Introduction:

Welcome to the introduction of our five part series on when is the best time to sell a home. We’ll examine issues that affect home values and selling opportunties on a macro level, and then provide detailed information for our market sector. We hope you enjoy the series.

When’s The Best Time to Sell a Home? That simple question is one of the most frequently asked when we meet a seller. Unfortunately, the answer is not as easy.

There are many factors which may influence your local market and having the data certainly helps one examine when may be the best time to sell a home

Everyone knows real estate highs and lows-like in business-are cyclical. The recent 10 year run up in home values nationwide appears at its end (for now); though some parts of the country remain more effected than others.

In this five part series we’ll examine some of the indicators you can watch when trying to determine where your local market may be headed.

On a macro scale, the overall housing outlook can be affected by a multitude of factors and indicators can be seen along the way. In this five part series we’ll look at the following:

• Interest rates and the availability of mortgage money
• Consumer confidence
• Job creation and stability
• New home starts

And on a more local level:

• Inventory
• Sales
• New listings
• Days on market
• Percent of asking received by the seller
• Median prices

We are entering uncharted waters with the recent defaults of high risk loans, Wall Street’s pull back on mortgage investments and the demise of several prominent lending institutions. Money will be harder to get and more expensive. Those who were counting on refinancing their variable rate mortgage at the end of its fixed period, have no equity left and cannot afford their current payment will be forced back into the rental market. This will cause home inventory levels to increase and home values to decrease. Fewer buyers with more choices will equate to lower selling prices. To the extent that jobs remain steady (or increase) interest rates level off, fallout from the mortgage industry dust settles and buyers perceive new opportunities to purchase their first home, this storm too shall pass. How much and how quickly it will be mitigated by these factors is anyone’s guess.

Thanks for reading this introduction and check back for the continuation of this five part series.

You can see detailed San Mateo County market reports on our web page at MorganHomes.com

Real estate is best examined on a local scale since a rapid sell-off in south Florida, or falling values in San Diego can have little bearing on what a home is worth at any given point in your neighborhood.

Although it is best to focus on your local area, keeping an eye on the big picture is prudent.

In part two of our five part series on "When is the Best Time to Sell A Home" we examine some of the broader national issues which affect the overall atmosphere of home buying and selling.

Interest Rates and the Availability of Mortgage Money

To begin to address these issues is rather redundant since the current issues facing the mortgage industry are changing everyday and are covered well enough by experts-for many-the writing was on the wall. Suffice to say though that when money is more expensive and harder to obtain, fewer people can afford or qualify for a home. This and the high median price of homes can be illustrated by what is referred to as the Affordability Index; when the affordability index is low, fewer buyers are able to purchase a home and less demand can mean more supply and falling home values.

In June of 2007 we saw interest rates rising and although they were still near historically low levels, the perception that they were high may have changed the minds of prospective buyers. Whether uneasy about if they should wait for lower rates and purchase more home, or higher rates made home ownership simply unaffordable, fewer sale transacted.

Watch for Part III-How Consumer Confidence affects buyers and seller…

Consumer Confidence

In part three of our five part series on "When is the Best Time to Sell A Home" we examine some of the broader national issues which affect the overall atmosphere of home buying and selling.

The confidence of consumers is critical to trade. The "Consumer Confidence" report is a measurement taken by the Conference Board, an independent not-for-profit organization who polls 5,000 representative U.S. households; it’s bit like taking the pulse of the average consumer. Of course when consumer confidence is high-or rising-buyers tend to be more bullish. The effect that the release of these numbers has is a bit like the tail wagging the dog. In fact, it is a measurement of what a predetermined group of consumers think about the future, and when the numbers are released they can have either a positive or detrimental effect on the average consumer mindset; just watch what happens on Wall Street after the numbers are released.

Consumer confidence is directly affected by a multitude of issues facing our country (global and national) and can vary widely yet not have a dramatic affect on housing. This is particularly true when the reason in the confidence drop was not caused by jobs or housing. Our involvement in Iraq was an excellent example when consumer confidence dropped precipitously and home values remained relatively high.

The Consumer Confidence model was indexed relative to 1985 when a baseline value of 100% was attributed. The latest report in July-right before the widespread news of the sub-prime mortgage news hit the airwaves. It had rebounded from 105 in June to 112 in July and we expect it to drop considerably at the end of August. Low consumer confidence can be found during the trough of most real estate cycles.

Watch for Part IV-How new job creation affects buyers and seller…

More about us at Morganhomes.com

In part four of our five part series on "When is the Best Time to Sell A Home" we examine some of the broader national issues which affect the overall atmosphere of home buying and selling.

Jobs

When people feel secure about their jobs they are willing to take on more debt. But that’s not the whole story. When more jobs are being created (and filled) in an area than are exiting, and the supply of available homes can no longer keep up with demand, there’s competition for housing. A good indicator of where your local housing market may be headed is watching the number of net jobs increase or decrease; not just employment data. In other words, after all is said and done are there more jobs entering your area than leaving? And what kinds of jobs are being created? Those of high salaried professionals or perhaps less skilled labor and manufacturing jobs. Job and employment indicators can go far to help in evaluating the national housing market; and perhaps more precisely, have a direct impact on where you live.

