Thursday, June 23, 2016

Hottest US Real Estate Markets for Summer 2016!

Wow, it sure did get hot fast this year! Summer has barely unfurled, but the residential real estate market is already delivering the most blistering June in a decade, according to new data on inventory and user activity on®. Homes for sale in June are moving off the market 2% more quickly than last year as prices continue to hit new record highs.
However, there were signs of a slight—we’ll repeat, a slight—slowdown in a handful of the nation’s hottest markets.
“In June, for the first time that I can recall, the hottest real estate markets saw inventory movement slow down, while the rest of the country saw inventory speed up,” says Jonathan Smoke, chief economist of “We’ve essentially seen how low the age of inventory can go.”

“It’s like saying the A students had their grades slip by a point, but everyone else’s grades moved up,” he says.
Smoke’s team projects that the median age of inventory nationwide for the full month of June will be 65 days—2% less than June 2015 but the same as May. One-third of the 300 medium to large markets surveyed saw a month-over-month decline in the days that homes spent on market—some of them with a percentage decline into the double digits.

The hottest markets, identified by the team as those with the most views per listing and the quickest inventory movement, had homes selling 20 to 38 days faster than the rest of the U.S. The median age in the hottest markets increased by an average of 1 day from May.
Continuing this spring’s trend, pent-up demand from buyers who weren’t able to purchase a home last year, combined with low inventory, pushed up prices and got homes to sell quickly. Very quickly.
For-sale housing inventory is increasing on a monthly basis as is typical of the season, but total inventory remains lower than one year ago. An estimated 525,000 new listings are expected to come onto the market by the end of the month—a 3% increase over May—but that number will fall short of quenching existing demand—as evidenced by the higher prices. Compared with June 2015, listing inventory fell 5%.
Meanwhile, the median home list price was $252,000, 8% higher than one year ago and 1% higher than last month. However, much of the effect of higher prices is being offset by mortgage rates that are the lowest we’ve seen in three years, Smoke notes.
This month’s hottest markets list is (again!) dominated by California, but it’s sharing the spotlight with eight other states represented (Texas, Colorado, Indiana, Ohio, Michigan, Washington, Massachusetts, and New Hampshire). Dallas and San Diego joined the top five club, and Grand Rapids, MI, and Los Angeles returned to the top 10. With Grand Rapids, Michigan has three markets in the top 20. These markets comprise the greater metropolitan area, so Dallas also includes Fort Worth and Arlington, and Detroit includes Warren and Dearborn.
Seasonality is definitely a factor in these rankings, Smoke says.
“This is a peak time for people to be buying vacation homes in Michigan, because the weather is perfect. California markets tend to be fairly consistent—we don’t see huge changes.”

Thursday, June 16, 2016

Would a Proposed Rent Control Bring Silicon Valley's Soring Rents into Balance?

After years of punishing rent increases, activists across Silicon Valley and the San Francisco Bay Area are pushing a spate of rent control proposals, driven by outrage over soaring housing prices and fears that the growing income gap is turning middle-class families into an endangered species. Those campaigns, if successful, would lead to the largest expansion of tenant laws since the 1970s.

“In the national picture, tenants’ rights and housing advocacy for the poor has been pretty sleepy for several decades,” said Michelle Wilde Anderson, a law professor at Stanford. “California is starting to wake up, and it may lead to national change.”
The Bay Area may be a special case, with the growth of technology industries driving housing costs into the stratosphere and a California initiative system that allows citizens to put proposed laws on the ballot. But the state has a long history of being at the forefront of populist uprisings that spread across the country, and rent control movements have already popped up in other higher-cost cities like Portland, Ore., and Seattle.
In 1978, Proposition 13 sharply reduced California’s property taxes, presaging a nationwide tax revolt. More recently, the state government adopted one of the nation’s most expansive minimum wage laws, to $15 statewide by 2022, reflecting a populist tide against income inequality that the rent control effort is also riding.
“This is happening so fast that we in the advocacy community can’t even keep track of it,” said Daniel Saver, a housing lawyer who is helping draft rent control proposals in several towns.
Instead of being based in big cities like San Francisco, today’s renters’ rights movement is centered in the collection of suburbs and bedroom communities that fill the peninsula south of the city. Here, the collision of tech riches with decades of slow-growth development measures has pushed rent prices up about 50 percent over the last five years, according to Zillow, the online real estate pricing service.

