Living in one of the best, most stable communities helped us maintain high home prices which appreciated immensely during the last 30 years. We did have some dips during that time but generally our homes appreciated about 5 times over, (milk, bread, fruit and vegetables hardly doubled in price). Very few homes get sold here. People prefer to stay put.
The easy access to shops, I-280 and I-85, the proximity to Cupertino, Los Altos or Palo Alto schools makes it ideal neighborhoods to live in. South Sunnyvale, Cupertino, Los Altos, Palo Alto and the good parts of Mountain View maintained high prices. A 3-bedroom ranch-style house in the South Sunnyvale, priced at $950K was reduced in price after a week to $908K and attracted 4 offers to raise the price to above $910k. Generally, in these desired areas the prices are about 20% lower than the peak time on March 2008. Back then, a 3 bedroom ranch style home was priced at $975K and after reviewing 11 offers sold for $1.109M. Invested funds lost many times more than 20%.
The banks’ new guidelines are very strict - they demand higher down payments and better credit. The new limit for Conforming loan starting January 2009 is $625,500. Buyers will have to pay a higher down payment or get a second loan. The underwriters who decide if you can get a loan and on what terms, expect a fully documented file. Stated income (in which you would state that you earn a certain amount without proving it) is gone. Many foreign families from overseas go back home to their native land. Most of them lived in rental homes so it didn’t affect the prices much. The banks are getting more organized and more in control of the situation but a new wave of layoffs is arriving and we all hope that the employment market stabilizes.

QUICK UPDATE:

The units sold in October 2008 v. October 2007 were up 57%. Most of that activity happened in homes under $500k, short sales and REO (Real Estate Owned by the bank after foreclosure or how you would want to call it “Real estate Opportunity”) In addition, the 1 million plus range seems to be moving better than the deep-freeze we were in from October 10 to the end of October. During the last 5 weeks buyers are buying 1 million dollar plus homes at a faster rate than in September - October. It’s a great opportunity to upgrade from smaller homes which lost relatively less to larger, more expensive home.

WHAT IT TAKES TO SELL IN THIS MARKET:

Price and condition of the home become even more critical than in the past. Homes that are still selling are either priced more aggressively or upgraded and in good Condition. The homes that are priced well and remodeled are attracting the most attention and getting sold faster.

Of course location is of utmost importance. Being in a good school area improves the saleability of the house immensely.

WHO IS BUYING TODAY?

Relocation Folks; First Time Homebuyers; Investors in anticipation for appreciation for under 400K market; Move-up Buyers making a lateral move; Folks that have been sitting on the sidelines for a few years; Folks at all price points that have been pushed out of the market by multiple offers over the last 4-5 years

Investors:

If you are planning to buy a short sale, check with your real estate lawyer. There are too many law suits going around due to innocent mistakes or not knowing the laws and regulations.

QUICK RATE UPDATE: please note, the actual rate that you can get depends on your credit history and down payment amount.

30 Year Conventional 6.000% @ 0 pts up to $417,000

30 Yr Agency Jumbo 6.375% @ 0 pts up to $729,750

5/1 ARM Super Jumbo 6.125% @ 0 pts up to $4M

In California the Real Estate Broker is responsible for pre qualifying the buyers, finding a suitable house/property that will fit the needs and budget of the buyer, negotiate the best price and terms, write the contract which is the purchase agreement, coordinate with the lender to get the best loan, inspect and check the property with professional inspectors, follow up and make sure all needed work be completed as per the contract, pay attention to every detail and educate the buyers through the process, walk through the check the property before releasing the down payment funds, check the closing statement and follow up with the home warranty and advice for many years to come. For Sellers, the Broker has to help decide on a marketable price, help prepare the house like a bride for her wedding day, do all property inspections, help the seller fill up all the disclosures, market the house and advertise in all possible ways, hold open house every weekend until the house sells, show it whenever needed, help maintain the house clean and tidy, choose the best suitable buyer, negotiate the best price and terms, check the lender and follow-up with every step of the sale process, and the contract and help deliver the house clean and ready to the next owners.

There are many other roles a broker has that are not written, like staging, moving furniture around, decorate with fresh flower arrangements, and be a real friend.