New Home Starts

This is a great indicator of where large corporations believe the market will be months down the road. In the Bay Area the new home starts statistic has very little impact since most of the peninsula is already developed and resale activity is the predominant indicator. This is still an interesting statistic to watch especially when recovering from a housing downturn or recession. Here’s why; clearly an argument can be made that these large corporate developers are no indicator at all as to where the market is headed especially after the surplus of homes overdeveloped in 2006. However, the new home housing industry used the only real tool they have to control pricing and that is to cut inventory-by selling the homes they have and halting future development until which time they feel the market will pick up and sustain their sales. New homes start increases are a good indicator of a future bull real estate market

Remember that though a recession will be on a national scope, it will clearly impact some areas more than others. Know how these factors are affecting the market where you live.

The availability and affordability of money and the average consumers’ outlook on their job security and confidence ion the markets play a large roll in determining how buyers will perceive whether or not it’s a good time to buy a home.

Watch for Part V-How to interpret all of this and what can I do about it?

More about us at Morganhomes.com

When is the Best Time To Sell A Home (Part Five of Five)

When is the Best time to sell a home? (Part five of five).

If you’ve read parts one though four of our series, you undoubtedly know by now that there are many factors affecting the real estate market.

Understanding your particular area’s local market conditions and fluctuations will assist you in finding the best time for you to sell your home.

In our home town of Belmont for example, just before spring, the winter inventory of homes for sale is typically low; but crescendos through spring into summer. Getting a jump of your competition can be rewarding. This is illustrated in the graph which shows the inventory levels at various times of the year.

If conditions are right for buyers (i.e. job stability, favorable interest rates, etc.), then usually during this time of year demand for housing outstrips supply and there is upward pressure on pricing as buyers attempt to outbid one another for the available inventory.

As winter gives way to spring we begin to see more equilibrium and by June with more homes to choose from the percentage a seller receives for their home is usually less; though the median price remains at the new established highs.

In looking at the graph that represents the list price to sale price correlation, one can see the changes as inventory grows.

Different buyers at different times of the year.

An intangible appears to be the quality of buyers during different periods of the year. From a seller’s perspective, by quality we are referring to how aggressively these buyers bid. In late winter and early spring buyers seem to be more bullish and aggressive in their bidding. Perhaps this is because many of these buyers are ones who were out-bid the year prior and are now more determined to get the home they want. Once these folks have succeeded though, the market is left with the unsuccessful bidders and even the ones who refused to be in a "bidding war". These less aggressive buyers are in the market usually around late spring and early summer when the inventory grows-compounding the differential in this graph representing the percentage a seller receives from the sale of their home.

With Indian summers blessing the Bay Area and Belmont in particular, great weather embraces us late into the fall buoying the house hunting season beyond traditional markets. After Labor Day, once summer vacations are behind and children back in school, the market takes another "bounce" and sales increase as more inventory appears and buyers wishing to make a move before the end of the year are once again more focused. Notice in this graph for San Mateo County how there’s a post summer "bounce" as market activity typically increases at this time of year.

It becomes pretty clear that historically, listing your home in late winter, early spring or fall in the Bay Area will bring you the most market activity. Notice in this graph for the entire San Mateo County that the percentage a seller receives and the median home price is highest usually around June. Remember though-June sales were from homes listed in April and May.

Most sellers do not want to sell their home during the holiday season. The market slow down starts around Thanksgiving and activity wanes thorugh the end of December. This is usually the slowest time of year with few buyers focused on shopping for a home. The sellers who are listing are usually ones who must sell (due to a job transfer in many cases) making this a great time to buy and a poor time to sell.

Even your local weather can have an affect on when is the best time to sell. The Bay Area has rather mild weather but still the stormy month of February might keep buyers indoors. If you are located on the coast for example, you may want to avoid June when the marine layer develops and brings with it cool, cloudy days. In Belmont, view homes show very well at certain times of the year when they air is clear and summers winds are at a minimum. If you have a garden or extensive flowering landscaping that blooms at certain times of the year that too should be taken into consideration.Consulting a specialist will help you weigh all of these factors and determine when is the best time for you to sell.

After all that has been said, it’s important to remember that past performance does not guarantee future results. Meaning that although there is a compelling case to optimally sell your home in the early spring or fall in our area, changing global and national economic conditions could radically change that in any given year.

The best advice other than avoid selling your home if possible during the holidays, is to sell when you decide the time is right for a move. Timing the market perfectly is impossible but managing when to list your home is not. Keep in mind that these statistics and generalizations are not meant to be definitive rules on on market conditions.

For more information on the Bay Area, San Mateo County and the Belmont market contact us for further information specific to your situation.

Disclaimer: This information is for entertainment purposes only and includes no legal, accounting or real estate advice nor is this response in tended to be specific to your situation-consult a specialist for your specific situation.

What’s in a Status Symbol?

