Sunday, December 8, 2013

2013 Bay Area Real Estate Year in Review

2013 Bay Area Real Estate Year in Review

I hope you and your family are having a wonderful year and I wish the best as the holiday approaches and into the new year.  As has become tradition, here is my year end real estate summary for this year as well as my outlook for this upcoming year.
 

Giving Thanks

The holidays are a time to reflect back and give thanks for all the blessings that we have in our lives.  As I look back on my last 10+ years in the business, I am grateful for your support as friends, family and referrals along the way.  I spend very little on advertising and I am a firm believer that by providing superior service, acting with utmost integrity as well as being an expert in the industry, that I can exceed the expectations of you as my customers and provide utmost confidence that I will do the same for you referrals.  Again, I personally thank each and everyone of you for your support over the years.

2013 Real Estate Year in Review

2013 has been a roller coaster ride for the Bay Area Real Estate marketThe market boom from last year continued through July of this year.  Bernake made a statement in June hinting at a tapering of the quantitative easing program.  In reaction, interest rates jumped about a percent which coincided with the seasonal increases in summer inventory.  Again there is the tale of two markets; "Prime Locations" (Strong Schools/Convenient Locations) continued to have low inventory and multiple offers.  Multiple offers were almost halved during this period of time.  Some Buyers were being priced out, but this market continued to be strong in Prime Locations.  Markets outside of Prime Locations took a hit from July until September.  Prices stabilized and due to competition, prices leveled or reduced, days on the market increased and homes struggled on the market.  There were many listings cancelled as frustrated Seller's were shocked to find that they were not able to attain those lofty over asking prices that have been happening for over a year.  However from October and continuing onto December, the rates have settled from their peaks about half a percent lower.  Another natural seasonal phenomenon is the lower inventory in the fall and winter months.  This coupled with the slight decrease in rates, multiple offers were back and but still prices were mostly level with some increases.

2014 Real Estate Outlook

The latest job report this Friday showed that we added 203,000 jobs in November, bringing the unemployment rate down to 7%.  This is the 4th straight month of stronger job growth, which indicates that our economy continues to improve.  Earlier in the year, the Fed had called 7% unemployment as a key milestone for tapering of quantitative easing.  Although of late they have backed off the hard number itself, there will be a Federal Reserve meeting next week that will be key.  If quantitative easing is tapered, mortgage interest rates will no longer be artificially held down and will rise as they did in June.  Even if this doesn't happen in December, most analysts project this will likely happen in the March/April time frame next year.  What this means to those of you buying or refinancing is that rates will be going up, which will affect how much home you can afford or higher monthly payments.  Just as we saw this summer as a pre-cursor, the tail of two markets will ensue.  Prime Locations will continue to be competitive with less homes and multiple offers.  This is marginally good news but going from 20 offers to 10 offers isn't going to change the fact that aggressive overbidding will be needed.  Markets outside of Prime Locations will likely see leveling for a period of time making for a more balanced market.  Homes outside of the Prime Locations will see leveling of prices once there is more inventory and possibly opportunities if demand slows and supply increases.

There are also several other factors that will affect us in 2014.  The first factor is that the technology industry continues produce more wealth for Silicon Valley workers.  Vesting schedules for companies such as Google, Linkedin, Facebook and the recent Twitter IPO will continue to produce downpayments for these well qualified workers.  Bay Area companies such as AirBnB, Square, Spotify, Dropbox, Uber, Pinterest, Box, Scribd, Flipboard and King.com are all possible IPO candidates in this improving economy.  The second factor is how much of the cash overseas Buyers and institutional investors will be a part of this market next year.  The third factor is that lending standards by the Consumer Financial Protection Bureau (CFPB) will be getting stricter for 2014, making it harder to qualify for a loan next year.  All of these factors make it extremely difficult to predict how our local market will unfold next year.

Summary

There is never a dull moment in the real estate industry.  For those of you looking to re-finance, I would lock in a rate immediately if you can, literally today or tomorrow if possible.  These rates will go up if not soon likely in Q1.  For Sellers in Prime Locations, I would wait until after the holidays and the market will continue to be on your side.  For Sellers in outside of Prime Locations you have likely seen your home prices soar to the over the peak times.  I would take your gains and sell now given the likely leveling coming in the upcoming years.  If you are in the market to buy, qualifying for a loan given rising interest rates and strict lending guidelines will be the first step to determine how much home you can afford.  As always buying in Prime Locations will be an aggressive battle in which you must have at least 30% down payment (ideally more) and be ready to be to go aggressive.  Locations outside of these Prime Locations there maybe some opportunities as the market levels out.  We will have to see how factors such as the recovering economy, interest rates, IPO wealth, lending guidelines and cash buyers play contribute to the market next year.

In closing, I thank you for your trust in me over the years and remembering me when real estate needs arise for you, your friends and family.  It would not have been possible without your support to be able to have my best year ever, ranking in the top 5% of agents in Northern California without all of your support.  Have a wonderful holiday season and remember to spend time with your family and I will see you all in the new year. 

Monday, September 23, 2013

Q4 2013 Real Estate Outlook

Q4 2013 Real Estate Outlook

Welcome to my Q4 2013 outlook.  There is some major news that affects the real estate sector and my overall outlook going forward.

