Sales of single-family Bay Area homes continuing to surge

Continuing a promising trend, sales of existing single-family homes in the Bay Area increased by 10.7 percent in February compared with a year ago — the biggest hike for that month in five years, according to a report released Thursday.

“Sales have been up on a year-over-year basis for eight consecutive months,” said Andrew LePage of DataQuick, the real-estate information service that issued the report. “That is significant. It’s been driven by lower prices and ultra low mortgage rates. So that’s a good sign. People are out buying. We’re working our way back to a more normal level in the Bay Area, which you would expect with a gradually improving economy.”

Home sales were at their highest February level since 2007 for the Bay Area as a whole, as well as in Alameda, San Mateo and Santa Clara counties, LePage said. February sales in Contra Costa County were the most since 2009, when a huge number of foreclosed homes were snapped up in that area, he said.

The median price of single-family home in February was $348,000 in Alameda County, $242,500 in Contra Costa County, $490,000 in Santa Clara County and $565,000 in San Mateo County. It was $350,000 for the Bay Area as a whole, a 1.4 percent drop from a year ago. The median price fell in every Bay Area county except San Mateo County, where it rose 1.8 percent.

Condo sales rose 14.4 percent in the Bay Area as a whole, 32 percent in Alameda County, 10.6 percent in Contra Costa County, 5.2 prcent in Santa Clara County and 91.9 percent in San Mateo County.

 

LePage cautioned that “it won’t be until March and April when we have a much better understanding of where we are at,” because it’s hard to make predictions based upon February sales. It was a leap year, which added an extra day of sales that month, he noted. Moreover, traditional homebuyer tend to be scarce during the first part of the year and usually don’t start shopping in earnest until spring.

Of all Bay Area homes sold last month, 26 percent were to so-called absentee buyers, mostly investors who don’t plan to live in the homes. Absentee purchases were 23.4 percent a year ago and have averaged 14.2 percent for every month since January 2000, DataQuick reported.

“The market definitely has turned,” said Barbara Lymberis, president of the Santa Clara County Association of Realtors. She noted that the number of houses on the market continues to be low, because prices have been so low many homeowners have resisted listing their properties for sale. Consequently, she said, “if a home is priced right and the condition is decent, there will be a buyer.”

In fact, these days, “multiple offers are pretty much the norm” for any house with a for-sale sign out front, Lymberis said.

Barbara Safran, president of the Contra Costa County Association of Realtors, said she also has seen “a definite increase” in sales, fueled by multiple offers on many properties.

“The buyers have waited long enough and they are finally ready to purchase,” she said, adding that she expects more people to soon start putting their houses on the market, especially those who don’t owe more on their homes than they can get from a new buyer.

Distressed property sales made up about half of the Bay Area’s resale market in February.

Homes foreclosed on in the past 12 months accounted for 27.4 percent of resales, according to DataQuick. That was up from a revised 27.2 percent in January and down from 32.6 percent a year ago. Foreclosure resales had been as high as 52 percent in February 2009. Over the past 15 years, the monthly average for foreclosure resales has been about 9 percent.

About 23 percent of Bay Area resales in February were so-called short sales, where the transaction price was less than was owed on the property. That was up from about 20 percent a year ago.

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Buying Vs.Renting

A home is one of the most expensive purchases most of us will ever make during our lifetime. Whether you decide to rent or buy, either choice comes with its own rewards and risks. Homeownership offers many advantages over renting including:

Advantages of Buying versus Renting

Buying Renting
Tax write-off No tax write-off
You can upgrade your home as you see fit Need permission to make any changes
Build equity in your home as value appreciates Your money goes toward the landlords equity
Control of loan payment options Rent can increase periodically
Pride of homeownership You have no ownership

While owning your own home has many benefits, there are still risks to consider:

Disadvantages of Buying versus Renting

Buying Renting
You’re responsible for property maintenance Your landlord or manager handles general repairs
Need to sell, rent or lease property in order to re-locate. May have to wait until market conditions are right Freedom to move once your lease expires
You pay for all your own utilities, property taxes and insurance May include utilities, property taxes, and property insurance
Home improvement upgrades can run into thousands of dollars You’re not financially responsible for improvements

However, all things considered, homeownership is by far one of the best single investments you can make given the potential long-term benefits.

