California Association of Realtor Forecast for 2009: Home Sales Up, Home Prices Down

News From California Association of Realtors (CAR):

Home prices throughout most areas of California will post declines next year, while sales of existing homes will continue to rise in 2009, according to C.A.R.’s “2009 California Housing Market Forecast,” released  during CALIFORNIA REALTOR® EXPO 2008 at the Long Beach Convention Center in Long Beach this past week.

“The current uncertainty about the financial system and economy is likely to persist over the next several weeks, and could extend into next year,” said C.A.R. President William E. Brown. “Our forecast assumes that the financial system will begin to show signs of stabilization late in 2008 and into early 2009.”

The median home price in California will decline 6 percent to $358,000 in 2009 compared with a projected median of $381,000 this year, according to the forecast. Sales for 2009 are projected to increase 12.5 percent to 445,000 units, compared with 395,600 units (projected) in 2008.

“Sales in 2008 will be ahead of last year by 12 percent, with a further increase of 12.5 percent expected in 2009,” said C.A.R. Chief Economist Leslie Appleton-Young. “However, the next couple of quarters in late 2008 and early 2009 will be marked by seasonal decreases in activity, with a pickup expected by the second quarter of next year.”

Report highlights:

• Sales of existing single-family homes are expected to increase in 2009 by 12.5 percent, to 445,000 units. In August, sales were 85 percent above the monthly low for the current cycle and for the first time this year were ahead of 2007 in year-to-date terms. 

                                                                           

• Although the median home price is expected to decline by 6 percent in 2009, to $358,000, the lower home price likely will increase the state’s affordability rate, currently at 48 percent, enabling more first-time home buyers to enter the market. C.A.R. anticipates home prices will stabilize once inventory thins out. In August, the Unsold Inventory Index stood at 6.7 months, down from 16.9 months in January 2008, meaning that it would take approximately 6.7 months to deplete the market at the current sales rate.
• The ability of consumers to obtain financing continues to play a vital role in stabilizing home prices. Currently, buyers with at least 10 percent available for a down payment, proof of income and excellent credit scores may qualify for conforming loans – mortgage loans that are $729,750 or less.

Campbell’s Oktoberfest A Rare Treat for All Ages

By Alicia Lanier, REALTOR

Save time in your weekend for spending a few hours at the annual Oktoberfest celebration in Historic Downtown Campbell. On both Saturday and Sunday, October 18-19, Campbell’s lively historic area will be closed to all except pedestrian traffic and authentic German music, good and fun will take over. Festivalgoers can also sample the official Oktoberfest beer, browse over 100 arts and crafts vendors and the kids will enjoy a big play area. There will be live entertainment on three separate stages.

Do You See The Silver Lining in These Clouds?

By Alicia Lanier, REALTOR

As mentioned here before, in anyone’s book, this has been a very challenging year. But there are some silver linings peeking out behind the clouds.

Joe Brown, president of our Coldwell Banker Silicon Valley, is one of the most upbeat guys I know. Possibly because he’s been in residential real estate for several decades, certainly long enough to know that bad housing markets are always a prelude to another good market.

Like many of us, Joe has been keeping one eye on CNN and CNBC these past weeks to keep tabs on the minute-by-minute change in the economic crisis and the free fall in the stock markets. He has this to say:

“During times of economic crisis, consumers tend to invest their money in tangible assets, like real estate. We expect that this may be the case in the months ahead as consumers look to buy homes for all of the lifestyle reasons that prompt people to buy (i.e. marriage, births, divorce, deaths, retirement, etc.) but also with a consideration of the historic long-term appreciation that makes homeownership a valuable investment over time.

Earlier this week, Bloomberg.com reported, ‘Rates are low enough that some consumers stung by losses in their portfolios may want to pull the trigger on a purchase or refinance if they can lower their payments.’

Indicative of this fact, the article went on to report, ‘A nationwide survey of consumer credit rates showed 30-year fixed rate mortgages averaged 5.8 percent yesterday, according to Bankrate.com. Rates were 6.26 percent on August 29 and also July 31, in the same survey. Home-loan applications rose 2.2 percent last week, according to the Mortgage Bankers Association and purchases were at a six-year low the previous week.’

