Historic Housing Law Should Help Lagging Home Sales in Silicon Valley, California

By Alicia Lanier, REALTOR

Several provisions in the historic U.S. housing bill, which was signed into law today by the President, will help Silicon Valley homeowners in distress and should also help flagging home sales.

The following California members of Congress supported the bill … be sure to thank your Senators and Congressmember:

Senator Barbara Boxer, Senator Diane Feinstein, and Representatives Joe Baca, Xavier Becerra, Howard Berman, Mary Bono Mack, Ken Calvert, John Campbell, Lois Capps, Dennis Cardoza, Jim Costa, Susan Davis, David Dreier, Anna Esho, Sam Farr, Bob Filner, Elton Gallegly, Jane Harman, Mike Honda, Duncan Hunter, Barbara Lee, Jerry Lewis, Zoe Lofgren, Dan Lungren, Doris Matsui, Howard “Buck” McKeon, Jerry McNerney, Gary Miller, George Miller, Grace Napolitano, Nancy Pelosi, Laura Richardson, Lucille Roybal-Allard, Linda Sanchez, Loretta Sanchez, Adam Schiff, Brad Sherman, Hilda Solis, Jackie Speier, Pete Stark, Ellen Tausher, Mike Thompson, Maxine Waters, Diane Watson, Henry Waxman and Lynn Woolsey.

The California Association of Realtors (CAR) and its thousands of members lobbied on behalf of the bill. In a statement released today, CAR’s President William E. Brown said:

“The legislation will assist an estimated 400,000 homeowners facing foreclosure, many of whom reside in California by current mortgages with a Federal Housing Administration (FHA)-backed loan.The bill also will permanently increase FHA, Fannie Mae, and Freddie Mac loan limits in high-cost areas. The bill permanently increases the conforming loan limit to $625,500. In February, the Economic Stimulus Act of 2008 was signed, temporarily raising the conforming loan limit in high-cost areas to $729,750 from $417,000 until December 31, 2008.

“Although we would have liked Congress to make permanent the current $729,750 loan limit C.A.R. is pleased with the new permanent loan limit of $625,500. It will allow California homeowners to refinance their loans into safe affordable loan products and allow first-time home buyers to enter the market

“The new loan limits for Fannie Mae and Freddie Mac are the greater of either $417,000 or 115 percent of an area’s median home price, up to $625,500. The new FHA loan limit will be the greater of $271,050 or 115 percent of an area’s median home price, up to $625,500. Both new loan limits will be effective at the expiration of the economic stimulus limits on December 31, 2008. 

“C.A.R. also supports the following bill provisions:

• A temporary increase in mortgage revenue bonds to refinance subprime mortgages
  New regulator for Government Sponsored Enterprises to restore investor confidence in loans and help the market and economy stabilize.
• First-time home buyer tax credit, which allows first-time home buyers to receive a tax refund worth up to 10 percent of a home’s purchase price, up to a maximum of $7,500. The refund serves as an interest-free loan and the homeowner is required to repay it in equal installments over 15 years.
  Temporary raise in the loan limit for the Veterans Affairs home loan guarantee program to the same level as the economic stimulus limits until the end of 2008.
  Adjustment to the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA), allowing sellers to provide the non-foreign affidavit to a qualified closing entity and not just the buyer.
  The setting of minimum requirements for mortgage originators, which mandates fingerprinting of loan originators and establishes a nationwide loan originator licensing and registration system. The requirements do not apply to those only performing real estate brokerage activities unless they are compensated by a lender, mortgage broker, or other loan originator. States will have the ability to implement more stringent laws.
  The creation of a National Affordable Housing Trust Fund to help cover the cost of the FHA rescue plan for the first five years and develop affordable housing in subsequent years. 

“Other provisions in the legislation:

• The Treasury Department’s proposal to create a federal backstop program to insure the financial well-being of Fannie Mae and Freddie Mac.
• The FHA’s inability to insure loans that utilize a seller-funded down-payment assistance program.  Down-payment assistance from family, employers and other nonprofits is still allowed.
• The Community Development Block Grant Programs’ $4 billion allotment for communities to purchase and refurbish foreclosed homes.    ”                                

Alicia Lanier is a REALTOR, e-PRO, and member of the Coldwell Banker Sterling Society, the top 11% of agents internationally    www.AliciaLanier.com  408-491-1634

Must Sell in Silicon Valley? Here’s How

By Alicia Lanier, REALTOR

Two or three years ago most of us would have been hardpressed to believe there would ever again be home sellers in the Silicon Valley feeling desperate about finding a buyer for their home. And, candidly, even today there are cities and neighborhoods (yes, most of them with high-performing schools) where sellers still have the advantage. But in most Silicon Valley communities, we have entered a buyers market with plenty of inventory and prices that have stopped skyrocketing, even dropping substantially in some areas.