United States Macroeconomy

The most critical news was what came out of the Federal Reserve meeting last week.  Bernake announced that the Fed would in fact not reduce it's stimulus and continue pumping money into the economy at this time.  This came as a surprise to the market, as he issued a warning in May, which inadvertently caused a 1% rise in mortgage rates.  My take on this is that the Fed is backtracking from that statement as it was pre-mature and they didn't realize that would cause an alarm in sectors such as real estate which was in the process of recovering.  A steady rise is preferred, but a 1% jump was a shock to home buyers because it is material in mortgage calculations especially to those who were pushing their limits.  The fact of the matter is that our economy is recovering very slowly and the unemployment rate continues to hover at 7.6%.  However, the Fed's easy money policy is designed to pump money into the economy in an attempt to jump start spending and overall activity in the marketplace.  Since rates are so low, there is no incentive for consumers to leave money in the bank to earn 1/10th of a percentage in savings accounts.  This has everyone flocking to the stock market which is closing at all time highs, as well as real estate investing which has pushed home prices close/over levels seen at the peak before the sub-prime mortgage crisis.  Personally I am very concerned that this approach is creating asset bubbles across the board, from the stock market to the real estate sector.  Are we trading short term gains for more long term pain and in fact slowing down a natural more sustainable recovery?  As far as rates, they may drop slightly, but with this level of uncertainty, people are guessing when the fed will layoff stimulus and that will likely prevent a sharp drop.

Bay Area Local Microeconomy

As I've been saying over multiple quarters, our local real estate boom has been aggressively accelerating since February of 2012 and is not sustainable, which we are seeing effects of that now.  What I didn't know was that we would slow so quickly.  This was due to Bernake's comments in May, there has since emerged the tale of three markets; prestige areas with great schools, locations further from center (without strong schools) and investment properties. 

Prestige Areas (Namely Strong Schools & Convenience of Location)

The markets with great schools or prestige locations close to the center of technology, continue to see low inventory and high demand with multiple offers aggressively pursuing these homes.  Some of the loan buyers may have been priced out due to the 1% rate jump, however these areas tend not to slow down much at all.  There maybe less bidders than before, but given that these homes are very limited and demand high, there maybe less bidding, but these homes will continue to move quickly and be competitive.  One of my clients were looking at a home on the Peninsula that had 12 offers and sold $250,000 over list price, this is the price tag for this type of home.  When I look at the inventory levels in cities such as Mountain View, Los Altos, Cupertino, Saratoga and Menlo Park, homes go into pending very quickly and there are very few active homes.

Locations Further From Center

Markets that maybe further from the center of technology or not supported by strong schools took a hit especially in June and July.  In these 2 months, the pending home sales were actually below the active homes which means homes took longer to sell.  These were tough months as Seller's and Agent's alike were listing homes expecting the rapid increase in pricing and may in some cases saw minimal activity and more competition.  These factors created the perfect storm.  Seller's were following the former market, while Buyer's were hit right at their pocket books with the rate increases pricing many people out of their range and at the same time that summer inventory gave Buyer's more choices.  The Seller's that needed to sell had to reduce their prices to a level that Buyer's actually felt was worthwhile to go through the process.  Many took their listings down or had to negotiate below the latest comparable sales.  I also noticed many loans falling through and pending homes coming back on the market which is never a good situation.  However, in August and September the statistics show homes are more even as far as active to pending homes.  Likely the price drops have lured some Buyer's in and the drops in summer inventory, balancing a bit better with the available Buyer's on the market.  Personally I much prefer markets in equilibrium rather than the lopsided market as we have seen over the last year and a half.

Investment Properties

Lastly, investors continue to be out and about with cash from overseas, locally as well as institutions.  Hence lower priced homes less than $600,000 become heavily sought after as they can generate income and a possibility for appreciation.  The math is simple.  If I have $500,000 in cash and let's say I buy a single family home.  Let's assume rent is $2,000 a month which generates $24,000 a year.  If I take out property tax as an expense ($6,249), my return on investment is $17,750 a year (assuming no other expenses).  This is a 3.55% return on investment in which the alternative would be to sit in the bank earning next to nothing in this macroeconomic climate.  However, this scheme is understood by many and cash was in fact 32% of August sales.  What I've found with my investors is that the competition is so fierce that the home price jumps to a point where the excel spreadsheet stops making sense.  Even worse, on homes such as these, regular home buyers looking for primary homes will be generally out of the running against these strong cash offers that have no loan dependencies and very fast close times.  Cash simply is king!  For my investors, I personally feel that home prices have increased to a point where investing in our local may not make a ton of sense.

Summary of Activities in the Last Quarter

I like to review some of the activity I've been running into, in order to give you a sample of what is going on in the marketplace.  Overall, I have more Buyer's opting to wait it out to see what happens in the marketplace.  Here are a few more samples in the last 3 months.

Listings
  • 455 Alegra Terrace in Milpitas, this listing hit the market literally two weeks into the slowdown.  Showings and overall interest was very low.  This home eventually sold after a price drop, with a slight loan extension provided as the lending process has gotten more challenging.  Congratulations to my Sellers for weathering the storm!
  • 1891 Anne Marie Court in San Jose, hit the market right at the beginning of the slowdown.  We planned for the aggressive price increases from the previous market which never came.  After a couple of price drops, we got an offer that eventually fell through due to loan issues.  This property is now available for rent.  Let me know if you or someone you know is interested!
Purchases
Q4 2013 Outlook and Beyond

I expect Prestige Areas to continue what they do, so if schools are what you want, gear up and be ready to compete.  I do see a more balanced market in that sweet spot in Locations Further From Center.  The closer you are to the center of technology in the Palo Alto/Mountain View area, the more competitive it will be.  Since the stock market is doing so well, buyers have plenty of equity from Google, Apple, Linkedin, Facebook and the list goes on.  Next year there are rumors of IPO's from companies such as Twitter and Box, which will create more wealth in the valley.  At the same time prices have been very aggressive and builders have been adding inventory to meet this demand.  With newer Townhomes selling in the high $800,000's and above in Mountain View and Sunnyvale, the affordability factor and rising interest rates are stopping many Buyers from jumping in.  I expect prices to stabilize from their aggressive acceleration as demand calms.  What is unclear is will there be a second coming of the madness we have seen?  Given that rates will likely hold steady and prices won't drop overnight, I see a steady calm as the market shifts to equilibrium.  In my opinion it is long overdue as it was never sustainable to see 20%+ increases in home prices.  The old adage rings true, "what goes up must come down", remember that real estate is a long term investment, but you should ride the waves appropriately.

