Risky Business

With the buying frenzies in 2013 so far, we heard ever aggressive, bold and daring offers from buyers and buyer agents. The conditions and situations are unprecedented. By throwing out unconditional offers, some predictable damaging consequences followed. Here are some instances:

1. Non Contingencies Offers – It is the trend in multiple offers world. Use this tactics to allure seller and secure the bid and stand out in among other offers.
Although offer being accepted quickly, the appraisal process may be blundered. Due to offerers swarmed in hitting price 15%- 20%, or more, than the asking, the appraised value may not support it. Since buyer does not have the appraisal contingency protection, buyer will have to come up the differences in order to get a loan, or else, buyer may loose the deposit money. Had buyer had the appraisal contingency as  an offer condition, he can reconsider this purchase. But in today’s market, buyers have no time to rethink, because if he does not take as-is in everything, the next person will. It’s just that crazy and practical! (Cash buyer may not have the loan concern, as long as cash buyers put in more cash!).

A regular 3% deposit on a million dollar purchase, it’s $30,000 stake, if buyer did not put down more.

2. By-Pass Inspection – As a responsible buyer, one always performs property inspection as an insurance of the product he buys. But in order to get the house fast, buyer under pressure to forgo this step. He may see everything looks nice and decent from outside but ignore the structural and functional parts of the house. Some may even think  since seller has done house inspection already, therefore,  I will skip this part. No one house has no crack line, one inspection may not say everything of the house. A second opinion will not kill the deal if no major problem is found. Actually, buyers will sleep better had he perform this process. And this will also avoid any “buyer’s remorse” or disputes in the future.

3. Ignore Disclosures – Due to lack of inventories, buyers are too concentrated  in figuring out numbers and  ignore another most important process- exam  the disclosure packages. (I have seen occasions that disclosures are not yet ready but houses gotten sold already!!!). Spending quality time examining the property is the basic procedure in buying your home, in order not to spend that $10,000 in termite fumigation, the eager buyers better check disclosures thoroughly.

4. Bidding Multiple Properties At the Same Time : In order to get the property, buyers  sign numerous contracts at the same time hoping there will be one got accepted. This tactics may add extra pressure on buyers and agents themselves.  Buyers may run the risk of getting two offers accepted and have to make decision in a very short time. Or buyer may encounter counter offers with multiples other contenders but loose the chance and timing in getting a better deal with the other offer. Timing is the essence in contract negotiation. Few minutes attention to key details can either get the deal or lose it.

I will continue more bidding war scenes in my next post.

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Lowest Inventory in the Decade of Silicon Valley

inv_sale.2

Please click the chart to enlarge the image. This is a valuable information of the Silicon Valley real estate inventory from 2001  to 2013.
The chart showed the inventory at each January of the year. Usually a healthy real estate market  inventory of 3,000 units and above support the market flow of support and demand  for 6-7 months. In January, 2013, we’ve only had 303 units for the NWQtr, Class 1 and Class 2 combined (see notes below for definition). Which explains why good new listings come to market and got sold right away. And price wars continue.

Also, January 2008, the inventory had its peak of more than 5,649 units in the market,  but at the same time closing was only 476 unit in that month for both Santa Clara County Class 1 and Class 2. (Lowest sale in the decade). That’s because most of the inventories were distressed homes and economy was about to melt down, home buyers were reluctant to buy.

I hope this valuable information will prepare home buyers of  this Spring season. The market in the Valley is very robust and buyers have to be more than ready in order to win.

Note:
Class 1 = Single Family Residence
Class 2 = Townhomes/Condos
SCC = Santa Clara County
NWQtr = NorthWest of Highway 17/011 & SouthWest of Menlo Park/101 = SILICON VALLEY

2012 Silicon Valley Real Estate Report

2012年矽谷的地產物業可以用快速暖化來形容. 交易呈現多頭競” (multiple offers)”現象.short sale 的存貨逐漸減少. 一直被市埸觀察家認定的銀行存貨”(bank owned, foreclosure properties) 流散市場現象也一直沒有發生. 導致貨存短缺, 房價上漲.