Which brings me to this point: Some sellers still haven’t caught up to the realities of 2008 when it comes to pricing and selling their homes. The Wall Street Journal’s David Crook has tackled this subject brilliantly in his recent article, “How to Sell a House, When You Have To Sell It Now.” And, he points out wryly: “It could be worse … You could be selling a Hummer.”

The entire article is worth a read if you already have a home on the market or want to sell now or in the near future. But I’d like to highlight a couple of points and make them relevant to our Silicon Valley conditions:

First, says Crook, “Don’t wait around.” Or, to use a well-known iconic phase, Just do it! The truth is there are countless sellers who have discovered that buyers are taking far longer than in the past to make up their minds and plunk down a purchase offer. In June, the average continuous days that a home stayed for sell in Santa Clara County was 73 days. Ranges were as extreme as 20 days in Los Altos and 381 in the Los Gatos Mountains. San Jose homes took an average of 87 days to sell.  And I agree with Crook’s assessment that this is not a “momentary lull” before a market uptick. Most observers believe that “what you see is what you get” (or worse) for the foreseeable future.

Second, price your home for the bargain-hunting mentality of today’s buyers. This is not the time to “test” a higher price in the belief that a buyer will make a realistic, if lower, offer. “Cheap” is the word heard most frequently when buyers are talking price. And selling prices are down by about 10% in Santa Clara County – and could go lower because of heavy inventory of bank-owned and short sale properties – so be prepared to adjust the price of your home appropriately if you want to sell in today’s environment. 

Thirdly, don’t dismiss an offer that is appropriate, even if under the list price. In fact, it’s the rare home today that sells for an initial asking price … most are reduced several times before even receiving a first offer. Market value today is largely set by the buyers and, in my experience, the first offer frequently reflects a price range that probably would be offered in any follow-up offers.

And, finally, remember the tried and true:

• Hire an aggressive real estate professional to market and sell your home (this is no time to go it alone!).
• De-clutter and freshen up your property to showcase it to buyers (you probably won’t recoup the expense if you decide on an expensive remodel).
• If absolutely necessary, play the banker by offering seller financing; in a worst case scenario, the buyer defaults and you can sell it again. 
• Help promote your home to your own network. Ask your REALTOR for the property’s e-flyer, print flyer, and link to the listing online (complete with photos and virtual tour) and then make sure your friends, family and business colleagues are aware that your home is move-in ready!

Happy selling!

Alicia Lanier is a REALTOR, e-PRO, and member of the Coldwell Banker Sterling Society, the top 11% of agents internationally    www.AliciaLanier.com  408-491-1634

Californians Tracking Housing Bill Progress

By Alicia Lanier, REALTOR

BREAKING NEWS Sat/July 26, 2008: Associated Press reports Congress passed the most significant housing legislation in decades Saturday, offering help to struggling homeowners and seeking to stabilize a troubled housing market that has dragged down the economy. The President will sign it quickly, the White House said. See details about the new law in this blogpost. ~ AKL

DataQuick reports that about 41% of all California home sales in June were foreclosed properties – way up from 6.6% the same month last year. In the second quarter, seven in 10 existing-home sales in San Joaquin and Merced counties were of properties that had gone through foreclosure and in Sacramento County, six in 10 sales involved foreclosures.

So the federal housing bill making its way through Congress can be turned into law none too soon. But, an article by Dale Kasler in the Sacramento Bee, also points out that the bill unfortunately will eliminate down-payment assistance programs that many Californians struggling with home affordability have found helpful in recent years. The bill would close down Sacramento’s Nehemiah Corp. of America on October 1, which some say would cause further distress for California homebuyers qualified for FHA loans. The Nehemiah program pioneered down-payment assistance programs about 20 years ago and has remained among the most flexible. FHA asserts that too many Nehemiah recipients have defaulted on loans.

On the other hand, the bill has much to offer.

There’s a refinancing program that would help an estimated 400,000 Americans who qualify keep their homes by refinancing with FHA-backed loans.

It would make permanent the “jumbo loan” increase from $419,000 to $625,500 which would help with interest rates for Californians. (This was earlier increased to $729,750 temporarily through the end of 2008.)

