The Most Valuable Monopoly Property Isn’t The Boardwalk

monopoly-hotels-2

While a little lighthearted I found this article to bring up an interesting point. What exactly indicates a ‘good’ location?

When showing properties in a client’s price point I show them in order of most attractive (tree-lined, quiet, based on personal needs) to perhaps not considered the most attractive (close to utilities or freeway, directly under airports, etc.) so they have an understanding of everything in their range. However in the bay area real estate in general is “good”. Home prices have been higher and locations more sought-after than almost any other region in the US since data began being collected half a century ago. The investment has proved sound if not staggering despite the usual market ups and downs. So we realtors should never act as arbiters of what is “good” and what is not.

Once again the notion that the bay area’s real estate “game” is played a little differently than any other in the country.

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Courtesy of BusinessInsider.com/lenpenzo.com

When playing Monopoly, the conventional wisdom is that the best property to own is Boardwalk because it commands the highest rent.

However, savvy players know the most valuable property is actually Illinois Avenue. How can that be?

Well, one of the biggest reasons is that Illinois Avenue’s board position — two “seven” rolls from Jail — gives it the distinction of being the game’s most-landed on property; Boardwalk is ranked fourteenth.

The bottom line: When buying real estate, the three most important factors are always location, location and location — regardless of whether you’re paying for it with Monopoly money or real cash.

Rental home shortage is America’s next housing crisis

Courtesy of soberlook.com, June 22, 2014

The US is facing a new housing crisis. No, it has nothing to do with subprime mortgages or bloated home equity balances. This time the nation is dealing with shortages of rental housing, a problem that will become increasingly acute in years to come and may result in a material drag on economic growth.

Americans are simply not building enough homes to accommodate the population’s needs. The number of housing units completed per capita in the United States remains a fraction of historical averages. The slight improvements from the lows of 2011 have barely scratched the surface.

Units completed per capita

Similarly, in spite of recent increases, residential construction spending as a fraction of the GDP remains at the lowest levels than at any time since WWII.

residential construction spending as percent o gdp

At the same time demand has been on the rise. As an indicator, the chart below shows Google search frequency for rent related phrases.

Google Apartments & Residential Rentals index

To read the full article go here.

Redfin Survey: 40% of Home Sellers Plan to Price Higher Than Market Value

Courtesy of Redfin.com, 5/8/2014

SEATTLE – May. 8, 2014: 

Home sellers are kicking off the spring real estate season with what might be considered a risky pricing strategy: 40.3 percent say they plan to price their homes above market value, according to the latest Real-Time Seller Survey from Redfin (www.redfin.com), the technology-powered real estate brokerage. Redfin agents warn against this pricing strategy, as it usually doesn’t pay off for sellers.

“Buyers this year are far less tolerant of overpricing, and homes that aren’t priced appropriately are likely to sit on the market until the seller is forced to reduce the price,” said Redfin Riverside area agent Paul Reid. “Buyers often interpret a price drop as a sign there is something wrong with the home, leading some to negotiate even more aggressively or lose interest altogether.”

More than half (51.3%) of home sellers surveyed said they plan to price their home in the middle of the range based on local comparable sales, which is wise considering that a home listing gets nearly four times more visits on real estate websites during the first week on the market than it does a month later, according to a Redfin analysis.

“Pricing a home correctly from the start is a critical component of Redfin listing agents’ strategy, and we use the very latest local comparable sales to create our pricing recommendations,” said Karen Krupsaw, vice president of Redfin real estate operations.

In the second quarter, 52.4 percent of sellers were confident that now is a good time to sell their home, compared with 37.5 percent in the first quarter. Nevertheless, home sellers are not free from worry. In the second quarter, 40.9 percent of sellers said they are worried about being able to afford their next home. For the survey, Redfin polled 1,128 active home sellers across 26 U.S. cities.

Whether people are buying or selling, it’s always critical to take the time and space to make the right decision to avoid home buyer’s remorse. According to a nationwide survey from Redfin and conducted online by Harris Poll among more than 2,000 U.S. adults, one in four American homeowners (25%) who bought the home they’re currently in said that they would not buy their home again if they had to do it all over.

The Redfin Real-Time Home-Seller Survey is a companion to the quarterly Buyer Survey and Agent Survey. Click here to view the full report, including charts and graphs. Additional data is also available by contacting press@redfin.com.

About the Q2 2014 Redfin Real-Time Seller Survey

This survey was conducted between April 15 and 18 and survey respondents included 1,128 active home sellers. Respondents spanned 25 metropolitan areas in the U.S., which are: Atlanta, Austin, Baltimore, Boston, Chicago, Charlotte, Dallas, Denver, Houston, Riverside-San Bernardino, Las Vegas, Los Angeles, Miami, Minneapolis-St. Paul, New York area (Bronx, Long Island, Queens and Westchester), Orange County, Philadelphia, Phoenix, Portland, Raleigh-Durham, Sacramento, San Diego, San Francisco, Seattle and Washington, D.C.

