds are still living with their parents. Combine this pent-up demand with low inventories and you have the spark that drives new residential development. With consumer debt service ratios the lowest they've been for more than two decades, more people are eligible to qualify for a mortgage. Plus, homeowners who were foreclosed on during the housing crisis will be eligible to give home ownership another go in the next few years.
Spring is when the real estate market usually heats up. Now is a good time to be shopping for a home. If you are selling, many professionals aim for listing a home in late March or early April, so buyers should have all their ducks in order. Understanding "pre-emptive offers" may come into play. Some of my buyers want to avoid a bidding war by making an offer before the property hits the market or before the seller's designated offer date. One con to this strategy is that you will probably have to waive all contingencies, so you will want to see if the seller has done all inspections and disclosures for you to review first. Also, you don't know if you may have gotten the home for less than the asking price if you wait. For sellers, the question remains that you may have lost out on having multiple offers that drive the price up. Not all sellers will even entertain pre-emptive offers. Others think that a clean good offer now is better than waiting. A seller may get multiple pre-emptive offers too.
Santa Clara County Trends at a Glance
March 2016 PREVIOUS MONTH YEAR-OVER YEAR
Median Home Price +11.7% $1,050,00 $940,000 +11.7% $940,000
Average Sales Price +9.7% $1,328,750 $1,210,850 +3.1% $1,289, 210
No. of Homes Sold +53.9% 705 458 -14.2% 822
Pending Properties +34.8% 841 624 -18.3% 1030
Foreclosures Sold -57.1% 3 7 -50.0% 6
Short Sales Sold N/A 1 0 -75.0% 4
Active Listings +22.8% 1035 843 -8.2% 1128
Active Foreclosures 0.0% 4 4 -63.6% 11
Active Short Sales -50.0% 1 2 -95.2% 21
Sales Price vs. List Price +1.8% 105.3% 103.5 -1.7% 107.2%
Average Days on Market -25.1% 23 31 -2.8% 22
Should You Rent or Buy?
if you are not planning on living in your area for at least three years, then renting may be a safer bet but it will depend on how home prices increase in value. You may make money by selling in 2-3 years. Americans spent nearly $20 billion more in rent in 2015 than in 2014. Median monthly rents rose at a record pace. Renters spent more than $535 billion on rent in 2015, nearly as much as the total budget for the Department of Defense according to a Zillow report.
Apartment renters paid $239 billion and single-family home renters paid $245 billion, with approximately two-thirds of the total rent spent in the country's 50 largest metro areas. Rents are continuing to rise, so before you sign another lease agreement, you should check out the opportunities from buying. If you have the down payment for purchasing a home, there is a strong chance that you will be able to make lower monthly mortgage payments than rental payments. Buying for your first home or buying as a potential rental property often makes sense.
A Few Buyers Tips
What’s your budget? To calculate a housing budget you can live with, start by figuring out how much you spend each month. Track your daily expenses in a notebook over the course of four weeks to get a real sense of how much is going out and where you’re spending most of your available cash. Based on the housing budget you figured out, and where you want to live, compile a list of what you’d like to have in your first home. Check out some homes in your price range online to get a feel for what your money will buy, and make your wish list based on the home you see.
Before you commit to a mortgage amount, be sure to take the true cost of making
those monthly principal, interest, taxes and insurance payments each month and
apply them to your take-home pay. If you can’t sleep at night worrying about
paying the mortgage or fixing your broken water heater, you’re spending too much.
In this market, many deals contingent on financing fall apart because
buyers can’t find a bank to give them a mortgage. Getting pre-approved
for your mortgage will help you avoid this problem. You should speak to at least
three different types of lenders including big national banks, mortgage brokers,
regional banks, local lenders and possibly a credit union. Typically, pre-approvals are good for 60 to 90 days. If you don’t find a home within that period of time, you may need to re-qualify with your lender.
Many first-time home buyers get so caught up in the idea of owning a home that they forget about life after closing. The real costs begin after you move into the house. In addition to mortgage payments, you’ll owe taxes, insurance and homeowner’s association (HOA) fees, and be responsible for any maintenance issues that come up while you own the home. These costs are all the more reason not to spend every last dime on your mortgage payment. If you have nothing left after paying your mortgage, you’ll be unable to pay all the other fees or save for unexpected expenses.
One of the biggest causes of buyer's remorse is people who do not do a home inspection and find out later there were big problems with the house. You want to be present during the inspection to learn about any costly repairs that might be needed and to get basic info on the home, such as where the electrical panel is and where you shut off the water. A home inspector can point out repairs that will need to be done in the next few years.
Make sure you shop around for a mortgage. Sticking with your regular bank can be costly. Approach several lenders, including banks and credit unions and get pre approved for a loan before you shop for a home. Sellers take pre approved buyers more seriously. To get the most favorable rate on a loan, you have to have a strong credit score of at least 740. A higher rate is given to those with lower scores which can cost you thousands over the life of the loan.
There’s a lot to think about when buying your first home. Take your time, do your research and don’t let anyone pressure you into buying a home you’re not completely sold on.
A Few Sellers Tips
Selling a home is one of the biggest financial transactions most people make, so you need to have an excellent real estate agent. Silicon Valley Agents can help!
The largest number of showings will occur in the first two to three weeks of a listing. The MLS (multiple listing service) systems and the Internet tend to drive the majority of showings. Many buyers are plugged in electronically. So the minute something new pops up that meets their criteria, they want to see it.
Ask your agent to give you a comprehensive list of the initial asking prices of nearby homes like yours, along with the final selling prices. How you set the price is important. A home marketed for $755,000 may not be seen by all of the buyers that you would like to see it. By lowering it to $749,500 the listing will appear within the computer search parameters of more buyers. Don't show the house before its ready. With 92% of home buyers using the internet as part of their search, photos are key.
Use lots of photos on real estate listings' websites. You need a good number of clear, well-lit, professional-quality pictures that show your house at its best. Check your home's street view on Google Maps. If it fails to show improvements you've made, make sure your broker addresses that in the listing. Do a Google search of your address to make sure nothing negative comes up, such as an old lawsuit or public records that have inaccurate information about your home's number of bedrooms.
The first thing a prospective buyer notices about a home is not the living room
but the front yard. So cut the grass, trim the hedges, rake those leaves, sweep
the sidewalks and power-wash the driveway. Make sure you don't have too many
potted plants scattered around the property, particularly those with dead plants.
Additionally, a de-cluttered room may appear bare to you, but the buyer won't think
so. You are not selling your things-- you are selling the space. Buyers cannot
visualize when there is too much stuff in the room.
Homes that don’t get shown don’t get sold. Don’t make it difficult for agents to get
their clients into your home – if they have to make appointments way in advance, or
can only show it during a very restrictive time frame, they will likely just cross your place off the list and go show the places that are easy to get into.
When you choose an experienced real estate agent to list your home, who has a successful track record of selling homes in your area, listen to their recommendations! Choose an agent you trust and follow their advice.