Priti Whatley Blog

Bamboo Consulting June 2010

Mon, 12 Jul 2010 00:00:00 -0700

Bamboo Consulting June 2010

May 2010 Statistics

Sat, 26 Jun 2010 00:00:00 -0700

Attached, please find the most updated Market Dynamics statistics for Santa Clara County through May 2010. These statistics are for Single Family and Condo/Townhomes in Santa Clara County.

Here are some highlights to pay particular attention to as you review the data/graphs through May of 2010:

1. Median Price- May's Median Price continued its upward trajectory from April 2010/$535,000 to $555,000 in May (which is $65,,000 than May one year ago). The SCC Median reached its low point in March, one year ago at $415,000. As we predicted over the last few months of 2009 and beginning of 2010, we experienced a higher rate of upper end sales in Santa Clara County (particularly between 2-5+ million) during most of the first six months of 2010. As these sales have been and are now closing escrow, the median price in SCC has climbed well above $500,000 and should approach $600,000 this year (last seen in July 2008 ($630,000). We are presently at the highest Median Price point in 21 months for Santa Clara County.

2. Supply&Demand (Units)- We continue to see a dramatic distinction as we compare May 2008 with 2010 in the following categories; For Sale (supply/inventory), Under Contract (pending sales) and Sold (closed escrows). To illustrate when we compare May 08 with the same month in 2010 we see the following- For Sale properties/supply is down 40%. The number of under contract properties (pending sales) is up 43% and the sold/closed escrows are up 44%. The pattern and direction of this market for the past 7-8 months continues to be the same story; declining overall supply/inventory, increasing new sales and closed escrows. Normal seasonality has fully come into play in 2010 as buyer demand continues to amplify moving well into the 2, 3, 4 and 5+ million price ranges at a significant rate as compared to the same time last year. Some of this activity decreased slightly over Memorial Day and for a few weeks after following more typical, seasonal sales patterns. As we have moved into summer break, we are seeing some increasing activity again and anticipate a strong push of sales mid to late summer and continuing as we head into fall of this year.

4. Basic Absorption- The declining residual inventory levels is one of the most significant factors over the past two years (the remaining inventory each month excluding pending sales, closed sales and new listings). This segment is down -59% when comparing May 2008 and May 2010. More and more of the less desirable or unrealistically priced properties are either now selling (in the case of unrealistically priced- prices are being adjusted) or coming off the market. The other metrics are quite compelling with the comparison of May 2008 vs May 2010 we see Under Contract Properties/pendings increasing and up 43% and New listing inventory coming on the market is now down 21%.

5. Percent Under Contract- This is typically one of the most telling statistics of all because this is @ the line of scrimmage, where the market is today. Essentially when looking @ this stat, we are factoring of all the available inventory what percentage is under contract or a pending sale. Typically in any area we have seen where @ least 1 for every 4 available listings (25%) is under contract, we have a stable or appreciating market. Whenever we have seen this factor less than 1 out of 10 or less than 10%, we have sign prices in more of a correction mode. We can look back historically and display where this occurred in pockets throughout SCC @ different times and how this was impacting values to the down or upside. SCC dipped slightly for the first month in 4 months to 27.7% of all the available listings/supply under contract/in escrow. This overall percentage has continued its progression for the past 15 months even though it is down from last month's fully adjusted figure of over 28.4%. This is a 137% increase when compared to May of 2008 when this figure for SCC was at 11.7%. One year ago May, the percent under contract figure was 19.3%.

In conclusion, the residential real estate market continues to stabilize and improve in Santa Clara County and in the overall bay area market. Listing inventory remains low and in control, even with new inventory coming on, strong buyer demand is consuming these properties in relatively short periods of time. The first six months of 2010 showed sales volume increases across the board when compared to the first six months of 2009. This was driven by increased sales and activity that has moved into the upper price ranges. Increased number of sales plus increasing average sale prices equates to increased overall sales volume. We are fortunate to be right at the pulse of activity and trends and this should be an advantage to our clients and/or those that have an interest in following the most current market trends.

In addition to the positive current rate of sales, one of the most encouraging signs continues to be the high-end sales activity, which was sluggish during much of 2009. This upper-end activity continued to increase through May and particularly in the $2-5+ million ranges. We are experienced a strong second quarter as this YTD (year to date) volume is up when compared to YTD 2009. As a company, Sereno Group is up 100% this YTD as compared to the same period in 2009. Most of the market and leading peer companies are up between 30-40% which is a strong indication for overall improving market conditions. We are in the midst the most balanced, healthy and active residential real estate market we have seen in over 2-3 years.

Non-recurring Closing Costs

Tue, 18 May 2010 15:57:00 -0700

Non-recurring closing costs

Information provided by Connie Chronis of Diversified Capital

Bamboo Consulting Newsletter Vol 17

Tue, 18 May 2010 15:40:00 -0700

Bamboo Consulting

Real Estate Unleashed May 2010 Newsletter by Carole Rodoni

April Statistics 2010

Tue, 18 May 2010 15:29:00 -0700

April 2010

Attached, please find the most updated Market Dynamics statistics for Santa Clara County through April 2010. These statistics are for Single Family and Condo/Townhomes in Santa Clara County.

Here are some highlights to pay particular attention to as you review the data/graphs through April of 2010:

1. Median Price- April's Median Price continued its upward trajectory from March 2010/$520,000 to $542,000 in April (which is $112,000 than April one year ago). The SCC Median reached its low point in March, one year ago at $415,000. As we predicted over the last few months of 2009 and beginning of 2010, we are noting an increasingly higher rate of upper end sales in Santa Clara County (particularly between 2-5+ million). As these sales are now closing escrow, the median price in SCC has already climbed well above $500,000 and should approach $600,000 this year (last seen in July 2008 ($630,000).

