Statistical Tables | Mortgage Rates Outlook | 10 Essential Questions To Ask When Buying A Home

Real Estate’s New Normal

Once upon a time, in a market far, far away, the National Association of REALTORS® decreed that six months’ of inventory indicated a “balanced” market. This was for the national market. In regional markets, your mileage would vary.

In the Bay Area, our mileage varied significantly. A “balanced” market here was between three and four months’ of inventory.

Those days are long gone. During the Great Recession of 2007 through 2011, inventory levels spiked as sales plummeted and foreclosures jumped.

Beginning in 2012, sales rose to normal levels, but inventory went down the drain.

There are three main reasons for the lack of inventory over the past five years, all of which seem intractable.

First, baby boomers aren’t moving. According to an AARP survey, 87% of baby boomers over the age of 65 want to stay in their homes. The main reason is to be near family and friends. Another reason is to avoid excess capital taxes. Selling a principal residence allows for either a $250K shield if single, or a $500K shield if married. Any gains over those amounts are taxed as capital gains. There are some ways around this, most of which involve setting up trusts. That is something you would need to discuss with your tax attorney and/or accountant.

Second, a significant number of the homes that were foreclosed on were bought by hedge funds and big private-equity groups who bought in bulk from the banks. Then, rather than flipping the homes, they rented them out to the families who had been foreclosed upon.

Frank Nothaft an economist with Corelogic, says in 2006 there were nine million single family houses in in the rental stock.  That number increased by three million in the following seven years, he said.

As a result, there were many fewer homes for sale, which helped drive up prices in markets around the country.

There is, as yet, no sign these investors will be putting those properties back on the market.

The third intractable reason for low inventory is builders aren’t building.

Home builders say it's new regulations that are holding them back from filling the void. CNBC reports that such regulations may cost builders up to a quarter of the price of a new home, and a recent National Association of Home Builders study found regulatory costs have increased 29 percent in the past five years. The builders also say labor shortages are holding them back. Finally, prices for land and materials are rising and there is a lack of finished lots in neighborhoods where people want to live. These price constraints create an incentive for builders to construct fewer, and more expensive homes, because under such high demand, they can fetch higher prices for each home they do sell, CNBC reports.

Starting in 2012, Days of Inventory, or how long it would take to sell all the homes for sale at the current rate of home sales, has averaged thirty-eight days. That is far short of the Bay Area’s “balanced” market of ninety to one hundred and twenty days.

There you have it. The new normal: low inventory resulting in multiple offers and rising prices.

March Sales Statistics

Trends at a Glance
(Single-family Homes)
  Mar 17 Feb 17 Mar 16
Home Sales: 268 168 257
Median Price:  $1,200,000  $1,090,000  $1,100,000
Average Price:  $1,561,738  $1,387,037  $1,440,337
SP/LP: 108.2% 109.8% 109.0%
Days on Market: 31 43 29
(Lofts/Townhomes/TIC)
  Mar 17 Feb 17 Mar 16
Condo Sales: 295 162 291
Median Price:  $1,100,000  $1,129,000  $   998,000
Average Price:  $1,230,744  $1,275,382  $1,160,853
SP/LP: 104.2% 103.1% 104.6%
Days on Market: 30 39 30
Sales momentum…
for homes rose 0.6 of a point to +16.6. Sales momentum for condos/townhomes fell 0.8 of a point to +0.0.

Pricing momentum…
for single-family homes gained 0.2 of a point to -2.8. Pricing momentum for condos/lofts rose 1.7 points to -1.7.

Our momentum statistics are based on 12-month moving averages to eliminate monthly and seasonal variations.

This is an extraordinarily tough market for buyers. It's important to be calm and realistic. If you don't know what to do or where to begin, give me a call and let's discuss your situation and your options.

The graph below shows the median and average prices plus unit sales for homes.

The following chart shows the median price difference compared to the year before.

 

The graph below shows the median and average prices plus unit sales for condos/lofts.

The following chart shows the median price difference compared to the year before.

The real estate market is very hard to generalize. It is a market made up of many micro markets, especially in San Francisco. For complete information on a particular neighborhood or property, or for an evaluation of your home's worth, call me.

If I can help you devise a strategy, call or click the buying or selling link in the menu to the left.

Monthly Statistics

Complete monthly sales statistics for San Francisco are below. Monthly graphs are available for each district in the city by clicking the links to the left.

