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

by Julie Wyss, Broker Associate

Originally published at DeadlineNews.com on 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.

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.

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

Is it time to move up in Silicon Valley?

BY JULIE WYSS  Originally published in the DEADLINENEWS.COM © JUNE 5, 2012 

 Those who have money to buy have been sitting tight for the past half decade.

Suddenly, everyone wants to buy real estate – first-time home buyers, investors, move-up, even move-down buyers.

What happened?

In the past four months inventories have fallen hard and prices have increased by $20,000 to as much as $100,000 on select properties. The bottom may have come and gone. It feels like recovery.

Silicon Valley bidding wars have erupted on everything from the worst distressed properties that attract all cash buyers because lenders won’t finance their sale, to $2 million homes in Cupertino, Los Gatos, Palo Alto and affluent areas with a tech worker-based populace.

Many local markets have become much more seller friendly.

Asked one buyer from Germany, “Why did the market move so quickly?”

Interest rates are at record lows. Prices have stopped falling. The Euro Zone troubles are prompting investors from abroad to buy U.S. There is no one specific answer.

I’m exposed to all of the global and local information available to real estate professionals and the best answer I have heard is “The herd has moved.”

Herd moving uphill

One of the fastest growing trends is move-up buys.

Home owners have been “sucking it up” and staying put, even through they have great jobs, tenure and steady pay increases. Now with this market surge, they are getting off the fence, selling mid-range homes, valued at $600,000 to $800,000 and buying up in the higher price range of $1 million to $1.5 million.

They are moving into long sought-after neighborhoods including, Los Gatos, Cupertino, Saratoga, Los Altos and Palo Alto.

They are married couples in their late 40′s and realize that life is too short to wait much longer and they really can afford their dream home.

I recently sold a Cambrian, San Jose neighborhood home that had appraised at about $700,000 a year ago. Concerned about over-pricing that could have killed a deal last year, we conservatively priced it at $760,000. It sold for more than $800,000.

The sellers, in turn, acted fast and found a great home in Las Gatos for less than $1.5 million – an entry level property for this affluent city.

Move-up financing

What kind of financing is attractive and available? It depends on the buyer. Do they hold shares of one of the hot fledgling tech companies and anticipate bonuses? Or are they on a fixed income?

One strategy is to get a conforming loan of $625,500 at a low, fixed interest rate under 4 percent and a second loan (Yes, they are back.) for $500,000 with an interest rate of 4.25 percent. For the down payment you’ll have to have to use the equity in the old home you just sold.

There are also amazing jumbo loans for a full $1 million available for low interest rates and 5- 7- and 10-year hybrid adjustable rate mortgages are back.

This is a fantastic time to move up.

Life is short.

Read this article on Deadline News by clicking here. 

408.687.2026   |   julie@juliewyss.com   |   www.juliewyss.com   

Silicon Valley Home Buyers: ‘Bigger ain’t necessarily better, baby’

by Julie Wyss, Broker Associate Article originally published in DeadlineNews.com Mar. 2, 2012 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.   Julie Wyss, Broker Associate Top Producing Individual Agent, Intero Los Gatos Top 1% Santa Clara County Realtors 408.687.2026 |  Julie@JulieWyss.com | www.JulieWyss.com

Real Estate Investors Offer Big Pay Off, If You Can Keep Up.

Deadline News.com article originally published on Feb. 3, 2012

JULIE WYSS – Today’s Silicon Valley real estate investor isn’t necessarily a high roller, but more often a working stiff with a small-business, who is tapping existing non-real estate investments to cash in on affordable real estate properties to flip or rent.

If you are a real estate agent looking to serve them, you’d better bring your A-game.

These younger investors aren’t “suits” sporting fancy cars, but are more likely to dress casually and drive a hard bargain, offering all cash or sizable down payments on the properties they buy.

Many are smaller, newer, more innovative-thinking investors with one or two rentals under their wing, looking to acquire more. One thirty-something investor with three children chose to drain the kids’ college accounts and buy three houses with 15-year loans. By the time the kids graduate, mom and pop can sell the farm and pay cash for college.

Some are trading in two-, three- and four-plexes for single-family homes (SFH), considered diamonds in the rough, valued at half what they cost at the peak of the market.

Investors with cash in the bank are getting off the fence because they no longer trust that their money will perform as well in conventional investments, including money market funds, stocks and other investments.

In the business to make money, investors also favor Section 8 housing’s guaranteed rental income.

