Will the Incentive Money Last?

After only four days, the Cash for Clunkers Program, designed by the government to stimulate auto sales, has run out of money and is on hold. The California first time home buyers credit of $10,000 is also shut down for lack of funds, and with the new state budget in place, I'm sure that it won't be revived.
This leaves only the federal program that rewards first time home purchasers with an $8000 credit. I wonder how long this incentive for buyers will last, now that statistics are starting to show a resurgence of home sales? With more foreclosures on the horizon, the housing market still needs all the help it can get.

Most of the Indicators Look Good

We are starting to see more signs of a market turnaround from a variety of sources.
Home sales increased 20.1 percent in June in California compared with the same period a year ago, according to a C.A.R. report released Monday.
...and the U.S. housing market continues to show signs of stabilization with a drop in the number of Multiple Listing Service-listed homes for the twelfth consecutive month. The number of single family homes and condos listed for sale according to MLS data decreased in June 2009 from May by 2.1%, bringing the total number of active listings in 28 major U.S. markets to 696,858.
Also, the rate of home price declines improved for fourth consecutive month although still in negative territory. According to a report released yesterday by Standard & Poors, the 10-City and 20-City Composites declined 16.8 percent and 17.1 percent, respectively, in May compared with the same month last year, down from 18 percent and 18.1 percent, respectively, in April. After 16 consecutive months of record annual declines, beginning in October 2007 and ending in January 2009, the indices have now shown four consecutive months of improvement in annual returns, according to the report.
Good news all around for our market.

There's Always Someone Worse Off

A year or so ago, I was calling our Sunnyvale/Cupertino area "the Oasis," because it seemed immune to the drop in real estate prices. It's true that our paper losses have only amounted to around 15% from the peak, while other area prices have come down 30-40%, but even our market has suffered.
A friend sent me an article from Forbes today which showed that even 'underwater' homeowners can take heart in knowing that other neighborhoods in the same city are worse off.
In the mansion-filled Bel Air neighborhood of Los Angeles, where sales prices have declined 31% at the median to $1.5 million, home owners can be happy that they don't live in Glassell Park in East L.A. In that part of town, buyers counting on neighborhood improvement when they bought in the fringe area have seen median sale prices plummet 50% to $225,000 in the last year.
In San Diego. Sales prices may be down 25% in University Heights, but homeowners there can say, "Better here than Horton Plaza." In that downtown, marina neighborhood, median sale prices are off year-over-year by 56%, to $612,500.
Forbes looked at the 25 largest cities in America to determine which neighborhoods witnessed the biggest year-over-year price drops. A neighborhood had to be within the city limits, have at least 10 sales, and prices had to be above $150,000. Otherwise,the list would be a rundown of markets such as Briggs, Detroit, where prices over the last year are off 96% to a median price of $2,500.
In San Antonio, Dallas and Houston, no neighborhoods fit the bill. In Greenwich Village in New York, sale prices dropped 45% from May 2008 to May 2009...but the price-per-square foot in the Village has only dropped 4%. That means most sales are for less expensive properties. The Manhattan luxury market is still down 26%, sales are flat, and listings have ballooned to record highs.
Nationally, there are too many sales in markets that are affordable to first-time buyers, driven by foreclosures and short sales, and too few sales in expensive parts of town because of a lack of financing and the impression that prices are coming down.
As Forbes says, in neighborhoods rich and poor alike, it's going to be a long summer.

Hurry Up and Wait

New federal rules developed to protect applicants for home loans take effect July 30.
These require lenders to provide consumers with disclosures of the estimated mortgage costs within three business days of the loan application; prohibit lenders from collecting any fees prior to the consumer receiving the loan-cost disclosures; and prohibit "quickie" closings on loans.
Prior to this, many mortgage brokers and lenders collected fees covering appraisal, credit, and other charges at the time of application. The new rules eliminate this practice and prohibit lenders from collecting any fees until the consumer has received the truth-in-lending disclosures and an annual percentage rate (APR) calculation of the loan costs.
The new rules also require lenders to deliver a copy of the real estate appraisal to the home buyer three business days before the scheduled closing on the loan. Previously, federal regulations guaranteed that consumers could request and obtain a copy of the appraisal, but many home buyers were not aware of this right.
Additionally, the rules prohibit quickie closings on loans by requiring a seven-day waiting period after applicants are handed their early disclosures or the disclosures are mailed. This provides applicants a week to think about the transaction and to decide whether it is right for them. Final truth-in-lending disclosures are due three business days before closing.
We've been notified that if costs should change by even a small amount, that could trigger a new seven-day waiting period, and that we should estimate longer close of escrow periods because of the new rules...just in case.

Anyone Have a Shoehorn?

How do you squeeze 40 real estate agents into an office that already has around 70?
No, this isn't a joke, and there's no trick answer. Our Cupertino office looks like a tornado full of boxes has hit, and more keep arriving. Amazing...the amount of files and papers that we collect. An old friend from the Sunnyvale office who was in the other Cupertino office (the one that closed this week) was in the process of a home move when they were notified of the office closure. Now she has a double move to manage.
But somehow we will sort it all out. The Realtors and staff, plus our IT guys and wonderful manager, will all cooperate to make this situation more workable and pleasant, and by Thursday, when we have our Welcome Barbecue Party, we'll be back to "normal" and selling houses.

Better News on the Housing Front

The U.S. housing market has started to recover from the most far-reaching crisis since the Great Depression. Sales of resale homes rose for the third month in a row in June, the National Association of Realtors reported. That hasn't happened since early 2004...during the boom.
We saw stocks jump on the news, with the Dow Jones average rising above 9,000 for the first time since early January.
Home sales rose 3.6 percent to a seasonally adjusted annual rate of 4.89 million last month, from a downwardly revised pace of 4.72 million in May. Sales were up in all four regions of the country.
It was the highest level of sales since last October and beat economists' expectations. In another encouraging sign, the share of foreclosures on the market is shrinking. About one out of three homes sold in June was foreclosure-related, down from nearly half earlier this year.
The number of homes up for sale dwindled to 3.8 million. That's a 9.4-month supply, and another important sign of a recovery. When the market balances at a 7-month supply, prices should begin to stabilize. That probably won't happen until next year because of a backlog of foreclosures that have yet to come on to the market.

The Good News and the Bad News

We were just informed this morning that the other Cupertino Coldwell Banker office (at the Oaks Shopping Center near Hwy 85) is closing this week. Three years ago, we heard the same news when they shut down our Sunnyvale office, which later became a successful fabric store.
To those of us moving from Sunnyvale, this always seemed like a strange move...losing our presence in Sunnyvale and having two large Cupertino offices. While we are delighted that we will be reunited with many of our fellow "refugees" from Sunnyvale, closing an office with around 70 agents is certainly a sign of the times and a reflection of declining sales and revenues.
The good news out of all this is that we will have an even stronger office, filled with top agents and run by the best manager in the valley.