March Sales Statistics
(Single-family Homes)
  Prices Unit     Yearly Change Monthly Change
  Median Average Sales DOM SP/LP Median Average Sales Median Average Sales
San Francisco  $1,200,000  $1,561,738 268 31 108.2% 9.1% 8.4% 4.3% 10.1% 12.6% 59.5%
D1: Northwest  $1,628,000  $1,823,791 13 49 106.2% -29.7% -20.0% 18.2% -19.6% -0.6% 160.0%
D2: Central West  $1,200,000  $1,281,429 28 32 114.8% 4.3% 6.5% 64.7% 1.2% 0.2% 115.4%
D3: Southwest  $   960,000  $1,096,714 7 18 122.9% -31.4% -12.2% -36.4% 4.3% -3.1% 0.0%
D4: Twin Peaks  $1,551,000  $1,795,110 25 17 114.0% 1.7% 19.6% 92.3% -2.5% 15.5% 108.3%
D5: Central  $2,375,000  $2,757,190 29 20 108.5% 8.0% 10.9% 93.3% -4.0% 2.5% 61.1%
D6: Central North  $4,925,000  $4,511,667 3 24 99.6% n/a n/a n/a 51.5% 70.3% 0.0%
D7: North  $6,777,500  $6,905,000 6 50 106.7% 106.6% 110.5% 500.0% 0.3% 2.2% 200.0%
D8: Northeast  $2,635,000  $3,701,667 3 15 99.3% -34.1% -7.5% 200.0% -56.8% -39.3% 200.0%
D9: Central East  $1,500,000  $1,713,316 19 17 105.8% -2.0% -10.6% 72.7% 16.5% 33.2% 5.6%
D10: Southeast  $   850,000  $   892,203 37 51 110.8% 11.8% 17.1% 68.2% 0.3% 1.2% 42.3%

 

March Sales Statistics
(Condos/TICs/Co-ops/Lofts)
  Prices Unit     Yearly Change Monthly Change
  Median Average Sales DOM SP/LP Median Average Sales Median Average Sales
San Francisco  $1,100,000  $1,230,744 295 30 104.2% 10.2% 6.0% 1.4% -2.6% -3.5% 82.1%
D1: Northwest  $1,180,000  $1,176,667 12 23 109.3% -5.6% 2.6% -29.4% 118.1% 50.5% 300.0%
D2: Central West  $   975,000  $   954,400 5 17 101.7% -7.1% -16.1% -28.6% n/a n/a n/a
D3: Southwest  $1,137,527  $1,000,676 5 47 105.1% 106.8% 71.2% 0.0% 75.0% 17.3% 66.7%
D4: Twin Peaks  $   705,000  $   653,667 3 12 107.1% 8.5% 0.6% 200.0% 9.3% 1.3% 50.0%
D5: Central  $1,265,000  $1,378,259 41 21 110.3% 3.3% 4.2% 115.8% -17.1% -16.2% 95.2%
D6: Central North  $1,130,000  $1,147,181 36 31 105.0% -6.6% -5.5% 38.5% -16.3% -11.0% 140.0%
D7: North  $1,326,000  $1,534,208 24 22 105.8% -31.1% -24.9% 166.7% -18.4% -8.6% -7.7%
D8: Northeast  $1,325,000  $1,591,562 39 33 102.2% 15.5% 20.7% 77.3% 53.2% 4.8% 85.7%
D9: Central East  $1,085,000  $1,230,920 97 39 101.1% 0.5% 9.2% 49.2% 6.0% 7.3% 86.5%
D10: Southeast  $   520,000  $   483,500 3 14 103.2% n/a n/a n/a 0.0% -7.0% 50.0%

Mortgage Rates Outlook

 

Mortgage Rates Lower But Still Rangebound

Mar. 31, 2017 -- Mortgage rates dipped a little further this week, settling close to the bottom of a range that has held throughout 2017, so far. However, we're probably pretty near the bottom of the between-Fed-meetings valley for rates, now that we're two weeks past the last central bank get-together.

The Fed's steady outlook for policy was one reason mortgage rates retreated from a recent peak; disappointment over a Republican failure to even vote on a repeal of the Affordable Care Act was another, as it casts at least some doubts that President Trump's agenda of tax and regulatory reform will come to pass, or at least come to pass anytime soon.

As well, with major stock indexes stocks hitting a record on several occasions in the first quarter, it is likely that at least some investors shifted funds out of equities and in to bonds in order to help lock in gains. Now that we've come to both the end of the month and the end of the quarter, odds favor at least some reallocation the other way in the days ahead.

Mortgage rates remain very favorable as the "spring homebuying season" kicks into full gear as April sets in. However, a full calendar of fresh inbound data along with the turn of the month and quarter probably sees us poised for a couple of basis point increase next week at least as far as the average conforming 30-year FRM as reported by Freddie Mac is concerned.

