Market condition in Bay Area – 10/19/2008

Market condition in Bay Area – 10/19/2008

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

25

10

4.15

Burlingame < $1,250,000

9

5

4.50

Campbell < $750,000

40

9

10.00

Daly City < $550,000

63

50

7.56

East Palo Alto < $360,000

24

43

4.00

Foster City < $1,000,000

9

4

5.40

Los Gatos < $1,000,000

28

7

10.50

Millbrae < $1,150,000

55

43

7.86

Milpitas < $550,000

24

13

5.54

Mountain View < $900,000

17

9

4.64

Pacifica < $580,000

19

14

3.56

Palo Alto < $1,200,000

10

3

3.00

Redwood City < $600,000

24

8

36.00

Redwood Shores < $1,150,000

5

0

1.67

San Carlos < $1,200,000

19

17

2.28

San Mateo < $700,000

51

30

6.65

San Jose < $400,000

611

403

10.18

Santa Clara < $650,000

92

48

7.89

South San Francisco < $600,000

39

26

4.50

Sunnyvale < $750,000

69

27

6.68

CNBC – Brokerage Asks Sellers to Cut 10% off Home Prices 10/06/2008

In an attempt to lure potential home buyers off the sidelines, a nationwide real estate brokerage is asking its approximately 25,000 sellers who have homes listed with its brokers to reduce their listing prices by as much as 10 percent for its first national, 10-day sales event.

To read the full story, please click here:
http://www.cnbc.com/id/27044918

San Jose investment property analysis

This is a typical single family investment property in San Jose.  This is a 3 bedroom 2 bath, with converted garage.  According to county record, it has about 1200 sq ft. (excluding the converted garage).  The purchase price is under $330,000.

The garage is converted into a 1 bedroom 1 bath with living room, it can be rented out separately or the house can be rented to a big family, which is typical in this area.

Assume the purchase price is $330,000 and the mortgage rate is 6.857%, the following analysis is for different % of down payment.


Purchase price: $330,000 with 20% down

Sales Price:

$330,000

% Down:

20%

$ Down:

$66,000

Loan Amount:

$264,000

Interest Rate:

6.875%

Mortgage Payment:

$1,734.29

Prop Taxes:

$310.75

Hazard Insurance:

$100.00

Total PITI:

$2,145.04

Projected rent:

$2,000.00


Purchase price: $330,000 with 20% down, interest only

Sales Price:

$330,000

% Down:

20%

$ Down:

$66,000

Loan Amount:

$264,000

Interest Rate:

6.875%

Mortgage Payment:

$1,513.00

Prop Taxes:

$310.75

Hazard Insurance:

$100.00

Total PITI:

$1,923.00

Projected rent:

$2,000.00


Purchase price: $330,000 with 30% down

Sales Price:

$330,000

% Down:

30%

$ Down:

$99,000

Loan Amount:

$231,000

Interest Rate:

6.875%

Mortgage Payment:

$1,517.51

Prop Taxes:

$310.75

Hazard Insurance:

$100.00

Total PITI:

$1,928.26

Projected rent:

$2,000.00


Purchase price: $330,000 with 30% down, interest only

Sales Price:

$330,000

% Down:

30%

$ Down:

$99,000

Loan Amount:

$231,000

Interest Rate:

6.875%

Mortgage Payment:

$1,323.44

Prop Taxes:

$310.75

Hazard Insurance:

$100.00

Total PITI:

$1,734.19

Projected rent:

$2,000.00

A few years back, it is impossible to put 20~30% down in a property in the Bay Area that would cash flow.  Last time this happens was over 10 years ago, around 1995.  If you miss the boat this time, you might need to wait another 10 years.

Unemployment data – 09/28/2008

County Unemployment rate
(Aug 2008)
Unemployment rate
(2002 Annual Average)
Alameda

6.90%

6.70%

Contra Costa

6.70%

5.70%

Marin

4.90%

4.90%

Napa

5.30%

4.60%

San Francisco

5.90%

6.90%

San Mateo

5.20%

5.70%

Santa Clara

6.50%

8.40%

Solano

7.40%

5.80%

Sonoma

6.10%

5.10%

Data source: California Employment Development Department

The statewide unemployment rate is 7.6%.  Comparing the data in Santa Clara, San Mateo and San Francisco between now and 2002, the current condition is better than the dot.com crash.  I believe one of the reason is that tech firms are thriving; social netowrking companies are doing good, green energy and bio-tech are still creating job opportunity in the Bay Area.

Bloomberg – Bernanke Sees `Grave Threats’ to Financial Stability 09/24/2008

“Federal Reserve Chairman Ben S. Bernanke said the U.S. is facing ‘grave threats’ to financial stability and warned that the credit crisis has started to damage household and business spending. ‘Economic activity appears to have decelerated broadly,’ Bernanke said today to a congressional Joint Economic Committee hearing, downgrading the assessment of Fed officials when they met on Sept. 16.”