2. Supply&Demand (Units)- We continue to see a dramatic distinction as we compare April 2008 with 2010 in the following categories; For Sale (supply/inventory), Under Contract (pending sales) and Sold (closed escrows). To illustrate when we compare Apr 08 with the same month in 2010 we see the following- For Sale properties/supply is down 36%. The number of under contract properties (pending sales) is up 92% and the sold/closed escrows are up 42%. The pattern and direction of this market for the past 7-8 months continues to be the same story; declining overall supply/inventory, increasing new sales and closed escrows. Normal seasonality is coming into play in 2010 as buyer demand continues to amplify moving well into the 2, 3, 4 and 5+ million price ranges at a significant rate as compared to the same time last year. Following an increase in sales and slow closing rate due to short sales and financing guidelines and challenges, we are now seeing closings coming through at a higher rate. This increasing closing activity in April, May and in the coming months will have a significant, positive affect on these monthly data points, further pointing to an imminent real estate recovery in Silicon Valley.

3. Months Supply of Inventory & Days on Market- The overall Months Supply of Inventory (months of inventory available based on the total existing supply divided by the rate of sales) dwindled down to a 2 year low range of 1.7 months supply at month end as compared to a fully adjusted MSI of 2.1 months in March 2010. This is down from a 2 year peak of 14.2 months in January of 08. The Months of Supply of Inventory declined each and every month in 2009 from 7.7 months in January to 2.6 months by year end. Days on market has remained under 60 days for the past 7-8 months, and has now dipped into the 50 day range in SCC. This reduction in the Days on Market is another indication of the improving residential real estate market.

4. Basic Absorption- The decline in the residual inventory levels continues(the remaining inventory each month excluding pending sales, closed sales and new listings). This segment is down -63% when comparing Apr 2008 and Apr 2010. More and more of the less desirable or unrealistically priced properties are either now selling (in the case of unrealistically priced- prices are being adjusted) or coming off the market. The other metrics are quite compelling with the comparison of April 2008 vs April 2010 we see Under Contract Properties/pendings increasing and up 92% and New listing inventory coming on the market remaining down 11%.

5. Percent Under Contract- This is typically one of the most telling statistics of all because this is @ the line of scrimmage, where the market is today. Essentially when looking @ this stat, we are factoring of all the available inventory what percentage is under contract or a pending sale. Typically in any area we have seen where @ least 1 for every 4 available listings is under contract, we have a stable or appreciating market. Whenever we have seen this factor less than 1 out of 10 or less than 10%, we have sign prices more in a correction mode. We can look back historically and show where this occurred in pockets throughout SCC @ different times and how this was impacting values to the down or upside. At this point in time, SCC is @ a 2 year high with nearly 33.4% of all the available listings/supply under contract/in escrow. This percentage continues its progression and is up from last month's fully adjusted figure of over 29.1%, and is a 202% increase when compared to April of 2008 when this figure for SCC was at 11.1%. One year ago March, the percent under contract figure was 17.9%.

In conclusion, the market continues to stabilize and improve in the Santa Clara County and overall bay area residential real estate market. Listing inventory remains at historical lows, even with new inventory coming on, strong buyer demand is consuming these properties in relatively short periods of time. From our sales activity over the past 30 days and increasing even in the past several weeks and months, we are certain to see improving data and statistics in the news as these new sales are now closing escrow. We are fortunate to be right at the pulse of activity and trends and this should be an advantage to our clients and/or those that have an interest in following the most current market trends.

In addition to the positive current rate of sales, one of the most encouraging signs continues to be the increasing high-end sales activity, which was sluggish during much of 2009. This upper-end activity continues to increase and particularly in the $2-5+ million ranges. It will be very interesting to see the upward movement in the median price as these sales continue to close over the next 30, 60 and 90+ days. We are projecting a strong second quarter as this YTD (year to date) volume is up dramatically when compared to YTD 2009. As a company, Sereno Group is up 110% this YTD as compared to the same period in 2009. Most of the market and leading peer companies are up between 30-40% which is a strong indication for the market overall. We are in the midst the most balanced and active market we have seen in over 2-3 years.

Thank you and have a great evening and weekend.

Sincerely,

Chris Trapani

President & CEO

Sereno Group

Supply & Demand Thru' February 2010

Thu, 11 Mar 2010 14:22:00 -0800

February 2010 Supply & Demand

Above, please find the most updated Market Dynamics statistics for Santa Clara County through February 2010. These statistics are for Single Family and Condo/Townhomes in Santa Clara County.

Here are some highlights to pay particular attention to as you review the data/graphs through the first two months of 2010:

1. Median Price- February's Median Price regained its upward trajectory from 2009, after a slight dip in January ($475,000), to $499,000 which is significantly higher ($78,000) than February one year ago. The Median reached its low point in March of 2009 @ $415,000 and has proceeded to climb and then hovered above and around $500,000 and reached a high of $530,000 in November of 2009. As we predicted over the last few months of 2009, we are already seeing a higher rate of upper end sales in Santa Clara County (several between 3-5 million). As these sales begin to close escrow, the median price in SCC will continue its climb well above $500,0000 during the course of 2010.

