Market Trends Report

May 2018 Silicon Valley Real Estate Market Trend Report 

Santa Clara County (SCC): The Median Price for Condos Continues Rising

The median price for condos was 28.9%, year-over-year, to $915,444. This is the second month in a row the median price for condos has set new highs. Notably, the median price for condos has been higher than the year before every month since July of 2011!

The median price for single-family, re-sale homes stayed at the high it set in March. The median price for homes rose 22.1% over last April to $1,450,000.

The median price for homes has been higher than the year before by double-digits ten months in a row. The average price was up by double-digits for the ninth consecutive month.

This is also the 74th month in a row the median price has been higher than the year before.

The average price for homes was up 20.0%, year-over-year, to $1,722,370.

The average price for condos was up 24.5% over last April.

Multiple offers continue to be the norm. The sales price to list price ratio, or what buyers are paying over what sellers are asking remains at triple digits: 112.4% for homes and 114.8% for condos.

The ratio has been over 100% for homes since March 2012 and for condos since April 2012.

Homes and condos are flying off the shelf. It is taking only fifteen days to sell a home, on average. Condos are taking nine days.

All this is due to an incredible lack of inventory. Since January 2000, Santa Clara County has averaged 94 days of inventory. Last month it was twenty-three.

Condos have averaged 87 days since 2000. Last month it was seventeen.

As of May 7th, there were 753 homes and 229 condos for sale in Santa Clara County.

March 2018 Sales Statistics (SCC)

* Total inventory is active listings plus pending     listings. Active listings do not include pending.

More information is available in our on-line report at http://avi.rereport.com/market_reports

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Selecting the Right Mortgage (SCC & SMC)

Selecting the type of mortgage that best suits your needs is not a simple undertaking. The right mortgage will depend on many different factors, including your financial situation and how you expect it to change in the future, how long you’d like to keep your house, and how comfortable you are with the possibility of your mortgage payment changing.

For example, a 15-year fixed-rate mortgage can save thousands of dollars in interest payments over the entire term of the loan, but your monthly payments will be greater. With an adjustable-rate mortgage, you may start with a lower monthly payment  — but your payments could increase.

The best way to find the right mortgage for you is to discuss your finances, plans and preferences with a mortgage professional, whom your REALTOR® can recommend.

Fixed-Rate Mortgages

Fixed-rate mortgages, the most common type of mortgage, offer consistently stable monthly payments. Your property taxes and homeowner’s insurance may increase, but your monthly payments typically won’t fluctuate.

With fixed-rate mortgages, you have the option of choosing a 30-year, 20-year, 15-year or 10-year repayment plan. You may shorten the loan through a biweekly mortgage, allowing you to make the equivalent of an extra month’s payment per year. In selecting the length of your repayment, remember that a shorter loan carries higher payments but accrues less interest and allows you to build equity quicker.

Adjustable-Rate Mortgages

The interest rate on an adjustable-rate mortgage (ARM) is dictated by changing market rates. When interest rates rise, your monthly payments will go up, and when interest rates decrease, your monthly payments will go down accordingly.

ARMs often provide a lower initial interest rate than fixed-rate mortgages, attracting people who need lower payments early in the loan in order to qualify for a mortgage. ARMs also can benefit people who plan to move or refinance in the near future or those who expect their incomes to increase in the coming years.

Before applying for an ARM, find out how high your monthly payments can go during the life of the loan. An ARM includes two caps or limits on interest rate increases; one cap states the boundary for how high your interest rate can go during each adjustment period, and the other cap sets the maximum total amount of all interest adjustments over the entire term of the loan.
The rates of an ARM typically change once or twice a year, and there is usually a lifetime cap on both the individual rate adjustments and the total amount the rate can change over the life of the loan. By applying the terms of the caps to your mortgage payments, you can anticipate the worst-case scenario prior to applying and determine if this figure is in line with your finances.