There is also $3.9 billion in cash for cities to buy vacant, foreclosed properties, which prompted a veto threat by the President. However, he dropped the veto threat because he favored so much of the bill – including provisions that will enable the U.S. Treasury to lend money to troubled Fannie Mae and Freddie Mac if needed.

Finally, there are federal tax credits for first-time homebuyers who purchase before July, 2009.

The bill is expected to pass the U.S. Senate tomorrow and then be signed into law by the President.

Alicia Lanier is a REALTOR, e-PRO, and member of the Coldwell Banker Sterling Society, the top 11% of agents internationally    www.AliciaLanier.com  408-491-1634

Highs and Lows in Silicon Valley Housing

By Alicia Lanier, REALTOR

Fred Hibbert, managing broker of the Coldwell Banker office on First Street in Los Altos, included this bit of trivia in his weekly sales report:

The five highest priced listings in Santa Clara County are #1 Los Altos Hills at $38,000,000, #2 Palo Alto at $29,850,000, #3 Los Altos at $19,900,000, #4 and #5 Los Gatos at $18,000,000 and $15,950,000.  And at the other end of the price range there are currently five single family homes listed under $200,000!

Fred doesn’t mention location for the properties under $200,000 so I did some quick research and found these results:

#1 South San Jose at $180,000; #2 Central San Jose at $195,000; #3 San Jose Alum Rock at $199,000; #4 Morgan Hill at $199,000; and #5 Gilroy at $199,000. Square footage ranges from 400 sf to 958 sf.

Alicia Lanier is a REALTOR, e-PRO, and member of the Coldwell Banker Sterling Society, the top 11% of agents internationally    www.AliciaLanier.com  408-491-1634

Housing Rebound in Silicon Valley? How to spot it

By Alicia Lanier, REALTOR

Calling the American housing slowdown the worst in half a century, Money Magazine’s Amanda Gengler reminds that all real estate is local and all recoveries are not created equal.

Gengler’s article focuses on several key questions to ask when trying to spot a housing rebound, and I’ve applied these real estate indicators to our Silicon Valley market to provide some clues about how to spot our market rebound.

Is the housing inventory shrinking? Gengler says a stable market typically has about 6 months worth of homes for sale. In Santa Clara County, at the end of June, 2008, there was about 6.5 months worth of inventory (meaning it would take about that long to sell all the homes for sale throughout the county). There were, of course, variations by city. For example, San Jose had 8.3 months worth of inventory while Cupertino had just a bit over 2 months worth of inventory. Guess which one is experiencing falling prices and which one still is experiencing multiple bidding? Yup … San Jose, falling; Cupertino, rising.

Are home prices falling at a slower rate? Frankly, when we can answer this question, then you’ve already bypassed your best buying opportunity. It’s that old “objects in the rearview mirror are closer than you think” situation. So, buy judiciously when you find a property you can afford and plan to live in for awhile … this is a market to buy and hold, not one in which to buy and plan to sell quickly.

Is it cheaper to rent than own? Gengler provides this handy checker: Divide the purchase price of a home you want (can afford?) by the amount it would cost to rent the same property. The result is called the Price-to-Rent Ratio and experts believe that buying starts to look attractive around 15 … which is all well and good if you live anywhere but the Silicon Valley or another pricey territory. I can tell you that neither San Jose or San Francisco have seen that magic 15 in recent memory!

So it’s best to compare today’s Price-to-Rent Ratio with earlier periods. San Jose, for example, had a 38.5 ratio in the first quarter, 2008, compared to a peak of 42.9 in the boom years; the ratio was “only” 25 in 2000 and 28.2 for a 15-year average. As the Price-to-Rent ratio dips, we can expect more buyers to enter the market and stabalize prices. Right now the ratio is still fairly high, which, of course, it has been for awhile.

What About Affordability and Foreclosures? Here’s the kicker: Unless a significant percentage of households can afford to buy homes, prices won’t rise. And housing affordability is getting better for Californians.

The California Association of Realtors (CAR) has this interesting “fast fact”: For the first quarter, 2008, the first time California home buyer housing affordability index stood at 44 percent, meaning 44 percent of buyers could afford a home (compared to 69% nationwide). Driven by the combination of rapidly dropping prices and low mortgage rates, the California affordability index rose by 18 points from 26 a year earlier, and increased 11 points compared to the fourth quarter 2007 figure of 33 percent. The last time Californians had an affordability index of 44 percent was in the third quarter of 2003.

CAR analysts said the affordability index does not account for changes in underwriting standards or the current liquidity crunch, both of which have muted effective increases in affordability resulting from price declines. On the other hand, they said, higher loan limits for Fannie Mae and Freddie Mac should be a positive influence on the market in the months to come.

