For Buyers

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November 22, 2008

October homes sales data: REO sales continue to drive market

Posted by veenahomes under For Buyers, Foreclosure | Tags: , , , , , , , , , |
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MDA DataQuick released October 2008 sales data for Santa Clara and Alameda counties.  The full report can be found here, but I thought I’d summarize some of the key takeaways:

  • Median house price in Santa Clara County was $515K, down 34% vs. Oct 2007.  However, the number of single-family homes sold was 1022, up 24% vs. the prior year. 
  • Although there is certainly some depreciation in the value of homes, a major factor behind the decline in median home prices is the number of REO property sales.  In both Alameda and Santa Clara County, there was a marked increase in sales of these bank-owned homes.  For example, over 33% of the home sales in Santa Clara County last month had been foreclosed on within the prior 12 months.  By contrast, in October 2007, REO properties comprised less than 4 percent of sales.
  • In addition, sales of higher-end homes declined as a percentage of the total.  For example, only 11% of homes last month were sold for greater than $1M.  By contrast, in October 2007, almost 30% of homes sold at the $1M+ level.  
  • As we head into the holiday season now, we can expect the market to hit its seasonal slowdown, as inventory (number of homes for sale) and demand quiets down until the new years. 

In my view, given the seasonal slowdown, there are very good deals to be had here in the Bay Area.  Furthermore, with an incoming Obama administration that is more likely to push for policies helping homeowners facing foreclosure, I believe that the number of homes entering foreclosure will gradually stabilize over the next year and then decline.  Regardless, its certainly a good time to start searching online for properties that interest you.  You can do this search and get automated email updates on homes that match your criteria on my website (www.FremontHomesTeam.com), by clicking here.  

Veena Grover, RE/Max | http://www.FremontHomesTeam.com | 510.378.7546    

 

November 7, 2008

California Calls for 90 Day Moratorium on Pending Foreclosures – Will it Work?

Posted by veenahomes under For Buyers | Tags: , , , , , , |
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As part of a proposed economic stimulus package, Gov. Schwarzenegger proposed a 90-day freeze on pending foreclosures in California. According to MDA DataQuick, California had 80,000 foreclosures in Q3 2008, so the proposal by Gov. Schwarzenegger is meant to slow down the pace and provide homeowners with more time to find and re-finance with other, more affordable loans. However, as an incentive to provide more affordable loans, lenders can avoid the 90-day freeze under the plan if they proved they were actively rewriting loans so that homeowners could afford to make lower payments and avoid foreclosure.

From a Bay Area perspective, while I applaud the government’s effort to call for a “cooling off” period from the time a homeowner receives a default notice from a bank, in terms of actually staving off foreclosure, the key will be a recovery in bank lending. Lets not forget that a lot of homeowners facing foreclosure in the Bay Area signed up for interest-only loans, which generally carry about a ½ point premium vs. a fully amortized loan these days. So, it all comes down to what type of risk the banks are able / willing to take – if they are willing to creatively work with homeowners to refinance during the 90 day period, great. If not, the 90 day period could simply be delaying the inevitable foreclosure for the homeowner.

Veena Grover  |  RE/Max Accord, Fremont CA  |  http://www.FremontHomesTeam.com

 

October 31, 2008

Income Generating Properties in Fremont and Union City?

Posted by veenahomes under For Buyers | Tags: , , , , , , |
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I had a buyer recently ask me about whether home prices in Fremont and Union City had declined to the point where they could generate positive cash flow right away. Except in rare exceptions, the answer is no. I wanted to at least highlight a scenario for you by looking at recent home sale prices in the Fremont and Union City area:

Example: Non REO property in Union City: 4BR, 2BA home in Union City; 2200 sq. ft, 4500 sq.ft lot, 10 years new: $700K

Assume a 6.6% interest rate on a 30-yr fixed rate, but tack on an additional 0.5% as an investor. Total interest payment = 7.1%.

With a down payment of 20%, the loan balance would be $560K. Multiplying this by the 7.1% rate results in a monthly mortgage payment of $3750.

A glance on Craigslist and HousingMaps to view rental property prices in Union City tells us that a rental property of this size would rent for about $2800/month. (Note that I don’t see a rental home in the same community, so I’m looking at comparables). Net-net, there’s a delta of $950/month on the rent, or about $11K per year. Factoring in property tax of 1.2% would result in another $8.4K, or about $19K per year.

In the event you could get such a property at a 20% discount or more, then certainly the financials get more interesting and rent gets closer towards mortgage payment. But at current price and interest rate levels, as you can see, one would run a cash flow loss on a monthly basis and as an investor, would bet on an increase in home values in the future or a decrease in interest rates to re-finance at more attractive terms.

 

Veena Grover  |  RE/Max Accord, Fremont CA  |  http://www.FremontHomesTeam.com

 

October 29, 2008

City of Fremont First Time Home Buyer Program

Posted by veenahomes under For Buyers | Tags: , , |
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The City of Fremont First Time Homebuyer Program and CalHFA financing may be able to assist with down payment assistance of up to $67,600 for a Fremont home, provided that you meet certain income levels, which adjust based on the number of people in living in the home.

According to the City’s website, you are eligible if you:

  • Have not owned a home in the last three years
  • Live or work in Fremont currently, or previously lived in Fremont.
  • Meet the income guidelines (see Income chart)
  • Are able to secure a mortgage and have good credit
  • Are able to attend the mandatory 2 hour First Time Homebuyer Workshop

To see if you are eligible, or for further information, please contact me.  I’d be glad to provide you with more information on making your home ownership dream a reality.

Veena Grover  |  RE/Max Accord, Fremont CA  |  http://www.FremontHomesTeam.com