WHY BUY NOW
11-12-07 - Posted by our good friend at Lawson & Associates, Gabe Bodner - Mortgage Planner

Many people ask the question, “Is now a good time to buy or should I wait?” The market in Northern California’s Bay Area is a market of opportunity. If you know what you are looking for and you have a good Realtor and Mortgage Planner working for you, there are many wonderful opportunities to buy a new home in today’s real estate market.

So you may ask why now? First, the geographic restrictions of Northern California proves there is a very limited amount of open space to build new homes. Developers simply cannot buy vacant land and continue to build new homes just anywhere. If someone wants to build a new home, they need to buy an existing home, tear it down and build a new house on the existing lot. There is a large premium associated with this process because the costs to buy an existing home, demolishing the house, and the costs to build new. In the end, the new house that is built then increases the value of the other homes in the neighborhood and adds a premium to the land value. It is this cycle that continues to push house prices higher in the bay area.

Second, there are more homes on the market than normal for this time of year. This is causing a softening in home prices. Sellers are motivated to sell and there are fewer buyers in the market. Since the media has sent so many mixed signals people have been more scared to buy. This has created a buyer’s market and a buyer’s market creates a competitive situation for sellers. In some cases, sellers are willing to reduce the sales price or give a credit to the buyer for closing costs just to attract buyers to their property.

Third, the job market. Companies are hiring and growing at a super accelerated pace. Companies like Google, HP, Apple, Adobe, and Oracle are growing and hiring locally. As they continue to hire, this creates job opportunities and a need for more people to buy houses. As employees continue to build wealth, they are investing in real estate.

Fourth, is household growth. What does this really mean? Due to the life cycle of families having babies and growing their families, we have an annual population growth between 220,000 to 250,000 people in California per year. However, we are building less than 150,000 (on average) new homes in California each year. Therefore, we have a net shortage upwards of 150,000 homes in California, every single year. This creates a continued demand for homes both for people who will own and people who will rent.

Fifth, interest rates. Mortgage rates are still very low. Rates are still between 6% and 7% on most home loans. These rates are historically very, very low. People typically do not buy homes solely on mortgage rates because they can refinance if rates drop. However, we are already at very low rates which makes the affordability of buying much easier.

The last reason why now is because in the spring there are always more buyers and less homes on the market. This in turn creates a sellers market and buyers are then competing with other buyers forcing home prices to go up because of the limited supply and the increased demand by buyers.

Today is a wonderful time to invest especially if you plan to hold onto the house for at least five years. If you have any questions regarding the above information, you can contact me directly at Gabe@BayAreaHomeFinancing.com or 650-492-4071.

A Good Time to Buy? Or Not.
by Ron Gable - Our VP/Manager in the HMB REVIEW 11/1/07

I always marvel at how the economics of our industry swings as the exterior influences affect the economy. Last year, the media was still talking about multiple offers and crazy things buyers were willing to do just to get sellers to accept their offers. The word overbid became commonplace in our real estate jargon and several slang words for overbidding were part of our normal dialogue.

People would talk about the number of offers on the properties they were selling, or buying. Neighbors would talk about houses down the street. “They got 6 offers…we got 8 offers…it sold for $100,000 over…we were able to get it for only 5% over the asking”.

Now in some markets particularly in parts of San Mateo County, some of those scenarios still exist. We are not seeing it in the degree we did at the height of the frenzy but are seeing some of it nonetheless. Because of the turmoil in the sub-prime market, the market dealing with high ratio loan to values particularly in the lower or starter price ranges has slowed quite a bit. Many of these “sub-prime” loans were made to borrowers who could not verify their income, had less than stellar credit and minimal or no down payment. Although there are still loans available for buyers that have moderate credit and can’t document their income, they do need a small down payment. What surprises me about this is that with some buyers not able to buy, many that are seem to be sitting on the sidelines. What I am sensing is that the feeling is “It’s not a good time to buy”. Because there are fewer buyers in the market, there are more available properties which means that some homeowners would be willing to accept less or offer more favorable terms than they would just a short time ago. And yet with all the negativity in the media, some buyers would rather sit it out. “It’s probably better to wait until the market and the other buyer’s situation improves. It will be more fashionable to buy then and I can feel good about beating

FORECLOSURES IN THE COUNTY HAVE TRIPLED (COAST ISN'T SO BAD)


There was an interesting article in the San Mateo County Times the other day. It appears that the current real estate market media hype, in the land of the sub-prime borrowers, has finally hit San Mateo County. Foreclosures are definitely more prevalent in areas where sub-prime loans were given to borrowers with less than average credit and with low down-payment. If it isn't just losing control of your debt situation sometimes people are also faced with "life" and the unexpected. Unfortanately, people cannot afford their home anymore.

Because it is our goal to provide excellent service we like to refer our clients to the most qualified lenders in the industry. One person who we like to work with is our good bud over at Lawson & Associates, Gabe Bodner. Gabe is so educated in his craft that he would never want to see his clients in the financial positions where they were in fear of losing their dream home.

According to RealtyTrac.com, there are currently 7 homes in pre-foreclosure and 5 homes ready for auction on the Coast. That is not too bad considering there are cities California where they are facing foreclosed homes in the 1000's. Ouch.

To save yourself from Foreclosure, here are some tips (Taken from the HUD website):

1. Contact your lender, immediately
2. Talk to a housing counseling agency, such as HUD
3. Prioritize your debts
4. Explore Loan Workout Solutions
5. Call your Realtor
6. Beware of Predatory Lending Schemes

FINALLY...OUR FALL IS HERE!

BLUE SKY BABY!


It has been rough the last couple of weeks. Rain, wind, some fog, overcast. We are so spoiled in late September and October. The days on the coast when there is nothing better than stopping by the pumpkin patches on Highway 92 then spending a day on the beach. We are pleased to announce that today was a picture perfect day. Light wind, 70 degrees, and what locals call pumpkin traffic. Don't worry - it goes away.

Fall is in the air. The Real Estate market usually picks up a little too. Good news, last week, 7 pending sales in our inventory (South HMB to Montara). As of today, 113 single family homes. If you can believe it, that is almost the same number of homes on the market as last year.