Today, as in the 1970s, the economic prescription would be to build more and soon. But as tales of eviction spread and landlords raise prices to the limit, even people who acknowledge rent control’s problems argue that it is still the best instrument to help middle-class families and lower-paid service employees who can no longer live close to work.

“The solution to the overall increase in housing prices in this area is bringing supply and demand into better balance,” said Leonard Siegel, a city councilman in Mountain View, where Google has its headquarters. “But until we get there — which means we need time to build housing — we keep losing people, and the fabric of our community is being torn apart.”
Silicon Valley looks and feels suburban, lacking in pedestrians and full of single-family homes. It also has many tenants. In Mountain View, for instance, renters make up 60 percent of the households. And since this is a place where a $1 million starter home is considered a steal, those renters also include well-paid tech workers at some of the most valuable companies on earth.
“In many of these places, rent growth by far outpaces income growth,” saidSvenja Gudell, chief economist at Zillow. “And you will find that not only at the bottom of the market, but even at the top of the income distribution, where incomes are growing but not as fast as rents are growing.”
Google employees routinely show up at City Council meetings to speak out about rents and evictions. And after a 2014 election that served as a housing referendum by bringing Mr. Siegel and two other housing advocates onto the council, Mountain View is poised to add 15,000 new units, about a 40 percent increase in the housing stock.
Nevertheless, a group called the Mountain View Tenants Coalition is collecting signatures for a voter initiative in hopes of putting rent control on the November ballot. One of the group’s leaders and its chief spokesman, Evan Ortiz, is a 29-year-old Google employee who works in ad sales.

Thomas K. Bannon, chief executive of the California Apartment Association, a landlords’ group, said his members were mobilizing a statewide response and planning to spend millions of dollars — he would not estimate exactly how many millions — to beat back the initiatives one city at a time. The members’ message: Don’t blame landlords. Blame cities for making it so hard to build new housing.
“We recognize that if there isn’t new development and there aren’t dollars for affordable housing, we are going to be up against the wall,” he said. “The days of the industry trying to play below the radar are, unfortunately, over.”
Rent control is rare nationally, and it is generally left over from decades-old laws for urban areas of New York, California and New Jersey, as well as the District of Columbia. About half the states have laws prohibiting localities from regulating rent prices at all, according to the National Apartment Association, while others, including California, have imposed limits, such as making more recent buildings exempt.
Economists have an almost universally dim view of rent control because it does nothing to attack the underlying problem here, which is that more people want to live in the Bay Area and Silicon Valley than there are housing units to put them in.
Indeed, study after study has shown that while limits on rental increases may have helped a comparative handful of tenants stay in their apartments, they only added to a shortage of affordable housing and did little to stem the tide of higher costs.
Rent control also comes with unintended consequences. The supply of rental apartments can become tighter as landlords exit the business. The properties that remain can become shabbier as owners stop keeping up with maintenance.

“Rent control exists for a reason, and it’s because someone gains from it,” said Daniel Fetter, an economics professor at Wellesley College in Massachusetts. “The question is, ‘Is that really the best policy for achieving those ends?’”
But such abstruse arguments don’t carry much weight when many people are worried about being displaced, especially in the Bay Area, where losing a cheap apartment can mean moving an hour or more from work.
On a recent evening in Burlingame, a Silicon Valley bedroom community about 20 minutes south of San Francisco, a 66-year-old legal secretary named Cindy Cornell sat at a foldout table in a San Francisco Giants visor collecting signatures for another rent control initiative.
About half the households in Burlingame are renters, and the list of horror stories went up and down the economic ladder. There was a 36-year-old mother of one whose husband is an engineer who makes good money at a tech company. She signed because their landlord raised the rent to $4,600 from $3,400 while she was pregnant.
A woman with four children and a husband who paints houses signed because the rent on her two-bedroom apartment had risen to $1,600 a month from $1,400 a month in two years.
A half-hour later in nearby San Mateo, Reyna Gonzalez, a 57-year-old nanny, was going door to door with her granddaughter and a clipboard, finding voters for similar proposal.
Whether or not these efforts are successful, Mr. Bannon, from the landlords’ group, said he expected escalating housing costs to remain one of the state’s central political issues for years.
“My members are not going to put their buildings on wheels and move them out of California,” Mr. Bannon, the landlord lobbyist, said. “We’ve got to do something to build. We can’t continue like this.”

