Where is the real estate market going in 2016?

Real Estate Changes in 2016Central California will march to its own drum.

California is not like the rest of the country, so it’s hard to compare California on a national level like CNN, CBS, and NBC tend to group together.  Even the real estate market in the Peninsula – San Francisco, San Mateo, Palo Alto down to the Bay Area in San Jose is even more unique and hard to compare on a California level.  The local housing market varies from mile to mile and location, location, location still stands strong.

The housing inventory on the MLS is relatively low, but that has been the new normal for South San Jose like Morgan Hill, Gilroy, and Hollister.   The real estate market has been tough for some buyers looking to invest or purchase their first home in a lower price range.  Using a local full-time agent will help point out some “pocket” listings and new constructions that are not on the MLS.

Since Intero Real Estate Services holds the market share in Hollister, our community oriented agents tend to hear about listings before they are active.  Sometimes we can make successful transactions without having to go public.  Seems to keep everyone happy and stress free.

New construction is booming in Morgan Hill, which is leading the trends followed by Gilroy and Hollister.  While the teezer base prices of new construction are appealing, home buyers spend well over $30,000 in upgrades for some standard features.  Buyers pay the price for the brand new tag, but communities went for years without new construction they greatly oblige to the prices.

Interest rates may rise in 2016, but not on a large scale originally anticipated.  Leslie Appelton Young shared that it really depends on the economy at that time before we see major increases.  With the Presidential Election 2016, America will just have to wait and see what is promised by the candidates. National Association of Realtors did a fantastic job stopping a “transportation” tax that would have impacted home buyers, so REALTORS had a win in 2015.

With home prices on the rise and flattening, investors are looking to buy properties to rent versus flipping.  Foreclosures and short sales are few and far between, so capitalizing on distressed properties are starting to become a thing of the past.

Home values have been neutral in San Benito County but Santa Clara County still remains a seller’s market.  If you have to buy a home in 2016, then it will be a great time for you to enter the real estate market.  Prices are not going down anytime soon, thanks to global powerhouses like Apple, Google, Twitter, Yahoo, etc.

If you would like a home value analysis or buyer location analysis, please contact Kristen Jurevich at (831) 635-6719 or (650) 503-4110 or MoveWithKJ@gmail.com

 

 

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JUST RELEASED: Bay Area Counties MLS Stats for January

San Benito, Monterey, Santa Cruz, Santa Clara, and San Mateo Counties all increased in inventory from the end of 2014 through the first month of January in 2015.  The average sales price in San Benito decreased 10% but Santa Cruz had the highest percentage decrease of 18%.  San Mateo and Santa Clara average price increased 6-7% even with residential inventory increasing 13%.  Buyers are still demanding on living in those counties and will gladly pay the price increase.   The average home stays on the market for a little more than a month before putting a JUST SOLD sign in the yard. If a home is on the market in San Jose, then it will most likely sell FAST. Great news for sellers, especially if you have a 50 year old home with no upgrades.  No worries, an investor or International buyer will gladly take it off your hands.

What can you expect with the real estate market in South County and Hollister? It surely follows the leader….Silicon Valley.  New construction are popping up in almost all vacant lots.  Permits have greatly increased across the board in 2013 compared to the earlier years.  Now buyers can expect to have a brand new home at a fraction of the Bay Area cost.

In general, don’t wait to buy a home.  The Bay Area housing is holding strong, unlike the rest of the United States.  Buyers will pay for the wonderful weather and easy access to work.  Local MLS stats show that things are looking good for real estate.  Where do you fall?

More great MLS Listing facts and reference, click here.

Data supplied is for MLSListings Inc five reported counties: Monterey, San Benito, San Mateo, Santa Clara and Santa Cruz. MLSListings data is tabulated the third of every month to the third of the following month; primarily to account for late corrections and additions by agents. These updates are often not included in most market reports. The Market Indicators Report reflects the most current information on the date the report is generated. A complete report for numbers indicated in summary can be found at mlslistings.com in the Media Center. Further media inquiry: please contact pr@mlslistings.com.

Hollister is More Than a Bedroom Community

After reading a Facebook blog from Hollister Mayor-Ignacio Velazquez with his new year resolutions for Hollister, I was compelled to take a trip to the San Benito County Planning Department to see what was going on with my little community.  With all the new construction developing down almost every vacant lot, I wanted to see if Hollister had any permits or potentials for commercial development.  Unfortunately my dreams were not fulfilled and Lowes or Home Depot did not fill the Hillcrest to Meridian spot.

With an estimated 1,200 homes on the horizon, I asked, “Where are all the people going to go? We only have one Target.”  I was told to “be excited” and Hollister is a “bedroom community.”  Although it was not said in a negative way, I could not help to challenge the remark. I am excited for growth and change, not to mention job security for Realtors like myself. But we also need a place for residents of all ages to go and spend their money locally.

