Belmont Homes Sales – May 2009

What’s happening in our local market is the number one question we receive so here’s the good the bad and the ugly for May 2009 in Belmont.

Bel May 2009

The Good

The number of homes sold in creased in May to 15 from April’s paltry 12. Still, compared to 2004 when 32 homes sold there’s not a lot of activity.

The number of days it took to sell a home in Belmont went from 48 in April down to only 37 in May.

Of the 15 sales in May, 5 sold over the asking price, none sold at asking, and 10 sold under the seller’s asking price.

The Bad

Homes which were originally overpriced took a beating.

Overprice Homes

10

Homes Priced Well

5

DOM

 

76.8

DOM

 

18.8

Percent Received of Original List Price

89%

Percent Received of Original List Price

101.4%

Real Dollar change

$67,000 less

Real Dollar Change

$5,000 more

 

The number of overpriced homes reaching a factor of 2-1 over well priced homes is indicative of the disconnect between what sellers feel their home is worth as compared to what a buyer will actually pay. It’s clear by looking at the numbers though that the number one mistake a seller can make continues to be overpricing their home.

The Ugly.

The median price in Belmont continued its correction in May.

 

May 2009

April 2009

May 2008

May 2007

Median Price

$820000

$775,000

$1,098,750

$1,036,733

* Corrected for size of home

$820,000

$855,000

$952,300

$1,106,533

May Δ in percent

 

-4.09%

-13.94%

– 25.89%

 

*We endeavor to report the true median price as accurately as possible. In doing so, we must take into consideration if larger or smaller homes are selling in a given period.

 

*Date retrieved form the Multiple Listing Service of San Mateo County.

Belmont and the Bay Area Peninsula Housing Downturn

If you’re wondering where the housing downturn is headed in Belmont you can get a good indication by these two snap shots taken for the month of March 2007 and 2009.

We use 2007 as a benchmark since it was the last year where the impact of the housing crises had not yet been realized in our market.

Here are some startling yet revealing statistics:

The far right column of this chart says it all. Every indicator in red illustrates a deterioration of the seller’s market which has prevailed for so long.

You may notice that even though larger homes sold in 2009 the median price still dropped $161,500 in 2009. Adjusting for this, the real median price drop is actually $252,850 or 26%.

Today, on average it will take almost three times as long to sell a home in Belmont; when you do sell you are likely to receive under you asking price. In fact statistically you no longer have any chance of getting over your asking price and the odds of getting less than your asking price has increased by 50%. Sellers now receive on average only 96% of what they ask for their home compared to over 103% in 2007. In real dollars that translates into a swing of $52,000.

In the end, this much anticipated market correction will produce a more stable real estate market. Affordability is increasing and eventually sales will increase as buyers feel more optimistic about the future, including job security and housing stability.

Considering the drop in value we are experiencing, for sellers who are debating a moving out of the area, sooner rather than later will probably produce a better result. In all likelihood it will be many years before inflation drives price points back to levels seen in 2007.

A down market is typically an attractive time for sellers who are thinking of a move up. The logic behind this is a more expensive home is less in real dollars–and also saves you thousands of dollars in property taxes over the life of your ownership. Our current market also includes attractive Interest rates that are at historic lows, though Jumbo loans are not enjoying the full benefit of the government’s intervention.

Buyers who have stable jobs and are planning to live in their first home for five years or more are benefitting the most from the current conditions. Prices are at a low not seen in years, interest rates are at historic lows, the government is paying them $8,000 to buy a home this year, multiple offers are for the most part non-existent and the high inventory levels means there are a lot of homes to choose from.

In every market, there are opportunities. If you would like advice on how to make the most of our current economic climate give us a call at (650) 508-1441.

*Data retreived from the MLS

The information contained in this post is educational and intended for informational purposes only. It does not constitute legal or tax advice, nor does it substitute for legal or tax advice.

HOUSING REFORM-2009 Panacea or Panic?

The news is full of housing reform stores but the shelf life for reform legislation seems shorter than that of freshly baked bread—what made the news just yesterday is often obsolete by today.Congress

We expect 2009 to be a turbulent time in real estate. Knowing how to weather the storm is paramount to the survival of homeownership.

