2010 Year End Market Report

With 2010 coming to an end, I want to wish you a healthy and prosperous 2011. This year again has been a very challenging year in real estate for many owners, buyers and agents. The foreclosures and short sales are a big part of our transactions. Fewer new construction activities broke ground, mostly; the builders are trying to finish their current projects. The employment has improved a little in the Silicon Valley (we are very lucky to be here), but overall the State unemployment is over 12%.

Santa Clara County is following the slow economic growth that exists state/nationwide. The foreclosures and short sales have spread into all area including the very high end. We are seeing short sales and foreclosures are in parts of Los Altos, Palo Alto, Saratoga, Cupertino and Los Gatos affecting 1M+ price tag homes.
Overall the median single family home prices in the Santa Clara County rose to about 8% since October 2009. The increase was more than 12% earlier this year but we lost some grounds due to the end of the first time home buyer’s tax credit that ended April 30, 2010. At this point, I believe that we have lost approximately 15% to 30% in home values from their peak depending on the area and the price range. The most desirable areas under 2M have experienced 15% to 20% drop.

Here are the median single family home prices since March, 2009,  Santa Clara County:
March 2009  $450,000
October 2009  $593,000
October 2010  $641,500
**You can see the effect of Federal and CA State Tax Credit Programs from above numbers.
Comparison of last 12 months ending October 31, Santa Clara County Single Family Stats:                                                                    
                                                                                                    2009                            2010
Total closed sales                                                             11308                            11460
Distressed Sales (Bank Owned
& Short Sales)                                                          5705         50.5%          4115      35.9%
Sales under      $500K                                          5450        48.2%          4217      36.8%
Sales between $550K to $1M                          4349         38.5%        5023      43.8%
Sales between $1M to $1.5M                            1067           9.4%         1524      13.3%
Sales Over $1.5M                                                     590           5.2%            850        7.4%

List of 2010 Improvements as per the above numbers:
1. 28% less distressed homes have sold
2. 23% less homes have sold under 500K
3. 15% more homes have sold between $500K to 1M
4. 43% more homes have sold between $1M to $1.5M
5. 44% more homes have sold over $1.5M

Bottom line, it is very encouraging to see such a high improvement in sales of properties $500K+ and $1M+. Also having a lot less distress home sales and a lot less under $500K home sales indicates that the low end has come up in value pushing more mid to high end sales.

The Interest Rates: “ARE THE LOWEST IN 50 YEARS!!!”. Loan below 417K, 30-yr fixed are around 4.0% to 4.75%. Below 729K are around 5% to 5.5% and the Jumbo loans above 729K are around 5.5% to 6%.  (as of November 25, 2010)
Good News 1: more homes are selling above 500K and $1M
Good News 2: the interest rates have made it possible for more buyers to qualify to purchase homes and to consider higher priced homes.
Good News 3: It is a great time to take advantage of lower priced homes, lower interest rates and flexible sellers who have to sell.
Good News 4: Record numbers of re-finance loan processing. More home owners are taking the advantage to refinance their homes and get the lower interest rates. Many even did 2-3 times in the past 2 years – without paying any fees.

Statewide, the inventory has leveled or is down across the board in all counties. As per CAR, 51% of all home sold, had multiple offers. There are a lot of cash buyers taking advantages of the bargain priced homes in the Central Valley. Short sales and foreclosures are the main activities in those markets.

Summaries: the employment in Silicon Valley is improving at a much better rate than any other areas. High tech is the engine that is powering our employment growth. There is a lot of expansion in companies like Google, Facebook, Cisco and many others. We are seeing more hiring and relocations to our area this year than in the previous 3 years. Another note, the bank did not flood the market with foreclosures, they market their properties in a controlled fashioned in order to obtain the highest value and the the least amount of loss.

There you have it. My 2010 Silicon Valley market assessment. Please do not hesitate to write or call me should you have any questions.

Wishing you and your family a peaceful, safe and happy holiday seasons!

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