Seller's

If you are in the first or third bucket of homes, I'd say you are still in a good position if you need to sell your home but the comparables will have to be taken with a grain of salt.  Of course strategies will vary depending on where you are located, so contact me for a customized evaluation.  Those of you in the second bucket, will have to adjust your expectations to a calmer market.

Buyer's

In many areas we are coming off peak prices to more stable prices.  This is overall good news if you have been on the fence waiting to buy.  However, this is a steady stabilization, not a situation where we can come with aggressive low offers and expect them to be accepted.  Homes will sell closer to list price, unless there is competition.  Again if you are in bucket 1 or 3, be ready to battle for homes as the competition is still alive and well.  The key decision to make here is do you buy now right off the possible peak, or hold for the next downturn.  I with I had a crystal ball of when that is, but if you have housing needs now and can't wait, at least you aren't buying at the peak of the market, assuming the market doesn't come roaring back.  I do want to say let's not forget the big picture.  4.75% is still a great interest rate, you may just have to scale back a bit on what you are looking.  Ask your parents what they paid in the 80's and they will remind you that their mortgages were over double digits for sure.

Happy Upcoming Holiday!

I wish you all the best as we head into the holiday season and thank all of you that constantly refer customers to me.  If you or your friends and family have real estate needs, please remember me when the need arises!

Thursday, August 1, 2013

Real Estate Alert Market in a State of Flux

Market Shift

As you all know I've been monitoring a possible slow down in the market.  I have confirmed in the last 6 weeks that the market has seen a slowdown in areas specifically without strong school districts.  Me and my colleagues have been noticing this and this is no longer a theory it is confirmed.  Most likely the interest rate increases shocked already frustrated Buyer's who were being outbid and were already at the peak of their budgets.  This also coincided with the summer increase in inventory.

Seller's

If you are a Seller, this isn't great news, but it is the situation right now.  The market shifted very quickly; myself, my clients and my colleagues are all trying to adjust our expectations.  Just 6 weeks ago (and the last year and a half), a home would go up on the market, sells way over list price within a week.  Now in some areas we are struggling just to bring in a single buyer and even generate agent showings.  Buyers seemed to have disappeared!  Homes are taking on average 1 and a half months to sell and it's all about Seller's adjusting their price points to the few Buyers that maybe willing to buy, while competing with increased summer inventory.  Even when in contract, I see many homes with transactions falling through, either cold feet or appraisal issues.  Homes with school districts continue to do well, but they do not necessarily have the same irrational overbidding as in the last year and a half.  Seller's you will have to adjust your expectations if you plan on selling your property.  Comparable data isn't relevant in a market that is shifting in the other direction.  But a home will sell it just depends on the price.

Buyer's

If you are a Buyer in an area without a strong school district, there are opportunities out there for you.  I know many of you have been sidelined and the prices aren't going to come down necessarily that fast to meet your budget.  Those of you that have had lower downpayments should consider coming back into the market.  If a home has been sitting, it is to your advantage as a Buyer as we may not need to go as strong on price and terms if it's been sitting.  Check-in with me for specifics on your situation and I will evaluate appropriately.

Looking Ahead

This market has shifted a lot faster than I expected.  I was seeing enough demand for at least this year and I thought into next year. It is unclear if this is short term (Buyers may come back) or long term (this continues to cool down).  I have been saying this behavior is not sustainable, but very surprised that it slowed in the middle of this year.  The wildcard that caused the shift was Bernake's statements that jolted interest rates upward about 1%.  This likely scared off Buyer's and priced them out.  Those rates have come down slightly after Bernake re-assured the market that stimulus would continue, however it is not clear that Buyers will come back, they may or may not.  Another factor is increased supply of re-sale and new home constructions to meet this demand.  Some but not all new home builders have been very aggressive in pushing prices up, that only added to pricing out and frustrating existing Buyers.  Again I will continue to monitor and report back.
In highly desirable areas with strong schools or convenience to work, these areas never really slow, but they will eventually shift to a more reasonable bidding level.  I see these areas trailing behind for a bit longer.

In short, I know as a Buyer it's been frustrating, I know many of you are sidelined, for those of you that have been and interested in coming back, let's grab time to evaluate your situation.

Tuesday, July 23, 2013

Just Listed 455 Alegra Terrace in Milpitas and Price Reduced on 1891 Anne Marie Court in San Jose