Key Elements

President Obama signed a $787 billion stimulus bill which includes many features to protect homeownership.

These are a few of the incentives targeted to help 4-5 million responsible homeowners stay in their homes:

\\· Provide access to low cost refinancing where borrowers who have less than the required 80% loan-to-value could refinance to lower their monthly payment.

· Seventy-five billion will be spent on homeowner stability initiatives to help struggling homeowners who, because of the recession, are hard pressed to make their mortgage payments and cannot afford to sell or refinance their home due to a drop in value.

· No aide to speculators. The initiative has no provision for assisting investors or speculators.

· Provide support for homeowners who are at imminent risk of default before they miss a payment.

· Provide loan modifications to bring monthly payments to sustainable levels.

· â€Pay For Success”—Initiative for loan servicers to receive $1,000 per month each month a borrow stays current on their loan.

· â€œHelp Borrowers Stay Current”—Provides a $1,000 per month reduction in a home owners’ principle loan balance for five years if the borrower keeps their payments current.

· â€œReaching Borrowers Early”—An incentive of $500 to loan servicers and $1,500 to mortgage holders if they modify at-risk loans before the borrow falls behind.

· â€œHome Price Decline Reserve Payments”—Holders of mortgages modified under the program would be eligible for an additional insurance payment (from a newly formed entity under the Treasury Department) on each modified loan to offset declines in the home price index.

There are quite a few more initiatives to help homeowners. Though many do not apply to the majority of the loans on the Peninsula since they are not held by Fannie Mae or Freddie Mac.

Lenders Are Worried.

Recently, many lenders have been modifying loans without incentives just to keep their head above water. However in contrast to the President's incentive plans, many banks require the homeowner to be months behind in payments before any relief is possible.

â–ºIf your mortgage is scheduled for an interest rate increase which you feel you may not be able to afford, we encourage you to contact your mortgage holder immediately and see if they will modify your  existing loan. It’s in everybody's best interest if homeowners can continue to make their monthly payments, even if it takes a loan modification to make it happen.

 

Belmont’s Beautiful Mountain Blog Revisited

 

In 2008 we began several new series on our blog site. Most of our content centered around the turbulent real estate market on the Peninsula, but we also endeavored to comment about the market in general and small town happenings in Belmont.

Some of our posts simply required too much time away from the business of selling homes, and we’ve decided to eliminate a few of those.

What we will be discontinuing is the weekly update of new listings and sales. Rather, we encourage you now to subscribe to our automated system for getting listing alerts in real time—including new listings and recent sales; we just felt that we were being a little redundant and this trade-off will allow us more time to concentrate on our business.

You can still count on getting a monthly wrap-up of homes that have sold. We feature Belmont home sales in detail on this blog site and you can always get surrounding cities and the entire San Mateo county stats at our MorganHomes.com web site under “How’s the Market”; we also implemented the Fusion style graphs that are more interactive and interesting.

We’ll continue to add occasional posts in our series “Frequently Unasked Questions” Unasked3 whenever we stumble across an issue we think you should know about, and probably don’t.

 

The Podcasts we began in 2008 will still be around when we want to discuss the market in general and we hope that you continue to stay tuned to those.Podcast

We think this more focused and succinct blog format will help our readers get the real estate information they want, and know that they can rely on our regular posts whicht have attracted the most readership.

Thanks for being patient as we enjoy an exciting 2009.

Best Dressed homes in 2008

IStock_000006475100XSmall With a nod to Carlmont High’s class of 2009 starting their first full week after winter break , and real estate just coming out of winter hibernation, we thought we’d take some of our downtime to summarize a few of our sales in 2008 and offer a big thanks to the many clients who hired us to help them get their perfect home this year.

 

Most Likely to Succeed

Hillsborough I guess you could say this Hillsborough home has already succeeded in many ways. At 10,000+ square feet it’s the largest home we’ve ever sold and at $10,990,000 it’s also the most expensive.  

