Friday, September 16, 2016

Delinquencies Low in Bay Area

One measure of the economic health of  any area is the number of homes in default or foreclosure in that locale.  A closely related measure is the average home value increases of an area with few defaulted mortgages.  The following analysis will examine this in more detail.


The substantial home price appreciation recorded over the past few years has been a windfall for Bay Area owners, with five local communities boasting the lowest percentage of underwater properties in the nation.underwater9616
That’s according to WalletHub’s list of 2016’s best real estate markets, which ranks 300 small, midsize, and large U.S. cities based on a scale of 100 and using 16 different metrics. Criteria include the quickest pace of sales, highest home price appreciation, the fewest mortgage delinquencies and underwater homes, and housing affordability.
Bay Area communities have the fewest amount of homeowners with negative equity, led by San Mateo (WalletHub doesn’t include exact numbers in its analysis). Berkeley has the second lowest rate of underwater homeowners, followed by Sunnyvale, Santa Clara, and San Francisco. The findings echo those of a report earlier this year, which said that the San Jose and San Francisco metro areas had the nation’s smallest percentages of underwater homeowners at the end of 2015.
Fremont, Sunnyvale, and Santa Clara tie Boulder, Colorado, for fewest number of homeowners who are delinquent on their mortgages. Sunnyvale also cracked the top five U.S. markets for a few other metrics:  highest median home price appreciation (No. 3), lowest foreclosure rates (No. 2), and lowest maintenance costs as percentage of income (No. 2). Homeowners in Santa Clara also did well on the latter metric, with the fifth smallest home-maintenance cost ratio in the country.
Additionally, Bay Area markets stand out for their speedy pace of sales, led by Berkeley, where houses sell in the fewest average days in the nation. San Mateo ranks No. 3 for fastest-moving U.S. markets, and Sunnyvale and Santa Clara tie Bellevue, Washington, for No. 4.
Only one California city, Irvine, ranks among WalletHub’s overall top 20 real estate markets for 2016 — including large, midsize, and small cities. This is likely due to the state’s well-documented affordability issues, which factor prominently in the study’s methodology. For instance, the analysis says that San Francisco and Berkeley tie with three other California markets for the highest home prices as percentage of incomes.
Here’s how Bay Area cities rank on the list when broken out by size:
Large Cities (more than 300,000 residents): San Jose (No. 18), San Francisco (No. 22), Oakland (No. 39).
Midsize Cities: (150,000 to 300,000 residents): Fremont (No. 15), Santa Rosa (No. 26).
Small Cities: (less than 150,000 residents): Sunnyvale (No. 18), Santa Clara (No. 25), San Mateo (No. 29), Vacaville (No. 40), Berkeley (No. 49), Concord (No. 50), Fairfield (No. 62), Hayward (No. 63), Daly City (No. 64), Richmond (No. 81), Antioch (No. 92), Vallejo (No. 106).

Monday, September 12, 2016

Jobs & What Will Fed Do

Well, everybody's ben expecting a rise in interest rates late this year, but so far nothing. The issue is still lurking, but no details are yet available in any meaningful way.  The subject of employment can have a major effect on this subject, but details in that market are difficult to fathom.  So how to plan--whether a buyer or seller you be.




Executive Summary:
  • Monthly job reports and anticipations over the Federal Reserve’s decision to raise interest rates have been moving in tandem in 2016. And as we approach the end of the year, anticipations are brewing over what the Fed will do about interest rates. For better or worse, today’s job report didn’t provide much insight.
  • According to the U.S. Department of Labor, there were 151,000 jobs added in August, which is a continuation of healthy growth and nothing to cause excitement or concern. But if previous years are any indication, August numbers may be revised up in subsequent months. August estimates are often challenging because of education-related summer employment, and this year’s seasonal adjustments are further challenged due to changes in the timing of school calendars.
  • So far this year, employment growth has averaged 190,000 new jobs per month, though not without a lot of monthly volatility.
  • The national unemployment rate has been below 5 percent since April.
  • As the U.S. has reached full employment, estimates suggest that only about 100,000 jobs need to be added per month to keep up with the growth in labor force.
  • What does this mean for the Fed’s interest-rate decision? It is honestly very hard to tell. Experts are split, but the majority expect at least one increase before the end of the year. However, any increase will be marginal and would not likely deter consumers from purchasing a home.
  • In fact, a survey of consumer confidence by The Conference Board also released this week, showed the sentiment nearing a cyclical high. Consumers are feeling optimistic about current and future expectations and are more positive about the job market. Increasingly, more consumers feel jobs are plentiful versus those who state that jobs are hard to get.
  • Additionally, and most importantly for real estate market expectations, the percentage of consumers planning to buy a home within next six months continues on a steady upward trajectory (see Figure 1 below).
Figure 1

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Source: The Conference Board


So there you have it--a possible guide.  Whatever your intent, Buy or Sell, give us a call for help.  We're in the market on a daily basis.  Peter: (415) 279-6466; Jane: (415) 531-4091.