For starters we do have Marich and DeBritos delicious chocolate factories that offers special tours to see divine sweets.  Hollister also contributes to a quarter billion dollars towards the San Benito Farm Bureau with worldwide distribution of vegetables, salad, bell peppers, and let’s not forget the Jurevich cherries.  San Benito Bene is a specialty store located in Downtown Hollister, that displays some of Hollister’s most elegant and personalize gifts.  The store’s owner Kathina is a key asset to the the San Benito Olive Festival which is following the successful profit generating Garlic Festival.

When the Board of Supervisors candidate Victor Gomez spoke at our San Benito County Association of Realtors meeting, he said that he “doesn’t see cars driving by on HWY 25, he sees wallets.”  Isn’t that the truth.  Money being spent elsewhere.  Even if a greater portion of sales stays local, we would have more funding for schools, first responders, and road maintenance.

Now that the ground breaking is happening, rest assure Realtors will be reaching out for more commercial development to sustain our growth.  Let’s make our home a better place to live.  Let’s provide necessities for families at the same rate we build homes.  Let’s be the change we wish to see in the world.

What’s Next After Labor Day?

fenceSummertime came & went already… Did you go on vacation, got a good rest and got a nice tan to prove it? Hope so for you. It’s good for the mind to go into neutral every so often. Summer 2014, however, has not been exactly quiet and relaxing for everybody and in all businesses. Try real estate for example. No time to smell the roses for the true pros; July & August have been hot in every way.

Some people might argue with the above statement. After all, sales units are actually down year-to-date, in many markets this year, particularly (and paradoxically) in the most buoyant of them. The Silicon Valley is a good illustration of this peculiarity. However, this apparent slow-down is more a mirage than the reality of the marketplace. Let me make my case…

First, the number of sales units does not always tell the story. For one thing, we can only sell what is available to be sold. As you know, we are suffering from the most acute (and often incomprehensible) shortage of inventory that I can remember. Give me more listings and I’ll give you more sales. A lot more.
But, no matter how relevant the number of transactions may be to describe the velocity of the real estate market, it is not, in my view, the N.1 indicator of a hot market. Prices are. And price appreciation during the last two months, in many sought after areas such as the Silicon Valley, has certainly continued at a good tempo, seemingly unaltered by the “slow” season.

I know what you are going to say: that too is all about that supply & demand dichotomy I was referring to earlier. Well, OK, up to a point. Prices don’t go up simply because of listings scarcity. There is a lot more to integrate that the eyes don’t see. The significant fact is that most people believe again in real estate; they believe in the value of purchasing a home, whether to live in or to leverage as an investment. The recession years are now well behind us and, if nothing else, the appetite for real estate has grown after a long diet.

There is more. US real estate is wanted. This is particularly true in the San Francisco Peninsula & the South Bay. Even when the domestic demand shrinks, for all the good reasons we can understand during tough economic times, the international demand makes up for some of the loss and keeps on driving prices higher and higher yet.

For most foreign buyers coming to town, prices are no object. They don’t perceive our real estate prices as being too high. In fact, many of them find local homes to be very affordable compared to what “similar” properties would go for in the countries they come from. Not to mention that in some Asian countries, for example, you stand to lose the property that you paid dearly for upon the expiration of a multi-years lease. Title remains with the State.

Hence a growing migration of international buyers to the US. Hence the upward pressure on prices. Cash deals, multiple offers and wild over-the-asking price offers are the new normal. It is what it is. As a Realtor, I am not complaining, I am just observing.

The thing to always keep in mind in the real estate business is that buyers “make” the market. Not the sellers; not the real estate agents. We have to look at the buyers’ behavior to measure the pulse of the market and understand where it is going. Today, the trends are good. Prices, more than units, are the expression of this optimistic view.

Labor Day is now behind us. We are about to start a “new year” of sort when the fall season pushes summer away. A big wave of buyers is approaching. It would be nice to see more listings hitting the streets. Chances are it will happen. Cross your fingers and stay tuned.

By Alain Pinel
General Manager of Intero Prestigio international
Intero Real Estate Services, Inc.

Photo courtesy of: http://blogbasics.com/i-want-to-write-a-blog-but-i-don%E2%80%99t-know-what-to-write/

Gen Y is Ready to Buy

Hollister may not support the average home value based off this California Association of Realtors information, but Hollister provides first time home buyers great opportunity to own near the San Jose area. Hollister real estate agent Kristen Jurevich can provide relocation assistance to home buyers looking to move in a more affordable areas, and Kristen cooperates with brokers for referrals.

GenYReadytoBuy

Pricing Right: Strategy, Tactics, or Black Magic?

HVThe market, over the last two years, has been so hot (after being so cold) that a good many home-sellers and Realtors got to thinking that price does not matter much nowadays when dozens of anxious buyers are waiting in line with a bid in their hands, hoping to get a house. Well, wake up. Price matters.

Typically, one of the most agonizing questions both sellers and their agents dread the most (aside from the commission issue…) is indeed “What price should we put on the listing to produce the fastest sale at the best price?” Today, this question is very relevant, perhaps more than ever. Depending on the local market, the uniqueness of the property and its price range, you may explore different approaches to maximize your chances.

