Are Home Prices Rising Too Fast?

Hello Readers!
Found this article and had to share it.  Why?  Because this is on all our minds.  My 2 cents are in italics.
  
When the real estate market hit bottom you could feel the thud.  Buyers were leery of buying afraid home prices would continue to fall and sellers wouldn’t sell if their life depended on it not wanting to take any kind of loss.  Thankfully those days are behind us.  What a difference 1 year makes….it is obvious the memo is out and buyers are ready to buy again.  However, sellers are not quite there yet.  It seems that the bulk of properties for sale since 2009 were pre and post foreclosures, overinundating the market with options.  Come 2012 and today, with sellers not quite ready to put their homes on the market inventory remains low in our area – thus pushing prices up.
No Realtor or client enjoys markets like this.  Multiple offers, over bidding, no contingencies – all this is back in force right now.  Ideally we would like to see a normal healthy market with normal growth.  But with so few homes for sales and pent up buyers jumping off the fence – it is amazing to see this change that has taken place in the real estate world.
Enjoy the article – and would love to hear YOUR thoughts too!
Are Home Prices Rising Too Fast?
Some housing analysts are concerned that the sudden rise in home prices could make homes more unaffordable again if the price increases outpace income growth, The Wall Street Journal reports.
Average housing costs for home buyers who took out a mortgage were around 22.5 percent of average incomes, according to John Burns Real Estate Consulting. That is down from 38.5 percent in 2006, the peak of the housing bubble. The historical average is about 33 percent.
But with home prices rising in many markets and, in some, rising at a faster pace than income levels, will more people soon be priced out of the market?
Housing analysts say that, for now at least, lower mortgage rates are offsetting the higher prices of homes.
Borrowers have seen their purchasing power rise by around 33 percent over the past four years due to the low interest rates, The Wall Street Journal reports. For example, a borrower can make a $1,000 monthly mortgage payment and qualify for a $222,000 mortgage at today’s low interest rates, compared to 2008 when they’d likely qualify for $165,000 when mortgage rates were around 6.1 percent — nearly double what they are today.
Borrowers are able to withstand home-price increases because of the low rates, not because household incomes are growing, The Wall Street Journal reports. If mortgage rates tick back up to the 6 percent or 8 percent range, homes may look overpriced relative to incomes, according to housing analysts.
By: DAILY REAL ESTATE NEWS
Source: “Why Rising Interest Rates Could Eventually Curb Price Gains,” The Wall Street Journal (April 10, 2013)
 
Got Questions? – The Caton Team is here to help.
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Thanks for reading – Sabrina

Bay Area home prices up 24.6% over 2012 – SF Gate Reports….

Great article I had to share by Carolyn Said in the SF Chronicle Friday.  It falls in line with what The Caton Team has advised our buying clients lately.  The market has definitely turned up the heat.  And I honestly have mixed feelings about this.  Don’t get me wrong – I am so happy to see our real estate climate heal from the crash.  But I don’t want to see another bust either!  My heart goes out to our first time buyers – most of who are pulling their hair out – trying to save enough of a down payment to compete with cash buyers – watching their smartphone apps track interest rates and counting their pennies, rather twenty dollar bills, when the rate sneaks up a half a percent.  I’m also excited for sellers who’ve been waiting for the chance to sell without bringing money to the table.   But then the next question arises – where do we go if we sell?  The SF Peninsula is experiencing a unique real estate market and we are grateful for the opportunity.   Enjoy this article….I’ve added my 2 cents in italics – please share your opinions too!

 With high demand, low inventory, bidding wars return

In the latest sign of a rebounding real estate market, eager buyers vying for a limited pool of properties pushed Bay Area median home prices 24.6 percent higher in February compared with last year, according to a real estate report released Thursday.

“Drum-tight inventory, lower (interest) rates than most people alive have ever seen, and in some areas record levels of investor purchases (created) an unusual environment,” said Andrew LePage, analyst at San Diego’s DataQuick, which produced the report.