Meanwhile, we'll be perusing the latest on both manufacturing and non-manufacturing business activity from the ISM, the March employment report, and plenty more. One potential market-mover is the minutes from the March Fed meeting; certainly, we already know what they did (lift rates) but perhaps we're learn a little more about why (opportunism, perhaps?) Should make for some good reading.

 

10 Essential Questions To Ask When Buying A Home (That You May Have Missed)

 

By: Lisa Johnson Mandell

You’ve finally found it: a home you’re swooning over and dying to own. From the exposed ceiling beams to the hardwood floors, this feels like the place. So what’s next? Don’t just stand there dumbstruck; it’s time to dig deeper and ask questions—and not just the kind that randomly pop into your head, either. You need to hit all of the necessary topics head-on, and some of them are not so obvious.

But you’re in luck: We’ve pulled together a checklist of some of the most important initial questions to ask when buying a home:

What is the home’s sales history?

When was the last time the house sold, and how much did the current owners pay for it? This is essential intel, and you don’t even have to ask the seller or your real estate agent about it, because it’s posted on every MLS listing. All you have to do is scroll down to find it. But make sure you know it.

When buying a home, the previous sale price will give you a sense of what the sellers might expect you to pay—but keep in mind that a home’s true market value is based more on what comparable homes are selling for now rather than what it went for in the past, says Los Angeles Realtor® Jennifer Niman of Berkshire Hathaway HomeServices. Sales history will also show you whether the home’s price has been trending up or down over time, which can help you hone your negotiating stance.

Did the sellers make any major renovations or additions?

If they’ve overhauled the kitchen, added a bedroom, or finished the basement, you’ll want to know that—and, ideally, see receipts from contractors to get a sense of what they paid for these upgrades.

In general, this will give you a ballpark notion of how much money they’ve sunk into the home—and what they hope to get out. That said, don’t assume you have to fork over as much cash as they put in; home improvements generally reap only a 64% return on average. And that return on investment varies widely based on which renovation is done.

How much are the property taxes?

Property tax history is also typically available right on the listing detail page. If you can’t find it, ask the seller. You’ll want to find out what previous owners paid, but understand that the property tax, since it’s based on a percentage of the value of the house, will probably be affected by your purchase price. This could be a huge additional expense, and you’ll need to budget for that when putting together your offer.

What are the monthly maintenance and utility costs?

Is there any type of homeowners association fee? Find out. Also learn what kind of power the house uses, be it gas, oil, electric, or a combination, and ask what the average monthly bill for each is. Also inquire about water, waste removal, and any other utility costs that are applicable.

Has there ever been a broken pipe? Sewer backup?

This may sound trivial (not to mention unpleasant), but according to the Insurance Information Institute, broken pipes account for an estimated 22% of all home insurance losses. If the homeowner doesn’t ‘fess up, a good home inspector can probably find evidence of either one of these situations, so you might want to put these on your list of questions to ask your inspector, too.

How old is the roof?

The 2015 Remodeling Impact Report from the NATIONAL ASSOCIATION OF REALTORS® says the national median cost of an asphalt roofing replacement is about $7,600. It would be good to know how soon you might need to lay out that substantial amount of cash.

Have there ever been any pest infestations?

If there was an infestation, when were pest control procedures undertaken? No, this won’t necessarily mean the house is pest-free at the time you’re buying it, but it’s a good starting point to know the history. Many buyers require that termite treatment be included in the price; it’s easiest to tent for pest removal when the house is empty, between owners.

Are there warranties on the appliances, HVAC system, garage door, etc.?

And if so, can the homeowner provide the documentation? Ask for it. This can establish how old these features are, and give you an idea of when they might need to be replaced and how expensive it could be. It will also help you decide whether or not to buy a home warranty. 

What are the parking restrictions around the house?

Will guests need parking permits? How many permits are you, as the homeowner, allowed, and can you obtain more if you decide to throw a party? Also, check out the parking situation on the property itself. Will your car(s) fit in the garage? Is there room to park anywhere else on the property other than the driveway?

Does the house have any kind of unusual history?

In many states, owners are legally bound to disclose if a death or major crime has occurred recently on the premises, but there are other circumstances you should be aware of as well. For example: Did anyone famous ever live there? Was it ever used in a film, TV series, or commercial? If so, you might have to deal with fans ringing your doorbell or driving by at all hours of the day or night.

Oh, and if the house has a history of being haunted or paranormally “stigmatized,” you might have a little extra negotiating power when buying a home. Thanks, ghosts.

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