Home buyers facing dilemma with shortage

Home buyers face dilemma with shortage
Kathleen Pender
Published 3:28 pm, Saturday, March 9, 2013

The home at 2334 Clipper Street in San Mateo that received dozens of offers and sold for far above the asking price. Photo: Courtesy Claire Haggarty / NBT, NBT Realty Services

The home at 2334 Clipper Street in San Mateo that received dozens of offers and sold for far above the asking price.

Photo: Courtesy Claire Haggarty / NBT, NBT Realty Services

Read more: http://www.sfgate.com/business/networth/article/Home-buyers-face-dilemma-with-shortage-4342162.php#ixzz2Nc0SDT3r

The sharp drop in homes for sale poses a tough choice for buyers: Jump in now and compete with hordes of others or wait until inventory improves.

If you buy now, you might have to pay above asking. But if you wait, you could end up paying an even higher price and a higher interest rate if you need a loan. That’s because inventory won’t improve until prices rise enough to get more homeowners to sell and more builders to break ground.

The inventory shortage is especially acute in California. Of the 30 largest housing markets, the four with the biggest drops in homes listed for sale on Zillow in February compared with February of last year were Sacramento (48 percent), Los Angeles, San Francisco (41 percent) and San Diego.

Although listings are increasing on a month-to-month basis as the busy spring season gets under way, Trulia Chief Economist Jed Kolko predicts they won’t start rising on a year-over-year basis for a year or more.

An example of that: “In all of Millbrae, there was one listing two months ago. There are about a dozen now,” says Roger Dewes, a Coldwell Banker agent on the Peninsula. In a normal market, there might be 20. “We are not there yet, but going from one to 12 is quite a leap,” he says.

Experts cite five factors contributing to the inventory shortage:

— Fewer foreclosures are hitting the market. “California did a good job of disposing of its backlog” of distressed properties, says Zillow Chief Economist Stan Humphries.

In California, where most foreclosures are handled out of court, the process is taking about 11 months on average, according to RealtyTrac. In New York and New Jersey, where foreclosures go through a court proceeding, the process is taking 36 and 32 months, respectively.

— Many people still owe more than their homes are worth. If they sold now, they would have to come up with extra cash to pay off their loan. Although prices have rebounded from their lows, 23.3 percent of homes with a mortgage in San Francisco, San Mateo and Marin counties were still underwater in the fourth quarter of 2012, according to Zillow.

— Even if they are not underwater, many owners won’t sell for less than they paid. If they bought near the peak, it may take a while before they are ready to budge.

The median price paid for a new or resale home or condo in the nine-county Bay Area was $415,000 in January. That’s less than halfway between its low of $290,000 in March 2009 and its high of $665,000 set in June/July 2007, according to DataQuick.

— Many people, even if their homes are worth more than they paid, won’t sell because they are afraid they won’t be able to buy another house. “It becomes a game of musical chairs; they are afraid to get out because they can’t get back in,” Humphries says. This becomes “a self-reinforcing cycle” that keeps homes off the market.

— The housing bust put new construction on hold.

The shortage comes at a time when demand is rising in the Bay Area, not just from regular buyers but from investors, second-home buyers and foreign buyers, especially from Asia.

‘Heck of a wreck’
The result is stories like this: A 1,500-square-foot home on Clipper Street on San Mateo’s east side, advertised as a “heck of a wreck,” attracted 97 offers in the first eight days, says listing agent Claire Haggarty of NBT Realty Services.

The home was listed in mid-January at $375,000, which Haggarty considered “a little under market.” It sold for $510,000 in an all-cash deal with no inspections, no contingencies and a 10-day close.

At some point, prices will rise enough to shake lose more inventory, but it won’t happen immediately.

Based on what’s happening around the country, Kolko says inventory tightens fastest in the first 12 months after prices hit a bottom. “Everybody wants to buy at the bottom and nobody wants to sell at the bottom,” he says.

About 12 months after hitting bottom, inventory continues to decline, albeit at a slower pace. But it won’t increase on a year-over-year basis until at least two years after hitting bottom, he predicts.

If you adjust for the mix of homes sold, Kolko says prices bottomed in February 2012 nationwide and in most parts of California and the Bay Area. (The San Jose metro area bottomed earlier, in June 2011.)

Although DataQuick shows Bay Area home prices bottoming in 2009, that’s when most homes being sold were low-priced. The middle and upper end of the market bottomed in early 2012, says DataQuick’s Andrew LePage.