我們拿2010, 2011 2012 的存貨情況來比較

Active inventory, Single Family and Condo/T-houses for sale:

October 2010 inventory 4590 homes for sale

October 2011 inventory 3076 homes for sale, a 33% reduction in inventory

October 2012 inventory 1337 homes for sale, a 56% reduction from 2011, 71% reduction from 2010 

新屋及建築商

2012 年新屋市場供不應求. 建商通常還未推出新計劃就早被搶購一空. 有建商還有因上門登計者太多的緣故, 採取”公開抽籤競標” (lotto) 的方式來銷售. 有意買家紛紛投標下注,下最髙標者,得以成功地買到房舍. 另外, 在Gilroy 的一個新社區, 據說建商以低於市價一半的價格來吸引買主, 結果導致有意的買家在工地外搭篷露宿好幾夜, 打破了頭血拼,場面熱烈紛擾交加. 

矽谷就職狀況2012年也較去年有大改進. Santa Clara County 2012的失業率是7.9%. 2011 為9.5%. 加州的失業率今年是10.1%, vs 2011年的 9.5%.
以下是自2009 三月來的房價比較. 2009三月是價最低點. 房價中點是當月售價的中間點

 

March

October

October

October

October

 

2009

2009

2010

2011

2012

Median Prices

$450,000

$593,000

$641,500

$549,000

$691,000

以下是Santa Clara County 過去四年來房屋比較

 

2009

 

2010

 

2011

 

2012

Total closed sales

11,308

 

11,460

 

11,248

 

11,920

Distressed Sales (Bank Owned & Short Sales)

5,705

50.5%

 

4,115

35.9%

 

3,998

35.5%

 

3,476

29.2%

Sales under $500K

5,450

48.2%

 

4,217

36.8%

 

4,551

40.7%

 

4,147

34.8%

Sales Between $500K to $1M

4,349

38.5%

 

5,023

43.8%

 

4,600

40.9%

 

5,122

43.0%

Sales Between $1M to $1.5M

1,067

9.4%

 

1,524

13.3%

 

1,375

12.2%

 

1,531

12.8%

Sales Over $1.5M

590

5.2%

 

850

7.4%

 

838

7.4%

 

1,254

10.5%

 租賃市場水漲船

  空屋率降至3%以下,而房租卻因地點房屋狀況上漲了8%-15%. 租屋的存貨下降而租金上漲的原因是基於下例因素:

 1. 房東因被迫法拍或欠繳房貸而失去房產者需要2-3年以後才能再允許申請貸款購屋

 2. 銀行貸款審核嚴格導致買屋貸款申請減少, 租屋者增加.

 3. 因房屋被查封或股票巿場上的損失者因現金缺乏,導致頭款無著.

 4. 因借款信譽喪失而無力申請貸款

 5. 因失去工作而無法申請貸款

租賃的收益大有利圖導致投資者多取長期出租賃而非短期轉手出賣, 以期許現金流轉. 現巿場上大量缺乏可租房屋. 因地區而異, 矽谷存貨低於正常的60% -80%不等.

 

低利率政策促銷

 空前未有的低利率是帶動市場的原動力. 四十幾年來從未有如此優惠的利息. 奧巴馬總統的低率政策是希望刺激民眾的購買能力. 因低利率而有能力借更多的貸款. 因此貸款率3年來一直繼續往下跌. 今年的貸款率比去年平均低了 .5%.

以下是今年利率的例子(以2012 11月第一個星期0 (0 point):

貸款=     $417K=3.4% (conforming loans)

貸款=在   $417K to $625K=3.6% (Jumbo conforming)

貸款<髙於 $625K=4% (Jumbo loans)

矽谷房地產回升的情況比全國一般狀況來得快速且健康. 今年市場活絡的情况又比去年更明顯. 眾所皆知, 就業市場的興旺是帶動房屋巿場的主力. 矽谷就業市場. 髙科技的龍頭老大如 Apple, Google, Cisco LinkedIn 公司今年都有大量的顧工動作, 不少外地.外國的顧員,搬進矽谷來. 預計明年顧員的遷徙會更頻繁, 房屋市場活動應會更頻繁活絡.

 

如往常一樣, 謝謝您平日的𨶹心與照顧. 2012年是繁忙的一年. 2013 相信是會更加繁忙與競爭. 您如果有任何房地產業務上的需要與幫忙, 請與我聯絡. 我服務的範圍包括買賣房屋,租賃管理, 土地投資, 升等降等,換區遷移. 我可提供免費估價, 房屋改建包工等承包的介紹.

在此謹祝您全家闔府身體健康,佳節愉快. 2013更上一層樓!

