Bay Area Real Estate Sales.com Newsletter

June 2005

 

IN THIS ISSUE:

 

Marin & San Francisco Home Sales Statistics

Eight Tips for Protecting Yourself When You Buy a House

Homebuyers Pick Amenities Over Space

Existing-Home Sales Rise to Record in April

Interest-Only Loans Not Good Choice for All

Fast Facts

 

Marin & San Francisco Home Sales Statistics**

 

There continues to be a strong sellers market for homes priced under $1,500,000.  If you are looking to buy a home in any of the communities with greater than 40-50% of the homes in contract, be prepared for multiple offers.  If you are thinking of selling your home, now is the time, as we are still experiencing a lack of inventory.  For example, 80% of all the homes

for sale in Larkspur and 65% of the homes in Corte Madera are currently in contract! 

 

 

 

 

 

 

 

**Charts represent information gathered from BAREIS and SFMLS at a specific point in time.

***Includes all: Sale Pending & Contingent properties

 

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Eight Tips for Protecting Yourself When You Buy a House

By Liz McCarthy

 

If you're getting ready to buy a house during what is typically the busiest buying and selling time of the year, then offers may be flying, loans may seem confusing, and everything may be moving way too fast. That's why it's important to do everything you can to protect yourself throughout the entire home-buying process.

 

Low mortgage interest rates and a strong underlying demand for housing are continuing to drive home prices higher.

And the NAR says that many states that saw sales decline actually had a shortage of homes for sale - and the biggest price increases.

 

Too many buyers, not enough sellers is making this an exceptional sellers' market ... Bidding wars are still the norm especially in the first-time buyers market of single-family homes.

 

What this means if you're buying during the frenzied spring and summer months is that you'll need to do everything you can to protect yourself as you make offers, obtain your loan, buy insurance, and strike up contracts.

 

Freddie Mac offers a number of tips:

 

·          Get pre-approved for a loan. With competition fierce, you'll want to be ready to make an offer. With a pre-approved loan, you'll have more clout as the seller considers your offer.

 

·          Make sure it's in writing. Don't settle for verbal agreements. If the seller says he'll replace the carpet or leave his washer and dryer, get it in writing.

 

·          Get a good-faith estimate. Your mortgage lender is required to provide you with a good-faith estimate of closing costs within three days of receiving your application. They need to provide it in writing. If you don't have to pay loan application fees, you may want to compare lenders and compare closing costs.

 

·          Don't settle for the first lender you come across. Contact at least three lenders and compare rates.

 

·          Lock-in your rate. One of the most stressful parts of the loan process is watching rates inch up and down each day and trying to figure out when to lock in your rate. Once you do lock in, be sure to get a written statement that outlines your interest rate and length of the lock.

 

·          Get a home inspection. A professional home inspector will examine the house's major systems and let you know if there are any problems or defects. You can then use the information in your negotiations. Look for an inspector who is a member of the American Society of Home Inspectors. Members are required to have completed at least 250 paid professional home inspections and passed two written exams that test the inspector's knowledge. Also, ask for references.

 

·          Shop for homeowners' insurance as soon as your offer is accepted. The National Association of Realtors recently cautioned homebuyers to not take homeowners insurance for granted. You and your spouse may have a clean claims history and a stellar credit history - something insurance companies use to determine whether they will insure you - but it's not just you they're looking at. If the house you're eyeing has had claims, there's a chance they won't insure you, especially if it's a water-related claim.

 

·          Read everything. When you have the closing meeting to sign the mountain of papers, make sure you read through everything carefully and don't hesitate to ask questions if there are something you don't understand.

 

Finally, give yourself enough time between your closing and your move date, just in case there are delays in the closing process.

 

 

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Homebuyers Pick Amenities Over Space

May 11, 2005 - Given the choice between more space or higher quality features, new home buyers are overwhelmingly opting for the latter, according to the latest survey data from the National Association of Home Builders (NAHB).

 

When asked to choose between a bigger house with fewer amenities or a smaller house with high quality products and amenities, 63 percent of the home owners surveyed by NAHB opted for the latter. To pay for those quality features, 57 percent said they preferred for them to be included in the base price of the home; while 43 percent wanted them to be offered as options at extra cost.

