The mortgage interest rates took a dip this week and look to stay low for a little while. Check out the following video to understand where the current rates sit and why they have come down.
2009
A recent business week article titled “Shortsales: A Fraying Lifeline for Homeowners” discussed some recent change in philosophy for banks regarding short sales
In this article the author highlights a recent trend with some banks who are now taking a new tact regarding the approval of short sales. In the past, banks with a red profit line have tried to move short sales along so that they could improve cash flow. In recent months due to increases in profits for many of the banks, we have seen some banks now taking longer to approve short sales in in some cases demanding the seller to subsidize the sale by contributing money outside of escrow by virtue of a promissary note. We have seen this happen with some short sales of residential real estate in Danville, San Ramon, and Alamo, along with the surrounding east bay communities. In the specific cases that we have been involved with in Danville and San Ramon, either the seller stepped up or the buyer agreed to pay the promissary note. I have created some video blogs for short sales, and the short sale decision process which are still relevant but it is imperative, now more than ever, that there be open and frequent communication with the bank negotiator, the seller, and the buyer in order to head off any surprises. Also, not all banks are moving to this strong arm tactic. There are some banks who have actually streamlined their process so that the short sales can be transacted in a reasonable amount of time.
In a L.A. times article it was noted that Consumer Confidence dipped in the month of September
The article titled “Consumer Confidence Unexpectantly Falls in September” quoted a recent consumer confidence index which measured a drop from 54.5 in August to 53.1 in September. The drop is contrary to most economists predictions of a modest increase in confidence and an overall stabilzing of the economy. A primary reason for the decline is noted as being a lack of confidence in the job market. What we are seeing as Realtors to some extent supports the article but the interesting thing is that in spite of a concern over jobs we are seeing a robustness in homes sales and at the lower price points we are seeing multiple offers over asking price. In fact the same article quotes a recent “Case-Schiller Home price Index report” that shows prices on the rise over this year. The same report noted that prices are still 13% below July of last year but they seem to have stabilized.
Analysis
Based on what we are seeing in terms of homes sales in the Bay Area my thoughts are that there is pent up demand for homes especially at the lower price points, and unless we have a large inventory of homes suddenly become available, I feel that prices have stabilized and in fact are starting on their way up. In general the mid-priced homes are not selling as fast but in areas likeSan Ramon we are seeing homes priced up to $800,000 sell with multiple offers. So, my conclusion is that the age old definition of real estate “Location,Location,Location” still holds true and in desireable areas, in spite of a slight drop in consumer confidence, homes will continue to sell.
The Town of Danville with it’s population of roughly 40,000 people is a suburb of Oakland and San Francisco and is a short 35 minute drive from the city of San Francisco.
Danville is one of the wealthiest suburbs in the San Francisco Bay Area, with some of the most expensive and exclusive country clubs and Real Estate in the country. It still keeps its small town charm by limiting growth and maintaining strict building code guidelines. While only a couple of small blocks in area, the rustic downtown is a destination point for the entire East Bay and is highlighted by historic homes, fine dining and boutique shops. The downtown area is home to several events and street fairs throughout the year. Danville’s main street is Hartz Avenue in downtown Danville.
The Downtown area hosts a farmers market every Saturday where local growers and merchants sell fresh produce and meats. Every Wednesday evening a local running shop hosts a 5 and 10 K run along the Iron Horse Trail which goes through downtown Danville and extends from the City of Dublin to the city of Concord.
Danville is within the award winning San Ramon Valley School District and hosts two High Schools serving the east and west sides of the town.
History
Danville’s name came from the town founders of Daniel and Andrew Inman, who bought 400 acres (1.6 km²) there in 1854 using their gold rush earnings. They rejected the name “Inmanville” and settled on Danville. However, “According to the modest Dan, the name was chosen as much or more out of respect for Andrew’s mother-in-law, who was born and raised near Danville, Ky. It was initially a farming community, switching from wheat to fruits and nuts after the Southern Pacific Railroad built a spur line through the area in 1891. It developed as a residential suburb starting in 1947 when the first sizable housing tracts were constructed and its population boomed in the 1970s and 1980s.
A post office opened in 1860.
Geography
Danville is nestled between the cities of Pleasanton to the south and Walnut Creek to the north and is immediately adjoined by San Ramon, Alamo, and Diablo.
Danville sits at an elevation of roughly 300 feet and is at the base of Mt Diablo and it’s nearly 4000 ft peak.
The inventory absorption rate for single family detached homes in Alamo has increased from 2 weeks ago.