Just Listed 455 Alegra Terrace in Milpitas

Executive Tri-level Townhome w/vaulted cathedral ceilings featuring the largest model in the community. Solid hardwood floors on main levels, updated kitchen w/granite countertops. All wet areas have oversized tiles and bathrooms w/granite countertops. Wall-to-wall laminate floors on bedroom level. Quick access to highways and close to top tech companies. Schools are Pomeroy 901 and Russell 889 - See more at: http://alanwangrealty.com/PropertyDetails?fl_hook=1725755971&show_description=yes&show_address=yes&presented_by=&show_virtual_tour=yes#sthash.Idh41PYX.dpuf
Executive Tri-level Townhome with vaulted cathedral ceilings featuring the largest model in the community. Solid hardwood floors on main levels, updated kitchen w/granite countertops. All wet areas have oversized 16x16 tiles and bathrooms w/granite countertops. Wall-to-wall laminate floors on bedroom level. Quick access to highways and close to top tech companies. Schools are Pomeroy 901 API and Russell 889 API - See more at: http://alanwangrealty.com/PropertyDetails?fl_hook=1725755971&show_description=yes&show_address=yes&presented_by=&show_virtual_tour=yes#sthash.Idh41PYX.dpuf
Executive Tri-level Townhome w/vaulted cathedral ceilings featuring the largest model in the community. Solid hardwood floors on main levels, updated kitchen w/granite countertops. All wet areas have oversized tiles and bathrooms w/granite countertops. Wall-to-wall laminate floors on bedroom level. Quick access to highways and close to top tech companies. Schools are Pomeroy 901 and Russell 889 - See more at: http://alanwangrealty.com/PropertyDetails?fl_hook=1725755971&show_description=yes&show_address=yes&presented_by=&show_virtual_tour=yes#sthash.Idh41PYX.dpuf
Executive Tri-level Townhome w/vaulted cathedral ceilings featuring the largest model in the community. Solid hardwood floors on main levels, updated kitchen w/granite countertops. All wet areas have oversized tiles and bathrooms w/granite countertops. Wall-to-wall laminate floors on bedroom level. Quick access to highways and close to top tech companies. Schools are Pomeroy 901 and Russell 889 - See more at: http://alanwangrealty.com/PropertyDetails?fl_hook=1725755971&show_description=yes&show_address=yes&presented_by=&show_virtual_tour=yes#sthash.Idh41PYX.dpuf
Executive Tri-level Townhome w/vaulted cathedral ceilings featuring the largest model in the community. Solid hardwood floors on main levels, updated kitchen w/granite countertops. All wet areas have oversized tiles and bathrooms w/granite countertops. Wall-to-wall laminate floors on bedroom level. Quick access to highways and close to top tech companies. Schools are Pomeroy 901 and Russell 889 - See more at: http://alanwangrealty.com/PropertyDetails?fl_hook=1725755971&show_description=yes&show_address=yes&presented_by=&show_virtual_tour=yes#sthash.Idh41PYX.dpuf
Executive Tri-level Townhome w/vaulted cathedral ceilings featuring the largest model in the community. Solid hardwood floors on main levels, updated kitchen w/granite countertops. All wet areas have oversized tiles and bathrooms w/granite countertops. Wall-to-wall laminate floors on bedroom level. Quick access to highways and close to top tech companies. Schools are Pomeroy 901 and Russell 889 - See more at: http://alanwangrealty.com/PropertyDetails?fl_hook=1725755971&show_description=yes&show_address=yes&presented_by=&show_virtual_tour=yes#sthash.Idh41PYX.dpuf




Price Reduced on 1891 Anne Marie Court in San Jose

Price reduced by $20,000 to $660,000!  Get a  re-modeled single family home for the price of a townhome!  Ask me for more details!  See more at - http://alanwangrealty.com/PropertyDetails?fl_hook=1721358443&show_description=yes&show_address=yes&presented_by=&show_virtual_tour=yes



Buyer's in  Sale Pending

Congratulations to my Buyers who won the following properties!
Market Trends
  • In certain areas I am seeing more inventory and a bit of a slower pace than in the last year in a half.  Generally still have some multiple offers, but homes are sitting longer than the standard 1 week
  •  It is likely that the rising interest rates were the cause in parallel with more summer inventory.  After Bernake's statement last week, these rates are now coming down from their high's
  • We will need to get through this summer to determine which way the trend is going
Market Rise to Date

This is a nice infographic put out documenting the area with the most price increases in the last year.  Six out of seven are in California.




Tuesday, July 16, 2013

7 Metros Wit the Fastest Rising List Price

My first reaction to this was that California is leading the way across the nation, which isn't surprising since we've had a head start since February of last year.  I anticipate the rest of the nation to follow suit.  However, there is a unique demographic in the Bay Area of high tech employees with extra equity to purchase homes.  The most surprising on this list is Sacramento, Phoenix and Fresno.  During the last boom, many investors flocked to these areas, and in the downturn they retreated.  I hope we aren't repeating history here.

Thursday, July 11, 2013

July Real Estate Update and New Listings Announcement!

Market Update

I wanted to provide you as my clients a quick market update.  In the last four weeks I have been noticing a slight slowdown in this aggressive market.  Before you get excited, by slight slowdown there are still multiple offers, however homes are seeing about half as many offers than prior.  Homes in certain areas are sitting longer on the market.  I will continue to see if there is a sustained trend here, it is too early to tell.  I have not seen this slowdown in areas with strong school districts, these areas continue to see aggressive bidding and could sustain longer due to the high value Buyer's place into strong school districts.


My thoughts are that there could be a few culprits that could be affecting Buyers:

  • Temporary Causes
    • Summer vacation and Buyers traveling during this break
    • July 4th weekend holiday break
    • Increased summer inventory spreading out the existing buyers
  • Longer Term Causes
    • Increased supply slowly meeting demand
    • Aggressive price increases are pricing buyers out of the market
    • Rising interest rates are also pricing buyers out of the market
It will be interesting to see how the data plays out through the summer.  I know many of you have been priced out or sidelined in this crazy market.  I suggest keeping an eye out for a home that sits longer than 2 weeks and maybe taking offers on a first come first served basis.  Now prices won't be coming down that fast, but we maybe able to shave a little off the list price and get a contract in our favor if there are no other competitors.  If you see something you might like, do let me know!


Below are some new listings and Buyer transactions that my give you a few real world examples on what is going on in the marketplace first hand!