 

"One particular consumer trend stands out: While homes do not appear to be getting bigger, they are definitely getting better. There is a marked increase in quality, with updated features and amenities," said Jerry Howard, executive vice president and CEO of NAHB.

 

The households who were surveyed indicated enthusiasm for just about every upscale feature available, Howard said, but became more realistic in their views when they were asked to choose among alternatives.

 

Among several other observations on what people want in their new homes:

 

- The top features home owners want in the kitchen are a walk-in pantry (84 percent), island work area (77 percent), special use storage (62 percent) and built-in microwave (62 percent).

 

- Thirty-seven percent said they wanted their kitchens visually open to the family room, with a half wall; 34 percent want the two completely open.

 

- The top bathroom features were a linen closet (91 percent), exhaust fan (88 percent) and separate shower enclosure (78 percent).

 

- Nine-foot ceilings are now a standard height, up from eight feet previously. "Consumers say it provides more openness, more light and makes the home feel bigger," said Howard.

 

- Younger households prefer their washer and dryer to be located near the bedroom; older households prefer them near the kitchen.

 

- Brick was preferred by 44 percent of respondents as the front exterior wall material for their homes.

 

- Asked to choose between more space in the master bedroom and less in the master bath or the opposite, 69 percent chose more bedroom space. "Some of the master baths have been getting bigger than the bedrooms themselves," Howard said.

 

After growing steadily since 1970, the average home size leveled off during the past three years and stood at 2,340 square feet in 2004. This is close to the 2,426 square feet that home owners said they would like to have, according to Howard.

 

Looking at trends for the next five years, he predicted growing popularity for low-maintenance, natural materials; synthetic stucco; energy efficiency; and security on the outside of the home.

 

Inside, open space, quality features, technology and special purpose rooms are on the upswing.

 

An emerging trend in the higher end market is the advent of a "flex" room or "bonus" room situated above three-car garages.

 

"These rooms can be over 1,000 square feet and include a full-bath. We are finding that home owners are using them for a variety of purposes - as an in-law suite, a guest room, home office or media room," said Howard.

 

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Existing-Home Sales Rise to Record in April

(May 24, 2005) --   Existing-home sales hit a record high in April, defying expectations of a modest slowing trend in 2005, according to the NATIONAL ASSOCIATION OF REALTORS®. Single-family home sales rose 4.5 percent in April to a record seasonally adjusted annual rate of 6.28 million from a level of 6.01 million in March.

Last month's sales activity was 5.0 percent above the 5.98 million-unit pace in April 2004. The median single-family home price was $203,800 in April, up 15.1 percent from a year earlier.

Total existing-home sales-including single-family, townhomes, condominiums, and co-ops-rose 4.5 percent in April to a seasonally adjusted annual rate* of 7.18 million from a downwardly revised pace of 6.87 million in March. April sales were 5.7 percent above the 6.79 million-unit pace in April 2004. The previous record was a sales rate of 7.02 million in June 2004.

David Lereah, NAR's chief economist, says sales had been expected to hold at high levels. "A new record is a bit unexpected, but so is the performance of mortgage interest rates, which have been lower than forecast," he says. "When we look at recent job gains, we see all the positive factors coming together to coincide with a powerful demographic demand for housing."

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 5.86 percent in April, down from 5.93 percent in March; the rate was 5.83 percent in April 2004. Last week, the 30-year fixed dropped to 5.71 percent.

NAR President Al Mansell, CEO of Coldwell Banker Residential Brokerage in Salt Lake City, says home prices have accelerated. "We've been facing a significant shortage of homes available for sale," he says. "Although housing supplies rose last month, it wasn't enough to take pressure off of prices gains, which are the strongest we've seen in nearly 25 years. The dynamics of the market underscore the value of housing as a solid long-term investment."

The national median existing-home price for all housing types was $206,000 in April, up 15.1 percent from April 2004 when the median price was $179,000. The median is a typical market price where half of the homes sold for more and half sold for less. The last time prices rose at a stronger pace was in November 1980 when the median price rose 15.6 percent from a year earlier.