Friday, September 09, 2016

Credit Scores--VERY IMPORTANT!!

For better or worse, we've all been there.  Buy a car. What's your credit score, often referred to as your FICO score? New credit card? What's your score? Buy or refi a home?  Let's see your score! And on and on and on ad infinitum.  In some cases, ad nauseam.  The point is: anything you've ever done that's credit based is recorded somewhere.  So, if you're trying to buy a home, your lender will check your credit score, along with your credit report, whichever reporting agency they use.  You can be assured that if your history is good, and shows you honor your credit obligations regularly, things will bode well for you.  If you don't, however, woe be to you!  This doesn't mean that you're doomed if you've missed a payment on your Visa once or twice in the last twenty years.  But, rest assured--there are some amazing things from long ago that can blow a hole in your hopes for a mortgage.


For example, you paid for college by a student loan that was Federally guaranteed--and somehow never paid it all back. As we used to say back in my Boston home town, "Good luck to you and the Red Sox."  Loan denied.  Department store credit card charged off for $150--not good, but, if in context, it's the only thing negative, you may still get your loan.

This history is shown as a 3-digit numerical score.  Those three numbers, based on their history, may be as good as hitting the lottery or as bad as having to dial another three: 911.


However, the following may serve as a guide on the subject. 


Bay Area home shoppers hoping to take advantage of today’s historically low mortgage rates should ensure that their credit ratings are in fine shape, as lenders in our region require the highest scores in the country.
Using data from the Urban Institute, CNBC compared average FICO scores for borrowers in more than 30 U.S. metro areas. The article also examined average loan-to-value ratios, defined as the percentage of a home’s value that a lender is willing to approve on a loan it issues.
On one end of the spectrum is Detroit, where the average FICO score is 728, the lowest in the U.S. Homebuyers in the Motor City can expect lenders to approve a loan of up to 90 percent of a home’s value, tied for most in the nation. Urban Institute Researcher Bing Bai told CNBC that lower credit scores are common in distressed real estate markets with a higher percentage of lower-income buyers, who usually make smaller down payments. However, lenders will charge such buyers with riskier credit scores higher interest rates.
In healthy and thriving real estate markets like the Bay Area, getting a mortgage can be more difficult. Homebuyers in San Francisco require average FICO scores of 770, higher than anywhere else in the U.S. San Francisco also has the nation’s smallest loan-to-value ratio, at 72 percent.
Conditions are almost as tight in San Jose, with the average buyer needing a 766 FICO score and lenders approving loans that represent 74 percent of a property’s value. Oakland homebuyers need credit scores of 762 and typically receive loan-to-value ratios of 77 percent.
CNBC points out that credit is currently much tighter now than it was during the housing boom 10 years ago. And it doesn’t appear that lenders are going to loosen their purse strings in the near future, with 90 percent of respondents to a June Fannie Mae survey reporting plans to keep their credit standards the same.
Americans having been slowly and steadily improving their credit ratings over the past decade. FICO’s guide to understanding its credit scores puts the average national score at 695 as of April. In October 2005, the average American had a score of 688 according to a FICO blog post. Serious delinquencies — accounts that are more than 90 days past due — have been falling over the past few years, which FICO says has been almost entirely driven by the real estate sector.
Prospective homebuyers should check their credit scores well in advance of the purchase process and take steps to improve them if they might not pass muster with a lender; FICO’s website offer tips for managing and repairing credit scores.
And when you get your loan and start looking for a home, give us a call! We know the markets, and would be pleased to help you. Peter: (415) 279-6466; Jane: (415) 531-4091.

Friday, August 05, 2016

Good News: Cal Job Growth Better than US's!