2. Supply&Demand (Units)- We continue to see a dramatic distinction as we compare early 2008 with 2010 in the following categories; For Sale (supply/inventory), Under Contract (pending sales) and Sold (closed escrows). To illustrate when we compare Feb 08 with the same month in 2010 we see the following- For Sale properties/supply is down -40%. The number of under contract properties (pending sales) is now up an amazing 92% and the sold/closed escrows are up 41%. The pattern and direction of this market for the past 7-8 months continues to be the same story; declining overall supply/inventory, increasing new sales and closed escrows. Normal seasonality is beginning to come into play as buyer demand continues to amplify moving well into the 2, 3 and 4+ million price ranges at a significant rate as compared to the same time last year. Despite the overall increase in sales activity in all price ranges, the overall rate of closings continues to be somewhat sluggish mainly based on a high percentage of short sales and the ongoing challenges of financing given the new disclosures and stringent guidelines. We are anticipating some strong closing months in late Q2 and during Q3 given the large pipeline of pending sales as they are worked through with lenders approving select short sales and financing coming through for purchases. This closing activity in the coming months will have a significant, positive affect on these monthly data points, further pointing to a balancing market and a imminent real estate recovery in Silicon Valley.

3. Months Supply of Inventory & Days on Market- The overall Months Supply of Inventory (months of inventory available based on the total existing supply divided by the rate of sales) dwindled down to a 2 year low range of under 2 months! This is down from a 2 year peak of 14.2 months in January of 08. The Months of Supply of Inventory declined each and every month in 2009 from 7.7 months in January to 2.6 months by year end. Days on market has remained under 60 days for the past 7-8 months, which on average is down about 10 days from the same period one year ago. This reduction in the Days on Market is another indication of the improving residential real estate market.

4. Basic Absorption- The decline in the residual inventory levels continues(the remaining inventory each month excluding pending sales, closed sales and new listings). This segment is down -62% when comparing Feb 2008 and Feb 2010. More of the less desirable or unrealistically priced properties are either now selling (in the case of unrealistically priced- prices are being adjusted) or coming off the market. The other metrics are quite compelling with the comparison of Feb 2008 vs Feb 2010 we see Under Contract Properties/pendings increasing and up 92% and New listing inventory coming on the market remaining down 17%.

5. Percent Under Contract- This is typically one of the most telling statistics of all because this is @ the line of scrimmage, where the market is today. Essentially when looking @ this stat, we are factoring of all the available inventory what percentage is under contract or a pending sale. Typically in any area we have seen where @ least 1 for every 4 available listings is under contract, we have a stable or appreciating market. Whenever we have seen this factor less than 1 out of 10 or less than 10%, we have sign prices more in a correction mode. We can look back historically and show where this occurred in pockets throughout SCC @ different times and how this was impacting values to the down or upside. At this point in time, SCC is @ a 2 year high with nearly 29.8% of all the available listings/supply under contract/in escrow. This percentage is slightly up from last month's fully adjusted figure of over 24.2%, and is a 222% increase when compared to February 2008 when this figure for SCC was at a lowly 9.2%!.

In conclusion, the market stability and strength in the overall bay area residential real estate market is confirmed by these data points. From our sales activity over the past 30 days and increasing even in the past week, we are certain to see improving data and statistics in the news as these new sales begin to close escrow. We are fortunate to be right at the pulse of activity and trends and this should be an advantage to our clients and/or those that have an interest in following up to date market trends. In addition to the positive current rate of sales, one of the most encouraging signs is the increasing high-end sales activity, which was sluggish during much of 2009. It will be very interesting to see the upward movement in the median price as these sales begin to close escrow over the next 30, 60 and 90 days. The biggest challenges of the day are high percentage of short sales (difficulties in getting lenders to communicate and close these transactions), the increased paperwork introduced into the loan process this year and the ongoing stringent lender guidelines. The market, despite its increasing buyer demand, is one of the toughest we have seen. Salespeople are working harder than ever to represent their buyers and sellers in the market and navigate them through the various hurdles that seem to be commonplace in every transaction. The buyers are in the market and ready to buy there is no question about it and this is a good starting point to build from. We are projecting a strong spring and summer market in most price ranges and possibly the most balanced and active market we have seen in over 2-3 years.

Bamboo Consulting Newsletter Vol.14

Wed, 17 Feb 2010 12:48:00 -0800

Vol. 14 February 2010

www.bambooconsultinginc.com

What Happens to Articles Left in Vacated Rental Units?

There are specific laws for landlords to deal with abandoned personal property left in residential units. Simply seizing and then disposing of these personal possessions without following the law is just not an option.

First, you must give written notice to the former tenant or any person you reasonably believe to be the owner of the property.

The notice must describe the items, indicate that reasonable costs for storage may be charged before the property is returned, specify where the property may be claimed, and a date when the property can be claimed. The date must be a date not less than 15 days after the notice is delivered or if mailed 18 days after mailing. As to where to send the notice by mail, use the last known address, which is probably the vacant unit.

Most boards of realtors have forms available called “Notice of Right to Reclaim Abandoned Property”. These forms deal with value of property – one if the property is thought to be worth less than $300 (resale value) and one for property thought to be worth more than $300 (resale value).

If the former tenant contacts you within the waiting period, you can require that they pay reasonable storage costs before releasing the property. If you are not contacted within the waiting period and the property is worth less than $300, you can dispose of the property or keep it yourself. If the property is worth more than $300, you are required to hold a “public sale” of the property by competitive bidding. This process requires that public notice of the sale be published at least once a week for 2 consecutive weeks in a newspaper in the county where the sale is to be held. The last publication must be at least 5 days before the actual date of sale. The public notice must also list the date, time, and location of the sale as well as list the items that are to be sold. Anyone can bid on the items including the landlord or former tenant. After the sale, you are allowed to deduct from the proceeds the cost of storage, advertising, and the sale itself. Then, any balance must be sent to the county treasurer. Note that any unpaid rent cannot be deducted from the proceeds.

