The hottest 20 housing markets to watch this spring

Buyers should expect substantial competition

sold sign

The early look analysis of March housing data from realtor.com suggests a surge in demand to Jonathan Smoke, realtor.com chief economist.

Despite a 2% growth in inventory month over month, the median age of inventory continues to be down, with a 13% drop month over month.

Additionally, Smoke notes, median list prices are rising faster, now at $220,000 nationally up 3% month over month and 11% year over year.

“It’s still a seller’s market,” Smoke said. “Realtor.com data shows that supply is not keeping pace with surging demand.  We expect rising prices to persuade those who may be on the fence about listing their homes to do so in the coming months, leading to closer parity between supply and demand.”

Looking at March data and website traffic, Smoke determined the 20 hottest markets in the country, based on the number of listing views relative to the number of listings.

“We are now firmly in the time of the year when peak demand and peak inventory levels typically occur, through spring and early summer,” Smoke said. “Buyers should expect substantial competition, especially in the hottest markets, and for affordably priced homes within most markets.”

He says that these markets should see particularly healthy activity in the coming months as home buying season kicks into gear.

  1. Waco, TX
  2. New Orleans-Metairie, LA
  3. Ann Arbor, MI
  4. Denver-Aurora-Lakewood, CO
  5. Santa Rosa, CA
  6. Fort Wayne, IN
  7. Vallejo-Fairfield, CA
  8. San Diego-Carlsbad, CA
  9. Columbus, OH
  10. Detroit-Warren-Dearborn, MI
  11. Manchester-Nashua, NH
  12. Boston-Cambridge-Newton, MA-NH
  13. Austin-Round Rock, TX
  14. Boulder, CO
  15. Springfield, IL
  16. Charleston, WV
  17. Pittsburgh, PA
  18. Tampa-St. Petersburg-Clearwater, FL
  19. College Station-Bryan, TX
  20. Lansing-East Lansing, MI
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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.

1031 Exchange: Buy now or you may pay for it later

Tax deferred exchanges are at an all-time high and continued momentum is expected. This growth continues from 2014 and is fueled by rising real estate values, higher tax rates and lower interest rates. With the recent threat of elimination or limitation of 1031 Exchanges in last year’s tax reform proposals, many investors are motivated to take advantage of their tax deferral opportunities now.

2015 promises to be another strong year for 1031 Exchanges as investors and owners seek ways to defer their taxes. Section 1031 of the tax code allows real estate investors to sell a property, defer the tax, and reinvest the proceeds into a replacement investment. Tax deferred exchanges are a popular investment tool which greatly enhances purchasing power and encourages taxpayers to continually invest in real estate.

If you want to know more about 1031 basics or brush up on more complex 1031 strategies to take advantage of tax deferral, please visit our website for in depth information or join us for one of our complimentary webinars below.  Contact Kristen Jurevich, Bay Area real estate agent with Intero Real Estate Services a Berkshire Hathaway Affiliate, to make a purchase in the San Benito, Santa Clara, Monterey, or Santa Cruz area.

Exchange Topics

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Sarah Malone, CES®
Assistant Vice President
Senior Exchange Officer

(831) 264-5515 Phone

What Bubble?

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


Are we spoiled, or are we bored, or are we blind? Is the Silicon Valley the eternal land of plenty or just a Fools’ Paradise?

I don’t know about you but I feel like I caught a virus that makes me a bit gloomy these days. No matter what business paper I read, I feel like being brainwashed about new impending dotcom slide. The word “bubble” is coming back in fashion. Every decent brain has a theory on the matter and they are ruining my days preaching tougher times in the tech industry and whatever business (like real estate) that benefits from it.

What are we talking about? The hi-tech euphoria which caused some IPO’s to reach stratospheric levels over the last two years, is dissipating. Valuations are being challenged, especially in the social media arena and biotech. Balance sheets do not support stocks performance. By the time employees of most new tech IPO’s can sell their shares, the median value shrinks substantially. The tech-heavy Nasdaq is down so far this year. Warning signs?

Anything can happen. I have not forgotten the tech boom of the 90’s in the Silicon Valley and the brutal wake-up call that followed in late 2000 & 2001. But what I see from my window, today, is that too many people believe way too much in Murphy’s Law. It is a good conversation topic around a dining table to predict a slowdown, just like we predict the next big quake can happen anytime, but the fact is that today’s “bubble” has no similarity to that of 2001.

Back in those days, the giants of the industry were still young and financially unsecure. Their market was, for the most part, limited to the country boundaries. IPO’s were mushrooming right & left, fueled by plenty of VC money looking for a quick return.

Today, the giants of the tech sector are loaded with cash. They are doing as well if not better overseas. They are grabbing new innovative tech companies at record prices without feeling any pain. Investors are in for the long term. VC people are hot about growth revenues prospects and are investing billions in the Valley, particularly in San Francisco, which appears to be the new destination. The returns sure beat other investment opportunities in this anemic economy.

Of course those same people complaining about overvalued tech stocks about to fizzle, are announcing the same prospect for the local real estate activity which depends so much on the tech sector in the Silicon Valley. The market, however, is behaving just fine. The only negative is that the so-called Spring market has not, so far, brought the thousands of new listings that we expected and we so badly need to satisfy a steady demand.

Most of the uncertainty regarding the regional residential market is not related to a tech slowdown; it is just a new normal here and everywhere else in the US given a sluggish economic recovery. NAR, the National Association of Realtors, was remarking a couple of weeks ago on the fact that the current sales activity in underperforming by historical standards. “In contrast, price growth is rising faster than historical norms because on inventory shortages.”

