Michael Walters' Blog

If you have been waiting to buy a home, NOW is the time.

If you have been waiting to refinance your current home today is the day.

Neither these rates nor the sale prices will remain down here much longer.  Some day soon the bills for “CHANGE” will come due and we’ll see the rates begin to rise.

Look at this AP article for more details.

Gilroy home values have already bounced off the bottom.  Likewise, Morgan Hill and Hollister homes have seen a balance in demand and supply.

Time for your co-workers, friends and family to make their move.

What do you think?

We all know home values have dropped over the last 3 years.  Will that slide continue?

Single family home values in Hollister dropped by 41.6% from 2007 to 2008.  In 2009 they fell another 17.4% . Townhomes values have likewise dropped: 54.3% from 2007 to 2008 and 25.5% from 2008 to 2009. 

The average sales price of Hollister homes in 2007 was $548,562.  In 2008 it was $320,419, and $264,601 the average sales price for 2009.

Townhome sales show a similar pattern: their average sales price was $339,780 in 2007, $155,354 in 2008, and $115,725 in 2009.

However, it appears that the value slide has hit bottom.  A closer look at 2009 average values suggests that we may have bottomed out in 9/09 and are beginning to see a rebound in both single family residence and townhome values.

Morgan Hill & Gilroy home and townhomes reflect a similar trend in values although the downward adjustments in value are more dramatic as you go south to Hollister.

(Data: MLSListings)

We have all watched the sales prices of homes drop over the last 3 years.  The question is: Will that slide continue?

Single family home values in Gilroy dropped by 35.5% from 2007 to 2008.  In 2009 they fell another 18.4% . Townhomes values have likewise dropped: 38.5% from 2007 to 2008 and 29.5% from 2008 to 2009. 

The average sales price of Gilroy homes in 2007 was $796,676.  In 2008 it was $513,913, and $419,228 was the average sales price for 2009.

Townhome sales show a similar pattern: their average sales price was $426,627 in 2007, $262,566 in 2008, and $185,070 in 2009.

However, it appears that the value slide has hit bottom.  A closer look at 2009 average values suggests that we may have bottomed out in 9/09 and are beginning to see a rebound in both single family residence and townhome values.

Morgan Hill & Hollister home and townhomes reflect a similar trend in values although the downward adjustments in value are more dramatic as you go south to Hollister.

(Data: MLSListings)

Everyone knows home values have dropped over the last 3 years.  Will that slide continue?

Single family home values in Morgan Hill dropped by 17.6% from 2007 to 2008.  In 2009 they fell another 18.2% . Townhomes values have likewise dropped: 26.4% from 2007 to 2008 and 18.3% from 2008 to 2009. 

The average sales price of Morgan Hill homes in 2007 was $901,582.  In 2008 it was $743,303, and $606,986 was the average sales price for 2009.

Townhome sales show a similar pattern: their average sales price was $493,158 in 2007, $362,976 in 2008, and $296,721 in 2009.

However, it appears that the value slide has hit bottom.  A closer look at 2009 average values suggests that we may have bottomed out in 9/09 and are beginning to see a rebound in both single family residence and townhome values.

Gilroy and Hollister homes and townhomes reflect a similar trend in values although the downward adjustment is more dramatic the further south you go toward Hollister.

(Data: MLSListings)

‘Houston…the Eagle has landed’.  I enjoyed recently the celebration of the Lunar landing.  Let’s change the wording to fit our times: “Buyers, we’ve landed, and are now lifting off”. 

Home values in San Jose, Morgan Hill, Gilroy, Hollister and San Juan Bautista “have landed” at the bottom of their value slide and are beginning to “lift off” that bottom.  We are not going to see these prices again for a very, very long time, if ever again. 

Here’s the affect of waiting to buy a home: A home listed today for $350,000 and goes up 5.0% in value will then be worth $367,500.  A buyer who waited and then buys this home will need $985 MORE CASH and $268/mth MORE INCOME to qualify for this same home. 

If the  interest rate is at 6.0% (vs. the 5.0% used above) when the buyer decides to purchase this increased-value-home, their income will need to be $843/mth. HIGHER to qualify!

Some prospective home buyers may be calling out: “Houston, we’ve got a problem“.  The erosion of their purchasing power may make them permanent renters. 

My crystal ball recommends that those who want to buy a home climb on board NOW while they can.  What does yours forcast?

When Ronald Reagan became president, Disco was hot, and home loan rates reached 19%!  Out of necessity agents became creative with financing for the few real estate sales being done.  One such tool was a “Wrap Around” or “Wrap”.  More home  sales closed because of  the development of “creative financing”; which typically turned out to be a Wrap.

Today, we again find ourselves in need of creative financing.  Up-scale homes, requiring ’jumbo loans’ are not experiencing the same resurgence as the lower cost, “conforming” group of homes.  In fact, homes with prices over $700,000 are selling at a much slower pace, if they sell at all.  Their prices are still falling while lower priced, ‘tract’ homes are rebounding.   It’s all about the financing or, lack of it.

Lenders are requiring at least 20% down from the buyer on prices above $463,300.  With the ‘Jumbo’ limit of $729,750 and minimum of 20% down many buyers simply don’t have enough cash.  Previously helpful, second loans offered by sellers must be over and above the minimum 20% cash from the buyer. ”Willing sellers and qualified buyers” (without 20%+ cash) for jumbo sales are being held at bay do to a significantly tightened lending atmosphere.

Even if an upper-end home finds a buyer with a large down payment good luck in the home appraising.  Lender’s are now being required to accept only those appraisals with 2 comparable sales within the last 90 days.  So, with fewer comparable sales, and dropping prices many higher priced home sales don’t close due to very low appraised values.