Jin Chen, Realtor

 

Cell: 650-207-1421

Referral Realty, 1601 S De Anza Blvd. #150, Cupertino, CA 95014

Email: realtorjin@yahoo.com

 

 

 

 

2012 Silicon Valley Real Estate Market Year End Analysis

With 2012 coming to an end, I want to write this letter providing you with our housing market analysis for the year:

The market has heated up this year! There are mostly, MULTIPLE OFFERS! The number of distress property sales (the short sales and Bank Owned properties) is much lower.

As it was predicted, about the Shadow (foreclosed or ready for foreclosure homes) inventory that the banks are holding and that they would flood the market, did not happened this year either. Here is the inventory numbers:

Active inventory, Single Family and Condo/T-houses for sale
October 2010 inventory 4590 homes for sale
October 2011 inventory 3076 homes for sale, a 33% reduction in inventory
October 2012 inventory 1337 homes for sale, a 56% reduction from 2011, 71% reduction from 2010  

Santa Clara County’s employment is increasing faster than the rest of the state and the country again. The number of distressed sales has dropped in all areas including the southern part of Santa Clara County.

The construction activity has picked up much more; builders are paying higher prices for the buildable land or tear downs. The new homes are selling before they are completed. The profit margin for builders and developers has increased, so the demand is high for buildable land. In some new developments the builders are able to set a date for release of a number of the built homes for sale and the buyers are waiting in line at the development site for 3 to 10 days to be the first ones to choose. If the builder is releasing 10 homes, there are 30 to 50 buyers in line. Some builders are turning to lottery to choose the buyer.

Employment has improved much more in the Silicon Valley (we are very lucky to be here). Santa Clara County unemployment rate is at 7.9% vs last year at 9.5%.  The State unemployment is 10.1% vs last year 12%.

Here are the median single family home prices since March 2009, which was the bottom:

 

March

October

October

October

October

 

2009

2009

2010

2011

2012

Median Prices

$450,000

$593,000

$641,500

$549,000

$691,000

The Median Price is the middle point of all the homes that sold in the month.

Total number of single family homes sold and closed escrow in Santa Clara County in a 12-month period starting November 1st of each year and ending October 31st of the following year are as follows:

 

2009

 

2010

 

2011

 

2012

Total closed sales

11,308

 

11,460

 

11,248

 

11,920

Distressed Sales (Bank Owned & Short Sales)

5,705

50.5%

 

4,115

35.9%

 

3,998

35.5%

 

3,476

29.2%

Sales under $500K

5,450

48.2%

 

4,217

36.8%

 

4,551

40.7%

 

4,147

34.8%

Sales Between $500K to $1M

4,349

38.5%

 

5,023

43.8%

 

4,600

40.9%

 

5,122

43.0%

Sales Between $1M to $1.5M

1,067

9.4%

 

1,524

13.3%

 

1,375

12.2%

 

1,531

12.8%

Sales Over $1.5M

590

5.2%

 

850

7.4%

 

838

7.4%

 

1,254

10.5%

The rental market has improved tremendously again. The vacancy rates have dropped to less than 3% and the rental rates have increased 8% to 15% depending on the location and condition of the units.
The rental properties are producing much better cash flow and investors are actively purchasing more rental real estate for long term vs flipping the properties. The inventory of the income properties are at all-time low. I estimate the number of active income properties on the market is less than 60% to 80% depending on the areas. Most of them are selling with multiple offers.

The interest rates are unbelievable this year. It is amazing that I am repeating myself for the 3rd year in a row. In all my practice I have never seen rates this low. The rates on the average are about .5% below the last year rates. Here is a sample of rates as of the first week of November 2012 with zero points:

Loans under          $417K=3.4% (conforming loans)

Loans between      $417K to $625K=3.6% (Jumbo conforming)

Loans above          $625K=4% (Jumbo loans)

Good news 1: 56% lower inventory than last year. We will see higher prices in 2013.

Good news 2: the interest rates are even lower than last year making it more affordable.

Good news 3: the impact of the price increases are offset somewhat with the lower interest rates. Our top buyers in the market are: first time home buyers, move up buyers and investors.

Statewide, As per California Association of Realtors, the inventory is lower across the board in all counties; many homes are selling with multiple offers. There have been more multiple offer sales in the State of California in 2012 than in any years in the past.