The choices have always been and will always be the same:

  • Overprice: deliberately or by ignorance
  • Underprice: deliberately or by ignorance
  • Price at what we perceive to be “market value”

 

Remember that there is no magic recipe that works every time. Again, you need to take the pulse of the market at that very moment and understand that what works at the low-end rarely works at the high-end. Just supply & demand common sense. Let’s look at the three options and briefly analyze the pros & cons of each one.

  1. Overpricing:  Hard to define what is an overpriced listing. As far as I am concerned, an overpriced listing is one that does not sell!  In other words, , a property is not “overpriced” if a buyer buys it, even if we thought it was when we put the For Sale sign on the front lawn. The supply & demand dance can do strange things in a good market. Want an example? Look at what happened in the Silicon Valley over the last 30 months or so: very little inventory, huge pent up demand, cheap mortgage money, reassuring economic news , more stable job market, wave of rich IPO’s, etc. Results: in the mid range of the market, between $1M & $2M, selling prices have jumped, on average, well over 10% per year. Now, before you get too carried away, let’s use a little wisdom that only experience gives us. In the real estate business, the past is not necessarily a good guide to predict the future. It is not because prices have jumped yesterday that we can count on the same thing tomorrow. What we can say, looking backwards, is that if a house in that region has been on the market more than a month and did not sell yet, chances are it is indeed overpriced. Overpricing, in any market, is a dangerous idea. In my book, it is a terrible idea. If the market is slow, it makes no sense. If the market is hot but the house does not move quickly, it will soon grow old and collect dust as Realtors will always prefer showing new listings rather than those which have been aging on the shelves. Your choice.
  2. Underpricing:  Talk about dangerous games!… You must have a strong heart to deal with that option. It can work to the sellers’ advantage. It can hurt just as well. In the hot market we have been enjoying for a while in the Silicon Valley and many other markets throughout the US, underpricing is getting to be as popular (and risky) a sport as bungee jumping. The idea is to tease anxious buyers with a price 5 to 10% lower than what we perceive to be the market price and manufacture a bidding war which may result in multiple offers and an ultimate sales price well over the asking (and presumably over what we the house would normally sell for…). Some agents make a good living advising their clients to take a chance. They may even win more listings using such gimmick with some degree of success. That, of course, is a bit deceptive since it is a strategy that can backfire. Keep in mind that underpricing does not guarantee a higher price. It could go the other way. Do I like this option? No. I just don’t like to play games. Your choice.
  3. Pricing at “market”:  If you, as a home seller or as an agent, think you know at what price a buyer and a seller are likely to come to terms in any market, because you have a bunch of reliable comps (recent local sales of similar properties, active listings…) I suggest you use that option rather than play with a grenade. You may put a tiny cushion on top of the price to allow for possible negotiation. If the price is too high, you will soon know and you will cut some right away. If the price is too low, well, you will benefit from a buyers’ frenzy. If the price is right, you will obtain a quick & easy sale. A win-win. I like that. We all sleep better when we do business that way. Your choice.

By Alain Pinel
General Manager of Intero Prestigio international
Intero Real Estate Services, Inc.

 

Pool of ‘Upside Down’ Homeowners Is Shrinking

Photo credit: Southernstatesinsurance.com

Photo credit: Southernstatesinsurance.com

Gino Blefari
Senior Vice President of HSF Affiliates
HomeServices of America, Inc

“Upside down” homeowners – or those who owe more on their mortgage than their home is worth in current market conditions – was a largely followed housing segment during the downturn and recession. Many markets and individual owners are still feeling the effects.

How deep is the problem now? Are we near more complete relief that puts more balance back into the market?

Real estate data firm CoreLogic last week released a reportshowing that about 312,000 residential homes regained equity in the first quarter of 2014. This raises the total of residential properties with equity to more than 43 million.

That leaves about 6.3 million homes – or 12.7% – with negative equity (i.e., owing more on the mortgage than the home is worth), an improvement from 6.6 million, or 13.4% in the fourth quarter of 2013.

The report went on to show that of the 43 million homes with equity, about 10 million have less than 20% equity. This is considered a risky situation for homeowners should home prices drop.

What does this mean for the market overall?

The improvement is good news for sure. For the owners with negative equity, it essentially means they either cannot sell or would have to show a hardship for short sale or even foreclose. But it’s important to note that as long as a seller is not looking to move and can afford the mortgage, there’s really no issue.

The owners with negative or short equity who need to sell or want to sell in the coming year or two will need home prices to rise to cover the value of their existing mortgage. While that may seem feasible in some markets where prices are right back at pre-recession levels, it may not in those markets that are still sluggishly pulling out of the downturn.

States with the highest percentage of negative equity homes include: Nevada (29.4%), Florida (26.9%), Mississippi (20.1%), Arizona (20.1%), and Illinois (19.7%).

CoreLogic expects another 5% increase in home prices over the next year, which would lift another 1.2 million properties out of negative equity.