Tuesday is our tour day and this home was the best deal we found in Belmont. It's located in a GREAT area of Belmont with a nice micro climate. It's hard to beat the west side for $749,000. This home shouldn't last a week.
Case-Shiller Reports Measureable Home Price decline in October 2010
I was awakened from my long winter nap by the predictable sensational reporting of the latest Case-Shiller home price indices.
The latest press release by Standard and Poor’s states:
New York, December 28, 2010 – Data through October 2010, released today by Standard & Poor’s for
Home Price Indices, the leading measure of U.S. home prices, show a deceleration
in the annual growth rates in 18 of the 20 MSAs and the 10- and 20-City Composites in October
compared to what was reported for September 2010. The 10-City Composite was up only 0.2% and the
20-City Composite fell 0.8% from their levels in October 2009. Home prices decreased in all 20 MSAs
and both Composites in October from their September levels. In October, only the 10-City Composite
and four MSAs – Los Angeles, San Diego, San Francisco and Washington DC – showed year-over-year
gains. While the composite housing prices are still above their spring 2009 lows, six markets – Atlanta,
Charlotte, Miami, Portland (OR), Seattle and Tampa – hit their lowest levels since home prices started to
Fall in 2006 and 2007, meaning that average home prices in those markets have fallen beyond the recent
lows seen in most other markets in the spring of 2009.
The index showed a decline in the Bay Area from October to September’s numbers but a year-over-year increase for the same period.
What does this mean? It means that compared to last year home values are up in the San Francisco MSA (metropolitan statistical area) which includes San Francisco down to Redwood City. It also means that the values dropped from September to October. How much? 1.9% to be exact. Not what I would call earth shattering and I certainly wouldn’t describe it as one of our local TV stations did as “Bay Area Prices Plummetâ€.
Later in the evening a competing station had the headline “Bay Area Prices upâ€, referring to the year over year statistic.
Neither news headline tells the whole story.
The much ballyhooed double dip in fact did occur but it was much more pronounced in other parts of the country and more akin to a glitch than a dip—and likely it was caused by the cessation of government subsidies which helped to prop up home values in 2009.
SF MSA
The information contained in this newsletter is educational and intended for informational purposes only. It does not constitute real estate, tax or legal advice, nor does it substitute for advice specific to your situation. Always consult an appropriate professional familiar with your scenario.
Belmont Home Sales – November 2010
We love the holidays as much as anyone, but a little less red in the chart would be nice too.
Belmont home sales for November of 2010 continued the trend of the last two quarters with fewer sales and declining home values as compared to the same period in 2009.
(Click on the chart to see a full-sized image)
Clearly consumer confidence is woefully short of normal. While consumer confidence does not in and of itself control the direction of the economy it does reflect consumer sentiment. Consumer sentiment is well represented by consumer spending—when consumers are comfortable with their view of the future they tend to spend more. Considering that some estimate consumer spending to represent 2/3rds of our nation’s domestic product (GDP) suffice to say that consumer confidence is necessary for a sustained recovery. For consumer confidence to rebound there needs to be more jobs and of course the feeling that the job one has won’t go away soon either. On a positive note the consumer confidence index rose to 54.1 in November from a revised 49.9 in October. It was the highest level in five months. The index was benchmarked at 100 in 1985, a year chosen because it was neither a peak nor a trough in consumer confidence.
How does this affect the housing market? The tenuous job market is taking its toll on nervous home buyers. Buyers are still purchasing homes but fewer can qualify for a loan and when they do it’s usually for less home than before. Those who are willing to purchase a home seem to want only exceptional deals—building into their offer price a buffer against further price declines.
SALES
Home sales in Belmont remained fairly strong considering the aporetic feelings among buyers.
This November we saw 16 homes trade hands in Belmont as compared to 22 in 2009.
Of the 16 sales, six sold for on average $21,350 more than the seller’s asking price in 17 days, one sold at the asking price, and nine sold for on average $16,500 less and took 82 days to sell.
Six sellers also reduced the price they were originally asking for their home by on average by $149,342, while last year there were only three homes which had price reductions during the same period and for on average only $13,590.