$1 million for that?? You don’t get much house in the Bay Area for $1 million, says Trulia

Courtesy of SiliconBeat.com, 4/3/2014

The tech boom has pumped up Bay Area real estate prices so much that $1 million will get you a fixer-upper — if you can find one.

OK, that may be an exaggeration, but not by much. In Palo Alto, $1 million gets you a nice condo. Over-asking price bids on homes priced at more than $1 million are common in other hot spots like Cupertino, Sunnyvale, Mountain View and Menlo Park.

The online real estate site Trulia has analyzed this, coming up with the following: In San Francisco, the Peninsula and the East Bay, 43.5 percent of the homes for listed sale are priced above $1 million. In the South Bay, 23.7 percent are.

In “pricey” U.S. markets like the Bay Area, “you’ll need more than a ‘one’ in front of six zeros to buy a mansion,” Trulia chief economist Jed Kolko reports.

The typical million-dollar home is 1,489 square feet in New York City; 1,774 square feet in San Francisco and the East Bay; and 2,161 square feet in the South Bay.

But in 68 of the 100 largest metro areas, $1 million homes are less than 5 percent of the total market. In Colorado Springs, $1 million gets you 6,023 square feet. In El Paso, it gets you 6,908.

“That means the differences in million-dollar homes across the country are so big, you could actually fit million-dollar properties from New York, San Francisco, Honolulu, and Miami together inside a million-dollar mansion in Birmingham and still have room to spare – that is, if you couldn’t find any better use for 8,000 square feet,” Kolko writes.

Bill Gates: It’s OK If Half Of Silicon Valley Startups Are “Silly”

Successful startups lead to successful buyers and sellers, and so we think this article is spot-on. Bill Gates

Courtesy of www.techcrunch.com, 3/15/2014

Microsoft Founder Bill Gates doesn’t worry that Silicon Valley is the home of billion-dollar texting apps and farming games. “Innovation in California is at its absolute peak right now. Sure, half of the companies are silly, and you know two-thirds of them are going to go bankrupt, but the dozen or so ideas that emerge out of that are going to be really important,” Gates told Rolling Stone, in a wide-ranging interview on government surveillance, financial inequality, immigration reform, and the cultural backlash against Silicon Valley.

Gates’ sentiment is a nice to response to a New York Times spread that lambasted Silicon Valley investors for encouraging their brightest minds to work on solving the problems of yuppie 20-somethings.

“Why do these smart, quantitatively trained engineers, who could help cure cancer or fix healthcare.gov, want to work for a sexting app?”, asked writer Yiren Leu in the aptly titled “Silicon Valley’s Youth Problem”.

It’s important to keep in mind that many of the technology industry’s most impactful companies were originally targeted at the recreational lives of (relatively affluent) users. Facebook was built to help ivy league college students share fun photos. Today, Facebook significantly boosts voter turnout, organ donation, and broadband access in developing nations.

To see the full article go here.

Bay Area Home Sales Drop, Prices Rise

HOUSING 031414Courtesy of www.siliconvalley.com, 3/13/14

Where are all the houses for sale?

That’s the question that homebuyers and their real estate agents are asking, as a report Thursday showed February home sales hit a six-year low around the Bay Area.

While factors ranging from credit to affordability can depress sales, “the main culprit is an inadequate supply of homes for sale,” according to real estate information service DataQuick.

While prices jumped, sales of single-family homes dropped an average of 10.5 percent around the nine-county Bay Area, with dips of 15.3 percent in Contra Costa County and 19.5 percent in Alameda County, DataQuick reported. Santa Clara County held its own with a 1.9 percent gain, while San Mateo County was up 8 percent.

Read the full article here.

Dream Home Inspirations We Love

With Valentine’s Day approaching we thought we’d share the home inspirations (practical and otherwise) that we love. An indoor treehouse, staircase slides, desk sandboxes and more.
Things We Love for Homes

For the complete showcase of 33 Awesome Home Ideas, go here.

Courtesy of ViralNova – www.viralnova.com

S&P/Case-Shiller Home Price Indices Forecast

As we enter 2014 the question everyone is asking is what is the prediction for the new year in real estate. 2013 was a wild ride along the bay area peninsula and while sellers are satisfied many buyers are feeling worn out and frustrated. In my personal opinion the start of 2014 will continue with the same low inventory/high demand that we’ve been seeing but will then taper off in spring as buyers lose steam trying to compete. Summer will bring a new quandary.

That said, I want to post a snippet from the latest Case-Shiller report, out last month:

New York, December 31, 2013 – Data through October 2013, released today by S&P Dow Jones Indices for its S&P/Case-Shiller1 Home Price Indices, the leading measure of U.S. home prices, showed that the 10-City and 20-City Composites posted year-over-year gains of 13.6%. This is their highest gain since February 2006

“Home prices increased again in October,” says David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices. “Both Composites’ annual returns have been in double-digit territory since March 2013 and increasing; now up 13.6% in the year ending in October. However, monthly numbers show we are living on borrowed time and the boom is fading.
“The year-over-year figures increased slightly from last month. Thirteen cities and both Composites posted double-digit annual returns. Cities at the top of the range (Las Vegas, San Diego and San Francisco) saw smaller annual increases. On the other hand, cities that have been relatively underperforming (Cleveland, New York and Washington) saw their annual gains grow.