My analysis, the employment in Silicon Valley is improving at a much better rate than any other area. Again, high tech is the engine that is powering our employment growth. There is a lot of expansion going on with some of our high tech companies like Apple, Google, Facebook, Linkedin and many others. We are seeing more hiring and relocations to our area this year than in the previous year again.

This year was a much better year than last year and I expect it to continue to get even better next year. We should have a higher number of sales, appreciation rate in the range of 8% to 10%, continued with low interest rates.

2012 has been a good year. I am thankful for your being around and all the great referrals that I have received from you.  As always, I appreciated your business and friendship. It is always a pleasure to talk with you when you call, whether it is business or just to say hello.

I am never too busy to answer any questions you might have regarding any real estate matters, and if in a rare chance I don’t know the answer, I will find it for you. I can also help you with any referrals for people in the home improvement profession to assist you with your home improvement projects or repairs at reasonable prices.

Wishing you and your family a happy, healthy and prosperous 2013!

Jin Chen

REALTOR, REFERRAL REALTY
650-207-1421 (B)
jchen@referralrealty.com

Inventory Crunch

Mr. and Mrs. Singh are frustrated with the current real estate market conditions. They recently submitted 2 offers in Cupertino (area 18), both were single family homes listed in upper 900K to 1M range. The properties have 3 bathrooms, 2.5 baths, around 1800 sq feet, moderately maintained and updated.

The first offer they presented was AT the asking price. They were 10 offers total. And they did not get a second chance. The listing agent was kind to tell their representative that theirs was in the bottom of all offers.
The following week, they made another offer. This time, they added $50,000 to the asking price. There were 7 offers total. 2 of them with cash and one of which has no contingencies. They did get a chance to counter: the seller asked all bidders to submit the highest and best offer.  In the end, the seller selected the offer which was clean (no contingencies) and 15% over the asking price.
Mr. and Mrs. Singh did not get it again, because they did not add enough. (8%)

Mr. and Mrs. Singh were not alone, they are just one of the eager buyers this house hunting season, baffled, frustrated and disappointed.

The reason made the real estate market so hot again in the Valley in past few months was the scarcity of inventories. Overall, all Bay Area cities are experiencing low inventories. In the Valley along, currently there are 1,640 units available (SFH + TH/CONDO), compared with last year this time, they were 3,726 units available.

Whereas, the SOLD UNITS,  of the same period are almost the same, 1625 vs. 1627.  This interprets: less inventory but fast closing. The demand is high.

The frantic bidding may or may not have backflash (appraisal issue. They were cases of 2nd and 3rd appraisal had to be ordered) . 10 to 15 percent over asking price was not rare.
The sold median prices in the Valley for the past 5 months has risen from $485,000 (Jan, 2012)  to $649,500 (May, 2012),  for single family homes. For town homes and condos, prices improved from $270,000 to $370,000.  A 34% and 37% jump respectively.

Mr. and Mrs. Singh may have to wait for a while to get the house they want. Let’s just keep the uptrend direction for the market for now. It’s about time to see real estate market to become hot again.

Stats source: MLS LISTINGS SERVICES

2011 Market Year End Letter

With 2011 coming to an end, I want to wish you a healthy and prosperous 2012.