Storage, advertising, and the auction cost you both time and money, so try and get the tenant to come back and reclaim their property (even if you have to give them more time and negotiate the storage fees). In the end, it will probably be the best solution.

A Primer on Mutual Fund Fees

Like any other business, businesses that run mutual funds involve cost. Most of these costs are incurred at the initial investment or subtracted from the overall return.

First, let's look at one time fees:

Not all mutual funds have these, but if they do they can be front-end sales load fees or back-send sales loan fees.

In both instances, these payments compensate outside brokers that have advised you to buy these funds. The Financial Industry Regulatory Authority (FINRA) has capped these fees at 8.5%, but most are generally around 6%.

Redemption fees are usually paid directly to the fund when a shareholder in the fund redeems their position before a preset period of time.

In some funds, there may also be a periodic management fee if an investment is below a certain dollar amount.

Did You Know?

Next, let's take a look at ongoing expenses:

These include management and administrative fees, marketing and distribution expenses, and staff to answer shareholder inquiries.

Also included in ongoing fees are the costs to buy and sell securities.

In the end, watch out for the fees as they can add up quickly. For example, $10,000 put into a fund at 10% annual return with total yearly expenses of 1.5%, would give you a return of $50,000 after 20 years. But, if you put the same amount in the same fund with yearly expenses of only 0.5%, the return would be $60,0000.

Review of the Last Decade

Best Technologies

According to PC Magazine, the top 10 technologies that transformed our everyday lives during the last decade were:

1. Google

2. Apple iPhone

3. Apple iPod

4. Facebook

5. Wi-Fi

6. Broadband Internet Access

7. TiVo

8. GPS

9. Windows XP

10. Apple iMac

Most Important Dates

According to Newsweek's top 10 lists, the 10 most important dates during the last decade were:

1. September 11, 2001: World Trade Center Terrorist Attack

2. December 12, 2000: Bush vs. Gore Decision

3. November 4, 2008: Obama Elected

4. August 29, 2005: Katrina Makes Landfall

5. September 15, 2008: Lehman Brothers Goes Bankrupt

6. March 1, 2002: U.S. Launches Operation Anaconda (first large-scale, coordinated campaign by U.S. forces against

the Taliban in Afghanistan)

7. February 5, 2008: Colin Powell Speaks at U.N. (U.S. presents evidence that Iraq had retained weapons of mass

destruction)

8. April 16, 2007: Virginia Tech Massacre

9. December 26, 2004: Indian Ocean Tsunami

10. February 12, 2004: First Licensed Gay Marriage in America (San Francisco)

The Last Word

Janitor (n)

Janus was once the mightiest Roman deity of all until his followers fell all over for the flashier Greek Gods. That left Janus

as the God of Doors, partly because he had a face on both the front and back of his head. Those who attended him were

the doorkeepers that over time came to be known as janitors (attendees to Janus).

Statistics

Bay Area Statistics December 2009

Sales in the San Francisco Bay Area were at 7,828. This is up 13.8% from 1 year ago. This is the 16 increase and the highest since December 2006.

December prices were at $380,000. This was down 1.8% from November, but up 15.2% from December 2008.

Foreclosures accounted for 32.3% of sales. This is down from the peak number of foreclosures (52% in February

2009).

25.6% of loans are FHA loans of choice.

Existing Single-Family Home Sales (December 2009)

County Number Sold Percent Change (YOY) Median Price Percent Change (YOY)

Alameda 1,552 4.0% $360,000 6.5%

Contra Costa 1,634 -8.6% $287,500 13.9%

Fresno 918 - $175,000 -2.91%

Marin 265 60.6% $635,000 12.9%

Merced 330 - $120,000 -4.0%

Monterey 327 - $235,000 -11.32%

Napa 128 15.3% $356,000 -11.6%

San Francisco 499 36.3% $650,000 5.4%

San Benito 77 - $270,000 -1.19%

San Joaquin 858 - $165,000 -5.07%

San Luis Obispo 231 - $400,000 -4.53%

San Mateo 642 47.6% $586,500 9.2%

Santa Barbara 268 - $302,000 24.04%

Santa Clara 1,915 51.4% $475,000 8.9%

Santa Cruz 171 - $437,000 13.07%

Sacramento 1,875 - $175,000 -5.41%

Solano 698 -4.8% $217,500 1.9%

Sonoma 495 -7.3% $330,000 10.0%

Kitty’s Corner

Kitty Lee, CMPS, CMA

General Manager

Bankers Preferred Real Estate Loans

1819 Trousdale Drive,

Burlingame, CA 94010

Office: (650) 227-1018 x 304

Cell: (510) 579-7462

Fax: (650) 899-1888

http://www.bankerspreferred.com

“Hot” Marketing Tip

Marketing Advice for 2010

Now that we have started a new year, it makes sense to evaluate your business and find ways to make your marketing more

effective. Here are some tips from a strategist on OPEN Forum:

1. Know your company and your products and how they meet customer needs. Share that message.

2. Update your online presence by giving your website a refresh and adding to or starting your blog.

3. Determine how you will interact with Social Media (like Facebook and Twitter). Social media is here for the long haul and successful businesses have a strategy on how to market in those spaces. For example, create a company profile on Facebook and update it with the most current information. Then, allow people to become fans.