“The key economic question facing housing is the Fed’s future course to scale back quantitative easing and how this will affect mortgage rates. Other housing data paint a mixed picture suggesting that we may be close to the peak gains in prices. However, other economic data point to somewhat faster growth in the new year. Most forecasts for home prices point to single digit growth in 2014.”

Bay Area Home Sales Slow, Prices Continue to Rise

For Sale Sign

As our end-of-year recap, here is a data-rich and highly informative article about our market.

December 17, 2013

(Courtesy of The Patch and data information was supplied to Patch by DataQuick)

In San Mateo County, sales volume was down 7.8 percent from November 2012 while the median price rose in that time from $618,000 to $700,500, a 13.3 percent increase.

La Jolla, CA.–Bay Area home sales dipped again in November, constrained by supply and market uncertainty amid mixed economic news. Prices continued their year-and-a-half-long upward march. Purchase and mortgage patterns are moving slowly but steadily toward long-term norms, a real estate information service reported.

A total of 6,659 new and resale houses and condos sold in the nine-county Bay Area in November. That was down 12.3 percent from 7,595 in October and down 10.9 percent from 7,474 in November last year, according to San Diego-based DataQuick.

In San Mateo County, sales volume was down 7.8 percent from November 2012 while the median price rose in that time from $618,000 to $700,500, a 13.3 percent increase.

Last month’s sales tally was 15.1 percent below the November average of 7,840 since 1988, when DataQuick’s statistics begin. Bay Area sales haven’t been above average for any particular month in more than seven years. The most active November was in 2004 when 11,906 homes sold, while the least active was in 2007 with 5,127 sales.

The median price paid for a home in the Bay Area last month was $550,000. That was 1.9 percent higher than $539,750 in October, and 25.6 percent above $438,000 in November 2012.

The Bay Area median peaked at $665,000 in June and July 2007, then dropped to a low of $290,000 in March 2009. While much of the median’s ups and downs can be attributed to shifts in the types of homes sold, it appears that most of the current year-over-year increase in the median reflects an actual rise in home values.

“Up until half a year ago, the greater Bay Area market was basically bouncing up off bottom. Beginning last summer, the market started incrementally rebalancing, trending toward normalcy, as it were. Not just sales and prices: There has been a serious drop in distress sales, cash sales, absentee buyer sales. Mortgage financing patterns are still far from normal, but are moving in the right direction,” said John Walsh, DataQuick president.

The number of Bay Area homes that sold for less than $500,000 last month dropped 32.5 percent year-over-year, while the number that sold for more increased 8.2 percent, DataQuick reported.

Last month distressed property sales – the combination of foreclosure resales and “short sales” – made up 12.8 percent of the resale market. That was down from 13.1 percent in October and down from 35.7 percent a year ago.

Bay Area home buyers put $1.8 billion of their own money on the table last month in the form of a down payment or as an outright cash purchase. That number hit an all-time high of $2.6 billion in May this year. Home buyers borrowed $2.7 billion in mortgage money from lenders last month.

Jumbo loans, mortgages above the old conforming limit of $417,000, accounted for 50.1 percent of last month’s purchase lending, up from a revised 47.7 percent in October, and up from 40.3 percent a year ago. Jumbo usage dropped to as low as 17.1 percent in January 2009.

Adjustable-rate mortgages (ARMs), an important indicator of mortgage availability, accounted for 20.1 percent of the Bay Area’s home purchase loans in November. That was down from 20.5 percent in October, and up from 12.0 percent in November last year. Since 2000, ARMs have accounted for 47.4 percent of all purchase loans. ARMs hit a low of 3.0 percent of purchase loans in January 2009.

Buyers who appear to have paid all cash – meaning no sign of a corresponding purchase loan was found in the public record – accounted for 22.0 percent of sales in November. That was down from a revised 23.9 percent in October and down from 28.6 percent a year earlier. The monthly average going back to 1988 is 13.3 percent. Cash buyers paid a median $450,000 in November, up 36.4 percent from a year earlier.

The typical monthly mortgage payment that Bay Area buyers committed themselves to paying last month was $2,167. Adjusted for inflation, last month’s payment was 24.1 percent below the typical payment in spring 1989, the peak of the prior real estate cycle. It was 43.9 percent below the current cycle’s peak in July 2007. It was 71.8 percent above the February 2012 bottom of the current cycle.

Indicators of market distress continue to decline. Foreclosure activity remains well below year-ago and far below peak levels. Financing with multiple mortgages is very low, and down payment sizes are stable, DataQuick reported.

To view the county-by-county chart, please visit DQNews.com.