Foreclosures in Santa Clara County rose 190.5% in the first quarter of 2008 compared to the same period last year.  But the actual numbers were far less (3,074 in 2008 compared to 1,058 in 2007) than other California counties. Contra Costa County, for example, had 4,718 foreclosures in early 2008; Alameda County, 3,194; and Sacramento County, 6,898. And Southern California counties were hit harder still.

And, finally, how about the jobs picture? According to California’s Employment Development Department, unemployment in Santa Clara and San Benito counties increased in June to a combined 6.1 percent, up from 5.6 percent in May. The counties also added a combined 3,000 jobs in June, but because a growing number of people were looking for employment, the month’s jobless rate still rose. June’s job gains were half the average job growth Silicon Valley has seen for the past 18 years, and layoffs at some of the region’s largest companies combined with lost jobs in the construction and financial industries were mostly to blame for sending unemployment higher.

My Opinion:  We’re still in transition here and the real estate story remains local - right down to the neighborhood level. But there are no “red flags” flying to warn buyers they should stay on the sidelines and, with the abundance of inventory and lower prices in the Silicon Valley, there’s plenty of opportunity.  Remember, you want to look ahead - do NOT wait for the rear view mirror to clue you in.

Alicia Lanier is a REALTOR, e-PRO, and member of the Coldwell Banker Sterling Society, the top 11% of agents internationally    www.AliciaLanier.com  408-491-1634

Affordable Housing in ‘Capital of Silicon Valley’

By Alicia Lanier, REALTOR

Several cities in our pricey Silicon Valley have offered for many years various “affordable housing” programs to homebuyers, usually geared toward helping their city employees remain in the communities they serve. Now comes San Jose, which recently held a highly promoted Homebuyer Fair with info workshops on buying as well as developers offering newer homes at deeply discounted prices starting in the low $300,000s for qualifying buyers.

And, on August 15, the Capital of Silicon Valley will begin accepting loan packages for its new Silent Loan Assistance program which will offer to qualified applicants a deferred 30-year loan of up to $25,000 at 3% simple interest. The loans can be used for resale properties or new construction. San Jose also has programs for potential homebuyers who are teachers at the K-12 level; for full-time San Jose State University teachers and staff; and an equity share program for buyers in specific developments for low- to moderate-income first-time homebuyers.

Big lenders also are getting on the bandwagon with their own affordability programs. I received a call last week from a  loan officer from one of the biggest lenders telling me that a Willow Glen property that I have listed qualifies for his bank’s program for “moderately priced” properties (this property is being offered at $650,000). In other words, qualified buyers would have the opportunity for a limited time to have a 1 point (or $100 per $100,000 borrowed) credited to closing costs or used to buy down a loan rate.

It’s a changing world in our Silicon Valley housing market for home buyers. We have more homes for sale for the first time in recent years with about 20% of them priced under $450,000. Scores of these properties for sale are bank-owned or “short sale” home with varying rules and regs for purchase. And we have a lending climate that offers both pitfalls and promise for prospective buyers. 

TIP: If you want to see any of the newer “affordable housing” homes with deeply discounted prices - or want help in successfully negotiating this tricky housing market and locating the right property – contact me today: 408-491-1634.

Alicia Lanier is a REALTOR, e-PRO, and member of the Coldwell Banker Sterling Society, the top 11% of agents internationally    www.AliciaLanier.com  408-491-1634

New Home Foreclosure Law Protects California Homeowners

By Alicia Lanier, REALTOR

A bi-partisan bill authored by Senate President Pro Tem Don Perata (D-Oakland) was signed into law this week by the Governor, giving homeowners some advance warning of a pending foreclosure action.

The new law requires a mortgage holder to provide a 30-day notice to a borrower prior to filing any default notice leading to the foreclosure. The bill would also provide tenants of foreclosed properties a minimum of 60 days notice to move and require holders of foreclosed properties to maintain the property.

“We need many tools to help Californians through this housing crisis, and this bipartisan legislation provides one more tool by giving borrowers the critical time needed before a foreclosure begins to work with their lenders and stay in their homes,” said Governor Schwarzenegger, in a press release about the legislation and other state efforts to assist homeowners. “We all benefit when families are able to remain in their homes, so I continue to encourage both borrowers and lenders to communicate and work together because it allows Californians to hold on to the American Dream of owning a home.”

Alicia Lanier is a REALTOR, e-PRO, and member of the Coldwell Banker Sterling Society, the top 11% of agents internationally    www.AliciaLanier.com  408-491-1634

Silicon Valley Home Prices … Up or Down?