4. Review your customer and prospect lists and see how you can market to them directly.

5. Look at doing videos to highlight your company and products. Remember that these can easily be shared through your online presence (website, blog, social media, etc.).

6. Become familiar with mobile marketing. These days, more people use text messaging than email.

7. Start a referral program and let the world know.

8. Focus on your ideal customer and figure out ways to attract more of them to your business.

New HUD Policy Created to Allow Quicker Foreclosure Re-sales

Effective February 1, 2010, the Department of Housing and Urban Development (HUD) will relax FHA rules that prohibit insuring mortgages on homes that are owned by the seller for less than 90 days. This is a move that could help expedite the rehabilitation and resale of foreclosure properties.

In a housing market where tighter lending requirements have made FHA financing the only option for some buyers, this 90-day policy has:

1. Kept some home buyers from being able to purchase affordable homes.

2. Prevented the quick resale of foreclosed properties, which affects the ability of communities to stabilize and rebuild.

Research has shown that the buying, fixing, and reselling of foreclosed properties is often achieved in less than three months time.

The temporary waiver, which will expand access to FHA mortgage insurance to many, will be in effect for a period of one year (unless extended or withdrawn by the FHA). With this in mind, now may be an excellent time to look at foreclosed properties for those who may be on the fence about purchasing a foreclosure as a short-term investment.

To ensure FHA borrowers are protected from inflated prices, the policy has certain restrictions, including:

ŸAll transactions must be arms-length and there can be no identity of interest between the buyer and the seller.

ŸIf the sales price of the property is 20% or more above the seller's acquisition cost, the lender must meet specific

conditions for the waiver to apply.

ŸThe waiver is limited to forward mortgages and cannot be used under the Home Equity Conversion Mortgage

(HECM) purchase program.

You can read the full text of the waiver at http://www.hud.gov/offices/hsg/sfh/waivpropflip2010.pdf.

Dear Carole & Kitty

If you have a question for Carole or Kitty, please email it to

AskCarole@bambooconsultinginc.com

Vol. 14 February 2010

Question: Has the economic crisis changed Americans?

Answer (Carole): According to the Parade Crisis Impact Poll, which surveyed a national moderate panel of adults ages 18 and over, the answer is yes.

Ÿ79% have personally felt its impact.

Ÿ42% delayed or canceled their vacations.

Ÿ27% pursued extra work to make money.

Ÿ34% delayed buying major appliances.

Ÿ29% forgot about doing home renovations.

Ÿ28% delayed buying a new car.

ŸOnly 52% now believe if you work hard and play by the rules, the American dream is yours.

Ÿ87% are worried about state of the nation.

Ÿ65% were really surprised at the economic meltdown.

Ÿ74% say they watch the news more.

Ÿ71% describe themselves as more politically aware.

ŸHome ownership went from 68% to 64%.

Ÿ25% of the homeowners are underwater in their home values.

Ÿ1 in 9 homes were either in default or foreclosure.

Not all the news is bad though. Americans see some benefits too:

Ÿ52% are forming stronger bonds with spouses.

Ÿ63% have become more do-it-yourselfers.

Ÿ30% are volunteering more for charities.

Question: Why are banks willing to write off $150K on a short sale or foreclosure, but not willing to write down the

principal so a homeowner can stay in their home?

Answer (Carole): When the banks do a short sale or foreclosure, the government allows them to take a loss on their balance sheet and they can then offset that with profits from prior years. In the end, the banks get a tax refund from the government.

With reduction of principal, they cannot do that and the loss they would incur can only be written off against profits in the same year or carried forward at a very low rate. With principal write offs, they would have huge losses that they could not write off in the year that they incurred them. Hence, there is no benefit to the bank to write down the principal where there is a benefit to write off money in a short sale or foreclosure situation.

Question: How soon can I buy a property after a short sale?

Answer (Kitty): The answer is it depends. According to the current Fannie Mae and Freddie Mac guidelines, a two year period is required to re-establish credit. The two-year period is measured from the completion date of the short sale. There are no exceptions for extenuating circumstances.

However, FHA recently issued new guidance to help responsible borrower who did not fully payoff their mortgage due to extenuating circumstances gain access to FHA financing. On December 16, 2009, FHA released a Mortgage Letter (09-52) to lenders and underwriters regarding borrower eligibility new FHA mortgages after pursuing either a short sale (when a previously owned property is sold for less than what is owed) or a short payoff (when there is a principal write down of indebtedness that cannot be refinanced into a new mortgage). In the letter, which took effect immediately, FHA stated that borrowers are considered eligible for a new FHA-insured mortgage if: 1) they were current on their previous mortgage and other debts at the time of the short sale and 2) if the proceeds from the short sale serve as payment in full. FHA also stated that borrowers are not eligible for a new FHA mort

THe Beat Goes On

Tue, 19 May 2009 09:53:00 -0700

I’m back. After a couple week hiatus, what has changed? In a couple of words—not much. Number of units is up and there is a bit more momentum in the marketplace. However, the same pattern still exists. The preponderance of activity is still in the lower end. First time buyers and investors are out in droves looking for bargains they could not have afforded a year or two ago. A few examples include a Novato 4 bedr. 2 ba. home priced at $499K, wherein within 6 days it received 10 offers and went over listing price; a Montclair 2 bedr. 1.5 ba. home priced at $645K garnered 4 offers; a REO listing in Hercules received 20 offers; and an Inner Sunset listing in SF priced at $625K received 4 offers. All of these homes went over asking. We are even seeing pre-emptive offers like a St. Helena home priced at $675K. We haven’t seen one of these for many a moon.

