January 2nd, 2013 · No Comments
September 1st, 2012 · No Comments
The San Francisco real estate market report is that the median price of single-family and condo is up 1.6% over July’s median price. It is up over 10% from August 2011 which are really good strong appreciation gain over last year!
Sales also were also up 11% from the previous month and up 19% over August 2011. The active inventory is up a bit over last month, 1.5% but down by half from September 1, 2011 from 1,160 to 558! Properties that are going through the escrow process, in contract or pending, on September 1, 2012 are down both from the previous month and the September 1st last year.
A new statistic that was quoted in the paper last week was the “age of the active properties”. This number shows the average “days on market” (DOM) of the active properties. I’ve set up an analysis to be able to track the number which is 57 DOM for single-family and 77 DOM for condo properties. This might be interesting to look at in conjunction with the usually quoted average DOM of the sold properties.
The market last month had a supply of 1.1 month for both products, which means that the number of active properties is a bit over the number of sales in one month.
This is a tough market for buyers but a great market for sellers.
July 3rd, 2012 · No Comments
Lest you think I didn’t run the numbers this month here are the San Francisco Real Estate market facts.
The top news is that the median price, $772,500 is up 10% over June of last year. It is also up 4% over May 2012.
Why is pretty obvious – inventory is very low. The inventory is less than half what it was in June 2011 and is even 13% lower than last month! With low inventory sales are still rising. Sales in June were up 31% over June 2011 and up 12% over last month. The numbers of properties in contract as of the 1st of July are up 13% over the prior year but down 7% from May 2012. The available inventory is only a bit over a month’s supply for both condos and single-family homes leaving the market in a strong seller’s market.
The graph shows the median price each month from January 2007 to last month.
June 1st, 2012 · No Comments
Here is the real estate report for the San Francisco market;
Properties that are for sale as of the first of the month are down 6% from last month and down 87% from the June 2011. Obviously this is the where the story lies! The number of properties sold in May 2012 is down 4% from May 2011 and even with last month. The median price for single-family and condo properties is up 6% over the same month last year and equal with last month.
The median price for single-family separately is up from $768,000 to $805,000 in one month. This is the effect of the low inventory cause.
While the inventory is down dramatically from May 2011 the number of properties in escrow on June 1, 2012 is up 4.5% over May 2011. This shows the stark reality that there are more buyers buying fewer properties. That fact is also shown in the 44% drop in the average days on market.
Here is a graphical rendering of the inventory situation.
The inventory of properties for sale in San Francisco took a steep drop in at the end of 2011 and hasn’t recovered. In the national news we hear reports of “shadow inventory” which is the number of properties that are moving through the foreclosure process or that bank’s own and are holding on to for various reasons. If there are properties that can be sold bring them on the market! There are many buyers ready and able to buy right now!
March 1st, 2012 · No Comments
As of March 1, 2012 the real estate market stats from the MLS as compiled and analyzed by the author show an increase in the median price for both single family homes and condos sold in February 2012. Taken together the rise is 6.4% above last month and 9.2% above February 2011.
Inventory is consistently low down from the most recent high of 1,380 units in October 2011 to 712 units on March 1. 2012. The absorption rate, how many months to sell the current inventory at the sales rate of the last month, is less than two months for single family and a bit over three months for condos. Low inventory absorption rates like this are usually indicative of a “seller’s market”.
Activity as measured by the number of units that are “in contract” shows a small increase of 6.2% over February 2011 and up 13.5% over January 2012. Completed sales show an increase over January 2012 of 17% but a 50% decline from February 2011.
On January 1, 2013 “The Mortgage Forgiveness Act and Debt Cancellation” of 2007 on Primary Residence will expire.
January 8th, 2012 · No Comments
This means that if you were to strategically default on your mortgage after 1/1/2013 and you were underwater $100,000 you’d owe the IRS income tax on that amount. If you do it this year you won’t owe income tax on the debt relief.
In an article for the ABC15.com investigative report, Dean Wegner with WJ Bradley Mortgage Capital writes about his conslusion that you have to do what’s best for yourself and family rather than the mortgage company. He spells out the damage voluntary foreclosure will have on your credit score and makes the point that the money spent getting even on an uderwater property could force you to retire ten years later than if you default and move on.