The real estate market has stabilized. We are getting more of the distressed properties sold and out of the bank system. The number of short sales and REOs (Bank Owned properties) were about the same as last year. As it was predicted, about the Shadow (foreclosed or ready for foreclosure homes) inventory that the banks are holding and that they would flood the market, it never happened. Here is the inventory numbers:
Active inventory, Single Family and Condo/T-houses for sale
October 2010 active inventory 4590 homes for sale
October 2011 active inventory 3076 homes for sale, a 33% reduction in inventory
Santa Clara County is growing faster than the rest of the state and the country. As I mentioned last year, some short sales and foreclosures have appeared in the premium areas like Los Altos, Palo Alto, Saratoga, Cupertino, Los Gatos and Almaden Valley. These homes are primarily over 1M. Their numbers were extremely low and they are few and far between.
The construction activity has picked up a little; builders are able to buy land at a cost that makes sense to build, primarily in the low to midrange homes. Employment has improved a little in the Silicon Valley (we are very lucky to be here). We are at 9.5% vs. the State unemployment which is over 12%.
Here are the median single family home prices since March 2009, which was the bottom:
March 2009 $450,000
October 2009 $593,000
October 2010 $641,500
October 2011 $549,000
The Median Price is the middle point of all the homes that sold in the month. Since the number of sold homes under $500K increased and the number of the sales over $500K was fewer, the Median Price becomes lower. We actually have seen the prices move up at least 5% in last 12 months, some areas even higher.
The rental market has improved tremendously. The vacancy rates have dropped to less than 5% and the rental rates have increased 8% to 15% depending on the location and condition of the units. The reduction in the rental inventory and higher rental rates is due to the following factors:
1. Owners losing their homes due to foreclosure and short sales can only rent.
2. Tough lender qualification requirements, causing fewer buyers and more renters.
3. Many have lost their equity in real estate and stock market = no cash down for purchase.
4. Many have damaged their credit and will not qualify to purchase.
5. Many have lost their job and are not able to get a loan.
The rental market is staring to produce much better cash flow and investors are actively purchasing more rental real estate.
The interest rates broke its historical lows of 2004-2005. The rates on average are about .5% to .75% below the last year rates. Here is a sample of rates as of first week of November 2011 with zero points:
Loans under $417K=3.87% (conforming loans)
Loans between $417K to $625K=4% (this is the new Jumbo conforming)
Loans above $625K=4.5% (this is Jumbo loans). $729K (old jumbo loan limit) is no longer available

Good news 1: 33% lower inventory than last year.
Good news 2: the interest rates are even lower than last year making it more affordable.
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. Our top buyers in the market are: first time home buyers, investors and move up buyers.
Statewide, the inventory is lower across the board in all counties. As per California Association of Realtors, many homes are selling with multiple offers. There are a lot of cash buyers taking advantage of the bargain priced homes.
My analysis: the employment in Silicon Valley is improving at a much better rate than any other area. Again, high tech is the engine that is powering our employment growth. There is a lot of expansion going on with some of our high tech companies like Google, Facebook, Cisco, Linkedin and many others. We are seeing more hiring and relocations to our area this year than in the previous years.
This year was a much better year than last year and I expect it to continue to get even better next year. We should have a higher number of sales, appreciation rate of at least 5%, and continued low interest rates.
2011 has come and will be done. I enjoyed the constant contact with you. It is always a pleasure talking with you when you call, whether it is business or just to say hello. And as always, I appreciated your business and friendship. I am never too busy to answer any questions you might have regarding any real estate matters, and in the case I don’t know the answer, I will find it for you. I can also help you with any referrals for people in the home improvement profession to assist you with your home improvement projects or repairs at reasonable prices.
I think this is another great opportunity to buy if your situation allows. You do not want to feel bad later that you missed such a good market for purchasing real estate.

Wishing you and your family a prosperous 2012!

Jin Chen, REALTOR®
Work: 408-996-8100 x 316 Cell: 650-207-1421 Email: realtorjin@yahoo.com

Special Loan Assists Programs for Santa Clara County

There  are a few loan programs put togethered by Housing Trust of Santa Clara County are available for first time buyers.

A. CCAP — Closing Cost Assistance Program
Summery:
1.Differed loan of 3% of the purchase price up to $15,000 for down payment and/or closing costs.
2. 3% simple interest rate loan due on sale or refinance of home, or in 30 years.
3. No interest or principal payments due during term of loan.
4. For first-time homebuyers who have not owned a home in Santa Clara County during the past three years.
5. Minimun 3% contribution required.

B. MAP — Mortgage Assistance Program
Summery:
1. Maximum loan amount 17% of purchase price up to $85,000
2. Amortizing second loan with interest and principal payments due monthly.
3.Interest rate for the MAP loan is 1% higher than the interest rate of 1st loan. 30 year term.
4. For first-time homebuyers who have not owned a home in Santa Clara County during the last 3 years.
5. Minimum 3% borrower contribution required.

C. PAL — Purchase Assistance Loan Program 
Summery:
1. Differed 2nd loan up to $50,000 to help with the purchase of foreclosed and abandoned homes and those at risk of foreclosure in San Jose.
2. 30-year loan with 0 interest. Payment deferred until the expiration of the term, sale of home or refinance of the first mortgage.
3. Purchase price of home must be 1% below appraised value.
4. Property subject to environmental review and home inspection by the City of San Jose.

For  more information, qualifications, and how to apply, please visit Santa Clara County Housing  Trust website: www.housingtrustscc.org