REVERSE MORTGAGES
A reverse mortgage is a loan made to senior homeowners that allows them to convert the equity in their homes to cash for living expenses, home improvements, in-home health care, or other needs.
To obtain a reverse mortgage, you must meet certain criteria that differ greatly from the qualification requirements for other mortgages. Reverse mortgages are generally limited to borrowers 62 years or older who own their own homes either outright or nearly so. Homes also must be clear of tax liens. And, unlike other mortgages, seniors don’t have to meet income or credit requirements to qualify for a reverse mortgage.
Borrowers typically have the option of receiving the reverse mortgage’s proceeds in the form of a lump-sum payment, fixed monthly payments for life, or a line of credit. A reverse mortgage’s interest rate is usually an adjustable rate that fluctuates monthly or yearly. However, the size of monthly payments that borrowers receive doesn’t change.

BALLOON MORTGAGES
Balloon loans are short-term mortgages with some of the features of a fixed-rate mortgage, like low interest rates, but without the benefit of full amortization. As opposed to a 30-year fixed-rate mortgage, balloon loan payments only cover part of what you’ve borrowed during the term of the loan. At the end of the term, you’re required to pay off the loan’s balance by refinancing or making a lump-sum payment.
Balloon mortgages are typically five-, seven- or 10-year loans, so they can be beneficial to borrowers who anticipate selling or refinancing their homes in a short period of time.
Many companies offer a conversion feature at the end of the loan’s term. For example, the loan may convert to a 30-year fixed loan at the 30-year market rate plus a certain percentage point. To qualify for a conversion, you usually need to be in good standing with the payments on your balloon loan. Balloon mortgage programs with conversion options are also called a 7/23 convertibles or 5/25 convertibles.

BUY-DOWN MORTGAGES
Today’s mortgage lenders have developed variations on the old buy-down method of offering an interest rate that is 2 percent below the fixed rate for the first year and 1 percent below the fixed rate for the second year, followed by 28 years of paying the regular fixed rate. Buy-downs now charge higher interest in the beginning of the loan to cover the future yields.
For example, if the current market rate for a fixed-rate loan is 8.5 percent at a cost of 1.5 points, the buy-down gives the borrower a first-year rate of 6.5 percent, a second-year rate of 7.5 percent and a third- through 30th year rate of 8.5 percent. The cost would be 4.5 points.

Call or email me if you have any questions.

For further details and a city-by-city breakdown statistics, go to http://avi.rereport.com/market_reports.

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Do you want to be notifiedof investment opportunities across the country? send me a note with subject “investment’s opportunities

Do you want to be notified
of investment opportunities across the country?send me a note with subject “investment’s opportunities

Real estate related Articles

Avi Urban
January 2018
The Impact of the New Tax Law on Real Estate Ownership
California Today
March 8 2018
Peter Thiel Is Leaving Silicon Valley. Will Others?
By DAVID STREITFELD and JOSE A. DEL REAL
East Bay Times
March 2018
New study: SFO, Foster City, other SF Bay shoreline areas are sinking, at risk for major flooding
Paul Rogers
Real Estate Matters  Real Estate Matters. Representing both buyers and sellers: A conflict of interest? Read more Dual Agency
Michael Repka

California homeowners interested in building accessory dwelling units on their property just caught a break, potentially shaving off thousands of dollars in fees and permits.
In a move proponents say will help ease the Bay Area’s housing crisis, Gov. Jerry Brown on Tuesday signed Senate Bill 1069, making the so-called “granny units” easier and less expensive to build throughout the state.

For more read California eases restrictions on ‘granny units’
and http://www.hcd.ca.gov/policy-research/AccessoryDwellingUnits.shtml

Helpful resource for home owners

Many new home owners or owners who consider remodeling or rebuilding their homes should take advantage of their county Tax Assessor web site. These web site and their respective city building departments web site typically have vest information regarding the process for applying for permits, the impact on their taxes and many other resources that home owners should be aware are available for them.
For the San Mateo County Tax Assessor office visit http://www.smcare.org/default.asp
For Santa Clara County Tax Assessor visit https://www.sccassessor.org/index.php

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The Silicon Valley 150 Index Corner

The Silicon Valley’s Real estate market is a derivative of the local economy–it prospers and withers depending on how well the local innovation-based sector performs. The San Jose Mercury News tracks the performances of the largest 150 publicly traded companies headquartered in Silicon Valley through an index called the SV150, which may be found at www.mercurynews.com. Stocks are valued based on several criteria, but one of the more important criteria is a company’s future earnings. Therefore, I see the SV150 as a leading indicator for Silicon Valley’s real estate market.