Total housing inventory levels rose 5.0 percent at the end of April to 2.48 million existing homes available for sale, which represents a 4.2-month supply at the current sales pace.

Existing condominium and cooperative housing sales also hit a record, increasing 4.8 percent to a seasonally adjusted annual rate of 899,000 units in April from a level of 858,000 units in March. Last month's sales activity was 10.7 percent above the 812,000-unit pace in April 2004. The median condo price was $223,600, up 18.4 percent from the same month a year ago. Condo sales last month accounted for 12.5 percent of market activity.

Single-family home sales rose 4.5 percent in April to a record seasonally adjusted annual rate of 6.28 million from a level of 6.01 million in March. Last month's sales activity was 5.0 percent above the 5.98 million-unit pace in April 2004. The median single-family home price was $203,800 in April, up 15.1 percent from a year earlier.

 

Regionally, the home resale pace in the South jumped 7.4 percent from March to a record annual rate of 2.74 million units in April, and was 8.3 percent higher than a year ago. The median price of an existing home in the South was $176,000, which was 8.0 percent higher than April 2004.

Existing-home sales in the West held even at an annual rate of 1.61 million units in April, and were 2.5 percent higher than April 2004. The median existing-home price in the West was $305,000, up 21.0 percent from the same month a year ago.

* The annual rate for a particular month represents what the total number of actual sales for a year would be if the relative pace for that month were maintained for 12 consecutive months. Seasonally adjusted annual rates are used in reporting monthly data to factor out seasonal variations in resale activity. For example, home sales volume is normally higher in the summer than in the winter, primarily because of differences in the weather and family buying patterns.

Existing-home sales, which include single-family, townhomes, condominiums, and co-ops, are based on transaction closings. This differs from the U.S. Census Bureau's series on new single-family home sales, which are based on contracts or the acceptance of a deposit. Because of these differences, it is not uncommon for each series to move in different directions in the same month. In addition, existing-home sales, which generally account for 85 percent of total home sales, are based on a much larger sample-nearly 40 percent of multiple listing service data each month-and typically are not subject to large prior-month revisions.

Existing-home sales for May will be released June 23. The next Pending Home Sales Index will be on June 1 and the forecast will be revised June 8.

-NAR

 

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Interest-Only Loans Not Good Choice for All

(May 18, 2005) --   Interest-only loans have risen from 1.5 percent of all mortgages in 2001 to 31 percent as of last year, according to LoanPerformance, a real estate information firm based in San Francisco.

The growth of interest-only loans is a concern because the sheer number of borrowers indicate that people are turning to the mortgage product to purchase homes they otherwise could not afford, including families who want to get into expensive housing markets.

The product is ideal for wealthy households, people with irregular incomes and strong self-discipline, and young professionals fresh out of school who anticipate a sharp increase in their income, all of whom likely would be able to handle a 50 percent increase in their monthly payment once the principal payments kick in and interest rates increase.

Most interest-only loans carry adjustable rates. A 30-year loan is likely to have an interest-only feature that ends after 10 years, which means the entire principal must be paid off over 20 years.

Source: Business Week (05/18/05); Coy, Peter

 

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Fast Facts

 

Calif. median home price - Mar. 05: $495,400 (Source: C.A.R.)

Calif. affordability index - Mar. 05: 18 percent (Source: C.A.R.)

Calif. highest median home price by C.A.R. region Mar. 05:
Santa Barbara So. Coast $1,150,000 (Source: C.A.R.)

Calif. lowest median home price by C.A.R. region Mar. 05:
High Desert $264,320 (Source: C.A.R.)

Mortgage rates - week ending 5/12:
30-yr. fixed: 5.77%; Fees/points: 0.5%
15-yr. fixed: 5.33%; Fees/points: 0.6%
1-yr. adjustable: 4.23%; Fees/points: 0.6%
(Source: Freddie Mac)

 

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The Bay Area Real Estate Newsletter is provided to you by:

Liz McCarthy

Real Estate Broker, e-PRO certified

Liz@BayAreaRealEstateSales.com

415-250-4929  (office)

415-250-4929 (cell)

60 Belvedere Drive

Mill Valley, CA  94941