Is it a buyer's market, seller's market, or neutral?

BY JULIE WYSS · DEADLINENEWS.COM © AUGUST 1, 2012 

If you are considering buying or selling a home in Silicon Valley, you are likely trying to take the pulse of the housing market to determine if this is the right time to make a move.

Even the most savvy investor can find the timing aspect of buying or selling daunting and timing can be a stressful ordeal after watching so many friends and family members stuck with mortgages that are larger than their homes are worth.

Here’s a quick formula to help you zero on the right time to buy, sell or stay put.

The calculations can be used in any sized market, by ZIP Code, by city or by county.

Calculating market conditions

• Buyer’s Market – There is more than a six-month supply of homes for sale. The market is loose. This puts the buyer in a better negotiating position, making it a great time to buy.

• Seller’s Market – There is less than a three-month supply of homes for sale. The market is tight. This puts the seller in a better negotiating position, making it a great time to sell.

• Neutral Market – There is a three- to six-month supply of homes for sale. This puts the buyer and seller on a relatively equal negotiating footing. The seller has an edge as supplies move nearer to three-month supply. The buyer calls more of the shots when supplies tip toward the six-month supply level.

In your area, calculate the supply of homes for sale by dividing the number of homes for sale by the number of homes sold in a given month.

Additional factors also can tip the scales one way or the other, including economic distress or growth, levels of appreciation, falling or rising prices and an imbalance between buyers and sellers.

Sellers rule

• It’s a solid seller’s market. Absolutely. All-cash buyers have snatched up a large chunk of lower priced properties. Distressed properties are down. And many equity-poor homeowners are waiting, hoping that prices will come up more so they can squeeze another $50,000 or so out before they list.

• It’s not a buyer’s market. Record low interest rates along isn’t enough to give them an edge in terms of a stronger negotiating edge. Inventories are also near record lows so buyers face stiff competition from multiple offers as they struggle to find the right property.

• Affordability is being offset by low inventories and that’s keeping the market out of neutral territory.

Still a good time to buy

As is often the case, Silicon Valley’s market experienced a swift transition from the buyer’s market of last year to the current seller’s market. That’s because home buyers and sellers typically move in unison – on or off the market – as soon as they see the market moving in and against their favor. That makes the neutral market the most fleeting of the three.

In a seller’s market as tough as this one, even well-trained professionals are left scratching their heads trying to get an offer accepted.

Prices are rising, record-low interest rates are sending buyers to market. It’s a great time to sell compared to a year ago.

With prices still affordable, it’s also an amazing time for existing homeowners to buy up and move to a bigger and better home.

ABOUT THE AUTHOR

A DeadlineNews.Com Silicon Valley Contributing Writer, Julie Wyss is a short sale and luxury home specialist serving Silicon Valley, CA. Wyss is a broker associate with Intero Real Estate Services-Los Gatos, CA and mortgage broker at North Star Mortgage Associates. Wyss, who has represented buyers and sellers the the San Francisco Bay Area for a decade that spans the housing bust, has also served as an expert media source for DeadlineNews.Com. Network with Julie Wyss on LinkedIn.

Silicon Valley Home Buyers: ‘Bigger Ain’t Necessarily Better, Baby’.

BY SPECIAL REPORT · DEADLINENEWS.COM © MARCH 2, 2012 

JULIE WYSS – From young, qualified first-time home buyers to 50-and-olders, moving up, over or down, a new breed of buyer is descending upon the Silicon Valley Housing market.

They’ve worked hard to save, they have solid jobs and they are qualified to buy big.

But offer them what they can really afford and they’ll give you the thumbs down.

They are the new financial conservatives.

They’d rather not be house poor.

They can afford much more, but they want less — less square footage, a smaller energy bill, fewer cleaning and maintenance headaches, but most importantly, less to pay out on the monthly mortgage.

They want a simpler, smaller American Dream.

It’s all about the “more” that comes with the “less.”

A smaller, less expensive home means more financial freedom in terms of more cash to save, more discretionary income to spend on nights out or travels away. A smaller home also means a smaller maintenance noose around your neck.

“Since new home prices peaked in 2007, new single-family sales of homes costing more than $500,000 have been more than cut in half, dropping from 13 percent to just 6 percent of all new home transactions,” said Rick Palacios Jr., senior research analysis of John Burns Real Estate Consulting.

“During this time, sales of home for under $200,000 have risen from 33 percent to 42 percent of transactions (nationwide). In fact, sales of homes priced under $300,000 now account for roughly 75 percent of all new single-family transactions. Of course, price declines and a shift to smaller homes played a role in this change, but consumer attitudes have shifted too. Our surveys and our consulting work show that today’s buyer is frequently very focused on affordability, and this broad macro theme will continue to play itself out in the new home space during 2012,” Palacios added.

A young couple in Silicon Valley with a combined income of $150,000 and top-notch credit can qualify for a mortgage with an debt-to-income ratio of up to 50 percent and their friends may be impressed, but the deal comes with a massive forever-property-tax-bill, uber cleaning and maintenance costs and yard upkeep from hell, not to mention massive energy bills.

Home buyers are wisely saying “no thanks” to that. “We don’t want house poor. We’d rather have extra money to enjoy life, travel, eat out and save a few bucks.”

That’s a decided change from boom times when buyers wanted the biggest, baddest, most expensive home money could buy.

It’s a lot like the change from the old fitness regimen of bulk and brawn to one of a more svelte approach for endurance.

Today’s economy demands a meaner, leaner bucks and brains for long-term homeownership.

If you have a need for a real estate professional, please contact me. I would also appreciate your vote of confidence by passing my name to anyone you may know who would benefit from my services.

408.687.2026   | Julie@JulieWyss.com   |  www.JulieWyss.com