 

 

 

 

What a deal though, Hillsborough3our buyer received an offer for over a million dollars more than what they paid for it a month later (they turned it down). LISTED for $10,990,000 SOLD for $10,900,000.

Hillsborough2

 

Check out the cool backyard with pool, tennis court and guest house!

 

 

 

 

 

 

 

Most Creative

Teredo Terrance and Patricia have grand plans for this modest home in Redwood Shores. We won this home for them in multiple offers. Plans include a two story addition which will give them views of the San Francisco bay! LISTED for $859,000 SOLD for $ 889,000 in four days. Good luck with your remodel!

 

 

 

 

Class Favorite

Laurel Everyone who has seen this home falls in love with it just like Chris and Tracey did when Chris found it online. We’d been looking for the perfect home for several years when lo and behold this estate came up in Los Gatos. Laurel2 

This has to be one of the neatest homes we’ve ever sold. Check out the outdoor entrainment possibilities with the coolest veranda we’ve seen. Laurel3 

Oh yeah, did we mention the weather down there makes outdoor dining a summer standard. Great housewarming party BTW. LISTED for $4,500,000 SOLD for $4,250,000

 

 

 

 

 

 

Best Dressed

Cape2 Hands down for Best Dressed was this home in Redwood Shores. Chris and Tracey had an amazing home which we were happy to sell. Even our stager said she wouldn’t change a thing! Cape 

Check out the rear BBQ area that's the envy of the neighborhood. And thanks to Tracy’s interior design skills, she made this an easy sell and was rewarded with the highest sale ever in their neighborhood. LISTED for $1,428,898 SOLD for $1,400,000.

 

 

 

Most Talkative

Hallamark1 Our listing in Hallmark gets the nod for most talkative since the neighborhood was abuzz when we listed it. We’d been prepping it for a month and being that it was on Hallmark Drive, it got quite the visibility. We were absolutely deluged at our open house and when we sold it in one week (in the midst of the financial melt-down) the calls were rolling in asking how we sold it so fast. Hallmark 

The answer is the seller did everything we asked of him and readied is home with professional staging and enhancements. There’s a neat video if you want to see the before and after pictures. Thanks Eiji—you were a pleasure to work  with and we are still saddened that you lost your cat one day before you moved—we’re always on the lookout for him. LISTED for $1,298,890, SOLD for $1,285,000 in about a week.

 

Thanks again for making 2008 another great year!

Real Estate re-cap–2008

Before we wrote this year’s forecast, we went back and re-read our assessment of where the market might be headed in 2008. Graphs

 

Of course very few people could have predicted that the dire real estate woes would drag the entire economy to the brink of collapse and we were no better than most.

 

However, for your enjoyment we’ve clipped a segment out of our 2008 market forecast made on January 4th 2008—and highlighted some of our more interesting comments:

 

“This is precisely why the Peninsula should fare better than other areas [in 2008]”.

 â€œHowever, it’s entirely possible we are on a precipice which could collapse at any time. What is [currently] impacting the Peninsula is the rising cost of energy—especially gasoline.”

“What could have an incalculable impact would be a prolonged recession and loss of local jobs; either of these would undoubtedly bring a decrease in home values to the Peninsula”.

In 2008, Investors eventually began to snap up undervalued properties in the central valley and a few of the nine bay area counties which were hard hit by foreclosures. This had the desired effect of liquidating the tidal wave of inventory but the undesirable effect of sinking the reported median price by skewing the sales mix to smaller homes (since smaller homes and distressed properties sell for less). The media meanwhile continued its relentless reporting of the falling median home price without appreciable application of responsible journalism. Bombarded by the media’s lack of analysis, invariably many buyers were frightened by the reports of falling home values and quite reasonably and expectedly took a “wait and see” attitude. That’s not to say the media’s information was wrong, but they do choose what to report and what to leave out and in many cases they reported numbers without the necessary perspective leading many to believe the housing situation to be far worse than it was in some areas, and far better than it was in others.