If you believe Kolko’s two-year rule, inventory won’t begin increasing on a year-over-year basis until at least early 2014 in most areas.

Humphries says it might improve earlier, by the end of the year, but “this spring will still be challenging from an inventory perspective.” If you wait until next year to buy, the market may be cooler but prices are likely to be higher. There’s also a risk that interest rates will be higher, he says.

Sweet spot
The sweet spot for buyers might be this summer. Even though inventory is falling year-over-year, “the seasonal pattern means there will be more homes on the market in the summer,” Kolko says. “Search traffic peaks in the spring, but inventory peaks in July.”

Many buyers also go on vacation in July and August, Dewes says.

The decision to buy or wait “really comes down to a fundamental decision about how long you will be in a home,” Humphries says. “If you want to be in a home long enough to make buying better than renting, make that decision as soon as you can.”

In the city of San Francisco, the breakeven point where it makes more sense to own is 3.7 years, Humphries says. “If you will be there more than 3.7 years, I’d say buy now.”

Home inventory drops steeply
Change in the number of homes listed on Zillow in the largest 30 metro areas, February 2013 vs. February 2012.

Region Change
Sacramento -48.0%
Los Angeles -45.7
San Francisco -40.9
San Diego -39.4
Minneapolis-St. Paul -36.7
Riverside -36.2
Kansas City -32.4
Atlanta -32.1
Las Vegas -32.1
Denver -32.1
Orlando -27.1
Phoenix -26.4
Boston -24.2
Houston -23.7
Washington -23.3
Detroit -21.9
Seattle -21.2
Dallas-Fort Worth -20.7
Portland -20.5
Tampa -20.1
New York -18.9
San Antonio -18.7
Philadelphia -18.1
Baltimore -16.9
United States -16.6%
Chicago -16.2%
St. Louis -13.2%
Cleveland -10.5%
Miami-Fort Lauderdale -6.9%
Pittsburgh -4.0%
Cincinnati -0.5%
Source: Zillow

Kathleen Pender is a San Francisco Chronicle columnist. Net Worth runs Tuesdays, Thursdays and Sundays. E-mail: kpender@sfchronicle.com Blog: http://blog.sfgate.com/pender Twitter: @kathpender

Read more: http://www.sfgate.com/business/networth/article/Home-buyers-face-dilemma-with-shortage-4342162.php#ixzz2NbyjotD1

You’ll notice that Sacramento is at the top of the list with 48% fewer available properties year over year. We’ve seen a sharp increase in home prices as a result of this supply shortage. What are your thoughts on the matter?

Winter is Coming! Are You Ready?

Preparing Your Yard for Winter

Article originally posted October 9, 2012- http://www.princetoncapblog.com/2012/10/preparing-your-yard-for-winter/

Preparing Your Yard for Winter

Welcome to part 3 of our 4 part series on preparing your home for winter. Here in Northern California, we’re fortunate in that we don’t get snow. But we do need to prepare for frost and heavy rains. Some meteorologists arepredicting that we’ll be getting an El Nino year. So the good news is it will be a warmer winter (unless you enjoy snow sports), but the bad news is that we will get more rain which could also be considered good news since we would be filling up our reservoirs and aquifers.

So here’s what you can do to get your yard ready for frost and heavy rains:

Remove Debris

First things first, you need to remove the debris before winter arrives including leaves, rocks, sticks, trash, and dead flowers. This will keep your yard and flowerbeds looking nice throughout the fall and winter months, as well as reducing the amount of yard work you will need to do in the spring.

Bushes

Roses, azaleas, and hibiscus will need to be protected against the cold weather. You can get creative with cardboard or garbage bags if you know there is a frost warning. Make certain you hold the cover down in place with stakes, bricks or heavy rocks.

Add mulch around the roots, but make sure it doesn’t touch the base of the plant. Give the plants a good watering before you turn off your sprinklers.

Trees

While the weather is still pleasant, put mulch around the base of the trees to help the tree retain water in the roots, and keep the soil at a steady temperature. This also cuts down on the weeds you will have to pull in the spring.

Mulch can be bark chippings, straw, pine needles, or a mixture of things. You can get free chippings by contacting your local tree removers and asking if they’ll drop off some mulch. But be aware that they may have a minimum amount that they drop off.

In a few weeks, you will want to trim your trees, bushes and roses. But, don’t prune now because the buds that will open in the spring have already formed, and you might clip them off accidentally. So what should you trim? Snip off unhealthy or dead sections, and trim off dead flowers.