New Berryessa Listing 1891 Anne Marie Court in San Jose!

I am pleased to announce a beautifully upgraded property located on a quiet court. Gorgeous kitchen with Corian countertops on updated cabinetry, oversized kitchen island/breakfast bar with highly desired modern open floor plan. Mahogany hardwood floors in living/dining rooms and tiled floors in wet areas. Tiled shower stalls with mosaic designs, dual pane windows and recessed lighting. Solid school, Northwood Elementary with an API of 902.

  • Listed at $680,000, same price as townhomes selling in the area!
  • 4 Bedrooms, 2 Bathrooms, 1,434 square feet of living space on a spacious 6,000 square foot lot
  • Modern open floor plan that combines the kitchen and the dining area
  • Gorgeous kitchen with Corian countertops on updated cabinets with an oversized island
  • Mahogany hardwood floors in living/dining rooms
  • Upgraded tiles in wet areas and bathroom shower with mosaic designs
  • Recessed lighting in public areas
  • Quick Access to Light Rail and Highway 680


I will be hosting an open house this Saturday and Sunday from 1:30PM to 4:30PM.  Come and visit me if you are in the area!

More details are located at http://alanwangrealty.com/PropertyDetails?fl_hook=1721358443&show_description=yes&show_address=yes&presented_by=&show_virtual_tour=yes

 
Not on the MLS, California Landing Townhome in Milpitas

Executive tri-level California Landing Townhome, 3 bedrooms, 2.5 bathrooms at 1,547 square feet in the city of Milpitas.  Within a few minutes to a neighborhood park and a safe neighborhood that is a convenient jump to South Bay and East Bay.  A 5 minute drive to compaines such as Cisco, Samsung, Sandisk, this is also a very livable or rentable location.  This property will likely be on the market in a couple of weeks but let me know if you'd like a sneak peak as we are preparing the home for sale.  Target list price is in the high $500,000's.  This unit can be rented today for $2,800 or send your kids to solid schools; Pomeroy Elementary (901 API) and Thomas Russell Middle (889 API).





More details located at:
http://alanwangrealty.com/PropertyDetails?fl_hook=1722580518&show_description=yes&show_address=yes&presented_by=&show_virtual_tour=yes

Listing at 1691 Braddock in San Jose is in Sale Pending

We had 5 total offers, 2 which were all cash offers and the property was sold in less than a week.  Congratulations to my Seller on this sale!


Details located at: http://alanwangrealty.com/PropertyDetails?fl_hook=1714295496&show_description=yes&show_address=yes&presented_by=&show_virtual_tour=yes

Sale Pending 729 Chopin in Sunnyvale on the Border of Cupertino

As I mentioned areas with great schools have not seen a slowdown.  My Buyers competed against 4 others even with the July 4th holiday and the competition was fierce.  The winning bid was substantially over the list price with 4 being non-contingent offers. Congratulations to my Buyers who were selected as the Buyer's of choice for this lovely home!  They were the 3rd group of Buyers in my 10 year career that trusted my advice and were able to go aggressive and win on their first offer, well done!

Details Located at: http://alanwangrealty.com/PropertyDetails?fl_hook=1721487788&show_description=yes&show_address=yes&presented_by=&show_virtual_tour=yes

Sale Pending New Home Development in San Jose

Another congratulations is in order to my clients who secured a new home development in the Southbay!  This is a dream home with 4 bedrooms, 2.5 bathrooms with 2,717 square feet of living space, built from the ground up!  Again Buyers were part of a priority list and were able to be selected for this lovely property.  To learn more ask me for more details!




Details located at: http://alanwangrealty.com/PropertyDetails?fl_hook=1719329239&show_description=yes&show_address=yes&presented_by=&show_virtual_tour=yes


Real Estate and Technology Workshop for Realtors

I will be giving a talk at the Asian Real Estate Association of America at SILVAR, on how to leverage the latest technology tools for Realtors!  This will occur next week July 23rd, if you are a Realtor come and join me for my insights into this arena.

Summary

I continue to have new Buyer requirement meetings, so the supply of Buyers continue to flow into the market.  There is also a steady stream of houses both in re-sale and new home construction coming to meet this demand. It will be interesting to see if the bidding wars slow down or grind to a halt and when prices may start to level or even reverse direction.  Generally these things won't be sudden, so I see this as a gradual event.  Buyers and Seller's, keep you eyes wide open as I monitor this trend.

I wish you all a wonderful summer!  I thank you all for your trust in me and your multiple referrals this year.  Without you, Alan Wang Realty would not be where it is today.



Tuesday, June 11, 2013

Just Listed 1691 Braddock Court in San Jose!

Picturesque view from your living room, greenbelt with a variety of redwood trees to complete the setting. Adored unit with Italian ceramic tiles in the wet areas and recessed lighting. Ample living space and a patio to enjoy the outdoors. Just a few steps to BBQ area along with a pool and 2 hot tubs for your enjoyment. A quick walk to Ebay and access to highways.  Click here for more details!










