The Albany market is getting hotter now that the New Year is underway.  Based on current levels of supply and demand I don’t see the trend in price increasing much, if at all.  I can’t believe that last month the Average Sales Price for Albany was in the mid-$350k range.  But with a large amount of condo sales in the sub $350k range, and a sale above $1.1mil, Albany’s numbers are quite skewed.

While I don’t think that we will see prices in Berkeley or the surrounding areas decrease significantly, I don’t think we will see much increase either.  With rates continuing to remain low there is no reason for buyers to make rash decisions.  Buyers are indeed picky.  And they are patient.  Because of this, they will wait.

There is talk of an influx of foreclosures hitting the market.  This doesn’t surprise me.  I think we will see more short sales, but the days on market for short sales will decrease.  Not because the banks have their systems in place, but because more sellers will lose their home to foreclosure during the process.  The one thing to watch is that banks are starting to promote short sales for their distressed clients, and are proactively calling owners to see if they would like to short sale their home.

I think the allure of investors seeking foreclosed properties will continue to rise.

2011 brought a ton of cash buyers.  As the economy attempts to recover, cash purchases in all price brackets will continue.

One demographic that is being hit is the younger market, the 30 – 34 year old market.  Loss of jobs, loss of appreciation, and student loans out of deferment, homeownership amongst this age bracket is falling faster than any other.  This is a market that I service, and I have definitely seen a shift in the mindset of the 30-somethings.

Sellers are discouraged.  They are fearful.  They are worried that prices will never go up.  Those who don’t need to sell, won’t.

This all sounds pretty grim, doesn’t it?  Well come on now, the economy is still in the pits.  Did you think real estate would be any different?  The good news is that if you are a seller, there are a TON of buyers who are well-qualified.  If you are a buyer, rates are still at an all time low.  And with rents projected to rise, now is the time to cash in on some real estate wealth.

Wherever your real estate path may take you in 2012, I wish you good health, happiness, and a hot cup of tea by a cozy fire.

Cheers!

Yes, cash!

I just had a listing in Berkeley that received 6 offers, 2 were all cash.
My 2-bed El Cerrito listing received 4 offers, 1 was all cash.
Another listing of mine in El Cerrito received 2 offers, 1 was all cash.
My clients just presented an offer on a cute house in Berkeley, they lost to all cash.

Where is everyone getting so much cash!!??!!

I asked some people and here is what they said:

1) “My parents gave us the cash, we are paying them back.”  (couple, 34 and 35 years old)
2) “We pulled all of our money from the stock market in 2010.” (couple, 41 and 44 years old)
3) “Stocks and 401K.” (39 year old single woman)
4) “We have saved for 6 years.” (38 year old and 44 year old couple)
5) “My company gave me a loan.” (46 year old single man)

Guess there is still some cash floating around in the Bay.

In addition to propping up the ceiling, which dropped to $625,500 on Oct. 1, the Senate amendment would also restore through 2013 the formula in use during much of the downturn for determining the upper loan limit in high-cost housing markets.

This is great news for the Bay Area!

The conforming loan limit determines the maximum size of a mortgage that Fannie Mae and Freddie Mac can buy or “guarantee.” Non-conforming or “jumbo loans” typically carry higher mortgage interest rates than conforming loans, increasing monthly payments and hindering the ability of families in California to purchase homes by making them less affordable.

http://newscenter.berkeley.edu/2011/09/13/in-law-units-east-bay/

• 3 beds and 1 bath!
• Radiant heating!  Yes, warm toes all day long.  And it comes with a solar back up.
• Solar water heater!
• Dual pane windows, wood floors!
• Fun colors throughout!
• Granite counters!

Ok, so here is what makes it E X T R A fab…

• 5200 sf lot, tastefully landscaped using California Natives!
• Tranquil and private patio and garden
• Automatic irrigation
• Landscape lighting

And if that isn’t enough, here is the icing on the cake…

• 240sf detached workspace w/concrete floors, vaulted ceiling and double doors overlooking the garden (think art studio, music studio, photography studio, and more!)
• adjacent to the workspace is a 600+ sf shed (owner was a photographer and used it as her dark room)

Told you it was cool.

www.1610-9thSt.com

Open Sunday!

1) 30 Year Mortgage. You can get a 30 year mortgage today with as little as 3% down.

2) Appreciation. According to the Macro Market Home Pricing Survey home prices are expected to appreciate starting in 2012, by 1.29%.

3) Interest Rates. Rates are on an increasing trend, and are expected to hit above 5% by the summer.  In November, 2010, rates were at 4.17%, today they are at 4.86%.  This small increase will cost you more money each month on a house that is priced the same.  Example: a $100,000 loan at 4.17% = $487.27/mo versus a $100,000 loan at 4.86% = $528.30/mo, a difference of $41.03/mo.  Yearly this difference adds up to $492.36 and over 30 years this adds up to $14,770.80.  If only you had bought in November instead of trying to chase down prices.

4) QRM. Quality Residential Mortgage- this is something you will start to hear more of in the future and it isn’t pretty.  The QRM will address 4 main issues: 1) they type of mortgage 2) The ratios between a purchaser’s income and their payment/overall debt 3) The amount of down payment which should be required (20% is being proposed) 4) The minimum FICO score for a borrower.  To give you an idea of the severity of these proposals, for the average mortgage written in 1997 (well before the housing mess), only 20.4% would have qualified for these current suggested QRM requirements. As mortgage underwriting has become much more stringent in the past three years, for mortgages written in 2009, only 30.5% (less than a 1/3) would qualify as QRM.  Here in the Bay Area this will be extremely problematic because of the high cost of housing.  Again, another reason that NOW is the time to buy.

5) Best Long Term Investment. Renters have only a fraction of the net worth that home owners do.  Real Estate has proven time and time again to be the best long term investment for your money.

Sounds like a good reason to me to buy now.