Could Demographics Be the Secret?
If we could see into the future, it would certainly be easier to make those life-changing decisions that keep us up at night. Where is the housing market headed? Should we buy now, or would it be better to wait a couple of years, in case the bubble bursts? While no one has all of the answers, there are predictors we can use to make an informed decision.
The current real estate expansion began when mortgage interest rates fell into the single digits, making housing much more affordable. While this certainly has contributed to home sales, there are additional causes we can isolate. Dr. David Lereah is a best-selling author and the Chief Economist for the National Association of REALTORS (NAR). In a recent interview, Dr. Lereah revealed, "The biggest factor that affects real estate today, and has made it immune to some cyclical changes in the economy, has been demographics." Here's why:
The "Baby Boom" Generation ?
This generation is the largest so far, and their impact has been felt across the nation. Now that Baby Boomers have reached their peak earning years, they are purchasing larger primary residences as well as vacation homes and investment properties. The statistics for 2004 reflect this trend, with 36% of all home sales going toward second homes.
Immigration ?
There has been a large influx of immigrants over the past three decades. According to Lereah, it typically takes at least a generation for immigrants to become fully active in the home buying market.
Children of Baby Boomers ?
This generation, the second largest ever, is now in their twenties and looking to purchase their first homes.
Retirees ?
While the demand for housing is expanding, the supply is decreasing. With advancements in medicine and treatments of diseases, retirees are living longer. This means that they are occupying their homes for more years, which decreases the supply of homes available for purchase.
So if the current market can be explained primarily by the factors we just discussed, how do we know whether it will continue to thrive? Dr. Lereah says, "We are in the Golden Age of Real Estate." Even if the economy should slow and interest rates increase slightly in the coming years, the demand for houses is still strong. The biggest impact that such a change would have is to decrease the rate of price appreciation. The media likes to refer to the real estate boom in terms of bubbles and balloons. In keeping with that analogy, Lereah indicates that local markets may react to higher interest rates by letting some air out of the balloon. The double digit price appreciation we've experienced may decrease over the next year or two to a more typical 4-6% range. This is still a higher rate of return than found in the stock market, all things considered.
Tuesday, October 23, 2007
Wednesday, October 17, 2007
OCTOBER MARKET FLASH
Time to Take Advantage
Intro:
The fall season, a time which beckons change, is here. For eager home buyers and sellers wishing to make a change before the New Year, now is the time to take advantage. Despite what is being reported in the news media, real estate in Northern California remains a strong investment and the opportunities are out there. Interest rates remain steady and the demand for well-priced homes remains strong. Read on.
Statistics:
Statewide:
C.A.R. reported the median resale price of a single-family detached home in California for August as $588,970, a 2% increase over the revised $577,300 median for August 2006. The August 2007 median price increased 0.5% compared with July’s revised $586,030 median price. Sales activity year-over-year decreased 27.8%, which is less than last August. Unsold resale inventory in August was sufficient for 11.8 months, compared to – we said 6.8 months a year ago, CAR claims 5.9 months now – of a year earlier. Median number of days till sale was 56, up from 51 a year earlier.
County Statistics: Click Here
Bay Area:
August median price, at $655,000, is down a sliver for the month, up a respectable 4% for the year. Sales activity is down 25% for the year, about mid-pack. Alameda and Contra Costa counties are holding their medians well. They remain two of the more affordable counties in the Bay Area, with lots of attractive entry-level and move-up housing. Marin County’s huge jump in median, together with the decline in sales of over a third since last year, points to lots of top-end and all-cash purchases. Monterey County median leads this month’s pack for month-to-month, but activity is down almost 38% for the year. Napa, Sonoma, and Solano Counties are showing declines in both median and activity. Some of this may be attributable to a very weak second-home market. San Benito County’s roughly 9% decline in median puts it near the middle of the pack. San Francisco County’s median price continues strong and its year-over-year decline in sales, at less than 14%, is actually the smallest dip for this month. We suspect that cash purchases, and purchases by overseas buyers, are playing a role here as they are in Marin. Santa Clara County’s median price took a slight leap between March and April and since then has been in the range of $713,000 to $720,000, which may be able to hold in the face of generally weak medians; sales activity is down almost 35% from last year. Santa Cruz County’s $669,500 median has dropped from last month’s $720,000, near its historic high.
Sacramento/Capitol Region:
Five zip codes – Granite Bay, part of Auburn, and three areas of Sacramento – had improved medians for August. In sales, Loomis more than doubled year-over-year; Granite Bay was the only community to show an increase in both sales and median; Shingle Springs and parts of Roseville, Sacramento, and Rocklin also posted better sales. El Dorado and Placer Counties are holding their own while Sacramento County continues to experience declines in its median, both month-over-month and year-over-year.
Interest Rates*:
Thirty-year fixed rates are 6.82% nationally, but edging up on 7% in California; other statewide figures are 6.59% for conforming 15-year fixed and 6.21% for conforming 5/1 ARM.
Inventory:
Still plentiful in many areas throughout Northern California. As usual, San Francisco and the Peninsula could always benefit from an increased selection of homes.
Overall Assessment:
With an increase in inventory, emphasis is on curb appeal and staging. Bargain hunting may still be difficult. Prices have cooled in many areas, but sellers still want acceptable return on investment. Remember that a residence is a long-term purchase and that finding the right one is a well-rewarded effort.