Another big factor – “unleashing of pent-up (buyer) demand,” he said. During the downturn, “for years, some people sat on the sidelines, afraid to buy. Now there’s been a shift in psychology in the past year with people switching from fearing prices might fall more, to fearing they will go up, so they want to buy now.”

This is so true.  I myself was sitting in the seller seat since 2009 – it felt like no one was looking to buy.  For years we were “on the market” with no offers in site.  After pulling my condo off the market for one more try at the loan modification game – by October 2012 – I stuck out the For Sale sign again and within a week I had several offers.  In the end 20 offers in had, 10 over the asking price and 5 buyers more than willing to pay a the upcoming HOA assessment!  What a change in the tide!

An improving economy and job growth – factors that are stronger here than elsewhere in the country – also feed buyer demand.

We are blessed to live in the Silicon Valley where the tech, bio-chemical industries call home.

“The San Francisco Bay Area is the hottest market in the country right now,” said Errol Samuelson, president of Realtor.com, the online marketplace for the National Association of Realtors.

February’s sales median for the nine-county region was $405,000, compared with $325,000 in February 2012. It was the fourth straight month in which prices rose more than 20 percent compared with the prior year, and the ninth consecutive month of double-digit increases, DataQuick said.

The same dearth of inventory that amped up prices caused the volume of sales to slump 6.1 percent compared with a year earlier. A total of 5,404 new and resale homes and condos changed hands in the region in February, DataQuick said.

Return of bidding wars

Realtors around the area report that tight inventories are spurring ferocious bidding wars over properties – a phenomenon that holds true at all price points.

In Berkeley, John and Judith of the Grubb Co. sold three homes in recent weeks that listed for more than $1 million and went for substantial amounts above asking. One architecturally distinctive home was listed at $1.295 million but sold for $1.8 million, all cash – more than half a million dollars, or 39 percent, above the asking price.

“Everything in our market is getting multiple offers,” Judith said. “We need more inventory.”

At a different point on the scale, Annie, an agent with ZipRealty in the East Bay, recently took an investor client to tour a $399,000 four-bedroom tract home in Dublin.

“We drove up and saw all these people in a line,” she said. “I was thinking, ‘What the hey?’ and then I realized it was to get in this particular house. It’s human nature; if people think they can’t get something, they want it more. We stood in line for over an hour to get in.”

Her client offered $92,000 over asking and lost out to another investor who bid $100,000 more than the list price, she said. There were 40 offers.

“It’s an investor’s market right now,” Judith said. “Our first-time home buyers … are having a really hard time getting an offer accepted. It’s hard for them to compete with investors.”

Absentee buyers

Indeed, investors continued to be powerful forces in the market. Absentee buyers accounted for an all-time high of 28.2 percent of February sales, DataQuick said. All-cash buyers also hit a record, representing 31.9 percent of February sales. Historically, cash transactions have been about 12.9 percent of sales.

Realtor.com data show that listings here are being snapped up much more quickly than elsewhere in the nation. In Alameda County, for instance, listings go into escrow on average within 14 days of hitting the market. Nationwide, it takes 98 days for houses to sell.

Around the Bay Area, inventories of for-sale homes are about half what they were a year ago, Realtor.com shows. By contrast, nationwide, inventories are down about 16 percent compared with last year, Samuelson said.

That’s true in many micro-markets as well. Take San Francisco’s Nob Hill, for instance. A year ago, it had 30 homes for sale. Now it has just 15, according to Redfin.

Kiesha S, a listing specialist with Redfin, is preparing a two-bedroom Nob Hill condo – a remodeled unit that retains its early 1900s character, including stained glass windows, wood wainscoting and two fireplaces – to hit the market next week for $799,000, a relative bargain in that neighborhood.

She’s already had six agents ask if they could make pre-emptive offers.

“There’s so little inventory that things are definitely skewed in sellers’ favor,” she said. “Right now there seems to be a surge of buyers.”

Fewer distress sales

DataQuick said that changes in the market mix, such as fewer bargain-priced distress sales and more high-end homes, account for about half of the median’s increase. In other words, all Bay Area home values did not jump 25 percent in February, although values definitely are rising across the board. Distress sales – foreclosures and short sales, both often sold at a discount – are still above their historic norms but are declining.