One of the most important factors in growing the housing market is the rate of job growth.  That's good news for California because the state is outpacing the nation in job growth.
Although California and Bay Area unemployment rates ticked up in June from the previous month, the increase was driven by seasonal effects and new graduates entering the workforce. The state’s annual job growth remains robust, once again outpacing the nationwide rate.vintagehelpwanted_sm
Citing monthly data from the state Employment Development Department, the Palo Alto-based Center For Continuing Study of the California Economy says that the state added 40,300 nonfarm jobs in June. Additionally, the EDD substantially revised its May numbers from an initial 15,100 new positions to 27,500.
Over the past 12 months, the Golden State has grown jobs at a rate of 2.9 percent, compared with 1.7 percent growth nationwide. California had the second largest annual employment growth rate of the six biggest states in June, slightly trailing Florida. CCSCE notes that industry structure has been a bellwether of job growth over the past two years, with oil-and-gas-producing states such as North Dakota, Wyoming, and Oklahoma seeing year-over-year job declines.
The educational and health services sector led California, adding 105,200 positions since June 2015 for a growth rate of 4.3 percent. The technical and business services sector, which includes the Bay Area’s high-tech bread and butter, created 93,700 jobs over the past year, for 3.8 percent growth. Seven other sectors posted year-over-year job gains, with only the manufacturing and mining and logging industries seeing declines.
California’s unemployment rate increased to 5.4 percent on a seasonally adjusted basis in June, up 0.2 percent from May, which CCSCE calls a likely anomaly. The national unemployment rate increased by an identical amount from May to June, rising to 4.9 percent.
Also somewhat of an aberration is the fact that jobless claims rose significantly in all nine Bay Area counties from May to June, in one case as much as a full percentage point. EDD Economist Brandon Hooker says that seasonal factors played a role in the monthly increase and that it is currently not indicative of any long-term negative trend.
Short-term unemployment gains aside, Bay Area counties still boast the lowest nonseasonally adjusted rates in California: San Mateo (3.3 percent), San Francisco (3.5 percent), Marin (3.5 percent), Santa Clara (4.1 percent), Napa (4.2 percent), and Sonoma (4.2 percent).
So, if you're thinking of either buying or selling, give us a call to help you get the best deal possible! We've got over 50 years' combined experience, and can provide the best advice for your plans. You know the numbers by now: Peter: (415) 279-6466; Jane: (415) 531-4091.

Friday, July 22, 2016

Bubble? What bubble?

As housing prices continue to head northward, you frequently hear some self-proclaimed "expert" on housing saying we're in danger of having another Housing Bubble with all of the negatives that such an event carries along with it. Well, here's some REAL information on housing bubbles and the likelihood that we're in one or in danger of being in one.


Residential construction activity and home price appreciation are both expected to see modest growth over the next 12 months, with the U.S. housing market showing very little indication of a looming bubble.
Those are a few of the key takeaways from The Summit, an annual conference held by John Burns Real Estate Consulting and attended by real estate consultants, investors, developers, and executives. The general consensus among attendees was that the U.S. housing market is in a state of slow, sustained recovery, though all assume that the country may face a moderate recession within the next three years.
This year’s attendees had fairly moderate expectations for construction volume, with 42 percent believing that the U.S. won’t issue 1.5 million permits until 2021, which translates to 5 percent annual growth over the next five years. Reasons given for the lagging construction activity include high regulatory and building costs and a lack of affordable labor. Participants expect single-family home construction to increase by 8 percent in 2017.
Home prices, too, should continue growing over the next 12 months, with attendees unanimously calling for single-digit appreciation. The vast majority — 77 percent — expect between 2 and 5 percent price growth. JBREC forecasts 5 percent price growth for this year and 3.5 percent in 2017, keeping with the theme of normalization that emerged at Pacific Union’s Real Estate Economic Outlook 2018 last November.
Homebuyers should continue to enjoy low mortgage rates in the coming year, with nearly 90 percent of attendees expecting rates to remain flat or to rise by 25 to 75 basis points. Fannie Mae’s chief economist believes that mortgage rates will actually dip even lower, pointing out that interest rates in some countries are currently negative.
Three years ago, attendees of The Summit offered 10 qualitative and quantitative signs of a housing bubble, and so far, only a few of them have surfaced. On the qualitative side JBREC cites an uptick in both urban high-rise and exurban home construction activity. Quantitatively, developer profit is slim to none in some markets, while others suffer from affordability constraints — including those in California and the Bay Area.


So, the word from here is: Don't waste a lot of time listening to all of these so-called experts.  A bubble appears unlikely at this point.


Which brings us to the next point.  If a buyer or seller you be--and you want some knowledgeable assistance, give us a call!  Whether it's finding out what your home is currently worth, what improvements make the most sense, or what's happening in the market closest to you, we offer the benefits of over fifty years in combined experience to you.  We can--and WILL-- give you good, reliable information based on facts to help you make the decisions that will benefit you the most.  You can reach us at either of the following numbers: Peter: (415) 279-6466; Jane: (415) 531-4091.

Thursday, July 21, 2016

Job Growth Strong

Forget what the pols are trying to tell you at the nominating convention.  The latest information shows that job growth is very strong, and that's a good thing--for the economy and for those of you trying to sell real estate.


