Since September the areas you mention have not only seen an increase in sales volume but an increase in average sales price. This is a result of fewer homes on the market for sale, and low interest rates, tax credit driving up demand.
The $400K price range has seen multiple offers and on average 101% list to sales price. In other words, buyer are paying over list for homes in this price range.
We know that there is a lot of potential for more REOs but we simply are not seeing it on the market. There are several potential reasons why:
1.) Banks are not going to "dump" REOs onto the market and drive the market down. This does not make sense when slowly releasing can help increase the average sales price.
2.) Many REOs will never make it to market because they are being sold to investor in bulk (100 homes at a time ) for 80 cents on the dollar. These investors or more likely to rent and hold most of the inventory and therefore we won't see a high volume of re-sale homes from this group.
3.) Many homes counted in the foreclosure group because a notice of default has been served, will most likely not make it to foreclosure. They have the potential for loan modification and short sale. With up to 40% of inventory short sales.
The main incentive for first time buyers are:
1.) FHA loans with 3.5% down
2.) Tax credits from Federal government $8000
3.) New Home tax credit extended by the state of California for $10,000
4.) Low interest rates
It takes an agent with strong negotiation skills and an understanding of the specific neighborhood market to help buyers not only get the deal but win out amongst multiple buyers. When you interview agents you should discuss their strategies for winning the negotiation in multiple offer deals.
Realty World Relocation Express
3400 El Camino Real
Santa Clara, Ca. 95051
You received very good advice and data from the Realtors here.
If I were you, I'd still be optimistic. I had a number of prospects from south peninsula and although they may have to go through several offers to win their home, I'm confident professional negociation skills and common sense in crafting offer terms are winning the good deals.
As you know, many foreclosed properties are not in the best shape, so many people are turned away by the work neeede and incertitude.
Stay open to home styles, consider starting with a condo (maybe on 2 levels), and prioritize on location, as it will help the overall investment and resale.
I can send you very detailed historical stats on each city, just drop me a note.
We're ready when you are!
Century 21 Realty Alliance
1528 South El Camino Real, Suite 110
San Mateo, CA 94402
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I donate 20% of my professional fees to The LAM Foundation http://www.thelamfoundation.org to help women diagnosed with this cruel disease.
You asked the following:
Q: I recently heard and read that Santa Clara, along with some other major Bay Area cities, experienced a rise in the number of sales during the past year, particularly in the $400k range (our range);
A: Sales have indeed risen and would probably have been higher yet except for one critical detail: weâ€™ve run out of inventory â€“ ESPECIALLY in the bottom end of the market (which is where your price range is). This is true for just about every city in the Bay Area.
Here are two posts that may be helpful:
MARKET ALERT: Starter Home Prices Rising Out Of Reach?
Bank Tactics Causing Repeat Of Crash Conditions in San Francisco Bay Area
Q: Does that mean competition is even fiercer in Santa Clara (and Sunnyvale, Mtn. View, Fremont, where we're considering)?
A: Absolutely â€“ AND â€“ prices are on the rise as well. If you are looking for a decent single family detached home for $400,000 â€“ you will not have an easy time. As an example, the average home sale price in Santa Clara has risen from $520,000 in 04/2009 to $694,000 in 12/09. Thatâ€™s a 25% increase in just 8 months. In Fremont, the average price rose from $508,000 in 04/2009 to $674,000 in 11/2009. Thatâ€™s also a 25% increase â€“ but only in 7 months. I can send you actual data in chart form if you wish - it wonâ€™t post here.
Q: Do you think there will be more foreclosures/listings coming out that might make it a better market for a first-time buyer like us, especially considering all-cash buyers?
A: There will be more inventory, but not a flood as some have suggested. We still have way more buyers than inventory and are, quite frankly, ending up in multiple offer situations on almost everything we write on. Cash buyers are most certainly not making things easy for ordinary folk, especially for those with FHA loans.
Here is a link which may be helpful:
New Flood Of REOs To Hit The Market? NOT LIKELY: Top 3 Reasons, 4 Implications
Q: Also, what are the current incentives/deadlines for first-time buyers?
A: Here are two links for more information:
Tax Credit Extended And Reinvented: 2 Market Predictions
Coming To A 2010 Near You â€“ 5 National Trends That WILL Impact Local Markets
You figure it out. Foreclsoure never ends. but to buy some thing in your price range this is another issue.
Market in this price range is still very hot and by the number of notices of defaults filed, there is expectation of foreclosure activity to continue but most banks are willing to accept Short Sales, so we may see a rise in approved Short Sales this year making it a good time to buy. Just make sure to get the offer accepted and in contract by April 30th 2010 and closing by June 30th 2010 to take advantage of First time home buyer tax credit of up to $8000.
1.Who is eligible to claim the $6,500 tax credit?
Qualified move-up or repeat home buyers purchasing any kind of home are eligible to claim this credit.
2.What is the definition of a move-up or repeat home buyer?
The law defines a tax credit qualified move-up home buyer (â€œlong-time residentâ€) as a person who has owned and resided in the same home for at least five consecutive years of the eight years prior to the purchase date. For married taxpayers, the law tests the home ownership history of both the home buyer and his/her spouse. Repeat home buyers do not have to purchase a home that is more expensive than their previous home to qualify for the tax credit.
3.How is the amount of the tax credit determined?
The tax credit is equal to 10 percent of the homeâ€™s purchase price up to a maximum of $6,500. Purchases of homes priced above $800,000 are not eligible for the tax credit.