With the new situation of the mortgage companies and banks that are going under, like Indibank this week and who knows who is next on the list, there is a feeling of uncertainty. Buyers are afraid to remove loan contingency because their lender might change terms at the last moment or even go under, leaving the buyers with no loan, risking their deposit check of 3% of the sale price, which is a considerable amount of money in our area. Until about 1985 the contract enabled the buyer to have loan contingency up to the final approval of the loan or the funding day. It is still the case in other states like Texas and Louisiana but not in the bay area. Here, the seller gets mad and asks the buyer what rights he has to expect the seller to hold his property off the market while he waits for his loan to get approved without jeopardizing his deposit check. Maybe it’s time to change this condition and give the anxious buyer some peace of mind.

The Real estate market is more balanced these days. There are more negotiations and less bidding wars. Some extraordinary homes still sell with multiple bids but most homes are being sold after a few weeks on the market and tight negotiations. Sellers still insist on their prices and buyers are more cautious. Many buyers wait to see what will happen with the banking industry, but others still buy homes especially in the preferred areas with the good schools.

I was having an email exchange with somebody about county taxes which are due in the next few days.

Here is what we talked about

Dear David

The seller pays his taxes according to the county assessed price. If it’s a house that was purchased 45 years ago for $28,000 (ha, ha,) her yearly payments should be around $600. Proposition 13 is protecting homeowners from a big raise in tax payments. Not more than 2% a year.

When you buy that same house for $1.1M (I am giving you an actual example from reality) your taxes will be about $13,200 a year. You would have to pay it in 2 installments one by December 10 and the other by April 10. $6600 each.

When you buy the house the county takes time to adjust the prices and you might benefit (temporarily) from that by paying what your seller paid, but be sure that the county will remember you and ask you to pay for the adjusted price. That would be the assessed price. They should send you a letter with the amount that you need to add on top of the original payment and probably let you pay it in 2 installments.
Have a great day!

Miri

—–Original Message—–
From: David

Thanks Miri for the answer. I should check this HUD-1 document.

What are the supplemental taxes? Aren’t they included in the Property tax?

Thanks,

David.

On 4/3/08, Miri Bialik <mbialik@interorealestate.com> wrote:

Hi David, if you just closed on the house there are 2 options:

1. The escrow company calculated your taxes and charged you through escrow and

you are good until November 2nd (becomes delinquent by December 10th)

2. The escrow company didn’t charge you but gave you credit for the time the

seller owned the house and it’s your responsibility to pay.

The answer will be in the HUD-1 document – the closing statement.

Most probably they have already charged you but it’s your responsibility to

make sure that you paid your taxes. The penalty for not paying on time is brutal.

———- Forwarded message ———-

From: David > Date: Thu, Apr 3, 2008 at 3:16 PM

Hi Miri,

Thanks for the information. If I start to own a house on Feb 29,2008

then when my property tax is due?

Thanks,

David

On 4/3/08, Miri Bialik <miri@miribialik.com> wrote:

Hi,

If you own Real estate property make sure you paid property taxes by 4/10/08.

Property taxes were due Feb 2nd and they become delinquent if the county

does not get them by 4/10/08. The penalty is painful.

Always at your service, Miri

Take your typical 3 bedroom 2 bath ranch, in its original condition, clean it nicely and poof, like magic, you turn it into millions of dollars. It was purchased for $28,000 45 years ago. Back then it was expensive. The neighborhood was very quiet and modest, there were cherry and apricot orchards around, in the heart of the Silicon valley. Now the magic word is Cupertino schools. This is the melting pot of the world. Immigrant from India, China, Japan, France, Germany, Finland, Israel, Iran, and many other countries, come to live the American dream. They want to get education, freedom and money. They are willing to pay $140,000 above the asking price for this 1600 s.f. house that has $30,000 termite and foundation damages. Additional $50,000 might be enough for basic remodeling. Yes, you need at least $1,1M to own a modest house in Sunnyvale, Cupertino School District. Last week a nice ranch house was sold with 18 offers and this week a similar house got sold with only 7 offers but the end price was higher. How high can it go?