icturesque view from your living room, greenbelt with a variety of redwood trees to complete the setting. Adored unit with Italian ceramic tiles in the wet areas and recessed lighting. Ample living space and a patio to enjoy the outdoors. Just a few steps to BBQ area along with a pool and 2 hot tubs for your enjoyment. A quick walk to Ebay and access to highways. Open House Sat/Sun 1:30pm-4:30p - See more at: http://alanwangrealty.com/PropertyDetails?fl_hook=1714295496&show_description=yes&show_address=yes&presented_by=&show_virtual_tour=yes#sthash.y3oEBGWR.dpuf
icturesque view from your living room, greenbelt with a variety of redwood trees to complete the setting. Adored unit with Italian ceramic tiles in the wet areas and recessed lighting. Ample living space and a patio to enjoy the outdoors. Just a few steps to BBQ area along with a pool and 2 hot tubs for your enjoyment. A quick walk to Ebay and access to highways. Open House Sat/Sun 1:30pm-4:30p - See more at: http://alanwangrealty.com/PropertyDetails?fl_hook=1714295496&show_description=yes&show_address=yes&presented_by=&show_virtual_tour=yes#sthash.y3oEBGWR.dpuf
icturesque view from your living room, greenbelt with a variety of redwood trees to complete the setting. Adored unit with Italian ceramic tiles in the wet areas and recessed lighting. Ample living space and a patio to enjoy the outdoors. Just a few steps to BBQ area along with a pool and 2 hot tubs for your enjoyment. A quick walk to Ebay and access to highways. Open House Sat/Sun 1:30pm-4:30p - See more at: http://alanwangrealty.com/PropertyDetails?fl_hook=1714295496&show_description=yes&show_address=yes&presented_by=&show_virtual_tour=yes#sthash.y3oEBGWR.dpuf
Picturesque view from your living room, greenbelt with a variety of redwood trees to complete the setting. Adored unit with Italian ceramic tiles in the wet areas and recessed lighting. Ample living space and a patio to enjoy the outdoors. Just a few steps to BBQ area along with a pool and 2 hot tubs for your enjoyment. A quick walk to Ebay and access to highways. Open House Sat/Sun 1:30pm-4:30p - See more at: http://alanwangrealty.com/PropertyDetails?fl_hook=1714295496&show_description=yes&show_address=yes&presented_by=&show_virtual_tour=yes#sthash.y3oEBGWR.dpuf
Picturesque view from your living room, greenbelt with a variety of redwood trees to complete the setting. Adored unit with Italian ceramic tiles in the wet areas and recessed lighting. Ample living space and a patio to enjoy the outdoors. Just a few steps to BBQ area along with a pool and 2 hot tubs for your enjoyment. A quick walk to Ebay and access to highways. Open House Sat/Sun 1:30pm-4:30p - See more at: http://alanwangrealty.com/PropertyDetails?fl_hook=1714295496&show_description=yes&show_address=yes&presented_by=&show_virtual_tour=yes#sthash.y3oEBGWR.dpuf

Thursday, June 6, 2013

Q2 2013 Real Estate Update Presented by Alan Wang Realty

A big thank you to all of you that have wished me a happy 10 year anniversary in the business last month.  What drives me in this business is to be able to help my customers attain their real estate goals.  Thank you for your business and constantly referring me to your family, friends and co-workers.

Market Update
 
I continue to see aggressive bidding on homes with the number of offers in the double digits with aggressive over bids.  Buyers are out and about and cash buyers continue to be abundant.  As an example last week, a moderate townhome in Santa Clara drew 15 offers "way over list price" with 4 cash offers and 1 strong loan offer.  It continues to be a Seller's market and Buyers who have the minimum 20% or less down will be unable to compete with cash or Buyers with strong down payments as the extra cash is needed to cover appraisal shortfalls.  I have been advising Buyers to have at least 30% to 40% down payment in order for us to have enough buffer to really overbid and go after homes in this market.  Even if you have the finances, you will also have to be able to go strong way above list price despite what any Comparable Market Analysis would say.  Data is meaningless in this market, it boils down to the Buyer's maximum willingness to pay and my ability to ensure the best terms to come out on top.  Seller's are wising up and starting take advantage of this market, but still there are low inventory levels.  Ask me for your custom strategy that fits your needs.

Mortgage Interest Rates Rose in the Last 2 Weeks

Interest rates shot up 2 weeks ago from 3.65% to over 4% as Bernanke's statement that the Fed may ease off their buy back of bonds has spooked the market and drove rates higher.  This likely was not the intention as the comments were directly towards the equity markets.  Nonetheless, the result will have an effect on the real estate.  My recommendations is for those buying to re-calculate with a rate of between 4% to 4.25% for a 30 year fixed and make sure those monthly payments still work.  Those of you that maybe more risk tolerant, may consider a 7/1 ARM with lower rates but of course carry more risk when they become adjustable.  The projections are that if rates continue to rise, more Buyers may enter the market in the short run due to the fear of missing out on the low rates, adding to an already competitive frenzy in the market.  Taking a big step back, 4% or even 5% are still very low rates compared to the 13% loans in the 80's as an example.

Upcoming Listings

I am pleased to present the following upcoming listings.

1691 Braddock Court in San Jose Listing Next Week

A lovely ground floor Condominium adored by a long time owner on the border of Campbell.  Italian tiled floors in the kitchen and bathrooms, recessed lighting in the kitchen and living room.  Steps away from the BBQ area, pool and spa and just a walk to Ebay's San Jose campus.  Generous 1 Car garage with an additional assigned carport.  Spacious living space with 2 bedrooms, 2 bathrooms at 1,021 square feet.  Price will be in the low $400,000's and won't last long.  This property will list next week and let me know if you want to be on the priority list to view this home.


Berryessa Single Family Home Listing in July

Heavily upgraded Single Family Home in Berryessa that will be on the market in July.  The property boasts hardwood floors, upgraded kitchen cabinets with corian countertops, dual pane windows, recessed lights, tiled entries and bathrooms with elegant mosaic designs.  There is also a bonus section of the home that could be used as more living space.  It is a 4 bedroom, 2 bathroom home with a spacious 1,434 square feet of living space on a 6,000 square foot lot.  Property will be listed in the mid $700,000's.

