San Francisco Chronicle: State’s home buyers seek bargains, move slowly 09/12/2008

“Lower home prices and falling mortgage rates have motivated California home buyers in 2008, but thoughts that prices may fall further have slowed decision-making, a real estate industry association said Thursday.”

For complete story, click the following link:

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/09/12/BU2112SFC4.DTL

Market analysis for investment properties in San Jose – 09/04/2008

month	no. of closing	avg. price	avg. pr/sq ft	min. price	max. price
Dec-07	2	$392,000	$373	$389,000	$395,000
Jan-08	7	$379,008	$320	$335,000	$400,000
Feb-08	19	$379,949	$319	$340,000	$400,000
Mar-08	21	$363,500	$298	$305,000	$400,000
Apr-08	38	$363,273	$313	$276,000	$400,000
May-08	59	$368,512	$295	$249,900	$400,000
Jun-08	57	$358,719	$301	$249,900	$400,000

This is to keep track the entry level SFR in San Jose area: min. 3 bedroom / 1 bath with 1000 sq ft and above. < $400,000

You can see from the data that the lenders let the flood gate open in May 2008.  The number of closing increased drastically from 38 in April to 59 in May.  The average price is also trending down gradually, however the average price / sq feet should be a more accurate reading.  I want to point out that there is a supporting level at $300,000, the price / sq feet number indicates that.  For the month of Apr, May and June, the lowest price SFR sold were all under $300,000, those properties are either very beat up or has fire damaged, which require lots of work, if those transactions are removed, the lowest price is very close to $300,000.

Any properties in decent conditions listed under $300,000 in San Jose always get multiple offers.

* There are 15 transactions under $300,000 from Dec 2007 to Aug 2008, the July and Aug data in the table are missing since there are still pending transactions in those months, those will be shown in up coming post.

Foreclosure rental scam

Foreclosure rental scam warning!

Combination lock used in the REO properties

Foreclosure Rental Scam Strikes Bay Area

http://cbs5.com/local/foreclosure.rental.scam.2.774727.html

Most bank owned properties has a combination lock on it when listed on the market, the crooks somehow get access to that code and target potential tenants and steal rents from them.

The notice in the picture says:

“This property is for SALE not for RENT.  If you contacted someone regarding an ad on CRAIGSLIST stating that this property is for rent, that person is part of a SCAM.  They are trying to take your money.  This property is NOT FOR RENT.  Please call XXX-XXX-XXXX and give full details to an office representaative stating the name of the person and their contact information from the Craigslist ad.”

California Association of Realtors reports sales increased 43.4 percent in July 2008

LOS ANGELES (Aug. 25) – Home sales increased 43.4 percent in July in California compared with the same period a year ago, while the median price of an existing home fell 40.3 percent, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported today.

For details, click this:
http://www.car.org/newsstand/newsreleases/july08salesandpricereport/?view=Standard

This house was sold in 2 days!!!!

The media keeps broadcasting the bad news about how poor the real estate market is, properties sitting on the market for several months even years and nothing is selling.  Why?  Because bad news sells.

Some first time investors ask me, can I rent my property quickly?  What if I can’t rent it out?  My response is always the following question, “If you rent it at $1.00 per month, do you think you have a hard time finding a tenant?”

It all comes down to the price, everything has a value.  When the property is priced correctly, even at this depressing market, it can be sold in 2 days.  That’s exactly what happened to this property, located in San Jose, it is a bank owned property, 3 bedroom 2 baths, around 1000 sq. ft.  It was listed below $330,000 with a huge lot.  It is not in perfect move in condition but not much work needs to be done.  Good choice for investors and first time home buyers.

Market condition in Bay Area – 8/20/2008

Market condition in Bay Area – 8/20/2008

This mainly keeps track of the entry level SFR in selected cities

Inventory: min. 3 bedroom / 1 bath with 1000 sq ft and above

 

	max. price	Active	Pending	Inventory Level (months)
Belmont	< $1,000,000	18	7	1.93
Burlingame	< $1,250,000	9	6	2.25
Campbell	< $750,000	30	16	6.43
Daly City	< $550,000	35	39	5.25
East Palo Alto	< $360,000	33	31	6.60
Foster City	< $1,000,000	7	4	1.91
Los Gatos	< $1,000,000	21	6	3.50
Millbrae	< $1,150,000	18	15	3.18
Milpitas	< $550,000	57	38	11.40
Mountain View	< $900,000	21	9	5.73
Palo Alto	< $1,200,000	9	4	2.70
Redwood City	< $600,000	23	6	9.86
Redwood Shores	< $1,150,000	7	7	3.50
San Carlos	< $1,200,000	17	17	1.55
San Mateo	< $700,000	48	32	5.33
San Jose	< $400,000	598	311	16.77
Santa Clara	< $650,000	96	37	9.60
South San Francisco	< $600,000	37	32	7.93
Sunnyvale	< $750,000	62	47	7.44

Totally fixed up REO in San Jose

This is a property owned by Wachovia, it is totally remodeled in perfect move in condition.

What’s the reason behind it?  The lenders have learned, they used to list the property at a price close to what was owed on the debt, that didn’t work.  Now, what they are trying to do is to lower the listing price and start a bidding war, usually with a perfect property like this, multiple offer will happen and the bank can get rid of this property in less than 10 days.  It is listed at around $320k, it should close around $350k

It DOES NOT mean that you can’t get it at a low price, some lenders play the FIRST COME FIRST SERVE game, if you are the first one offering full price with good down payment, you can get it at the low listing price.

San Jose, CA low end SFR market update

Market condition in San Jose, CA.

Current inventory level for min. 3 bedroom / 1 bath, 1000 sq ft, Max. price $400k  SFR in San Jose, CA is around 23. 8 months.  It seems to be a lot but what was it a few months ago?  60 months.

The inventory level has dropped drastically, which is an indicator that lots of buying is going on.

What’s the reason behind this?  Typcial rent for these SFR in San Jose ranges from $1,800 ~ $2,400.  For people who can afford the down payment, buying a $350k SFR is cheaper or same as paying rent, so what would they do?

On the other hand, for investors with lots of cash who can afford 20~30% down payment, it is also an attractive investment, since it would cash flow.