About a third of February’s existing-home sales were distressed; a year ago more than half (53.4 percent) were foreclosures or short sales, DataQuick said. Just 13.6 percent of resales were foreclosures in February, the lowest level since November 2007.

At their peak in February 2009, foreclosures accounted for 52 percent of all resales. Short sales also declined, but not as much. They were 21.4 percent of resales, versus 27.0 percent a year ago.

The number of homes selling for more than $500,000 rose 27.7 percent compared with last year, while those less than $500,000 fell 14.4 percent, DataQuick said.

Prices, which went into free fall during the downturn, are still far off their peaks. The Bay Area median reached a high of $665,000 in summer 2007 and a low of $290,000 in March 2009. DataQuick said that if the current rate of increase holds up, the Bay Area prices will be halfway back to their peak this spring or summer.

By Carolyn Said

As a full time Realtor this is exciting news for growth in our area.  As a potential buyer, I know I cannot save fast enough to compete with the overbids and cash offers coming down the pipeline.  There is a small window for some buyers today, a window that can shut if interest rates rise while prices are also climbing.  

My advise to buyers – get approved and get out there NOW!  Be clear on your financial goals; be sure you have done your math and know what you can afford.  Then look at what you can buy and re-evaluate your situation.  The Caton Team is here to help – every step of the way – please call or email your questions or comments – info@TheCatonTeam.com 

My advise to sellers – if you’ve been waiting for market and price recovery – now is the time!  It appears some sellers don’t even need to prepare their home for sale, just listing the home on the market will get a line around the block.  The Caton Team is here to help too! 

 I would love to hear your opinions too! – Sabrina 

I read this article at: http://www.sfgate.com/realestate/article/Bay-Area-home-prices-up-24-6-over-2012-4356658.php#page-1

Got Questions? – The Caton Team is here to help.

Email Sabrina & Susan at:  Info@TheCatonTeam.com

Visit our Website at:   http://thecatonteam.com/

Visit us on Facebook:   http://www.facebook.com/pages/Sabrina-Susan-The-Caton-Team-Realtors/294970377834

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Please enjoy my personal journey through homeownership at:

 

http://ajourneythroughhomeownership.wordpress.com

Thanks for reading – Sabrina

Sound Off: What are the biggest mistakes the buyers make? – Great Article from SF Gate

I enjoy reposting articles I find so I don’t sound like I’m shouting from my soap box all day long.  This artcile, in the Sunday Real Estate section was a great read – please enjoy and if you have any questions – ask me – Info@TheCatonTeam.com or call at 650-568-5522

Q: What are the biggest mistakes buyers make?

A: In this fast-paced market, it is still important for buyers to remember the fundamentals of purchasing a home. The items listed below will always be relevant, and they are important issues for buyers to be aware of, and try to avoid:

1. Failing to read documents they receive from their lender and their agent. Buyers receive a lot of information after escrow is opened, which can be overwhelming. But it is imperative that these reports, ranging from disclosures from the seller, to preliminary title reports from the escrow company, to all the various inspection reports completed, be carefully reviewed by the buyer, and they should be encouraged to ask questions. Call on your escrow officer, inspectors, real estate agent and lender until you are completely comfortable and understand all the paperwork you have received.

2. Time is of the essence in all things real estate. There are so many people involved in a transaction, and it is important that all items requested of the buyer from their lender, or their agent, be responded to as quickly as possible. If not, a delay could cost them dearly, from an increase in their loan rate, to even losing the property by not being able to remove a loan contingency in a timely manner.

Another area where the buyer needs to move quickly is when they have identified their dream home. Hesitating a day could mean losing out to another buyer. A slow response to a counteroffer could lose the home to a more aggressive buyer.

3. A buyer’s financials must be in order, and it is most important they don’t make any large purchases during the escrow period, pay bills late, incur derogatory marks on their credit report or change jobs. Make sure to stay in close contact with a lender before making any major money moves.

I read this article at:  http://www.sfgate.com/realestate/article/Sound-Off-What-are-the-biggest-mistakes-the-4283038.php#ixzz2LOGh3yKt

Got Questions? – The Caton Team is here to help.