MEDIAN PRICE
The median price (on paper) went up 5.4% to $843,475 from November 2009 when it was $800,000. However, in 2009 the median size home which sold was only 1,558 square feet as compared to this November when the median size home sold was 1,920 square feet—a difference of 352 square feet. At the median price per square foot that homes sold for during November, $466 and the difference in the size home sold, 352 sq. ft. one could make an argument that if all things were equal (the same size home selling in the two periods) the adjusted price for 2009 would be closer to $964,032 ((352 Sq. Ft. x $466 per sq. ft. = $164,032) + $800,000) =$964,032. This allows us to estimate that home values dropped around 12.5% year over year in the month of November. How much the median price changed for the year as a whole is yet to be determined. Remember, just because homes dropped 12.5% in the month of November, earlier increases in the year can mean at year's end the median price could be up for down from the previous year.
It’s also interesting to note that although the median size home which sold in November of 2010 was much larger, only one home sold over the one million dollar mark as compared to three in 2009.
DAYS ON MARKET (DOM)
Not surprisingly it took more time to sell a home this year than last–on average 62 days—up dramatically from 38.5 days in November of 2009. One also must be cognizant that last November the first-time buyer tax credit was in effect which skewed the numbers in favor of more sales, selling faster, and for more.
When home values are dropping, the time it takes to sell a home typically increases as sellers often price their home based on recent past sales. But when home values are falling, recent sales were worth more. Eventually most sellers get the idea that they must get ahead of the pricing curve and lower their home more than the market suggests it might be worth. This has an ancillary effect of lowering home values rapidly and perhaps more than they would otherwise drop.
Noting the huge difference in not only the number of homes which had price reductions, but the steep adjustments that were made, illustrates the difficulty in pricing a home in a declining market and underscores the importance of introducing your home to the market at the right price.
Summary
There’s always some danger in looking at a small market sample such as Belmont with only 16 sales in a given month. Seasonal factors play heavily in the statistics which is why we choose to compare each month we examine to the same month a year before. However, it’s important to note that other factors can effect comparing these two periods. For example, last November the first-time buyer tax credit was expiring, causing many buyers to rush to the bargaining table. This increased competition for homes undoubtedly buoying the prices while increasing sales.
Our leading indicators of future market conditions indicate a gradual recovery in the housing sector.
- The Institute for Supply Management reported that the monthly composite index of manufacturing activity fell slightly to 56.6 in November after reaching 56.9 in October. A reading above 50 signals expansion. It was the 16th straight month of expansion.
- Total construction spending rose 0.7% to $802.3 billion in October, following a revised 0.7% increase in September. Economists had anticipated a drop of 0.4% in October.
- The National Association of Realtors reported that its pending home sales index, a forward-looking indicator based on signed contracts, rose 10.4% in October after a 1.8% decrease in September.
- The Institute for Supply Management reported that the monthly composite index of non-manufacturing activity rose to 55 in November from 54.3 in October. A reading above 50 signals expansion. It was the 11th straight month of expansion.
On a local level our professional staging company has reported to us that their orders for staged homes are booking up fast for January, indicating that Sellers are interested in getting a jump on the spring market.
If you are considering selling your home next year you may want to consider doing it sooner rather than later before inventory rises to levels which make price reductions necessary to attract Buyers.
If you are considering selling your current home and/or purchasing a new one be sure and contact us for your real estate needs.
Now for the inevitable disclaimer: The information contained in this newsletter is educational and intended for informational purposes only. It does not constitute real estate, tax or legal advice, nor does it substitute for advice specific to your situation. Always consult an appropriate professional familiar with your scenario.
Carlmont Associates Partners with Re/Max Star Properties
Most of you know we’ve been operating out of the Carlmont Associates office in Belmont. Effective today, Carlmont Associates has joined a partnership with Re/Max Star properties.
Our level of service and commitment to our clients will be unaffected except that we'll have access to the benefits the number one real estate franchise in the world can offer.
FOR IMMEDIATE RELEASE:
(Redwood City, CA Nov. 20, 2010)—Re/Max Star Properties, a real estate leader in San Mateo County with projected sales of over 200 million dollars for 2010 announced today that it has added the premier Carlmont Associates team and premium location in central Belmont to its local group of Peninsula offices. “Carlmont Associates is a well established, centrally located real estate firm serving the Belmont area for over 50 years and we’re proud they’ve chosen to join forces with usâ€.