These buyers are being motivated by the convergence of several factors including the steep drop in prices, the lowest interest rates since they began recording them in 1971, and the shrinking inventories.

Even the media has turned more positive and is talking about the increased activity with homes in the lesser price categories. It has taken them a while to notice.

The million dollar plus properties are moving, but nowhere near the pace of the lower priced homes. The upper price ranges are building inventory as the spring market unfolds. It is taking longer to receive offers and if properties are not priced within realistic price boundaries, it takes numerous price reductions to entice buyers to look at them. Occasionally, we will see multiple offers like the Piedmont 4 bedr. 3 ba. home listed at $1.55mil. or the 4 bedr. 3 ba. home in San Anselmo listed for $1.2 mil, which sold having received 4 offers. These homes are the exception, not the rule. They are aggressively priced, expertly staged, and in exceptional condition.

The good news is lenders are coming back in the market with jumbo product. Both buyers and lenders are still concerned that prices could fall further in the more expensive homes. Appraisals are more difficult as consequent of the uncertainty in the market, prompting both appraisers to be conservative in their estimates and some banks to drop values to protect themselves in case values drop further. Lenders have more confidence in the lower ranges despite prices having dropped from the peak anywhere from 35-70% depending on location. The higher priced homes haven’t fallen as much, although those homes that are selling have seen their prices fall on average by 20-25% or more from the peak depending on location. It is surprising that the $3 mil. plus range is still experiencing good activity. One Napa Valley property listed at $3.3 mil. in escrow received another offer that went into back-up position. We also had several showings on a St. Helena estate property listed for $5.5 mil.

We did notice a rise of million dollar plus properties in the month of April. However, in the last week or two, the under million dollar properties have dominated sales once again.

Open house activity remains strong in most markets. The usual warm spring weather has increased traffic. Most open homes have double digit buyer activity. The strongest activity is in San Francisco and in the East Bay. A Berkeley Hills home listed at $1.650mil. was visited by 75 groups of buyers, a Crocker Highlands home in Oakland priced at $985K had 80 buyers, an SF Inner Sunset 3 bedr. 2 ba. home priced at $1.497 garnered 50 groups, and a SF West Portal 4 bedr. 2 ba. home listed at $1.25mil. was visited by 42 groups. Demand is still strong, but the urgency to buy is tempered with caution.

Consumer confidence is rising slowly, the increase in the number of unemployed workers is beginning to wane, and the stock market has risen nicely over the last month and half and seems to be steadying. All these factors are helping in breathing life back into the housing market. I know there is concern about the foreclosed properties that have been held off the market by lenders due to the moratoriums. The estimate in California alone is 80,000 homes. That could mean between 10,000-15,000 homes in the Bay Area could hit the market in a very short time. To be honest, I am not overly concerned with those properties in the lower ranges. I believe the watermark has been set and there is enough pent up demand of both first time buyers and investors to absorb those properties. I believe we will see more of upper end foreclosures and short sale properties entering the market, which will begin the process of setting the watermark for that category of properties much like it did for the lower end price ranges over the last year.

When all is said and done, prices may roll back to 2002-2004 price levels, depending on the location of the properties. In the end, it will be healthy, allowing the housing market to come back into historical appreciation averages that can be sustained over the long run.

he Goldman Report

Spring Is In the Air

Tue, 21 Apr 2009 00:00:00 -0700

Spring is in the Air

It is not only the blossoms that are blooming; sales are starting to bud too. The pace of sales has quickened over the last week. Maybe the consumer perspective is changing with the media now indicating that the economy may be showing signs of life. The first week of April home sales compared to last year were up over 30%. This being the best week since July of last year. Average sales price is still off by 25%. Although the lower end of the market is still experiencing most of the activity, we are seeing some life in the upper end. Over a week’s period we had four sales between 3-4 million dollars. We are also just beginning to see a lift in sales over the million-dollar threshold.

As we finished the first quarter of the year, there are some interesting observations to note. In those counties where average and median price are down 30% or more, inventory this year versus last is down, pending sales are up, sold homes are up, and months supply of inventory is down. In those counties (San Francisco and Marin) where median and average prices haven’t dropped by 30% or more, inventories are up from last year, pendings and closed sales are lower, and months supply of inventory is up. These counties are the only ones where residual inventory (inventory that is on the market over 30 days) is up over last year. Months supply of inventory is substantially down over last year in those counties with the lowest median and average sales prices. Those counties whose median prices are under $400K—Alameda ($305K), Contra Costa ($200K), Napa ($334K), Solano ($179K), and Sonoma ($349K)—all with one exception have MSIs under 5 months. The national average is 9 months. Napa is the only exception with 7.2 months supply. However, when you consider that last year Napa had the highest MSI of all counties in the Bay Area with 18.4 months, they had the largest drop in MSI both in absolute and relative terms of any county. Marin (10.1 MSI) and SF (7.5) had the two highest MSIs for March. For San Mateo and Santa Clara whose median sales price are $520K and $415K respectively, months supply were steady or below last year’s MSI.