Tuesday, June 7, 2016

3 Facts of the "New Normal" in Bay Area Real Estate

1: This is a high-stress market and it will continue
Buying or selling a home is usually prompted by a life event: death, divorce, marriage, relocation, job change and increase or decrease in family. These life events often bring stress and buying or selling a house adds to this stress. Add in the drama of a notably contentious presidential campaign, toss in the uncertainty of the financial markets and then add the pressure of the fast-paced expensive Bay Area market where decisions and offers need to be made quickly.
Unfortunately, all this is here to stay for a while. Yes, any normal person would be hard-pressed not to feel like they were in a tornado.

2: Low inventory of good homes will continue to drive pricing. However, buyer demand is becoming tempered and more deliberate
Yet another reminder that markets invariably change. While our group of top agents acknowledged the low inventory, they also recognized that buyers were becoming much more selective and deliberate. They look, they think and if they don't "feel it" they move on. "Who cares if there is an offer date?" "Another day and another home will appear." "Maybe the home won't sell and we can buy it for less." If they don't see the value they pass.
As a client of mine once said during a previous hot market, "This market is so crazy even a burning house will sell." Not so any more. Many agents believe sellers are seeing the last days when homes with deficiencies will sell quickly for top dollar. Great homes in great locations, priced fairly and marketed properly are selling. However, we are now beginning to see situations where even these homes only have one offer and sometimes, unfortunately, none.

3: Now more than ever you must play to win
While we don't believe another downturn is on the horizon, having a Realtor with strategies to address even the slightest of market corrections is critical to success whether you are a buyer or seller. A San Francisco agent in our group told a story of a home with 12 disclosure packets out to potential buyers. When the offer date came his buyer did not make an offer. What happened? The buyer thought the home would sell outside his price range. Sadly for him, the home sold below what he was prepared to spend. The moral to the story is "nothing ventured nothing gained." We are entering into a shifting market. Don't be afraid to make an offer.

Finally: The bottom line is we are moving to a ‘new normal’
The "feet on the street" believe that the outlook for the rest of the year remains positive, but moderating, with a continuing but more purposeful demand for Bay area housing.

Saturday, May 21, 2016

7 Outdoor Features That Attract Buyers

If you’re considering putting your home on the market, don’t neglect your outdoor space while making improvements indoors as well.
Your home’s exterior and the backyard are important in drawing the eyes of potential buyers and making your home as appealing as possible. Here are some modern trends in outdoor living that will entice today’s buyers.

Outdoor structures

These outdoor structures boost the function, and therefore increase your home’s value. These structures make the backyard, and even the front yard in some homes, more functional. An outdoor structure can be something simple like a gazebo or pergola, or even an outdoor kitchen, that provide more outdoor living space.

Privacy in outdoor spaces

The outdoor living space is considered more than just a backyard for the modern buyer. Today, the outdoor space is an extension of the home. People are moving indoor furniture outdoors, adding fireplaces and even installing televisions. Yet when they are relaxing outside, individuals want a measure of privacy. No one wants to be gawked at when enjoying a drink and watching the game after a long day at work.

Water features

Water features are a desirable upgrade to outdoor living spaces. They create a tranquil environment and peaceful setting to allow a homeowner to enjoy relaxing in their own sanctuary. Water fountains, waterfalls, koi ponds, pools or a combination of all of these water features add to the enjoyment and help create a serene setting that any buyer will find attractive.

Outdoor kitchen

More and more meals are being cooked outdoors, and the modern outdoor kitchen includes more than just a gas or charcoal grill. An outdoor sink, gas range, small refrigerator and even an oven can make your outdoor kitchen a more inviting home overall. Of course, you will need to weigh the costs of this upgrade against the potential benefits; but if you have a great outdoor entertaining space, consider adding an outdoor kitchen to attract potential buyers.