I’ve been watching this issue for some time, first because of the “moral” weight put on homeowners that isn’t put on corporations making the stretegic decision to default on a loan. Then watching the housing value numbers as this recession has continued for the past four years I fear that millions of homeowners who are paying for mortgages that out strip the value on the property will add to the instability of our recovery.
With the ending of the mortgage forgiveness act there seems to be a new impetus to legislating debt reduction fincancing for all borrowers.
January 6th, 2012 · No Comments
Federal Reserve Bank of New York President William Dudley called on the U.S. government to try new programs to evive the housing market while saying the central bank may still consider ways to cut interest rates.
“I believe we should also develop a program for earned principal reduction for borrowers who are underwater but keep on making their mortgage payments,” Dudley said. “Such a program would strengthen the incentives for mortgage holders who are underwater to continue to stay current on their loans, and reduce the likely number of defaults” and real estate owned sales.
Here is a map showing levels of negative equity in America
January 4th, 2012 · No Comments
A segment of Early Show had CBS Moneywatch’ s Jill Schlesinger talking about strategic defaults; if you should do them, when you should do it and what are the costs of doing it. Here is a link to the segment “Strategic Foreclosure” .
She talks about using a simple calculation to determine if you should be considering walking away from you mortgage. She states that if you are 20% underwater on your mortgage it could be the best thing to do. Her example was a home valued at $200,000 with a mortgage of $240,000. In our area, where the median price is over $600,000 the amount owed above market value would more than $120,000.
Interstingly the time it takes for a property to regain the value owed using an assumed average of 3% appreciation is over 6 years. So if you are diligent in your payments on the interest owed and all properties appreciate over time you will be even again in 6 years or you can not service the debt and spend money putting your kids through school.
Obviously the downside is that you will not be allowed credit for seven years.
Also obviously anyone considering a strategic default should work with an attorney.
It seems that it would be better for all concerned to figure out a way for the 3 to 4 Million Americans who are making payments on loans that exceed the value of their homes to refinance the mortgage with debt reductions. Why do people need to go through the process of breaking a contract and suffer the full impact on future credit when the lender could retain 80% of a perfoming loan investment? Riddle me this . . .
All Housing in America is subsidized! Without Government support homeownership opportunities will disappear.
January 2nd, 2012 · No Comments
For all the folks who falsely believe that housing as we know it would exist without government subsidy really need to look a bit deeper into history.
I have to first admit that I felt the same way as I railed against below-market housing production and sales locally. Then I took an introductory course on urban planning and learned that all housing is subsidized by government. If you consider taxes not collected and government programs to foster homeownership the entire market comes into a different light. Yes all housing is subsidized!
Look at the homeownership situation before the FHA was created. We were a nation of renters living in apartments. Add in the GI Bill which in many ways created the equity growth of the “greatest generation” and a perspective grows that nothing grows without government support.
If the Fannie and Freddie are eliminated, as is being discussed, the thirty-year mortgage will disappear. Really can anyone imagine a lender giving a fixed credit rate loan for such a term unless it is the government which recognizes the LONG term benefit of homeownership?
I hope that those who believe, as I did, that government intervention is wrong can see the truth in what I learned. The problem isn’t government intervention; the problem is greed pure and simple greed.
There was money to be made selling loans, there was insurance against loss of principal if the borrower defaulted, and we saw corporate leaders who made millions while destroying companies that had succeeded for hundreds of years. We see now that we had CEO’s of the GSEs who succumbed to the greed and went deeply into leveraged positions.
Please look beyond the most recent situation to understand the importance of government support in the stability of America’s community through homeownership.
San Francisco’s market shows a median price decline but 26% more sales in December 2011 over the same month last year.
January 1st, 2012 · No Comments
Inventory, the number of residential properties available on the first of the month, is also down from the previous month and down by 67% over the same month last year. But the bright news is that the number of properties sold in December is up by 26% over the same month last year. The number of properties in escrow on the first of the month is also up over the prior year.
The large number of sales can be a sign that buyer activity is increasing and coupled with the low inventory sellers can move properties if they do the right things.