Email Sabrina & Susan at:  Info@TheCatonTeam.com

Visit our Website at:   http://thecatonteam.com/

Visit us on Facebook:   http://www.facebook.com/pages/Sabrina-Susan-The-Caton-Team-Realtors/294970377834

Yelp us at: http://www.yelp.com/biz/the-caton-team-realtors-sabrina-caton-and-susan-caton-redwood-city

Or Yelp me:  http://www.yelp.com/user_details_thanx?userid=gpbsls-_RLpPiE9bv3Zygw

Please enjoy my personal journey through homeownership at:

http://ajourneythroughhomeownership.wordpress.com

Thanks for reading – Sabrina

Top 10 Home Remodeling Projects – Get More Bang for Your Buck!

I love helping my clients buy and sell their home.  But what really gets my blood pumping is home renovation.  I truly enjoy seeing a home before and after a client puts their touches into their space.  However, home renovation is costly and sometimes it doesn’t add up.  Please enjoy this article about which home projects get the most bang for your buck!   Let me know what you think!

Top 10 Remodeling Projects That Offer the Biggest Returns

Home owners are investing in their homes once again, according to recent industry surveys that point to a strong rebound taking hold in home remodeling. Home owners also may be seeing higher gains from some of these remodeling projects at resale, according to the most recent Cost vs. Value Report, which reviews the top remodeling projects that offer the highest returns at resale. The Cost vs. Value Report is conducted each year by Remodeling Magazine, in conjunction with REALTOR(R) Magazine.

So, which remodeling projects offer the potential for some of the biggest pay-backs at resale? The following mid-range remodeling jobs offer the highest returns, according to the 2013 Cost vs. Value Report.

1. Entry door replacement (steel)

Estimated job cost: $1,137

Return on investment at resale: 85.6%

2. Deck addition (wood)

Job cost: $9,327

ROI: 77.3%

3. Garage door replacement

Job cost: $1,496

ROI: 75.7%

4. Minor kitchen remodel

Job cost: $18,527

ROI: 75.4%

5. Window replacement (wood)

Job cost: $10,708

ROI: 73.3%

6. Attic bedroom

Job cost: $47,919

ROI: 72.9%

7. Siding replacement (vinyl)

Job cost: $11,192

ROI: 72.9%

8. Window replacement (vinyl)

Job cost: $9,770

ROI: 71.2%

9. Basement remodel

Job cost: $61,303

ROI: 70.3%

10. Major kitchen remodel

Job cost: $53,931

ROI: 68.9%

Home Trends, Remodeling Adviser, by Melissa Tracey

By Melissa Dittmann Tracey, REALTOR(R) Magazine 

I read this article at: http://styledstagedsold.blogs.realtor.org/2013/02/18/top-10-remodeling-projects-that-offer-the-biggest-returns/?om_rid=AACmlZ&om_mid=_BRImwmB8w5t6jo&om_ntype=RMODaily

Got Questions? – The Caton Team is here to help.

Email Sabrina & Susan at:  Info@TheCatonTeam.com

Visit our Website at:   http://thecatonteam.com/

Visit us on Facebook:   http://www.facebook.com/pages/Sabrina-Susan-The-Caton-Team-Realtors/294970377834

Yelp us at: http://www.yelp.com/biz/the-caton-team-realtors-sabrina-caton-and-susan-caton-redwood-city

Or Yelp me:  http://www.yelp.com/user_details_thanx?userid=gpbsls-_RLpPiE9bv3Zygw

Please enjoy my personal journey through homeownership at:

http://ajourneythroughhomeownership.wordpress.com

Thanks for reading – Sabrina

For-Sale Home Inventories Remain Tight – From the Daily Real Estate News

I find it important to share articles related to our real estate market.  Please enjoy this one about our low inventory.

For-Sale Home Inventories Remain Tight – Daily Real Estate News

Inventory levels in 2012 reached an 11-year low and fell yet again last month, further limiting the number of homes for sale nationwide. Inventories of for-sale homes were down by 16.5 percent in January year-over-year, and fell 5.6 percent from December, according to the latest data compiled from Realtor.com.