Investors Corner

S&P CORELOGIC CASE-SHILLER NATIONAL HOME PRICES:  CITIES IN THE WEST CONTINUE TO LEAD HOUSING MOMENTUM

NEW YORK, APRIL 24, 2018 – S&P Dow Jones Indices today released the latest results for the S&P CoreLogic Case-Shiller Indices, the leading measure of U.S. home prices. Data released today for February 2018 shows that home prices continued their rise across the country over the last 12 months. More than 27 years of history for these data series is available, and can be accessed in full by going to https://goo.gl/2h1N5N

Is it time to seriously consider investing in real estate?

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San Mateo County (SMC): Median Prices Set New Highs, Again

The median price for both single-family, re-sale homes and condos set new all-time highs in March, for the second month in a row.

The median price for homes has been higher than the year before by double-digits seven months in a row. The average price was up by double-digits for the fifth month in a row.

The median price for homes rose 20.0% over last March to $1,610,000. That is a $5,000 gain over the record high set in February.

This is also the 24th month in a row the median price has been higher than the year before.

The average price for homes, which set a new record in February, was up 27.6%, year-over-year.

The median price for condos gained 12.4%. The average price for condos was up 12.3% over last March.

Multiple offers continue to be the norm. The sales price to list price ratio, or what buyers are paying over what sellers are asking remains in the triple digits: 113.3% for homes and 111.8% for condos.

The ratio has been over 100% for homes since April 2012 and for condos since June 2012.

Homes and condos are flying off the shelf. It is taking only fifteen days to sell a home, on average. Condos are taking nine days.

All this is due to an incredible lack of inventory. Since January 2003, San Mateo County has averaged 83 days of inventory. Last month it was twenty-three.

Condos have averaged 92 days since 2000. Last month it was fifteen.

As of April 5th, there were 262 homes and 58 condos for sale in San Mateo County.

April 2018 Sales Statistics

* Total inventory is active listings plus pending listings. Active listings do not include pending.

You can get more information at: http://avi.rereport.com/market_reports

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Call or email me if you have any questions.

For further details and a city-by-city breakdown statistics, go to http://avi.rereport.com/market_reports.

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Looking to Downsize?

Keep Your Property Tax Base

Under Proposition 60, California homeowners 55 and older get a one-time chance to sell their primary residence and transfer its property-tax assessment to a new one, but the market value of the new home generally must be equal to or less than the market value of the old home.

Prop. 60 was designed to help longtime California homeowners who want to downsize but don’t want to give up the low property-tax assessment they enjoy in their existing home.

Under Proposition 13, homes are reassessed for property-tax purposes when there is a change in ownership or new construction. In between ownership changes, the assessed value can go up by an inflation rate not to exceed 2% a year. (Homeowners can get temporary reductions when property values go down.)

Prop. 60 lets homeowners 55 or older transfer their base-year value from an existing primary residence to a new primary residence, but there are restrictions.

The new home must be in the same county as the old one or, as Proposition 90 added, in one of eleven counties that accept transfers of base-year value from other counties. The eleven counties are: Alameda, El Dorado, Los Angeles, Orange, Riverside, San Bernardino, San Diego, San Mateo, Santa Clara, Tuolumne and Ventura.

Also, the new home must be purchased or built within two years – before or after – the sale of the original property.

If the new house is purchased before the old house is sold, the market value of the new house on its purchase date cannot exceed 100% of the old home’s market value on the date it is sold.

 

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