“We are both pleased and excited by this mergerâ€, said Tom Diridon, one of the principals of Carlmont Associates. He, his wife Eda Diridon and partner Gary Rossetto couldn’t be happierâ€. Mr. Rossetto mentioned, “It will bring state of the art systems, services and global name brand recognition and lead generation systems of RE/MAX to Carlmont Associates allowing us t better serve our clients.â€
“This move will bring major benefits to the local consumers and its agents by the ability to offer more marketing solutions, exceptional financing opportunities and unmatched after the sale protectionâ€.
Do You Plan on Spending More This Year Than Last?
You all were so accurate at predicting the school bond poll results we thought we’d send out another one to see if this year retailers will get in the black.
We’ve been out shopping for Thanksgiving and are seeing a lot of activity in the stores. That caused us to wonder if people feel confident enough about the economy, and have the wherewithal, to spend more than last year on entertaining or gifts.
Let us know what you think and maybe you’ll even get an indication if that special gift you’re after will be on sale the day after Christmas, or fly off the shelves weeks before.
Belmont Home Sales – October 2010 Where’s the Beef?
With the election behind us and the stock market rallying to the excitement and anticipation of more economic stimulus and legislative gridlock, Belmont’s housing market continues to show signs of what could be viewed as stagnation at its best, or a double dip at its worst.
This October, housing sales for Belmont revealed a slower market and softening prices compared to October 2009.
(Click the picture for a larger image).
SALES
Thirteen home sales—one shy of last year’s 14, would not normally give great cause for consternation—especially since the sample size in Belmont is so small. However across the board indicators are eluding to a reluctance on the part of buyers to commit to purchasing a home.
In light of comments like that of John Paulsen who made a fortune betting on the sub-prime market collapse proclaiming “this is the best time to buy a home in fifty years, exclaiming that, "If you don't own a home, buy one. If you own one home, buy another one, and if you own two homes buy a third and lend your relatives the money to buy a home†clearly job security is the number one reason buyers are waiting before taking on any new debt.
MEDIAN HOME PRICE
The October median home price in Belmont was $864,200 and appears to have dropped only slightly from October 2009 when it was $865,000. Once again though larger homes sold this October. The median size home sold was 2010 square feet as compared to last year when the median size home sold was only 1760 square feet. Put another way, this year you could buy a home 250 square feet larger (14%) for the essentially the same price as last year.
DOM
The average time it took to sell a home in Belmont this October also went up from 38 days last year to 46 this October.
% RECEIVED
Seller’s also enjoyed getting 99.6% of their asking price last year while this October dropped to 98%.
PRICE REDUCTIONS
Six of the 13 sales this year had lowered their price on average $92,000 to attract a buyer while last year only three sellers reduced their asking price for on average $40,000.
This October while three homes sold for on average $29,000 more than their asking, last October six homes sold over asking for on average $23,000.
The last thing any seller wants is to get less than their asking price and this year more sellers were disappointed as nine homes sold for on average $34,000 less compared to last October when only seven homes sold for on average $30,000 less than their asking price.
In October of both years just one home sold at the seller’s asking price.
COMMENTARY
This fourth quarter slowdown in real estate is not all that unexpected. It’s a fairly mild hiccup at this point which may be attributed in part to election jitters but certainly it’s exacerbated by our own government when they announce they are re-visiting the home mortgage deduction. Of course every year some committee wants to reexamine if they could do away with it to be replaced by a flat t tax, but to do so in a year when the government is spending billions of dollars trying to stimulate the economy, and particularly the housing sector, one wonders why they wouldn’t just table any further debates on the home mortgage deduction until after they economy was on track.
NEWS FLASH– Belmont Measures I and N Pass
With a needed 55% voter approval for each measure both passed handily with each measure receiving well over 60% of the votes.
Measures I and N from the San Francisco Examiner:
Five schools in Belmont would get new classrooms, repairs to leaky roofs and other improvements if voters approve two bond measures on the November ballot totaling $70 million.
Measure N would give the Belmont-Redwood Shores School District $35 million to spend on facilities at four Belmont elementary schools – Nesbit, Fox, Central and Cipriani.
Measure I, a companion measure, would generate $25 million for Ralston Middle School. Both need a 55 percent majority vote to pass.
Measure I would cost property owners about $11 per $100,000 of assessed value annually, and Measure N will cost about $27 per $100,000, according to the school district. *With the median price in Belmont at $850,000 right now that would mean an additional $110.50 per year.
Measure N only impacts Belmont schools, so voters in Redwood Shores would not be affected.
New 3.8% “Real Estate Sales Tax” gets a lot of play
You may have already heard through an errant email or co-worker that hidden in the health care bill was a provision for adding a 3.8% sales tax on the sale of your home.