In a few counties we are beginning to see price stabilization. Alameda, Marin, San Mateo, Santa Clara, and Sonoma counties have seen a small rise in average price over the last 90 days. Median price has varied only a few percentage points in each month this quarter in the majority of Bay Area counties. We could be close to the bottom of price swings. How long will we stay at this level is difficult to predict. This is particularly true of the lower price ranges, which have dominated sales activity in the first quarter. A recent article in USA Today estimated when each state would see a housing recovery. California was one of a few states to begin recovery in 2009. The recovery begins with price stabilization. Just to show you how crazy it has become in the lowest end of the market, a 3 bedr. 1 bath home in Oakland listed for $195K received 17 offers. Most of our multiples offers occur in the under $800K price level. Even in the most challenged real estate market in our lifetime, we are still experiencing multiple offers. This rarely occurred in past down-cycle markets. I think that the building buyer demand, historically low interest rates, the significant price drops over the last 2 years, and the REO/short-sale markets have created this rare anomaly (opportunity).

Open house activity at all price levels continues to increase as the weather and increasing number of listings come on the market. Most open homes are attracting a double-digit number of buyers. The most popular are bringing in well over 30 guests. This was the case for a Greenbrae 3bedr./3ba. listing priced at $995K which had 60 visitors, a Montclair home listed at $1.650 mil. which had 55 buyers, and the SF Seacliff 6bedr./5ba. listed at $4.580 mil. which entertained 40 groups.

There are plenty more reasons to buy other than the ones mentioned above. Among them are the Federal government’s $8000 tax credit for first-time buyers and, in addition, the state of California just passed a $10,000 tax credit for new homes purchased this year with fewer restrictions than the feds program. I believe this spring will be a bright spot for home sales after a lackluster first quarter.

Avram Goldman

Feeling Better

Mon, 16 Mar 2009 07:32:00 -0700

Feelin' Better

The Dow this past week had four straight days of gains, finishing up slightly over 9% for the week and having its best week since the end of November. I may not be popping the champagne yet, but doesn't it feel good. I wouldn't fool myself for a minute that we are out of this economic mess, but it is at least a flash of light in the darkness. There were other good signs as reported in the WSJ-the three major banks-BofA, Citigroup and J.P. Morgan Chase all turned a profit in their underlying businesses in the first two months of the year; retail sales for February fell only 0.1% from January exceeding expectations, and January sales were revised up by .2% to 1.8%; prices for copper and scrap steel rose indicating increased demand for metals typically used in manufacturing; and global shipping prices began to increase having completely collapsed last year. Even the consumer confidence index rose-not much, but at least in the right direction. Warren Buffett, in a televised interview, reemphasized his confidence in our ability to weather the storm.

Finally those sparks in the wilderness that I mentioned last month are burning a bit more brightly. Our local Bay Area housing markets continue to take baby steps. The February results are in and the trends of the last six months continue. The lower price ranges are the most active. Sold units were up significantly over February 2008 in those counties that have the lowest median prices. Solano county was up 105%, Sonoma was up 80 % and Contra Costa was up 38%. Counties that have a mix of lower and upper end ranges were down slightly. as was the case in Alameda was down 11% and Napa was down 12%. Those counties with the highest median prices dropped significantly in closed units. Santa Clara was down 25%, San Mateo was down 27%, San Francisco was down 50%, and Marin was down 54%. Pending escrows reflected the same pattern, although it was more positive as six out of the nine counties posted positive increases over 2008. Solano was +234%, Napa +134%, Contra Costa +87%, Sonoma +82%, Alameda +27%, Santa Clara +11%, San Mateo -19%, Marin -25%, and San Francisco -32%.

Median prices year over year dropped in all counties. The counties with the largest declines were those that had the highest increases in sales. This being another indicator of how active the lower price ranges have been.

Months supply of inventory was down from the peak in all but one county and down from last February in four counties. The following numbers show the current, last year's, and peak MSI numbers. The first number is the peak MSI over the last two years, the second is February 2008, and the third is the current MSI: Napa 24/9.9/9.9, Solano 22/14.5/4.7, Contra Costa 16/7.8/5.1, Sonoma 14.5/14.5/5.1, Alameda 13.7/4.8/6.0, Santa Clara 13.0/3.8/7.9, Marin 11.4/4.3/11.4, San Francisco 9.9/2.6/8.8, and San Mateo 9.8/3.7/7.3.

New listings coming on the market this year in February compared to last year were down in 6 of the 9 counties. The numbers are as follows: Contra Costa -33%, Sonoma -32%, Alameda -28%, Marin -19%, Napa -5%, and Solano -2%. Residual inventory, that is, those listings that were on the market prior to February and still available, was up in 6 of the 9 counties over last year. The six counties are San Francisco (+94%), Santa Clara (+75%), San Mateo (+56%), Alameda (+43%), Marin (+39%), and Contra Costa (+11%). The bottom line is that prices have come down substantially in the lower end of the market over the last year resulting in the reduction of inventories in those markets. The high residual inventory and the increases in MSI in the upper end markets show that prices in those markets still need to adjust downward before we reach equilibrium. As sellers in the million dollar and up ranges (in some market places $700K and up) price their properties in accordance with market conditions, we will begin to see unit sales increase and inventories decline in those markets.

The market is fluid. A recent newscast highlighted a shift in San Francisco, particularly in the lower ranges. Our sales during the second week of March were up over last year. There seems to be a greater sense of confidence in buyers, particularly in the last couple of weeks. We are beginning to see more multiple offers. Although most are in the lower end, we are now seeing a few in the million dollar plus range. A Piedmont 4 bedr. 2 ba. listing priced at $1.295 received 4 offers and went over asking. Buyers are moving quickly when they come across a value priced home in a desirable area. A 3 bedr. 2 ba. Larkspur remodeled home listed at $1.595 went into escrow 48 hours after going on the market. Homes that are priced appropriately to today's environment and show well are selling.