Outdoor lighting

Outdoor lighting appeals to buyers for a number of reasons. First, it improves the overall look of the outdoor area, making it more enjoyable. A well-lit water feature enhances the tranquil effects on a hot summer night while having a barbecue with friends and family. Outdoor lighting also helps attract buyers by making the residence more visible when they drive by the property, even if they drive by after dark. Good outdoor lighting will make the home inviting at all times of day. Also, it helps improve the security of the property, which may be important to select buyers.

Low-maintenance landscaping

Most home sellers know they should improve and upgrade their garden areas, but do so carefully. A lush, yet high-maintenance garden may detract from your home’s ability to sell. Many of today’s buyers are busy and do not have the time it takes to tend a garden.

Thursday, May 12, 2016

California Home Affordability on the Rise

Housing affordability is on the rise, thanks to strong wage growth and lower home prices, a real estate group said Monday.
Thirty-four percent of California households could afford to purchase the $465,280 median-priced home in the first quarter, up from 30 percent in fourth-quarter 2015 and unchanged from 34 percent in first-quarter 2015, the California Association of Realtors reported.
A minimum annual income of $92,571 was needed to make monthly payments of $2,314, including principle,interest, and taxes on a 30-year fixed-rate mortgage at 4.01 percent interest rate.
Forty-one percent of home buyers were able to purchase the $389,910 median-priced condo or townhome. An annual income of $77,575 was required to make a monthly payment of $1,939.
“This is the 12th consecutive quarter that the index has been below 40 percent and is near the mid-2008 low level of 29 percent. California’s housing affordability index hit a peak of 56 percent in the first quarter of 2012,” the statement said.

Wednesday, April 27, 2016

5 Tips for Buying or Selling a Home in 2016

Buying or selling a home in 2016 can be both easier and harder than it’s ever been. For first-time home buyers or sellers, there is a lot to navigate. This is especially true for millennials, who are beginning to come out of their economic shells, get married, start families and buy their first home.
Buying or selling a home is easier because there are an incredible array of tools and websites to help you do it. In-depth information on homes, neighborhoods, prices, school districts, etc. helps to give you a full picture.
However, it’s also more difficult. There is so much readily accessible information that the average home buyer or seller can get caught up in “paralysis by analysis.”
Taken together, you’ve got a recipe for confusion and frustration.
But it doesn’t have to be this way. By avoiding these five common home buying or selling mistakes, millennials — and every other group of home buyers and sellers — can successfully tackle the real estate market.
Mistake #1: Assuming the real estate process is the same as when your parents bought their house
Not too long ago, the only way to buy or sell your home was to work with a real estate agent. That’s how your parents did it and their parents before them and so on. So why wouldn’t that be how you do it?
The answer is easy. You are most likely already working in a self-directed manner. If you visit real estate websites to see what’s for sale in your neighborhood, share a listing with a friend or ogle pictures of your dream house online, you’re gaining information that was until recently closely guarded. The California Association of Realtors® reported in 2015 that home buyers are spending approximately four and a half months searching online.
There’s still definitely a place for the full service agent experience. But there are also a growing number of options where you can handle parts of the home buying or selling process that you’re comfortable with on your own using online tools and then access expert advisors when you need help with the trickier parts of the transaction, saving you thousands in commission along the way.
Consumers, especially millennials, are gravitating toward this approach. They instinctively understand it because it follows the unbundling trends we’ve seen in other industries, like people doing their own taxes or trading their own stocks.
Mistake #2: Forgetting that you can actually do a lot of this yourself — and save some money along the way
Many people, especially first-timers, don’t realize that when it comes to selling your home, there is a lot you can handle yourself. You can create your own listing, upload pictures of your house, set the price (with a little bit of comparative market research) and handle the showings. You can even conduct a lot of the negotiations yourself.
Remember, a seller’s agent typically charges six percent commission of the asking price of the home. (Half the commission is paid to the buyer’s agent.) On a $300,000 house, that’s $18,000. Sellers need to understand what the agent’s services include to determine if these are tasks they could do on their own to save a buck — for example, setting up the listing, getting the home on the Multiple Listing Service (MLS) boards where housing inventory is shown and perhaps managing some showings.
Instead of shelling out that six percent, take advantage of new online real estate options. There are brokerage services that will help you get your home on the MLS boards and more for a flat rate. Then you can decide how much more you want to take on or outsource. You are better prepared to do more in the real estate game than you might realize.
Mistake #3: Flying blind when it comes to pricing and neighborhood stats
When you’re buying or selling your home, which can easily be the largest financial transaction you’ll make in your lifetime, it’s not the time to take a dartboard approach to pricing. You need to do your homework.
Fortunately, there is a huge amount of information available on home pricing, neighborhoods, school systems — basically, everything you care about is easy to research. This is a moment where your Internet browser can be your best friend. Any of the major online real estate sites have pricing tools and deep information about trends. It also makes sense to read up on the neighborhood in the local papers and visit open houses of competing homes to make sure you’re pricing your home properly or making an appropriate offer. An informed buyer or seller is a smart one, and today consumers and pros have access to essentially the same data.
Mistake #4: Assuming you should buy at the asking price or, if you’re the seller, take the first offer you get
You might not be a born negotiator, and that’s OK. Many people are uncomfortable with the give-and-take of negotiation and feel unsure about how to approach it. For them, this is a time to work with a professional. Hedge your bets and choose the real estate service that gives you expert advice or help when you want it. For many others, getting through the negotiation to buy or sell a home is not really that difficult — as long as they’ve avoided Mistake #3 and know plenty about the pricing dynamics and trends in the area. Know the facts on comparable sales and competing inventory. Remove emotions from negotiations. And determine your highest/lowest price before you begin negotiations.
Mistake #5: Getting overwhelmed by the process (because it isn’t really that complicated)
This is the most important mistake of all to avoid.
The truth is that you can do this. Millions of people already are. In fact, 45 percent of home buyers say they alone found the property they purchased, according to the California Association of Realtors. And about one-third of real estate consumers no longer use full-commission or traditional listing agents, according to the National Association of REALTORS®. These consumers are choosing ways to buy and sell homes that offer greater choice over the professional services they want to pay for and greater savings if they decide to take on more of the process themselves.