Buyer Homes

23496 Belaire Court in Los Gatos

Congratulations to my clients that won a lovely Los Gatos property in the mountains with a view of a redwood forest to die for.  An amazing property in a great location.  We were able to beat out a cash buyer on this property!  Specifications on the home are 5 bedrooms, 3 baths, 2,860 square feet on 1 acre of land.  Absolutely lovely!  Looking forward to closing on this next week.


New Home Development in Dublin

A brand new tri-level single family home with a yard, who's market value has increased 14% price increase since we signed the contract!  Property specifications are 4 bedrooms, 3.5 baths at 2,557, great location and great schools.  The bonus room on the third level is just what children need to safely play in an area all their own.  Property has great views, ask me where this is located!


Q3 Outlook and Beyond

I do not foresee the market changing this quarter and expect the same level of Buyer competition through the rest of the year and next year as well.  If you plan to buy a home, plan to go as strong as you can if you want to play in this market.  We are now 16 months into the recovery in the Bay Area and the rest of the nation is really just starting to feel the recovery which you are seeing more in the news.  I am often asked where I feel we are in this cycle.  I do not have a crystal ball, but I am concerned how long these overbids can be sustained.  I would say we are in the early to middle stages of this boom with at least 2 years of continuous upward movement left.  The key factors I am concerned about are the following; possible upward movement of interest rates (which may push some buyers to lower home prices), prices increasing beyond the limits of what a 2 income family can afford, some panic that causes investors and buyers to sell off their assets thereby flooding the market with inventory.  I also see new home builders that were wise to pick up land during the downturn, trying to accelerate their plans to deliver more homes to the market.  There is a long lead time to prepare a parcel and build the homes, but this will provide more supply as well.  My advice would be if you plan to buy, go aggressive and get a home while it's still early in the cycle as you don't want to be stuck buying at the peak.  Each of our situations are different, so do contact me if you'd like a custom plan for your real estate needs.

I wish you and your families a wonderful summer and thank you for always remembering Alan Wang Realty for your real estate needs.

Friday, April 5, 2013

Q1 2013 Real Estate Update

10 Year Anniversary

Next month marks my 10 year anniversary in the business.  As I reflect back at my career and what has happened in the real estate industry in that span, I have worked through 2 booms and 2 downturns.  If I were to name a few key lessons I've learned, I would say first off real estate if treated with the long term perspective in mind, you will generally have an appreciating investment.  However, you also must time your purchases and sales properly in order to maximize your investment at the appropriate times.  For example if you panic and sell in the downturn and in turn panic and buy in an upturn, this strategy most likely won't yield stellar results.  This sounds like common sense, but you would be surprised how many people are unable to capitalize.  Many just follow what's called the "herd mentality."  Real Estate is a hard resilient asset that people always come back to.  The valley is extremely unique because it is supported by our large bay area population, a demographic that values real estate, low supply of livable land and an abundant amount of technology jobs that draw immigrants to the state.  One must have the courage to buy when times are tough and the wisdom to sell when things are good.  Having a long term strategy in place, with an eye for the right market is absolutely key.

Q1 2013 Market Summary

The market has moved into the realm of irrational with multi-offers so aggressive that people are taking to over $100,000 increments in their bidding for a chance to win a home in this market.  My Buyers are extremely frustrated and having a tough time competing against cash buyers (primary home buyers, overseas investors and hedge funds) or buyers with hefty down payments that provide them much headroom for overbidding.  It has been so difficult to deliver this message to my Buyers as I share their dream of home ownership, but without a large sum of cash most simply cannot compete with this level of competition.  Buyers need to be realistic based on their means and evaluate the appropriate strategy that can win in this market.  If not, I have been advising Buyers not to play in this market and wait for a more favorable market.  This market has enough steam for likely another 2 years or more, it is hard to tell.  However, my opinion is that $100,000+ overbids isn't a scalable approach in the long run.

Seller's this is your market so contact me immediately if you would like to sell your home!  The million dollar question is where do I go if I do sell?  This is of course a personalized question so contact me so we can do an analysis of your situation.

Sample of Home Activity

The following are some of the activity that I have encountered in the marketplace.  This will give you a sample of what is going on in the greater market.

- Buyers offered on a San Carlos single family home that sold $300,000 over list price against 22 offers.  An all cash offer is suspected though not confirmed
- Sale pending on a new home development in Dublin.  We came right as the demand uptick caused the builder to increase prices every few days trying to adjust to this new demand.  Congratulations to my Buyers!


- Fremont single family home my clients and I went $50,000 over list and for the first time beat out a cash offer with a strong overall offer!  Congratulations to my Buyers!  First client in history to heed my advice and win on their first offer


- New home development lottery against 11 other Buyers on a particular model.  There were about 150 groups of people out for the lottery for other models
- Buyers offered on a Sunnyvale townhome went for over $120,000 over list price

Conclusion

The market does not seem to be slowing down in the near term.  On the contrary, as predicted Buyers are escalating their behavior in an attempt to beat out of Buyers pushing prices higher and higher.  Cash is king in this market, and I have been advising my clients to have at least 30% to 40% downpayment in order to have room to overbid and buffer for bank appraisals that often come short due to this aggressive market.  Above all things, know yourself and your limits and it maybe wiser to wait this out until the market is more to your advantage.  Seller's you may want to really gauge this market and see if you want to capitalize on this market.

Each person's situation is different, so please contact me for a personalized strategy for your real estate needs.

Regards,

Alan

Monday, February 11, 2013

2012 Real Estate Year in Review and 2013 Outlook


Happy Lunar New Year!

I wanted to wish you and your family a Happy Lunar New Year and a great 2013!  Here is my 2012 year in review and my outlook for this coming 2013 and beyond.