Serious price reductions are producing results. Our listing in San Ramon originally listed at $635K was reduced by the seller to $535K and sold immediately. Value is on every buyer's mind. Irregardless of the economy, there are many serious buyers looking to purchase homes. as evidenced by increasing number of buyers attending open homes. As the economy improves over the next year or two, lending in jumbo mortgages is made more available, unemployment numbers steady and consumer confidence begins to rise, we will approach a more balanced market. In the meantime buyers have a "golden opportunity", but it won't be there forever.

Source: The Goldman Report

My Bet is on Warren

Mon, 02 Mar 2009 06:44:00 -0800

My Bet is on Warren

It is difficult to find bright spots in the current economy. The stock market is being hammered and even Mr. Buffett is being challenged. Berkshire-Hathaway experienced its largest loss since its inception. However, Mr. Buffett doesn't fear, as he takes a long-term view. He admits we are in for a rocky ride this year and probably next, but is confident, that as a nation, we will overcome this travail as we have always done in the past. I will put my money on Warren whose company's stock started at $66 and is now worth $78,600 a share. Another encouraging sign was the amount of corporate debt underwritten since the beginning of this year as compared to last year. This bodes well for banks who charge fees to underwrite the bonds and shows signs that the credit markets are beginning to thaw.

To be sure, we can certainly be thankful for the rain this past week. If we are gloomy about financial markets, at least the thought of achieving our normal rainfall is a pleasant one. Even with the rain, buyers are still coming out to view homes. Most opens had double digit attendance.

The buyer interest is there. A few markets are beginning to see a modest pick up in sales activity. Both SF and the East Bay are seeing increasing numbers of sales. In spite of the economic conditions, a few listings are receiving multiple offers. The bulk of these sales are still under a million dollars. In SF, a 3 bedr. /2 ba. Forest Hill fixer listed at $699K entertained 8 offers and went well over asking. In SF a 3 bedr./3 ba. Sunnyside listing priced at $899K received 4 offers. In the East Bay, a 2bedr./2ba. condo in Berkeley listed at $575K garnered 6 offers.

The highlight of the week is that we are experiencing a few more million dollar plus sales, as sellers are pricing their homes more realistically to market conditions. A good example is on the Piedmont side of Montclair where a 4bedr./4ba. home priced at $1.295 mil. received 4 offers. The one to two million dollar category is seeing a little more life. These transactions require patience, as both buyers and sellers are taking their time with negotiations. It is getting done, but not without a great deal of give and take. One more note, the trend continues for unique upper end properties with a $5mil. sale of a home on the Belvedere lagoon that went into escrow after seven days on the market.

Source: The Goldman Report

Baby Steps

Mon, 02 Mar 2009 05:53:00 -0800

Obama's Housing Plan certainly has promoted a wide range of responses. The objective of the Plan is to stabilize housing values by allowing approximately 7-9 million Americans that could potentially go into foreclosure, remain in their homes. The logic behind it is that if the number of REOs and short sales diminish, then supplies will get in balance with demand and prices should level off. Will or won't it work? That is anyone's guess. There is still confusion over who qualifies and exactly how it will be implemented.

Interesting to note that the hottest selling part of the market today is the lower end where most of the REOs and short sales exist. In many markets, the inventories in this sector are some of the lowest of any price range. If the plan is successful in achieving its objective by keeping more of these homes off the market, it could have its desired effect.

In the meantime buyers remain cautious and are focused on value. The trend I discussed last week continues and that is that, the higher end of a few Bay Area markets continue to heat up. This past week in San Francisco alone there were five homes in the $4mil.-9mil. price range that went into escrow. One home listed at $8.9 mil. received 4 offers. All of those homes were on the market less than 25 days. We are also seeing this trend in the Piedmont and Marin markets.
These sales are increasing our average sales price on a week over week basis. Our average sales price rose substantially by close to 30%. However, the majority of sales are still well under the million dollar threshold.

We are seeing an increase of multiple offers in the East Bay, particularly in the Oakland, Piedmont, and Berkeley areas. A 4bedr/2.5 ba. Oakland home listed at $695K sold over asking with 6 offers. A Berkeley 3bedr/2ba. home priced at $640K received 3 offers and went over asking. A Piedmont 5bedr./4.5 ba. listed at $2.55 mil. garnered 2 offers.

As prices have fallen, affordability for buyers has risen dramatically. In a recent news article on national home affordability, the SF Metro area rose from a meager 5.7% in the 2nd quarter of 2007 to a current 20.5%. That, combined with the continued low interest rates in the conforming loan sector, has fostered the increased activity in the lower end of the market.

It should be interesting when Mr. Bernanke, the Fed Chief, speaks to Congress in the coming week. The expectation is that he will talk about new tools that the Fed will use to get the economy on track. The potential good news for the housing market for both buyers and sellers (at least those in the conforming loan limits) is that rates could drop lower, creating greater affordability and motivating buyers to finally make a move.

The market is taking tiny baby steps to improvement. The buyers are still circling as open house activity is remaining constant with most opens generating between 10-20 buyers. There are larger numbers of buyers at a few listings, particularly those that are open for the first time and primarily at under million dollar homes, as exemplified by the Berkeley 2bedr/1 ba. home listed at $599K that had 66 groups visit.

What I am hearing is that we will be seeing more well-priced, attractive listings hitting the market over the next month or two. Sellers are becoming more realistic in their pricing. We are also seeing an increase in price reductions from sellers who now realize that it is not 2006. Both of these factors should have a positive impact on our Spring market.

Source: The Goldman Report