Last year, the Silicon Valley has fared quite well compared to most other areas. In the “money-towns” of the Mid-Peninsula, such as Atherton, Woodside, Portola Valley, Menlo Park, Los Altos, Los Altos Hills & Palo Alto, the dollar volume of sales exploded year over year, up to 28% in Woodside and 22% in Palo Alto. Unit sales also jumped to new highs, except in Menlo Park, Los Altos & Palo Alto where the inventory of active listings was particularly low.

When you compute the price appreciation over a 5 year period, homeowners did pretty well: Atherton jumped 28%, Woodside 29%, Portola Valley 38%, same for Menlo Park and Los Altos, Los Altos Hills 15%, and Palo Alto…57%! Is that enough to talk about a bubble? Not in my book since it is mostly a function of the dichotomy between supply & demand. Yes, 2014, so far, has been a bit weak, but you give me a lot more listings and I’ll give you a lot more sales without inflationary prices. The Silicon Valley is OK. Keep the faith. Thank you.

 

Intero Insider: House Flipping Heats Up at the High End


If house flippers flooding all ranks of the real estate market eight years ago was the sign of the impending market downturn, then what does it mean that investors are embracing high-end flipping today?

Reuters this week ran a story that looked at a growing trend in the flipping of high-end homes. “Flipping” is the term we give when someone buys a house at a low price, usually invests a bit – or a lot – of money in remodeling, then sells for a nice profit.

Flipping was once a street sport where you’d find just about anyone regardless of investing or real estate experience partaking in markets across the U.S. But it faded out pretty quickly when the downturn hit the housing market.

Even Jeff Lewis, star of Bravo’s “Flipping Out” has since pivoted to a design services model.

It’s back – but in a different form. And it could mean better things for the market rather than being an ominous sign for rampant speculation and decline.

This time, what Reuters reports is more flipping with luxury homes. According to Reuters, the number of flipped homes valued at $1 million or more has risen nearly 40% nationwide since 2011. It’s important to note that RealtyTrac defines a flip as a home that’s been purchased and sold within six months.

RealtyTrac cites a few specific markets where high-end flipping is rampant. Luxury house flipping was up 867% in Orlando between 2011 and 2012, and increased 456% in Phoenix. To get a deeper sense of what these percentages mean, the number of flipped high-end homes in Orlando went from 3 to 29 during this time, from 27 to 150 properties in Phoenix, and from 10 to 73 properties in Las Vegas.

What’s driving this activity?

Well, as one source tells Reuters, the opportunity in flipping at the low end has all but dried up. And despite more risk with more dollars at the high end, the investments have paid off handsomely for those investors who know what they’re doing.

I like to look at it as another example of why real estate is never just one story. With so many markets each centering on different local economies and so many different levels of each of those markets – low to high end – it’s almost impossible to make blanket statements about the state of housing.

But it’s easy to see how the growth in investment at the high end is a positive overall. If nothing else, the confidence investors must have going into these high-end deals is a wonderful strength that eventually will help strengthen overall confidence in the greater housing market.

By Gino Blefari, President & CEO, Intero Real Estate Services, Inc.

Pending Sales Slip in June, but Soar Above Last Year’s Levels

Pending home sales, a key indicator pointing to short-term market projections, eased back from a six-year high in June as rising interest rates and restricted supply began to impact buyers.

The National Association of Realtors’ latest Pending Home Sales Index was down 0.4% in June from 111.3% in May, but still 10.9% above the same month a year ago when it was 100%.

Regionally, the pending sales index fared the best in the West where it jumped 3.3% to 114.2% and is 4.4% above where it was a year ago. The index remained unchanged in the Northeast at 87.2, while coming in 12.2% higher than year ago levels.

In the Midwest, the index fell 1% to 114.3%, but was 19.5% higher than it was a year ago. And pending sales in the South fell 2.1% to an index of 118.3% in June, which was 9.5% higher than the same month last year.

Does this mean summer is over and markets will ease through the end of the year? Not necessarily.

The fact that pending sales are still notably higher across the U.S. than they were at this time last year bodes well. What we’re seeing in the month-to-month slippage is more likely to be from the recent rise in interest rates, as well as continued low supply in markets where there is healthy demand.

In some places, buyers are either getting outbid due to excessive competition or they simply cannot find a home that suits their needs.

Because of this, new construction is another indicator we all should watch closely. I expect to see much more aggressive building in the next five years in markets where land is abundant.

With demand so high and interest rates still incredibly attractive, many markets could probably see sales increase substantially if there were more opportunities to buy.

Pending sales may have slipped, but the fact is the market is still moving pretty well in many areas. Supply is the wildcard this year.

Watch the video on the NAR’s Pending Home Sales Index by clicking below:

By Gino Blefari
President and CEO
Intero Real Estate Services, Inc.

San Jose Market Paves the Real Estate Market for Hollister

San Jose

 

San Jose real estate market is making newlines in the Wall Street Journal. It is important for Hollister home buyers and sellers to follow because the town follows similar selling patterns. The statistics may not be as steep but shortly after a change in San Jose, Morgan Hill, Gilroy, and Hollister follow.

Here are some interesting facts:
— San Jose (Silicon Valley), CA was the fastest-moving market, with 58% of new listings going under contract within two weeks on the market.

— The six fastest markets were all in California, followed by Denver, where 48% of listings went under contract within two weeks.

— The San Jose, CA and Chicago markets slowed the most last month, with the rate of homes going under contract in 14 days in Chicago falling from 23.8 percent in April to 14.6 percent in May. San Jose dropped from 64.0 percent to 57.7 percent.

— All 22 markets were still in seller’s market territory, defined by having less than six months of supply. San Jose, CA had less than one month of supply.