  • Today’s much-anticipated U.S. June jobs report showed a strong rebound in hiring. The country added 287,000 jobs in June following downwardly revised numbers for May in which 11,000 jobs were created. May’s sharp slowdown has proven to be a blip.
    • June’s job numbers confirm that the U.S. economy is still growing solidly and highlight the importance of examining a broad range of economic data. Job growth averaged 149,000 in May and June and 172,000 per month this year. At this rate, the U.S. economy is poised to create more than 2 million jobs in 2016.
    • The national unemployment rate ticked up to 4.9 percent from last month’s 4.7 percent, but that reflects more people entering the labor force, which is a again a good indicator of consumer confidence.
    • The U-6 measure, a broader gauge of unemployment that captures discouraged and part-time workers, also showed an encouraging reversal in June and hit a cyclical low of 9.6 percent. This indicator has remained stubbornly high during the recent economic recovery.
    • Furthermore, wage growth continues to show strength and increased 2.6 percent on an annual basis. This is the highest reading of wage growth this year, and expectations suggest further acceleration of wage growth to reach 3 percent.
    • A separate report on tech employment showed a strong rebound in the IT sector, which added 32,100 jobs in June and a net of 43,900 new jobs in 2016. The rebound does partly reflect the return of Verizon’s workforce from a May strike.
    • The IT sector grew at a faster rate than overall employment, with all categories recording positive growth in June. Additionally, the number of IT job postings also increased slightly in June. Software-developer positions topped the list of IT job openings, at 60,500.
    • The rebound in national employment numbers suggests that we will most likely see strong June numbers for California and the Bay Area, and that May’s statewide net gain of 15,200 will be revised up. The California Employment Development Department will release June employment numbers later this month.
    • This job growth means more and more folks will be able to purchase a home ore other real property, as they will definitely have the means to do so, even as prices rise.
    So, if you want to sell, or get your property ready to sell, give us a call.  We can show you what it will take, and how to go about the preparation for the sale.  If you're not sure about selling, but wondering what your home is worth, we can give you an idea of its value, including what the competition will be for your property.


    You know the numbers! Give us a call! Peter: (415) 279-6466; Jane; (415) 531-4091.  We'd be pleased to help.

    Friday, July 15, 2016

    China Buys American!

    Every so often the subject of foreign buyers of US property pops up in conversation.  Most individual property owners don't get too involved as they either are not sellers of what many believe to be 'appropriate' property, or they feel that the foreign buyers would not be likely to contact local sellers.  In both cases, however, they may be incorrect.  The accuracy depends on the specifics at the time of the conversation.
    For example, if you would be interested in expanding your opportunities to sell your property to include foreign buyers, it would help to know what nation or nations are the origin of the largest number of foreign buyers.  As the following info indicates, now that is China.
    For the fourth straight year, buyers from China invested more money in U.S. real estate than any other foreign country. They also purchased the most housing units and the priciest homes, and California remains one of their preferred destinations.china_us_flags
    According to the National Association of Realtors’ 2016 Profile of International Activity in U.S. Residential Real Estate, foreign buyers purchased $102.6 billion of U.S. residential real estate between April 2015 and March 2016, a decline of 1.3 percent from the previous year. International buyers picked up 214,885 properties with a typical value of $277,380, about $50,000 more than the median U.S. existing home price.
    In a statement accompanying the report, NAR Chief Economist Lawrence Yun said that rising home prices are not deterring international buyers from investing in the U.S. housing market, with Chinese citizens leading the way.
    “Foreigners — especially those from China — continue to see the U.S. as a solid investment opportunity and an attractive place to visit and live,” he said. “Although China’s currency modestly weakened versus the U.S. dollar in the past year, it’s much stronger than it was 5 to 10 years ago, thereby making U.S. properties still appear reasonably affordable over a longer time span.”
    Chinese buyers were responsible for $27.3 billion in real estate purchases from last April to this March, a slight decrease from the previous year’s analysis but still more than triple the amount spent by Canadians, the second most active international investor. In fact, spending by Chinese investors exceeded the total sales volume of the next four ranked countries combined. Buyers from China purchased 29,195 housing units, more than any other country, and also bought the most expensive properties, with a median price of $542,084.
    Five states accounted for half of all international home purchases, with 15 percent of foreigners opting to buy a home in California — second only to Florida in popularity. NAR says that the Golden State is one of the most popular destinations for Asian buyers, with Chinese investors exhibiting a strong preference for single-family homes. Additionally, buyers from China were among the most likely to pay for their home entirely in cash.
    While Chinese buyers are a good bet to remain active investors in U.S. real estate in the coming years, purchases by U.K.-based buyers may drop off as a result of the recent Brexit vote. The U.K. was the only foreign country that purchased more U.S. real estate in this year’s survey than in 2015.
    “Sales activity from U.K. buyers could very well subside over the next year depending on how severe the economic fallout is from Britain’s decision to leave the European Union,” Yun said.
    Interested in learning more about this facet of the current market?  As with everything else regarding the local property market, give us a call!  We can arrange for you to receive important information on the subject.  Through the international affiliation with Christies, we have access to the latest facts and figures to assist you.  In fact, on a personal level, our own experience includes years of overseas professional residence assignments that we can leverage to your advantage.
    Our contacts: Peter: (415) 279-6466; Jane: (415) 531-4091.