Also, check to see if branches are close to your house. If they are, trim them back as you don’t want them banging against the house during strong winds.

Garden

If you have strawberry plants, they should be covered with layers of straw to keep them protected from getting frostbitten. Plant those bulbs now before the ground gets too hard to dig. You will be well rewarded in the Spring.

You can pull out your summer vegetable garden, or you can leave it to overwinter and see what pops up in the spring.

Consider planting a few cold weather flowers to brighten up your garden.

Sprinklers

If you know you’re not going to turn on your sprinklers at all during the winter, then drain them of any water. You would turn off the water supply going to the sprinklers, and then open the drains including the backflow to get all of the water out. Leave the drains open for several hours to ensure it’s completely drained. You can remove the sprinkler heads to allow the water to drain more easily, and you can hook up an air compressor to blow air through the system. Make certain that you’ve set the controller to Off or Rain.

If you’d like more detailed information, check out Irrigation Tutorials’s winterizing directions. There are detailed instructions for both temperate and cold weather.

Hoses

Make sure your hoses are drained completely, roll them up, and store them away in a shed or garage. Keeping them out of the elements will also prolong the life of the hose.

When do you expect the frost to hit in your area?

If you missed the other two blogs in our series, you can find them here:

World Reaction to 9/11

Regardless of where you stand on the political isle, I hope you remember to feel gratitude today for all that you’ve been blessed with and for the loved ones you still have with you. I pray for the families who lost their loved ones on 9/11/2001 and in the events that followed. I hope today they feel peace and not anger, and that they know the absence of their loved ones is not insignificant and not forgotten.

Happy Mother’s Day Ladies!

Mothers Day 
A Mother loves right from the start.
She holds her baby close to her heart.
The bond that grows will never falter.
Her love is so strong it will never alter.
A Mother gives never ending Love.
She never feels that she has given enough.
For you she will always do her best.
Constantly working, there’s no time to rest.
A Mother is there when things go wrong.
A hug and a kiss to help us along.
Always there when we need her near.
Gently wipes our eyes when we shed a tear.
So on this day shower your Mother with Love.
Gifts and presents are nice but that is not enough.
Give your Mother a day to have some peace of mind.
Be gentle, be good, be helpful, be kind.
Happy Mothers Day. 
Carol Matthews 

#ChuckLoses 5/9/12 Because All the #CoolKids are Doing it ;o)

When the Boogeyman goes to sleep every night he checks his closet for Chuck Norris. Chuck Norris checks HIS closet for KRIS VOGT- Future 2012 LLS Man of the Year. http://www.facebook.com/berelentless2012Chuck knows that any man who runs 24 hours in the name of curing cancer is NOT a man to be messed with.

We’re inviting everyone in the Twitterverse to join us in supporting Kris Vogt’s 2012 LLS Man of the Year Campaign at Chevy’s on the water on Wednesday, May 9th from 5pm-9pm. Chevy’s has generously agreed to contribute 15% of all proceeds from food and non-alcoholic beverages to LLS in support of Kris Vogt’s fundraising efforts.

This is where philanthropy meets partying- bring a friend and take this opportunity to meet some of your favorite twitter folk!

Register Here

Breakfast with The Bunny Tomorrow Morning in EG

ImageElk Grove is one of the coolest towns around for families with young children! Enjoy a pancake breakfast with the Easter Bunny. This Breakfast is co-sponsored by the Pride of Laguna Creek Lions Club.  Fees: Children 2 and under $1 / $5 in advance / $7 at the door (all members of the party must pay).

http://www.mapquest.com/embed?hk=Huo8BN

If you’re looking for a fun and budget-friendly way to spend time with the kiddos tomorrow, you should definitely check out this fun EG Event. You can go to the 8am, 9am, or 10am depending on your schedule 🙂

 

 

 

Free Buyers’ Workshop on Thursday April 28 in Elk Grove!

Everyone knows that now is a great time to buy if you’re able- but a lot of people don’t understand what it takes to be ready to purchase a home.  If that’s you then you need to make it to my office THIS THURSDAY, APRIL 28TH!  Darin Marquardt will be hosting a free buyers’ workshop at 6pm.  The address is 7801 Laguna Blvd. Ste 100 in Elk Grove.  Try to make it if you can.  Darin will be giving out some really great information!!

From the first time home buyer to the savvy investor – from the seller with equity to the seller underwater and needing options – I am here for you.