By Alicia Lanier, REALTOR

In the last year, the risk of declining home prices has kept many home buyers edgy here in the Silicon Valley. And, according to an analysis by PMI Mortgage Insurance Co., the chances are still about 50-50 that prices will decline further over the next two years in the San Jose-Sunnyvale-Santa Clara metropolitan area.

On the other hand, PMI rates the Riverside-San Bernardino-Ontario, Calif., MSA as having the greatest chance of lower prices in two years — 95.5 percent, up from 94 percent during the fourth quarter of 2007. Oakland and Los Angeles are other California metro areas that showed sharp increases in the risk of price declines.

The PMI U.S. Market Risk Index is based on home-price data, labor market statistics, housing affordability, household income, past trends in price appreciation, and mortgage rates. The index generates a score estimating the chance that home prices will be lower in two years.

Alicia Lanier is a REALTOR, e-PRO, and member of the Coldwell Banker Sterling Society, the top 11% of agents internationally    www.AliciaLanier.com  408-491-1634

June Home Sales in Silicon Valley Inch Upward

By Alicia Lanier, REALTOR

Continuing a trend started in January, single-family home sales continued to inch upward in June throughout Santa Clara County from the previous month. But the bigger news was increased sales numbers in several cities in June when compared to June of 2007.

Recording both increased unit sales and dollar volumes in June, 2008, compared to June, 2007, were the following cities: Cupertino, Gilroy, Monte Sereno, Morgan Hill, Mountain View and Santa Clara. However, the median selling price of single-family homes dropped in all except Santa Clara where the median sales price rose to $780,000 this June from $750,000 last June.

Countywide, the steepest declines in median prices were Gilroy, which declined to $510,000 from $745,000 the previous June, and Milpitas which dropped to $528,888 from $730,000.

Inventory of homes for sale climbed to 6,089 units in June, about 26% higher than the same month last year. Nearly all cities showed significant increases in numbers of homes for sale. Higher inventory combined with the declining median selling prices in all but four Silicon Valley cities - and some easing of mortgage money – has combined to make 2008 an attractive market for home buyers and investors.

Alicia Lanier is a REALTOR, e-PRO, and member of the Coldwell Banker Sterling Society, the top 11% of agents internationally    www.AliciaLanier.com  408-491-1634

Established Down Payment “Gift” Program Helps Silicon Valley Home Buyers Afford A Home

By Alicia Lanier, REALTOR

A few years ago, many home buyers in the Silicon Valley found there was a constant flow of 100% financing for the property they wanted to purchase. As we all know, the mortgage meltdown turned off the spigot early last year.

What conventional lenders and many mortgage brokers won’t tell you is that qualified Californians now can find affordable financing that is insured by the FHA and usually requires only 3 percent down payment. Even better, my friends Vance Riddle and Roseanna Archie, senior loan officers with Princeton Capital, also are spreading the word that home buyers seeking an FHA-backed loan may also qualify for a little-known, but well-established, “gift” program

Vance popped by our office today to inform us agents about the program and suggested that we might want to pass details along to both our buyer clients and our seller clients as well.

Interestingly, you need to know that this program has been in existence for 10 years and virtually created the down payment assistance industry which is now used by about one-third of FHA buyers. Since its inception, over 250,000 individuals have been helped to become homeowners with over $1 billion in “gifts”.  The program itself is a true gift to the buyer, requiring no re-payment and providing up to 6% of the purchase price which can be used for downpayment and closing costs. Best of all, there are no geographic, asset or income restrictions for using the gift program and the buyer-occupant may qualify with a non-occupant borrower. However, the property seller must agree to participate and abide by the program requirements but there are advantages to the seller as well in this slower housing market.

What about the property to be purchased? It must be owner occupied and meet minimum FHA standards but it can be a single-family residence, a condo or townhome, or even a duplex, triplex or fourplex.

As for sellers, we agents have an additional marketing tool for them that can dramatically help increase the buyer pool and help sell the property in a timely fashion at a higher market value. In fact, ask for an estimated seller’s net sheet that compares a selling price with/without using the gift program.

TIP: Whether you are a buyer or seller, contact me today to arrange a quick meeting with a Princeton Capital loan officer and me so we can outline the benefits of this program and discuss your wants and needs.

Alicia Lanier is a REALTOR, e-PRO, and member of the Coldwell Banker Sterling Society, the top 11% of agents internationally    www.AliciaLanier.com  408-491-1634