Summer Home Buying Tips

Trulia has some excellent tips if you’re looking to buy a home this summer. One caveat: some of these tips may not apply quite as much to the Bay Area, where real estate is … different.

  • Consider older listings: While it may seem that homes on the market go into agreement within minutes of being listed, that is not actually the case. Sometimes a house may be on the market because the buyer changed their mind or couldn’t the proper financing. Might be worth a look.
  • Consider a house that “needs work”: While the number of starter homes is decreasing, fixer-uppers have increased by over 8% in this category.
  • Strong offers often trump highest offers: Here, of course, strong means cash which may be out of reach for most. But it probably will get you that new home.
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May 2018: East Bay Real Estate

Homebuyer demand remained strong in the East bay during May 2018. The median home price of home sold as $1,200,000, up 4.1% from the previous year. The number of home sold was 609, up 7% from May 2017.

The average number of days on the market was 16, 4 days faster than in 2017. The average sold price as compared with the asking price was 119%, an increase of 1.9% from May 2017.

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46 Percent of Bay Area Residents Likely to Leave

A new poll by he Bay Area Council reveals that 46 percent of Bay Area residents surveyed say they are likely to move out of the area in the next few years. Last year the percentage was 40, in 2016 it was 34 percent.

Not surprising the continuation escalation of housing costs is the main reason for the desire – or need – to leave. The median price in the area is now $850,000 — up 13 percent from a year ago.

Fifty-five percent of those residents polled in the survey said they believel the Bay Area has “gotten pretty seriously off on the wrong track,” up significantly from 42 percent just last year.

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Bay Area Economic Boom to Continue; Housing Crisis to Worsen

It is the best of times, it is the worst of times… At a recent San Jose State University economic summit the general consensus as jobs – and pay – continue to increase across the Bay Area, which is only exacerbating the housing crisis.

It is estimated that California needs construction of roughly 210,000 to 250,000 residential units a year but is building only 110,000 annually.

As more and more tech companies are moving or expanding to San Jose, the city is responding by pledging to build 25,000 residential units in San Jose through the end of 2022. 12,000 have either been approved or being reviewed for potential approval, although only 3,000 are actually currently under construction.

A ways to go.

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Surprise! Home Prices Set a New Record – Again

Call it the law of supply and demand – or, in this case, the law of extremely limited supply and excessive demand – but, once again, prices in the nine-county Bay Area have risen to extraordinary new levels.

Santa Clara County saw the largest gains with home prices increasing by nearly 25 percent(!) over 2017 with a median price of $1.308 million. Alameda County homes rose 11.8 percent with a median price of $900,000 and Contra Costa County rose 10 percent to $649,000.

Interestingly, the number of homes for sale this April actually increased by 7 percent over a year ago. Nevertheless, the total home sales in April were nearly 16 percent below the historical average..

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New Home Construction

Despite the low inventory of home for sale and the high demand, new home construction is up only marginally from 2017. Why? According to the National Association of Home builders (NAHB) there are several reasons:

  • Shortage of labor: Despite low overall unemployment, the housing industry has only recovered 50 percent of the jobs lost during the recession
  • Higher lumber prices: As of Feruary, lumber prices were up 45% year over year, which will only get worse due to the new tariff on Canadian lumber
  • Shortage of available lots: 65% of home builders say that land shortage is a major constraint on the construction of new homes
  • Regulatory costs: Government agency costs have risen over 29 percent since 2011
  • Available financing: Since the recession, lending standards have been tightened for both homebuyers and builders of multi-family projects. This may be easing.
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Listing a home? Do it Wednesday … or maybe Thursday … but not Sunday

According to a new study by Redfin, listing a home for sale on a Wednesday will bring the seller $2,023 more than if listed n a Sunday – which is the worst performing day of the week.

Homes listed on a Thursday, while bringing in an additional $1,609, sold five times faster than those first listed on a Sunday. These homes also had a higher likelihood of being sold within 90 to 180 days.

Analysts can’t seem to pinpoint why these factors are true other than speculation that they simply align closer to many would-be buyers house hunting schedules.

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The Importance of DTI

One of the most overlooked factors in securing a home is DTI – debt-to-income ratio. Easy enough to figure out: divide monthly debt by monthly income.

These days most lenders require a DTI to be below 36 percent, although some lenders will allow a DTI as high as 43 percent.

However, it’s incumbent on the would-be homeowner to honestly assess what percentage of their they are willing to devote to housing and still maintain their lifestyle.

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Millennials forced to sacrifice

High prices, low supply are causing many first-time homebuyers, often millennials aged 20 to 35, to sacrifice on many of the features they value in order to purchase a home; or to give up the search all together.

A recent survey by Trulia found that 84 percent of respondents would give up features in order to live in their ideal neighborhood; 34 precent would skip the garage, 32 percent would forego the updated kitchen and 30 percent would accept less square footage. 16 percent said they wouldn’t make any concessions.

Unfortunately, even with concessions competition remains fierce and many millennials give up on the idea of buying a home or move out of the area.

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Businesses move on housing crisis

A recent survey by the San Francisco Business Times reported that 93 percent of businesses responding believe the current housing crisis is a problem for their business. Many businesses are taking a pre-active approach to the situation including the following measures:

  • Assisting with home loads
  • Establishing housing allowances
  • More telecommuting
  • Temporary housing
  • Improved commuting
  • Relocating remotely

Even greater than the individual measures themselves is the realization by business that they can no longer wait for political solutions but must take responsibility themselves.

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