Monday, April 18, 2016

Market Update: It's a Seller's Market

Real estate agents that sell houses in La Jolla, Pacific Beach, Point Loma and Ocean Beach say that now it is a seller's market. It is a great time to sell because many buyers are looking for a house and there aren’t that many houses listed. 

“If a house is market-ready, clean and neat and has a good location, it sells fast. Many families don’t want to renovate a lot before they move in, so they buy a house that is ready to move in,” says real estate agent Michelle Serafina.

Agents Tony Franco and Lionel Silva note that the hot buying season has been early. It started already in December, although it usually is in March to June.

In 2015, the prices were at the same high level as in 2007, and now the prices have steadied. Buyers are active, but they don’t buy anything. Some sellers check what other sellers in the same area have gotten and try to get their prices higher. Agents note that buyers are smart and that they notice when a house is overpriced.

Interest rates are also quite low, so people are willing to take a loan on a house. Some people also buy houses now with cash.

“One out of 10 deals I sold, a buyer received a loan. That also saves buyers money. For many years, people invested in the stock market, and after that, they are now willing to put the money for a house or apartment,” says Franco.

Listing agent Chris Mannerino says there will be a correction in the prices at some point.

“Nobody knows how shortly markets change, because global events are usually a chain reaction. But banks don’t give out house loans so much than they used to, so some kind of bubble with loans is avoided for the most part,” he says. 

Lionel and Tyler Silva say that during the last 12 months, rents have raised 20 percent or more, so families that rent want to buy a house. Meanwhile, Michelle Serafina says families are paying attention to comfort.

“They want quality of life: a house that is in good shape, large yard, space that they need and short distance to schools,” she notes.

Agents say that some homes are now sold even before listing. Lionel Silva notes it’s not always wise to sell a house that way.

“Why would you sell before every potential buyer has seen it?” he notes. “With more buyers competing, it is possible to get the price that you want, or even more.”