Inventories typically fall in December and January in preparation of the spring buying season.

“But the shortage of homes for sale in a growing number of U.S. markets is maddening for would-be buyers who frequently complain that there aren’t enough good choices,” The Wall Street Journal reports. “Bidding wars are becoming more common.”

At a time when buyer demand is strong, inventories remain constrained as banks slow their pace of foreclosures and home owners delay selling until they regain more equity in their homes.

Metro areas posting some of the largest monthly declines in inventory levels are San Francisco (where inventory levels are down by 21 percent in January compared to December and down 47 percent year-over-year) as well as Seattle (where levels dropped 9 percent from December). The two have also seen some of the largest price increases in the nation. Median asking prices have risen by 16.4 percent and 23.7 percent in those places, respectively.

My 2 Cents

Inventory is tight – across the board – across each price point on our beloved SF Peninsula.  Which is great news for sellers who’ve been waiting on the fence for recovery.  If you or someone you know is thinking about selling – let us know.  We’ll show you what your home is currently worth and with all the information – you can make a better decision on your next steps.

I read this article at: http://realtormag.realtor.org/daily-news/2013/02/18/for-sale-home-inventories-remain-tight?om_rid=AACmlZ&om_mid=_BRImwmB8w5t6jo&om_ntype=RMODaily

Got Questions? – The Caton Team is here to help.

Email Sabrina & Susan at:  Info@TheCatonTeam.com

Visit our Website at:   http://thecatonteam.com/

Visit us on Facebook:   http://www.facebook.com/pages/Sabrina-Susan-The-Caton-Team-Realtors/294970377834

Yelp us at: http://www.yelp.com/biz/the-caton-team-realtors-sabrina-caton-and-susan-caton-redwood-city

Or Yelp me:  http://www.yelp.com/user_details_thanx?userid=gpbsls-_RLpPiE9bv3Zygw

Please enjoy my personal journey through homeownership at:

http://ajourneythroughhomeownership.wordpress.com

Thanks for reading – Sabrina

What’s the Best Season for Home Buying? Great question!

Just today I was asked this very question.  “What’s the Best Season for Home Buying?”  And thought this article was interesting from the DAILY REAL ESTATE NEWS.  I must say though – when buying a home, instead of trying to figure everything out on your own, sit down with a Realtor, ask some questions.  We’re happy to meet with you.  Because truly, the time to buy is when you – as a buyer – are ready to do so.  These days (2012 and early 2013) the housing market is competitive no matter what time of year it is.  On average, buyers entering the market today are faced with a minimum 3-6+ month house hunt due to a lack on inventory and an abundance of buyers.  So writing several offers on several homes over the course of several months is standard operations these days.  If you are ready to become a homeowner – jump in and get started.  So much to learn, so much to see – The Caton Team is happy to help!

Enjoy this article…

What’s the Best Season for Home Buying?

After the holidays, buyers tend to start getting more aggressive with their house hunting. Search activity usually peaks around March or April in most states, according to a new study of home searches from 2007 to 2012 conducted by Trulia.

In September, searches slow down. By December buyer searches ebb to their lowest point of the year.

“Home-search activity swings with the seasons in every state,” says Jed Kolko, chief economist of Trulia. “Buyers and sellers can use these ups and downs to their advantage. Sellers looking for the most buyers should list when real estate search traffic peaks. Buyers, however, should think about searching off-season, when there is less competition from other searchers.”