We certainly are in a time of uncertainty. But while so many of us sit glued to CNN and our investment portfolios, the housing market labors on. Because the beautiful thing about real estate is that it’s not just an investment—though it may be one of the most important investments a consumer will make in his/her lifetime. Your home is where you raise your family and plant your roots. It’s where you hang your hat and make memories to last a lifetime. “

My memo to all: Housing kept our U.S. economy robust after the tragedy of 9/11 sent shockwaves through the financial markets … it can lead the way again. In fact, I would bet on it … I’m already getting calls from clients who have kept their extra cash in conservative investments, have strong credit scores, and know Silicon Valley real estate is historically a great long-term investment.

Alicia Lanier is a REALTOR, e-PRO, and member of the Coldwell Banker Sterling Society which places her among the top 11% of agents internationally   Contact her at Alicia.Lanier@cbnorcal.com or 408-491-1634

‘Staying Positive in a Negative Economy’

By Alicia Lanier, REALTOR

I arrived in the Silicon Valley in early 2000, just at the peak of the dot-com economy, and signed on with a dot-com that had a vision that matched mine and colleagues who were an inspiration and joy to work alongside. Within the next year, I had even found a home to buy and moved in. (Can we say ’sticker shock’ for this Native Texan?!) Then, just weeks later, our 100-employee Santa Clara company had folded because of lost funding. Needless to say, it was not the dream I had envisioned for The New Millenium. 

There was, however, a positive from this forced sabbatical from work. My first grandchild – whose birth in 2000 was the primary reason I had pulled up my Texas roots and moved west – was a delight to watch growing from infant to toddler – and I now had the time to indulge in this joyful period.  As my job-loss anxiety subsided, it became clear that this was the time to pursue the real estate career I had considered for several years. My sister-in-law is fond of talking about “turning a lemon into lemonade” and I made a concerted effort to do so. The licensing process took awhile. But I was able to find employment while I studied and tested and was finger-printed and, once I became a Realtor and helped my first clients, I haven’t looked back. 

I bring this up because many of us right now feel anxious (even extreme stress if we pay too much attention to the daily news reports!) right now about our struggling economy and how it will impact our financial lives. I can only think: Obviously, we all need to seriously consider squeezing some tasty lemonade out of the lemons!

As I was surfing the web today, I stumbled across Jon Gordon’s Blog and his excellent blogpost on Staying Positive in a Negative Economy. If you are feeling stressed or despairing, I suggest you give it a read … there are some excellent tips on staying positive in this negative economy we are experiencing.

Keep your chin up! We will survive – and even thrive.

Alicia Lanier is a REALTOR, e-PRO, and member of the Coldwell Banker Sterling Society which places her among the top 11% of agents internationally   Contact her at Alicia.Lanier@cbnorcal.com or 408-491-1634

September Highs-Lows for Silicon Valley Homes

By Alicia Lanier, REALTOR

Have you been wondering just how much home prices have dropped recently in the Silicon Valley? Here’s one example: A single-family home on Luther Ave. sold in September for only $190,000 … however, although the home had two bedrooms, this bank-owned fixer did not qualify for residential financing. The value was definitely in the Central San Jose land.

Actually four single-family properties have sold for under $200,000 in the past year, with one of them in the Los Gatos Mountains on Laurel Drive selling for a mere $126,000. This one-bedroom home with 626 sq. ft. was also termed a fixer upper. 

How many homebuyers were rewarded with bargain prices this past year? According to the Multiple Listing Service (MLS), there were 131 single-family residences – many of them bank-owned – that sold for under $300,000 and were located in San Jose, Gilroy, Morgan Hill, or the Los Gatos Mountains. 

At the other other end of the Silicon Valley price spectrum, 14 homes sold over $5 million in the past year, the highest at $11 million was a Los Altos Hills mansion on Magdalena Road. Most recently, a new 4,956 sq. ft. Spanish Revival mansion sold in Old Palo Alto in September for a mere $5.2 million. And the new owners may consider this a bargain since this estate originally was listed at $7.3 million.

Ahhh … there’s plenty of drama in the Silicon Valley housing market these days!

Alicia Lanier is a REALTOR, e-PRO, and member of the Coldwell Banker Sterling Society which places her among the top 11% of agents internationally   Contact her at Alicia.Lanier@cbnorcal.com or 408-491-1634