San Diego-based DataQuick says absentee buyers – mostly investors – purchased a record 23.8 percent of all Bay Area homes sold, up from 21.7 percent in November and 20.2 percent a year earlier. That’s an average. The share is higher in some counties, cities and neighborhoods.

If investors sound like tough cookies, they are, but you can serve them well if you have the energy and expertise to meet their demands.

The average real estate agent thinks the job is to write a contract and pray it gets accepted. Here’s what’s really required.

Going the distance

Investors aren’t in the mood to manage. That’s what they do for a living. They expect you to take the lead on acquiring their investment and expect you to understand their investment goals.

Be prepared to show an investor as many homes as they wish to see in a day, six, eight. And not just any homes. They include short sale properties occupied by families down on their luck and homes in horrid shape.

When a hot property is available, the investor needs to be convinced to tour it.

“You need to see this property and I am picking you up at your office in 30 minutes and will have you back in an hour….” Worker bees may say “no” at first, but later will agree, because you insisted. They appreciate your initiative and ultimately enjoy the thrill of the chase.

Bring hard core negotiating skills to the table. An investor needs a real estate agent familiar with the distressed property market. After several investment purchases, a skilled agent should recognize a good deal and advise the buyer what to offer. Hit the nail on the head and you gain their trust.

When the investor trusts the agent, the investor is more often willing to offer a higher price, if that’s what it takes to get the offer accepted. However, if the investor is an all-cash buyer and can forgo the appraisal contingency, even the property inspection and disclosures contingency, then a lower offer with a quick close is a more effective strategy.

Investors have little time to spare, including the celebratory two-martini lunch after the deal closes. Instead, they’d prefer you to pick them up, get them to the sign-off and back to work in an hour.

Other investors prefer not to leave work, but complete the transaction without leaving their desk. They appreciate the convenience of electronic signatures, when permitted. Electronic signatures are not allowed on a short sale, but offering to send a traveling notary or providing curb-side pick up can overcome that obstacle and help them maintain a sense of control without actually managing you.

Investors don’t care to read the fine print, but they do want to know what’s in the deal. You, along with the lender, must review the note to be sure the rate and the terms are what the investor wants. You must sign off on the title report and be certain there are no problems with liens or easements. The new title must be in the correct name of the investor or the investor’s living trust.

After escrow, the tough keep going

The real work begins after escrow closes.

Whether the investor will flip the property or rent it out, chances are, the property could use some help.

You’ll have to have at the ready a database of trusted vendors available for any work necessary – termite work, painting, hardwood floor finishers, roofers, general contractors, landscapers, pool repair guys, HVAC companies, virtually any provider you can think of. But not just any contractor, great contractors with competitive prices.

You can manage the work by installing a lock box and setting up appointments with the contractors. This allows them to quickly get to work transforming the purchase into an investment with hefty returns.

Source: Julie Wyss is the top producing individual broker associate with Intero Real Estate Services-Los Gatos, CA. For more information about Julie and her real estate services, please visit her website.

What Is Proposition 90?

Ordinarily under Proposition 13, the value of a home for property tax purposes is re-assessed to market level whenever a change in ownership takes place. This usually results in higher property taxes for the homebuyer. 

In November 1988, the state‘s voters approved Proposition 90, which is designed to induce greater turnover of homes owned by senior citizens. The measure provides anyone over the age of 55 with relief from Proposition 13 by allowing them to move from one county to another without undergoing a change in their basic property taxes.

Proposition 90 is a "local-option" law; each county has the option of participating. If a county has adopted a Proposition 90 ordinance, it accepts transfers of property tax base assessments from other California counties. If the county that the homeowner is moving from does not have a Proposition 90 ordinance, this does not affect the eligibility of the homeowner.

Qualifications for Proposition 90 are as follows:

(1) The purchaser or spouse must be 55 years of age, AND

(2) The replacement residence must be equal to or less than the value of the residence sold, AND

(3) The replacement residence must be located in the same county as the property being sold OR must be located in one of the counties which have voted to PASS Proposition 90 in order for the real property tax base to be transferred from the former residence to the replacement residence.

Before making plans to move, call the County Assessor's Office in the county you are moving to and request the most recent information concerning Proposition 90.

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.