However, the “Wrap” is making a come back (more properly called an “All Inclusive Deed of Trust” or A.I.D.T.).  A willing and capable buyer can pay the seller’s price and avoid the lender limits and appraisal constrictions.  Additionally, since there are no lender fees the money normally spent on closing costs can be added to the down payment.

In the last 30 days I proposed 4 AIDTs for stagnant Hollister and San Juan Bautista up-scale homes.  Morgan Hill and Gilroy ‘Jumbo’ homes could also benefit form an AIDT sale.

When one of these AIDT sales records there will be a new comparable property appraisers can use to justify the higher prices nice homes should bring.  THEN, we’ll begin to see the ‘Jumbo’ home sales moving toward their earlier values.  I love problem solving!

If you have been waiting to buy a home in Hollister review the following sales activity and then go buy your Hollister home.

The Average Sales Price (ASP) increased 15.2% from May to June! Hollister’s ASP in June was $287,900 whereas a month earlier the average was $249,900.  Compared to June 2008 however, Hollister’s ASP was down 14.7% .

A valuable indicator: the “Closed Sales to New Listings ratio” (CS:NL) is actually in conflict with the jump in ASP.   June’s CS:NL ratio dropped to 56.9% from May’s 89.6%.  We saw the same drop in Gilroy for June however, their ASP also dropped.   The harbinger of things to come, may lie in the nice increase of Hollister’s CS:NL over 6/08’s ratio of 40.2%.  Just wait and see.  As our CS:NL ratio increases so will our ASP.

Nearby Morgan Hill’s homes experienced an increase in both the CS:NL ratio and ASP.

My strong advice: if you plan to buy a home this year do it now.  We see nothing that suggest prices will drop or even level off in the foreseeable future.  Likewise I think interest rates for home loans are about as low as they are going to get.

For your own study of the actual Multiple Listing Service figures go onto “Client Portfolio” on the navigation bar.  There you can see a great deal of real-time data.  Enjoy.

Here’s the good news Gilroyans: Our Closed Sales-to-New Listings-Ratio (CS:NL) nearly doubled that of the same time last year.  June’s CS:NL ratio was 87.3% vs. 47.6% in June last year.  The “bad” news is that June’s CS:NL ratio was down from May’s 93.5%.

As you would expect, Gilroy’s Average Sales Price (ASP) of $395,900 dropped 3.8% in June from the month prior ($411,500).  Likewise, the ASP was down 32.5% from 6/08’s $586,800.

While  interest rates and prices are still down buyers who want the American Dream, Gilroy-style, should jump on the shrinking inventory of homes.  Gilroy’s home prices will go up.

Down the road in Hollister the CS:NL ratio also dropped from May to June but the ASP went UP 15.2% in that same month!   Compared to ‘08 Hollister is following Morgan Hill and Gilroy’s trend of an increasing CS:NL ratio.

For your own study of the actual Multiple Listing Service figures go onto “Client Portfolio” on the navigation bar.  There you can see a great deal of real-time data.  Enjoy.

The Morgan Hill housing market is beginning to show some promising signs: The Closed Sales-to-New Listings-Ratio (CS:NL) rose nicely to 89.2% in June from 51.5% in May.  June’s ratio nearly doubled 6/08’s of 47.2%.  As you would expect Morgan Hill’s Average Sales Price (ASP) also rose in June, up 10.2% from May. However, the ASP of $614,500 is down 31.5% from last year’s average of $898,200 in June.

The best hint of what’s to come is the nice increases in CS:NL.  As that indicator continues to increase the ASP is bound to go up.

Next door: Gilroy’s activity seems to be headed in the right direction.  While June’s CS:NL ratio dropped slightly from May to June, June’s ratio nearly doubled over last year’s figures.  The Average Gilroy Sales Price was lower in June than May by 3.8% and down 32.5% from a year ago.  Stay tuned however.

As I update these ‘09 figures I predict an increase in ASP in both Morgan Hill and Gilroy.

For your own study of the actual Multiple Listing Service figures go onto “Client Portfolio” on the navigation bar.  There you can see a great deal of real-time data.  Enjoy.

In these Dog Days of Summer it seems like every other home I show in Gilroy lately has a pet door in the garage door entry to the home.  There is nothing more exciting than to have “Spike” come blasting through the door to check out who is in his home.

Gilroy, as well as virtually every other city, has a building code requiring that homes be built with a firewall between the attached garage and the home.  Many house fires begin in the garage so the firewall is engineered to impede a fire which starts in the garage from spreading to the home.  Most jurisdictions require the firewall to provide such a delay for up to two hours.

While making “Spike’s” life a little more convenient the homeowner who puts a pet door in the the door leading into the home from the garage may have problems collecting from their homeowners insurance where a fire began in the garage.

I find it interesting that many insurance agents say homeowners with such pet doors will still be covered yet home inspectors seem compelled to address this issue in their written reports.

Occasionally, a homeowner will cut the firewall for attic access or to install a drop down ladder.  They may face the same dilemma with their insurance company.

Building Code also requires that your garage-to-home door have a functioning, self-closing, hinge.  For obvious reasons that door needs to close so that the firewall retards the spread of a garage fire.  For reasons beyond me some homeowners disengage such a hinge.  Again, such a move may prove costly later.

So, why not check with your homeowner insurance agent and see what their position is on the doggie door dilemma.  We can check with the City’s code enforcement folks.  Sorry “Spike”.  Of course the standing rule remains: “caveat emptor”.