When does it make sense to buy?

People, who have generally rented their whole lives, purchase a home for various reasons. Owning something of value with a chance of watching their investment appreciate is one reason. Purchasing a home to save money over the long-term is another.

Example

Let’s say you’re currently renting a two-bedroom, two-bath apartment. Your monthly rent is $1,000. You find a two-bedroom, two-bath at a market price of $250,000 (roughly the national average.) You have $25,000 saved – enough for a 10 percent down payment. For the purpose of this example, you’re looking to finance $225,000, which includes closing costs.

Using one of several mortgage calculators on the Internet, your monthly payment would be approximately $1,385 for a 30-year fixed loan at an APR of 6.20 percent (the national average). After taxes and appreciation in equity, your monthly payment over five years would average $499 per month.

Costs Savings of Buying versus Renting

Calculations Rent Purchase
Monthly rent/estimated mortgage payment $1,000 $1,385
Purchase price of home $250,000
Percentage of down payment 25,000
Length of loan term (years) 30
Interest rate 6.2%
Years you plan to stay in the home 5
Yearly property tax rate 1%
Yearly home value appreciation rate 4%
Results
Price of home after appreciation $304,163
Remaining balance after 5 years 209,887
Equity in house 94,276
Tax savings (28% bracket) 23,030
Avg. monthly payment over time 1,047 499
Total payments (over 5 years) $62,820 $29,973
Total savings if buying $32,847
Source: Ginniemae.gov. These calculations are estimates only. You should always seek the guidance of financial or tax experts before making any buying decisions.

The outcome could dramatically change should an unforeseen economic downturn or financial hardship occur (e.g., home improvement costs, catastrophic damage, etc.). While, no one can predict if home appreciation values will spiral downward, or if mortgage interest rates will rise, it’s clear that under the right circumstances home ownership can be financially rewarding.

PMI files for bankruptcy, listing $736 million in debts amid rough housing market

Whether you know it or not, if you bought a home with less than 20% down you are probably paying PMI (Private Mortgage Insurance). Now the company that insures your mortgage in case you default protecting the banks, not you, is now filing for bankruptcy. Goes to show the way things are going in this economy. . . .

PMI files for bankruptcy, listing $736 million in debts amid rough housing market

 

Tech-rich vacation home buyers head to Tahoe

For you folks that have too much money burning hole your pocket, here is an inserting article about some place that is not too far from the bay area that you might want to invest your money.

 

 

Tech-rich vacation home buyers head to Tahoe

 

http://www.mercurynews.com/business/ci_19379661

 

Happy Thanksgiving!

Happy Thanksgiving to you and your family.

May your holidays be filled with joy and happiness.

History of Thanksgiving Day

Apartment construction surges as fewer buy homes

I don’t know if you can classify this as good news because in my opinion the econonmy needs more home owners, not more renters. However, if you’re an investor looking for an investment property to own, you may consider buying an appartment building if you can afford it rather than buying single family homes. There are quite a few affordable small appartment buildings out there for sale that as an investor may be worth your while.

Apartment construction surges as fewer buy homes

http://www.mercurynews.com/real-estate/ci_19366619

More problems are found with home buyer tax credits

How many of you out there bought a home during the time of the home buyer tax credit? Did any of you have problems or not?

 

More problems are found with home buyer tax credits

An audit shows the IRS has been sending notices to taxpayers that either inform them they owe no repayments on their credits when they actually do, or demand repayments from recipients who legally owe nothing.

http://www.latimes.com/business/realestate/la-fi-harney-20111106,0,6604266.story

 

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