We’ve even been forwarded emails with the story contained in a newspaper article. So is there any truth to it? Well, sort of.
The much ballyhooed 3.8% tax in the health care bill which takes effect in 2013 is actually a Medicare tax on investment income—not a real estate tax per se. That alone might not make you feel any better but read on.
According to factcheck.org , which did extensive research, there are very limited circumstances in which this tax would be levied.
As it would apply to real estate, first your income would need to be over $200,000 a year ($250,000 for married couples filing jointly).
Now if you’re selling your principle residence, the first $250,000 of gain for single tax filers and $500,000 for those who file jointly would be exempt from taxation—as it currently stands for capital gain taxation.
The 3.8% tax would, as we understand it, apply only to the portion which might exceed this threshold. It’s also important to note that this tax is on the gain, not the sale price. So if you were to sell a home you and your spouse bought for $500,000 several years later (you need to have lived in the home two of the past five years) for $800,000, you would have a gain of $300,000. This is of course is further diminished by any capital improvements you made to the property and selling costs but to keep it simple we’ll use the higher figure of $300,000. Based on this you would still owe no capital gain tax nor would you owe the new Medicare Tax even if your income was over the $250,000 threshold because your gain was only $300,000—less than the allowable first $500,000 which is forgiven.
So several things need to happen before you would be subject to the tax:
- Your income must exceed the thresholds mentioned above.
- Your gain on the sale of your home must exceed the allowable forgiven limits.
Note that this capital gain exclusion is for your principle residence only so high wage earners who sell their investment properties would be subject to this new tax on that gain—assuming they had gain to tax.
As far as we can tell the viral nature of this email succeeded in part because it resonates with what many readers feared about the health care bill—that it would be caulk full of special interest groups’ and hidden agendas. Further exacerbating this was that many email authors added their own spin by including miscalculated and outrageous examples of how the tax would be applied. Their agenda was then further picked up by those who wish to freighted people into voting the way they would want by saying, as the email I received said, “People have the right to know the truth because an election is coming in November!â€
I couldn’t agree more and we hope this explanation is closer to that truth.
Now for the inevitable disclaimer: The information contained in this newsletter is educational and intended for informational purposes only. It does not constitute real estate, tax or legal advice, nor does it substitute for advice specific to your situation. Always consult an appropriate professional familiar with your scenario.
Belmont Schools Want Your Vote…And Your Money.
Two measures are on the November ballot which would allow for assessments in Belmont to generate funds for school improvements.
During difficult economic times, many people choose not to vote for increases to their parcel tax. We’re not sure if there’s ever been study showing a direct correlation between subsidizing school improvements and higher API achievement scores, or if it’s strickly empirical evidence, but there certainly is ample evidence that homes in areas with great schools have higher property values.
With these two measures on the ballot we’re interested to see how people are considering voting–anonymously of course. Answering this short poll will allow you to see how others might cast their vote as well.
Measures I and N from the San Francisco Examiner:
Five schools in Belmont would get new classrooms, repairs to leaky roofs and other improvements if voters approve two bond measures on the November ballot totaling $70 million.
Measure N would give the Belmont-Redwood Shores School District $35 million to spend on facilities at four Belmont elementary schools – Nesbit, Fox, Central and Cipriani.
Measure I, a companion measure, would generate $25 million for Ralston Middle School. Both need a 55 percent majority vote to pass.
Measure I would cost property owners about $11 per $100,000 of assessed value annually, and Measure N will cost about $27 per $100,000, according to the school district. *With the median price in Belmont at $850,000 right now that would mean an additional $110.50 per year.
Measure N only impacts Belmont schools, so voters in Redwood Shores would not be affected.
Read more at the San Francisco Examiner:
Orion in the night sky in Belmont
Just thought I’d share this with everyone.
We’ve always enjoyed astronomy and love it when there’s a new moon and we can get a good look at the night sky.
In Belmont, we’re pretty close to the city (San Francisco) and get a lot of city light which tends to wash-out the night sky.
If we look south-south-west however it’s much darker as we’re looking towards the Santa Cruz mountain range.
When I got up early this morning I had to grab my camera and capture one of my favorite constellations—Orion.
This was taken today, October 9th 2010 just after six in the morning.
I used our Nikon D70 with a shutter speed of 30†at f4.8 and ISO of 1600.