Last week I heard the saying that 80% of the statistics quoted are made up on the spot.Â Certainly, most have heard the saying that "statistics can be made to say anything you want". The exact reason why most marketing experts look at trends more than a single number stat. With that said, I took time to revisit some of the "stats" that I ran last year to compare to where we are now.
The bulk of the foreclosures occurred in late 2008 than in 2009. By 2009, the banks were quite tired of seeing their brands splattered all over the evening news with interview after interview with homeless sellers talking about their recent foreclosure with You-Know-Who-Bank. Not to mention, the tax payers came to the rescue and actually provided incentives to banks who did not foreclose.
In that same time period we began to see more and more short sales come to the market and home owners were given some chance to save their credit while re-grouping for where they would live next. Short sales quickly became a third of the San Jose housing market. Equally, less than 1/3 of the short sale deals would actually close. Buyers were not patient to wait for 6-12 month approvals and with lots of houses on the market, they moved on quite quickly to the next house. (Graph 1Â March 2009)
"Affordability" played a role as well. In 2005 the median home price in San Jose was $685,000. In 2009, the median home price had dropped to $450,000. Many buyer's who simply had been priced out of the market and wisely rejected exotic home loans found themselves with a real chance to own a home in the Bay Area. Throw in some tax incentives and a revised conventional loan limit from $417,000 to $729,000 and a demand was created. It worked. In late 2008 San Jose held nearly 8 months of housing inventory. In late 2009, there was less than 4 months of inventory on hand.
But we are not quite finished. The numbers tell us that 1 in 7 home owners are behind on their mortgage payments. Defaults rose in April 2010 and the tax incentives ended for most May 1st, 2010. The inventory hit a high of about 4000 homes in summer third quarter 2008. The current inventory is about 1400. The lowest inventory in boom years ran about 1200. Supply has been heading down since late 2009 demand has created an actual increase in average sales price in the first part of 2010 for many San Jose housing micro markets neighborhoods.
Heading forward, short sales will continue to increase. There are too many option ARMS on the books to assume home owners will not struggle to afford their revised house payment. With unemployment numbers struggling more and more home owners will become delinquent. Currently, short sales are about 30% of the housing inventory across the San Jose market with some neighborhoods as high as 60%. It will not be a surprise to mostÂ to see short sales make up nearly 50% of the San Jose housing market by the end of 2010. Some neighborhoods will hit as high as 85% of homes listed as short sales.
The condo/town home market will continue to be challenged due to the delinquency in payments to the home owners association and vacancy rates. First time buyers mostly use FHA loans and these loans have specific requirements for delinquency and vacancy rates. There has been predictions that some of the newer developments will convert to apartments simply because they can not fill the complex enough to support a home owners association.
For those buyers looking for a "deal", I would suggest a condo in Blossom Valley and/or a single family detached home in Santa Teresa.Â If schools are important, look at Sakamota Elementary and Bertha Taylor Elementary in Santa Teresa.Â Â Also look in Berryessa for single family homes and condo/town homes.
If you are a home owner and are behind on your mortgage payments, recognize you have options.Â Short selling your home is aÂ much better option than foreclosure.Â A foreclosure can be 200-500 point hit on your credit.Â If you are not sure if you qualify for a short sale, contact me.Â I am a Certified Distressed Property Expert, experienced with short sales, and can help review your specific situation at no cost to you.Â Before you walk away, give me a call (408) 406-6035.
Over the remaining year and into the 2010 market, expect to see more homes for sale.Â Prices in some neighborhoods will continue to come down and other neighborhoods will see an increase in average sales price.Â If you are looking at specific neighborhood information and trends, visit Home Values in San Jose.Â If you would like a current market analysis on your home, contact me.
CJ Brasiel is a REALTORÂ®, Broker Associate with Fireside Realty located in the great neighborhood of Willow Glen in San Jose.Â Committed to exceeding clients' expectations through market knowledge, strong negotiation skills, prompt communication, and a passion for making each transaction a win-win.