The absorption rate for Alamo Homes as of September 14 was at 4.5 months. The rate is now at 5 months. This may just be an anomoly because a swing of 1-2 active or pending homes can make a difference. I would still consider the market stabile but slower than those of the surrounding communities of Danville and San Ramon. The difference seems to be due to the price per square foot of the Alamo homes. Most buyers are looking for value and the Price per Square foot metric used. The price per square foot for the active listings is higher in Alamo than in Danville or San Ramon so perspective buyers are deciding on bigger homes for less money as opposed to location. Also, The homes in the newer areas of San Ramon and Danville are in the San Ramon Valley school district along with the Alamo homes, so the Alamo homes do not offer a quality of education benefit over the other communities.
Current Alamo Statistics:
There are 121 active listings in Alamo for single family detached homes. The average list price for these listings is at $2,086,530 with a high of $38,000,000 and a low of $599,000. The average price per square foot is at $446 and the average days on market is 128. There are 25 pending listings that have an average list price of $1,436,027 with a high of $3,375,000 and a low of $694,000. The average days on market is 112 days.
The Danville market has stabilized with available inventory hovering at about 2 months, but this is not the whole story.
Over the past year we have seen the statistical strength of the Danville Market relative to local and national markets. However, the Danville market has segmented and homes at the price points less than $1,000,000 account for over 80% of the total sales. So, statistically speaking the overall market looks quite strong and robust. What we are seeing though is that the homes priced between $1,000,000 and $1,200,000 are sitting for long periods of time. The homes over $1,300,000 seem to be selling faster than those in this middle segment. In speaking with perspective home buyers what we are finding is that people are really looking for value and in many cases the homes priced between $1M and $1.2 M are listed at a fairly high price per square foot. Many of them are older homes that need remodeling or updating and buyers would rather pay more for a home that is already remodeled and priced well, or one that is not remodeled and priced low.
Current Danville Statistics:
There are 162 active listings for single family detached homes in Danville. The average list price for these homes is $1,302,245 with a high of $4,500,000 and a low of $529,000. The average price per square foot for these homes is $421 and the average days on market is 107 days. There are 83 pending sales in Danville with an average list price of $920,263. The highest priced pending sale was listed at $1,550,000 and the lowest at $484,900. The average price per square foot for these pending sales is $354 and the average days on market of 69 days.
The market for resale detached single family homes in San Ramon continues to be hot.
With an inventory absorption rate of a very low two weeks we are seeing many homes sell within a week with multiple offers that are over asking price. In speaking first hand with buyers the consensus is that the prices are either at or near bottom. In fact prices seem to be inching up at the lower price points. Additionally the First Time Home Buyer Tax credit is providing a very good incentive for first time home buyers along with very low fixed rate interest loans. There is some talk that interest rates will be starting on their way up soon and that at this same point next year we may see rates approaching 7-8%. Congress has yet to decide whether or not to extend the First Time Home Buyer Tax Credit through next year so as of now it expires on Novermber 30 of this year.
Current San Ramon statistics:
There are currently 89 active listings for detached single family homes in San Ramon. The average list price for these homes is $943,214 with a high of $4,990,000 and a low of $365,000. The average price per square foot is $399 and the average days on market is 71. There are 174 pending sales in San Ramon with an average list price of $767,203 and a high of $1,700,000 and a low of $370,000. The average price per square foot for these pending sales is $290 and the average days on market is 49.
In this video I discuss some of the current issues why listings don’t sell. The market has changed and in most cases homes should sell. I discuss reasons that they don’t and what can be done so that they do.
Active Danville Listing
Active Danville Listing
The Danville Real Estate market is still very stable but homes are moving quicker at the lower price points.
The inventory absorption rate for resale residential real estate in Danville is currently at 1.87 months. This continues to show a downward trend along with the neighboring communities of Alamo and San Ramon. The biggest piece of news though is not so much the downward trend in available inventory but the segmentation of the market into 3 distinct groups. As I explained in my video regarding Danville home sales, over the last 2 and 1/2 months there have been 103 homes sold in Danville. A full 80% of these sold homes were sold for under $1,000,000. The interesting statistic is with the mid point and high end. Homes ranging in price between $1,000,000 and $1,200,000 only had 8 sales during the same period while homes priced over $1,200,000 had 15 sales.
The current Danville statistics are:
There are 159 Active listings for single family detached homes in Danville. The average list price for these homes is $1,289,470 with a high of $2,995,000 and a low of $529,000. The average price per square foot is at$420 and the average days on market at 111. There are 85 pending sales in Danville with an average list price of $940,239 and a high of $2,750,000 and a low of $399,950. The average days on market is 67 days and the average price per square foot is $361.
In the attached video blog I discuss what you should do to mentally prepare yourself for selling your home.