Ever wondered why you might see a home with sign in the yard and not be able to find it on the internet? Read on. Status symbols and what they really mean.

This can be a bit confusing if you aren’t part of the local multiple listing service so allow me to clarify these terms.

When we list a home for sale is becomes "active" in the MLS system. That’s the first status and it’s referred to as status "1", aptly named. This is when people who have subscribed to automated email alerts generally receive an email announcement that the home has been listed for sale-often times indicated with an [A].

If you see a "Pending Release" or "Pending Sale Release" it typically means an offer was accepted which contains a contingency (usually on the sale of the buyer’s home). This means that the seller has accepted the offer but can release the buyer from the contract if they get another (usually better) offer. This is typically reported as "SALE PENDING RELEASE" or status "2" in the MLS system-also denoted as [PR].

A release clause may be employed in any contract but it’s typically relegated to sales wherein the buyer must sell a home to complete the transaction. Not wanting to be tied up for a protracted period of time, the seller may add a "release clause" to have an option to cancel the contract. Release clauses are typically upon 72 hour notice but they could be whatever the buyer and seller agree upon; and they are typically reserved for when the buyer has a home to sell but again they could be used in any scenario where the buyer and seller agree.

The way a release works is simple. Say you’ve accepted an offer on the home you are selling for $1,000,000, but the buyer must first sell their home to complete the transaction. The seller might agree to your offer but add a release clause stating that upon notification (some point in the escrow period) you have 72 hours to remove the contingency or the seller can then elect to cancel your contract and accept another offer or move a back-up offer into first position-it’s sort of a warning shot across the buyer’s bow if you will. Now let’s say another buyer brings you an offer for $20,000 more after you’re in contract with buyer #1. The first buyer must after written notice either remove their contingency within 72 hours or risk losing the property. So why would a buyer agree to this? Usually because they have no choice. Most sellers insist on this, but secondly the buyer may have sufficient funds in which to close the transaction either in stock or equity but for whatever reason would rather sell their home first. Faced with the 72 release notice, the buyer can then elect to let the home go to another buyer or cash in stocks or their equity and remove the contingency. This way the buyer is not forced into liquidating stocks or paying interest on an equity line of credit until and if necessary.

Status 3 is Pending Sale continue to show. [PS]

This simply means that the seller wants to continue and have their home shown to prospective buyers, and agents. Typically this means there are contingencies in the accepted offer and until they are removed it usually stays in this pending continue to show state. This status is typically reserved during financing and inspection contingencies.

Status 4 is Pending DO NOT SHOW. [PN]

This typically is used when all contingencies have been removed by the buyer but it too can be employed earlier at the seller’s election. This is usually where a property will drop off of the radar by most internet search engines. That’s why you may see a home with a sign in the yard but not be able to find it any longer in the MLS system via the internet.

Status 5 is SOLD and used for when the home has transferred title to the new owners.[S]

Disclaimer: This information is for entertainment purposes only and includes no legal, accounting or real estate advice nor is this response in tended to be specific to your situation-consult a specialist for your specific situation.

Most real estate agents at one time or another wonder what planet their local news media is reporting from when it comes to home values in their area. Often time prices are rising when the media is seemingly reporting waning sales; and other times the media appears to be Johnny-come-lately in their reporting of trends such as the latest run up in mortgage defaults.

Unfortunately, as mainstream media becomes more sensational and less informational we’ll all be exposed to more stories on which celebrity is due for another DUI arrest on their way home from a drug rehab program and less stories that matter-ones which actually affect our lives.

Case in point–On the peninsula where we live in the Bay Area, our little town of Belmont has continued to show strong gains in real estate for the past ten years. Yet every January, the media reports that sales were down for that month. That seemingly incongruent piece of information would puzzle the likes of the fine citizens of Belmont and would invariably result in us receiving calls from past clients wanting to know what’s up with the market; every year we’d explain that often times the information they are hearing is the result of national or even statewide reports, and may not necessarily be applicable to the mid-peninsula.

It goes like this: the media gets a wire that the National Association of Realtors reported sales of resale homes were down in January over the prior month. That gets translated into a teaser tag line that says, "Is the real estate market crashing-stay tuned". So you patiently stay up for another twenty minutes when right after they erroneously predict the next days weather and apologize for the previous night’s errors, there’s this 20 sound bite that NAR reported resale home activity slowed in January. Slowed compared to what? Of course no one remembers the details and the next day the water coolers are bubbling over with conversation about a downturn in the value of homes. Even if they did mention that sales were down over the previous month (which they always are) nobody hears that part or knows that that’s par for the course and they mistakenly draw the assumption that slower sales means a downturn in values. And of course the media takes no initiative to interview any agents who are involved in multiple offers and losing home after home due to the low inventory. You don’t have to be the recipient of a Nobel Prize in economics to understand if you have fewer widgets to sell sales will be down and prices may go up if demand is strong.

I almost forgot, every year-months after we’ve sold a half dozens homes for considerably more than asking-the media reports a median home price gain. But were those numbers national or statewide? Who cares, it’s good for the ratings.