Julie Wyss, Broker Associate
Top 1% Intero Real Estate & Santa Clara County Realtors
408.687.2026 |  Julie@JulieWyss.com | www.JulieWyss.com

2013 Year In Review

By Gino Blefari President & CEO Intero Real Estate Services, Inc. It's hard to believe another year has come and gone. Looking back, 2013 indeed was a pivotal year for housing markets nationwide. Many markets saw an incredible bounce back, homeowners regained equity and mortgage rates for the most part remained incredibly low. Here's a look back at the highlights that stood out and will help us understand how housing will perform in 2014. 1. Home sales soared for the most part Despite the fact that home sales have hit some seasonal slippage here near the end of the year, it's hard not to remember the amazing summer that took place in many markets. Home sales hit their highest level in over six years in August, and took prices along for the ride. NAR data showed that end-of-summer sales hit an annual rate of 5.48 million in August, the highest pace since February of 2007. 2. Home values inched toward record highs Perhaps even better news for America's homeowners and sellers was that the national median price for existing homes made major strides in 2013. After a hot summer, the median price was $212,100 in August, up 14.7% from the same month in 2012. 3. Negative equity eased  Of course, one of the best side effects of the rising strength of home values was the easing of negative equity for homeowners. One of the big stories of the fall was data released from RealtyTrac that showed 8.3 million homeowners – or about 18% of homeowners with mortgages – were on track to gain enough equity to sell their homes in the following 15 months without resorting to short sales. Of course, this doesn't mean that 8.3 million homes will come on the market for sale next year. But it does mean a lot more options for sellers who've wanted to sell. 4. Seasonal cooling landed The year was not immune to occasional doses of more sobering news. An expected period of cooling off indeed took place in the fall. It almost had to, given the booming summer that real estate markets experienced. Total existing home sales fell to a rate of 5.29 million in September from August, though it's worth noting they remained 10.7% above year-ago levels. 5. Access to mortgage improved, despite pockets of interest rate increases This month, we saw two great pieces of news that have to do with improving overall access to mortgages. Federal housing officials said they would leave the GSE loan limits as is, which means borrowers in higher-cost areas will still continue to see opportunities for Freddie Mac and Fannie Mae-backed loans. And a report showed that loan eligibility continued to increase for borrowers in the first half of the year. 6. Smaller cities took the lead In NAHB's fall housing index, the builders group found that smaller cities are leading the way to a housing recovery. Smaller cities accounted for 43 of the top 50 markets in the NAHB's index released in October, underscoring how much local economies play into housing activity. 7. House flipping made a comeback – at the high end A Reuters story in August investigated a rising trend in flipping homes, revealing that the number of flipped homes valued at $1 million or more had risen nearly 40% nationwide since 2011. RealtyTrac also cited a few specific markets where high-end flipping has become rampant. Luxury flipping was up 867% in Orlando between 2011 and 2012, and increased 456% in Phoenix. 8. 'Boomerang' buyers returned What's a boomerang buyer? A former homeowner who's gone through short sale, foreclosure or bankruptcy in the past few years who is now preparing to buy a home. 2013 saw many more of these folks coming into the market – a good sign as it shows positive sentiment for homeownership from a group of folks who perhaps have the biggest reason to run far far away. Wow, 2013 was exciting, fast-paced and overall really positive for our housing markets. Of course, there's still more work to be done in 2014. www.JulieWyss.com   |  Julie@JulieWyss.com

What is a Supplemental Tax Assessment

State law requires the Assessor's Office to reappraise property immediately upon change of ownership or completion of new construction. The Assessor's Office must issue a supplemental assessment which reflects the difference between the prior assessed value and the new assessment. This value is then prorated based on the number of months remaining in the fiscal year, ending June 30th.

For example, if property is purchased on September 15th with a market value of $150,000, and it has a prior assessed value of $50,000, this will result in a supplemental assessment for the difference ($100,000) prorated for the remaining months in the fiscal year (9 months from October through the following June):

$150,000 New Purchase Price/Market Value
-$50,000 Prior Assessed/Taxable Value
$100,000 Supplemental Assessment
x 9 1/2 Remaining months in Fiscal/Tax Year
$75,000 Supplemental Assessment
x 1% Tax Rate
$750 Supplemental Tax Bill

This supplemental tax bill is in addition to the regular tax bill which is based on the assessed value as of March 1st of each year. If a second sale or transfer of the property occurs during the same fiscal year, but before the mailing of the first Supplemental Tax Bill, the taxes will be prorated between May 31st, a second Supplemental Assessment will be required for the next fiscal year.

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