Although clearly there were several other factors which inhibited the ability of people to purchase homes—not the least of which was tighter lending standards and higher interest rates—our intrinsic evidence suggests that most credit worthy buyers on the Peninsula withheld from purchasing a home based on the fear of values spiraling down, not because they wanted to wait and “time the absolute market bottom” or couldn't get a loan.

 

Belmont-Month in Review December 2008

We’ve got a lot to cover at the beginning of a new year as we go back and examine all of 2008 as well as the month of December.

This is our month-end report of home sales in Belmont for the month of December 2008. Note that while the median price dropped significantly from November, so did the size home which sold in December. The difference in size of homes in the two months was 190 square feet. At the price per square foot of $514 that could account for $97,660 of the difference in the median home price—meaning that home prices were actually higher in December if you factor in for the size of home which sold.

Sales were up too. There were eight sales in November and eleven in December. That’s an anomaly as typically sales in November are greater than December. We’ll chalk that one up to the dire economic news in October (October sales are November’s closings).

Click on the chart for a readable picture.

December 2008 Belmont Sales

Welcome to our 2009 Market Conjecture

Those of you who have been following us for some time know that at the beginning of each year we re-cap the previous year and take a stab at where the market might be headed in the upcoming year.2008-2009

Of course you expect to read the median price has dropped and in fact it has, just not as much as you may have been anticipating. While the Bay Area nine counties reported a median price drop of over 40%* from 2007, Belmont had only a 5.4% decline and that’s after we factored into our calculations slightly larger homes sold in 2008. The raw numbers, which tend to be the only ones reported, suggest a decline in median price of only 2.6% for the year.

SALES ARE KEY

Sales are key to the survival of Realtors®, but unless you are selling your home you could probably care less how many homes sell in a given year. However, it gives us a good indication of overall market activity—with the caveat that sometimes sales are down simply because there are fewer homes to sell.

Sales of single family homes (our benchmark for all comparisons) were down from last years’ 219 to a paltry 170 for the entire year in 2008—a decrease of over 22%! Contrasted to a year of more normal market activity, (as recent as 2003 when 343 homes sold), sales are down up to 50%. Clearly we are in a period of slower than normal home sales.

 

HOMES LISTED FOR SALE

But were there fewer homes to sell in 2008? It’s hard to believe but for the entire year, at 309, there were only two fewer listings than in 2007.

What’s in store for 2009?

With the perfunctory disclaimer that past performance does not predict future results, we fear in 2009 it may however be quite true. We wouldn’t be surprised at all to see a continuation of the stagnant real estate market which has had a choke-hold on home sales in 2008. Interestingly, the last major downturn in real estate which began in 1989 was caused by an overall weak economy and most importantly the loss of jobs. In contrast, the current housing downturn has in effect created the recession—a reversal of past cycles.

 

That’s a long way of saying that housing cannot recover until the economy does and the economy won’t recover until housing stabilizes. Sound like a Catch-22? Well it is. And while it appeared in the second quarter of 2008 that the real estate recovery might begin in 2009, we now believe that will be pushed out at least another year. That said, any sign of a recovery will manifest with a leveling off of inventory and declining home values. A period of stagnant home values will invariably last for another year or two following a price plateau as buyers still wary of a volatile market will only reluctantly reenter the market. Most will wait too long and catch prices on the way back up but there’s no telling when that will happen. We’re not telling you to run out and buy a home as part of a fear based campaign, “Hurry or you may miss the bottom”, but in every market there are opportunities which should be examined. We learned long ago to resist trying to explain to people why they should buy a home and rather help those who are already motivated. Like the old saying, “You can lead a horse to water…” but he has to be thirsty. This year’s wild cards? Interest rates, consumer confidence the recessions and jobs, jobs, jobs!.

 

Cheers,

Drew

Belmont – November 2008 Housing Report

We anticipated Belmont home sales closing at eight for the month of November in a previous post where we did an extensive review of the local market.


Click on the play tab to hear an overview



These first two graphs will be explained more in detail further in our post but as you can see the percentage of homes selling over the seller’s asking price has increased.




(Click on the chart below for a full size image).