Market Conditions

2012 was a great year if you were a selling a home and a challenging year if you were buying a home.  Sellers were able to get into contract in less than a week and close within a month.  Cash buyers (overseas investors, investors, real estate funds, flippers and some Buyers from recent IPO's) have been abundant, outbidding and attracting homeowners to the low risk of a cash deal. The reasons for this sudden increase in buyers are the following; in a low interest environment investors are looking for a positive return on investment in hard assets, increased confidence in local and domestic economies, pent up demand from Buyers that held off during the recession and an influx of workers from out of state recruited by local technology companies which drove up rents and forced more Buyers in the market.  The market completely shifted in February of 2012 and accelerated steadily from that point onward.  Here are the variation in winning bids; for single family homes I am seeing overbids take on $100,000 increments and upward, Townhomes $50,000 to $75,000 and Condominiums $25,000 to $50,000 over comparable/list values.  This varies by neighborhood and how a low the list price is set at.  The market is moving so fast the home will not appraise for your winning bid, which will mean you have to have cash to pay the difference.

2013 Outlook

Looking forward to 2013, if you are planning to sell your home, contact me for an analysis to see if your home has recovered from the time you purchased the home.  I expect listings to continue to move quickly as inventory remains at very low levels there is simply more demand than supply can provide.  If you are a home buyer, my advice is that this market is not for the faint of heart and you have to be prepared to overbid over list and comparable prices to win homes and have very strong terms.  I am recommending that Buyers have AT LEAST 30% down and be prepared that 10% will be to cover the difference in the price you pay and the appraisal differences.  You will have to bid on homes against 10 to 20 people on average and will often run into cash buyers.  If you don't have 30% down, we can discuss other possible options, though they are limited.  My outlook for 2013 (barring unforeseen surprises) is that inventory will remain low and multiple buyers will remain continue into 2013.  2013 will be extremely challenging as competition appears to be accelerating beyond the levels I saw in 2012.  What I predict is that Buyers that have learned what it takes to win and are frustrated, they will go extra aggressive to win.  Prices will continue to push upwards.  The only silver lining is that interest rates will hold steady throughout the year.  If you are a first time home buyer this it going to be a tough market to compete in.  I always ask my clients to really consider this market and if you really want to play or sit this one out.

Post-2013 and Beyond

This is an Economics 101 exercise of very low supply creating excessively high demand and thereby increasing prices.  What is different here is that the investors/cash buyers are flooding the market with external cash further restricting supply, which is why you see the prices jumping so heavily as the bidding shifts the demand curve upwards.  They are in effect disrupting our regular supply and demand curves further restricting supply for local buyers.  If inventory levels continue to hold at these levels, this behavior will continue until prices go beyond Buyer's willingness to pay.  Having practiced real estate through 2 busts and 2 rises in the last 10 years, this environment is not sustainable as Buyers cannot sustain bidding from $50,000 to over $100,000 over comparable prices to win homes.  What goes up must come down.  I do not have a crystal ball, but most likely 2013 will continue in this manner but in the years onward this cannot be sustained.

Recent Fiscal Cliff Impact on Real Estate

The Fiscal Cliff was a hot topic last year and the here is the following summary by the California Association of Realtors:

"As you know, the bill includes a provision to extend the Mortgage Forgiveness Debt Relief Act, which will for one more year exempt the taxation of mortgage debt that is forgiven when homeowners and their mortgage lenders negotiate a short sale or loan modification (including any principal reduction).  While debt relief has been extended at the federal level, the California exemption expired at the end of 2012, so forgiven mortgage debt is considered taxable state income for now.
We’re aware of your concerns this could have on short sales, and that’s why C.A.R. is sponsoring SB 30 (Calderon, D-Montebello).  SB 30 will conform state law to the federal law passed last week.  Upon passage of SB 30, the measure will be effective retroactive to Jan. 1, 2013.
Here are other housing-related provisions included in the federal law:
  • The “Pease Limitations” that reduced the value of itemized deductions, including the mortgage interest deduction, are permanently repealed for most taxpayers but will be reinstituted for high income filers.  This provision reduces a taxpayer's itemized deductions by 3 percent of the amount of his or her adjusted gross income (AGI) that exceeds the threshold amount.  Under the new law, the Pease thresholds are $300,000 for married taxpayers filing jointly and $250,000 for single taxpayers (i.e., a married couple with an AGI of $400,000 would be $100,000 over the threshold; the couple’s deductions would be reduced by $3,000 which is 3% of $100,000).  No matter how high a taxpayer's AGI, the Pease reduction cannot exceed 20 percent of the amount of itemized deductions otherwise allowable for the year.  
  • The restoration of a tax deduction for mortgage-insurance premiums, including premiums paid to the Federal Housing Administration and private mortgage insurers.  This provision expired at the end of 2011 but has now been retroactively extended for all of 2012 as well as 2013.
  • 10 percent tax credit (up to $500) for homeowners for energy improvements to existing homes is extended through 2013 and made retroactive to cover 2012.
  • Capital gains rates will remain at 15 percent for those earning less than $400,000 (individual) and $450,000 (joint).   Gains above those income levels will be taxed at 20 percent.  Gains on the sale of principal residences will remain unchanged and continues to exclude the first $250,000 for single taxpayers and $500,000 taxpayers filing jointly."
I do advise that you contact a CPA or lawyer for more details on how these impact your specific financials.

Real Estate Evaluation

Wherever you are with your real estate needs, I am more than happy to sit down and advise on what strategy fits your family needs the most.  It is critical to sit down and come up with a plan and what is realistic and what is not.  Each of you have variable circumstances and you can always count on me to have a realistic advise and strategy that will serve you and your family the best.

Wishing you a happy 2013!