Brian Ripp ~ Your Bay Area & Fremont Real Estate & Financial Agent

A surge in home sales that started in some of California’s more affordable inland areas has begun to spread to several more expensive coastal areas, another indicator that the state’s real estate market may be in recovery mode.

·         Many homes in the lower end of the market are receiving multiple offers, with some prospective buyers bidding well above asking prices. Inventory levels for homes priced under $500,000 stood at 3.2 months in May 2009, compared with 9.4 months in May 2008.

·         Some buyers, especially those in historically higher-priced markets such as the San Francisco Bay Area, are newly optimistic about buying homes and are realizing that the combination of low interest rates, favorable home prices, and first-time home buyer tax credits may not realign for many years.

·         Some housing economists caution against interpreting signs of increased sales activity as meaning the market has bottomed.  Interest rates on 30-year, fixed-rate prime mortgages have risen above 5 percent in recent weeks and could continue to increase as fears of inflation impact interest rates.  Additionally, the federal tax credit for first-time home buyers is scheduled to end Nov. 30, which may remove the incentive to purchase.

·         Although the median price in the state has risen for four consecutive months, prices in some higher-income neighborhoods still are declining. Some agents say that declining prices in these neighborhoods are a reflection of borrowers’ problems getting jumbo mortgages to make purchases.

Bottom line is – it appears that we have hit the bottom of the market (if not, it’s really, really close) and if you have considered buying a home or condo, now is the time to start the ball rolling.

Brian Ripp, CRS, GRI, Broker – your Bay Area Realtor

www.BrianRipp.com  serving Fremont, Newark, Union City & surrounding communities. Real Estate & Property Management.

Real Estate Market Weekly Update Webcast: http://realtytimes.com/REUv/BrianRipp

The pattern gets clearer week after week: We are looking at a slow-motion housing recovery that should have us out of the recession later this year.

Now that’s not to ignore the fact that there are markets in the country that still face very challenging economic dynamics – with no real turnaround in view yet on housing sales, prices and unemployment. But the national numbers are telling us something important, and they increasingly look postive.

Brian Ripp, CRS, GRI, Broker - your  Bay Area Realtor

www.BrianRipp.com   serving Fremont, Newark, Union City & surrounding communities. Real Estate & Property Management.

The tide is rising for high-end borrowers.

Some traditionally stable housing markets are facing new stress as rising numbers of affluent homeowners find that they have little to no equity in their homes.

Last week we looked at the accelerating deterioration of jumbo mortgages, which are too large for government backing. Wednesday’s WSJ looks at a new Zillow study that says 20% of homeowners are underwater, with mortgages worth more than the value of their homes.

Jumbo borrowers were once seen as less likely to default, because they were required to put down substantial down payments—ranging from 10% to 20% or more—even during the boom when lax lending ruled. But as home prices have fallen sharply, more markets that have lots of jumbo loans are seeing an outsized share of borrowers with negative equity.

In the San Jose-Santa Clara, Calif., area, almost two-thirds of all outstanding mortgages are jumbo, according to Zillow. In that market, nearly one in five homeowners are underwater and that figure rises to around 45% when looking at mortgages obtained within the last five years.

One big worry: Negative equity situations could spur more foreclosures and short sales, particularly as more affluent homeowners lose their jobs or take new ones that pay less. Short sales accounted for around 12% of all home sales in both of those California markets last year.

Jumbo borrowers face added challenges because it’s hard to refinance without putting more money into their homes, and it’s hard to find jumbo mortgages with low rates that don’t require hefty fees. The Obama administration’s housing rescue plans haven’t dealt much with jumbo borrowers, largely focusing on helping homeowners below the conforming loan limits, which are set at $417,000 in most of the country and rise to as high as $729,750 in the most expensive housing markets.

Brian Ripp, CRS, GRI, Broker - your  Bay Area Realtor

www.BrianRipp.com   serving Fremont, Newark, Union City & surrounding communities. Real Estate & Property Management.