The study revealed seasonal patterns of search activity state to state. Here are the months when online real estate searches peak in every U.S. state:

  • January: Hawaii
  • February: Florida
  • March: Arizona, California, Delaware, Georgia, Idaho, Iowa, Kentucky, Maryland, Massachusetts, Michigan, Missouri, Nebraska, Nevada, Ohio, Oklahoma, Pennsylvania, Virginia, Washington
  • April: Colorado, Connecticut, District of Columbia, Illinois, Indiana, Kansas, Minnesota, New York, North Dakota, South Dakota, Utah, West Virginia, Wisconsin
  • May: Real estate activity does not peak in any state
  • June: Mississippi
  • July: Alabama, Alaska, Arkansas, Louisiana, Maine, New Hampshire, New Jersey, New Mexico, North Carolina, Rhode Island, South Carolina, Tennessee, Texas, Vermont, Wyoming
  • August: Montana and Oregon
  • September-December: Real estate activity does not peak in any state

Source: “Trulia Reveals Best Home-Searching Season,” HousingWire (Jan. 29, 2013)

Sabrina’s 2 Cents:  In my experience, especially this year with our beloved 49’ers in the Superbowl, the market doesn’t really start to pick up until after Super Bowl Sunday.  It is funny to hear – but it is true.  We see the buyers get off the couch once the football season is over and listings start coming on the market.  We are ready when you are – give us a call or email!

I read this article at: http://realtormag.realtor.org/daily-news/2013/01/31/whats-best-season-for-home-buying?om_rid=AACmlZ&om_mid=_BRCsnAB8wncg3e&om_ntype=RMODaily

Got Questions? – The Caton Team is here to help.

Email Sabrina & Susan at:  Info@TheCatonTeam.com

Visit our Website at:   http://thecatonteam.com/

Visit us on Facebook:   http://www.facebook.com/pages/Sabrina-Susan-The-Caton-Team-Realtors/294970377834

Yelp us at: http://www.yelp.com/biz/the-caton-team-realtors-sabrina-caton-and-susan-caton-redwood-city

Or Yelp me:  http://www.yelp.com/user_details_thanx?userid=gpbsls-_RLpPiE9bv3Zygw

Please enjoy my personal journey through homeownership at:

http://ajourneythroughhomeownership.wordpress.com

Thanks for reading – Sabrina

Existing-home sales near 5-year high – great article I wanted to share…

Hello Blog Readers!

Sabrina here, came across this great article pulling statistics from the National Association of Realtors.  Please enjoy this positive report on our real estate market.

Existing-home sales near 5-year high

NAR’s year-end stats show housing markets flirting with pre-bust growth

BY INMAN NEWS, TUESDAY, JANUARY 22, 2013.

Existing-home sales, prices and inventory saw dramatic changes in 2012 reminiscent of the housing boom, statistics released today by the National Association of Realtors show.

At 4.65 million units, 2012 existing-home sales were up 9.2 percent from 2011, according to NAR’s preliminary totals for the year. That would be the highest volume since 2007, when 5.03 million were sold.

Bolstered by low inventories, the national median existing-home price was up 11.5 percent from a year ago in December, to $180,800. December saw the 10th consecutive month of year-over-year price gains, a trend not seen since May 2006.

For 2012 as a whole, the national median existing-home price was up 6.3 percent, to $176,600, the largest annual price gain since prices surged by 12.4 percent in 2005.

At 1.82 million units at the end of December, existing-home inventory now represents a 4.4-month supply, the lowest level since May 2005, near the peak of the housing boom.

“Likely job creation and household formation will likely fuel (market) growth,” said NAR Chief Economist Lawrence Yun in a statement. “Both sales and prices will again be higher in 2013.”

To finish reading this article and few their charts and graphs please visit: http://www.inman.com/news/2013/01/22/existing-home-sales-near-5-year-high

Here is another great article about home sales: http://newsgeni.us/?em=info@thecatonteam.com&p=106674

Got Questions? – The Caton Team is here to help.

Email Sabrina & Susan at:  Info@TheCatonTeam.com

Visit our Website at:   http://thecatonteam.com/

Visit us on Facebook:   http://www.facebook.com/pages/Sabrina-Susan-The-Caton-Team-Realtors/294970377834

Yelp us at: http://www.yelp.com/biz/the-caton-team-realtors-sabrina-caton-and-susan-caton-redwood-cityå

Or Yelp me:  http://www.yelp.com/user_details_thanx?userid=gpbsls-_RLpPiE9bv3Zygw

Please enjoy my personal journey through homeownership at:

http://ajourneythroughhomeownership.wordpress.com

Thanks for reading – Sabrina