To read the full story, please click here:

http://www.bloomberg.com/apps/news?pid=20601087&sid=aHmtQYUlxHlg&refer=home

DQNews – “Bay Area home sales near bottom again, median price plunges” 09/18/2008

La Jolla, CA.—-The pace of Bay Area home sales reversed its July uptick and dropped again last month, marking a return to the long-running waiting game that many potential buyers and sellers have been playing for more than a year. Parts of the East Bay are bucking the trend with active bottom-feeding in foreclosure-stressed neighborhoods, a real estate information service reported.

To read the full story, please click here:

http://www.dqnews.com/News/California/Bay-Area/RRBay080918.aspx

Belmont recent sale data and analysis 09/18/2008

This mainly keeps track of the entry level SFR in Belmont

Inventory: min. 3 bedroom / 1 bath with 1000 sq ft and above, under $1M

Sale data in the last 3 months in Belmont as of 09/18/2008

Sale data in the last 3 months in Belmont as of 09/18/2008

Sale Date

no. of sale

min. price

max. price

avg. pr/sq ft

Sept-07

5

$705,000

$980,000

$528.82

Oct-07

9

$650,000

$932,000

$604.76

Nov-07

4

$710,000

$865,000

$648.68

Dec-07

4

$707,000

$855,000

$619.09

Jan-08

2

$615,000

$725,000

$551.05

Feb-08

5

$910,000

$969,000

$602.98

Mar-08

16

$610,000

$1,000,000

$551.50

Apr-08

6

$590,000

$1,000,000

$471.82

May-08

11

$599,888

$979,000

$549.85

Jun-08

16

$660,000

$955,000

$578.79

The Belmont market has become active since March 2008.  The inventory level remains low, please check out Market Condition in Bay Area – 9/16/2008.  Overall residents in Belmont are wealthy, not much short sale or REO listings.  People in Belmont can wait till the market come back, they are not in a rush to sell, so the price doesn’t go down by that much.  The average price / sq ft is fluctuating.

Market condition in San Jose – 9/18/2008

Per Jimmy’s request:

Market condition in San Jose – 9/18/2008

This mainly keeps track of the entry level SFR in San Jose

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

Zipcode max. price active pending inventory level
(months)

95111

<$400,000

123

81

14.19

95116

<$400,000

93

40

14.68

95122

<$400,000

203

111

13.84

95127

<$400,000

136

79

14.07

San Mateo recent sale data and analysis 09/17/2008

This mainly keeps track of the entry level SFR in San Mateo

Inventory: min. 3 bedroom / 1 bath with 1000 sq ft and above, under $700k

Sale data in the last 3 months in San Mateo as of 09/17/2008

Sale data in the last 3 months in San Mateo as of 09/17/2008

Month no. of sale min. price max. price avg. pr/sq ft

Sep-07

2

$625,000

$690,000

$565.67

Oct-07

6

$570,000

$650,000

$536.55

Nov-07

5

$545,000

$680,000

$546.77

Dec-07

3

$588,000

$700,000

$491.11

Jan-08

4

$615,000

$690,000

$414.33

Feb-08

3

$548,500

$650,000

$417.93

Mar-08

14

$492,000

$700,000

$514.75

Apr-08

13

$450,000

$693,000

$463.70

May-08

12

$505,000

$675,000

$442.10

Jun-08

14

$458,000

$665,000

$461.74

The majority of the entry level inventory are located on the east side of 101.  The number of sales has increated since March, 2008.  The average price / sq ft value is trending down, the lowest sale price is fluctuating.

Market condition in Bay Area – 9/16/2008

Market condition in Bay Area – 9/16/2008

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

9

3.18

Burlingame < $1,250,000

6

6

1.64

Campbell < $750,000

28

38

4.94

Daly City < $550,000

54

41

3.52

East Palo Alto < $360,000

32

37

5.05

Foster City < $1,000,000

5

6

3.75

Los Gatos < $1,000,000

21

7

9.00

Millbrae < $1,150,000

25

10

5.00

Milpitas < $550,000

61

39

9.63

Mountain View < $900,000

17

11

4.25

Pacifica < $580,000

13

21

3.90

Palo Alto < $1,200,000

8

6

4.80

Redwood City < $600,000

25

6

10.71

Redwood Shores < $1,150,000

3

4

0.82

San Carlos < $1,200,000

23

18

2.38

San Mateo < $700,000

45

33

6.75

San Jose < $400,000

611

359

13.68

Santa Clara < $650,000

89

48

8.61

South San Francisco < $600,000

32

30

5.33

Sunnyvale < $750,000

60

47

7.20