November Belmont Sales 2008 As you can see from the sales report, sales are down considerably from the previous month and down from than that of a year ago as well. We’ve added a chart showing the differences (below) that will help put November’s numbers in perspective.


(Click on the chart below for a full size image).


November Belmont Sales 2008 comparison



 


To sum up the data we’ve also added arrows depicting whether each indicator (or data point) is an improvement this November over the two previous periods reviewed. An up arrow ↑indicates that this November’s data is an improvement over the previous periods while a down arrow↓ indicates the opposite is true.


MEDIAN PRICE


The Median price, the point at which half of the homes have sold more or less, remains virtually unchanged from October 2008. Counter intuitively November’s median at $912,000 is higher than in 2007 when it stood at $894,000. The size of homes selling greatly impacts the price per square foot as smaller homes sell for more per square foot and larger homes tend to sell for more period. Accounting for the difference where in 2007 the median home size was 1645 square feet and this year where the median home sold was 1,910 sq. ft., at $514 per square foot that would make the 265 sq. ft. difference in size worth around $136,210 meaning that home values actually dropped 7% over last year’s November, not up 2% as the raw data suggests.


SALES


At only eight sales as compared to last November’s 20, it’s amazing that inventory is not higher. At the time we wrote this the inventory of active homes for sale in Belmont stood at only 50. To some degree that helps balance the supply and demand and keep prices in relatively check.


This November three homes sold over their asking price—the same number as last year. The difference is this year homes that sold over their asking price represented 43% of all the November sales while last year it represented only 15%.


PRICE PER SQUARE FOOT:


Be careful not to read too much into this. Last year homes sold in November sold for $70.00 more per square foot than this November—but the homes that sold last year were much smaller; and  as was discussed above, smaller homes tend to sell for more per square foot because land is a constant in the calculation and can account for half of a home’s value.


PERCENT RECEIVED:


This November sellers received on average 99.38% of their asking price—virtually unchanged over October’s performance and better than last November’s 97.9%. This needs to be weighed against the CDOM (Continuous Days on Market) and the number of price reductions statistics to be meaningful at all. Sure homes sold this November closer to their asking price, but did the seller receive more in real dollars? How many price reductions and how many days a typical home is on the market help put this number in perspective. Notice that homes which needed a price reduction in order to sell accounted for nearly 63% of all sales this November while last year they accounted for only 25%. But the time it took to sell a home, though higher than in October, dropped from 46 to only 29 days this November. What does this suggest? That more sellers are forced to lower their expectations and lower their asking prices sooner rather than later.


This information is for entertainment purposes only and includes no legal, accounting or real estate advice nor is this intended to be specific to your situation-always consult a specialist who is familiar with the details of your situation.


Information deemed reliable but not guaranteed. This is not intended to be a representation of homes listed or sold exclusively by Drew or Christine Morgan or Carlmont Associates.


Download Nov.2008




Real Estate Bidding–Are you a Bidder’s Fool?

As part of our Real Estate REVEALED series we answer another Frequently Unasked Question Unasked3 in our latest Podcast—how do you know when a home is priced right? In addition to this latest Podcast, we’ve added a web page that makes finding the entire series of archive issues in one place.

 

Podcasts

Drew & Christine Morgan

"Helping People Make Good Decisions"sm

(650) 508-1441

Click the mic for the web version of this page.
Thanks for visiting our Podcasts. Each week we offer a housing market update podcast on our blog at BeautifulMountainBlog.org as well as our series titled "Frequently Unasked Questions" where we tackle questions buyers and sellers should be asking but frequently aren't, and "Real Estate Revealed" where we discuss industry insider information. Enjoy and don't forget you can subscribe to our podcast stream to be automatically updated with any new releases by clicking on the orange RSS icon.

Pitfalls of Dual Agency

The Big Broker Myth

Staging your home for sale

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Note: For detailed market discussion visit our blog at:

BeautifulMountainBlog.org

Drew and Christine Morgan

(650) 508-1441

dmorgan@morganhomes.com

"Helping People Make Good Decisions"sm

Download Overbid