*Area interest rates are reported to be as follows:
Sacramento/Tahoe, San Francisco Bay Area and Silicon Valley regions: Princeton Capital reports that as of October 1, 2007, the 30-year fixed with one point is 6.75%, the 15-year fixed with one point is 6.25% and the 5/1 ARM with one point is 6.375%, on non-conforming loans of $500,000.
Intro:
The fall season, a time which beckons change, is here. For eager home buyers and sellers wishing to make a change before the New Year, now is the time to take advantage. Despite what is being reported in the news media, real estate in Northern California remains a strong investment and the opportunities are out there. Interest rates remain steady and the demand for well-priced homes remains strong. Read on.
Statistics:
Statewide:
C.A.R. reported the median resale price of a single-family detached home in California for August as $588,970, a 2% increase over the revised $577,300 median for August 2006. The August 2007 median price increased 0.5% compared with July’s revised $586,030 median price. Sales activity year-over-year decreased 27.8%, which is less than last August. Unsold resale inventory in August was sufficient for 11.8 months, compared to – we said 6.8 months a year ago, CAR claims 5.9 months now – of a year earlier. Median number of days till sale was 56, up from 51 a year earlier.
County Statistics: Click Here
Bay Area:
August median price, at $655,000, is down a sliver for the month, up a respectable 4% for the year. Sales activity is down 25% for the year, about mid-pack. Alameda and Contra Costa counties are holding their medians well. They remain two of the more affordable counties in the Bay Area, with lots of attractive entry-level and move-up housing. Marin County’s huge jump in median, together with the decline in sales of over a third since last year, points to lots of top-end and all-cash purchases. Monterey County median leads this month’s pack for month-to-month, but activity is down almost 38% for the year. Napa, Sonoma, and Solano Counties are showing declines in both median and activity. Some of this may be attributable to a very weak second-home market. San Benito County’s roughly 9% decline in median puts it near the middle of the pack. San Francisco County’s median price continues strong and its year-over-year decline in sales, at less than 14%, is actually the smallest dip for this month. We suspect that cash purchases, and purchases by overseas buyers, are playing a role here as they are in Marin. Santa Clara County’s median price took a slight leap between March and April and since then has been in the range of $713,000 to $720,000, which may be able to hold in the face of generally weak medians; sales activity is down almost 35% from last year. Santa Cruz County’s $669,500 median has dropped from last month’s $720,000, near its historic high.
Sacramento/Capitol Region:
Five zip codes – Granite Bay, part of Auburn, and three areas of Sacramento – had improved medians for August. In sales, Loomis more than doubled year-over-year; Granite Bay was the only community to show an increase in both sales and median; Shingle Springs and parts of Roseville, Sacramento, and Rocklin also posted better sales. El Dorado and Placer Counties are holding their own while Sacramento County continues to experience declines in its median, both month-over-month and year-over-year.
Interest Rates*:
Thirty-year fixed rates are 6.82% nationally, but edging up on 7% in California; other statewide figures are 6.59% for conforming 15-year fixed and 6.21% for conforming 5/1 ARM.
Inventory:
Still plentiful in many areas throughout Northern California. As usual, San Francisco and the Peninsula could always benefit from an increased selection of homes.
Overall Assessment:
With an increase in inventory, emphasis is on curb appeal and staging. Bargain hunting may still be difficult. Prices have cooled in many areas, but sellers still want acceptable return on investment. Remember that a residence is a long-term purchase and that finding the right one is a well-rewarded effort.
*Area interest rates are reported to be as follows:
Sacramento/Tahoe, San Francisco Bay Area and Silicon Valley regions: Princeton Capital reports that as of October 1, 2007, the 30-year fixed with one point is 6.75%, the 15-year fixed with one point is 6.25% and the 5/1 ARM with one point is 6.375%, on non-conforming loans of $500,000.
Tuesday, October 02, 2007
SEPTEMBER MARKET FLASH
IT’S ALL IN THE DETAILS
The Northern California real estate market continues to hold steady. Overall, median home prices remain strong and inventory remains plentiful in most areas. Many home buyers and sellers are realizing that in order to successfully buy or sell a home, they have to meet at middle ground. This market has its advantages for home buyers and sellers. Read on.
Statistics:
Statewide:
The median resale price of a single-family detached home in California for July was $586,030, an increase of 3.2% over July 2006, but down from the previous month. Unsold resale inventory represented a 10.7 month supply, compared to 7.3 months for the same period a year ago. Median number of days until sale was 52 in July, up from 48 for July 2006.
Bay Area:
Note: Please Click on the table for a larger image
Many parts of California seem to be leading a charmed life. Of the 13 regions we now track – and incidentally, hello this month to Alameda and Contra Costa Counties – eight have improved year-over-year medians, from Santa Cruz County’s almost 1% to the Bay Area’s almost 7%. Strong prices are concentrated in the most affluent and most developed areas; Northern California as a whole is down almost 10%, which means the rural counties (including the ones we don’t track separately) have to be taking the brunt of the decline. What’s happening is a readjustment in the banking and lending industries, not a recession.
Sacramento/Capitol Region:
Pollock Pines is this month’s Capitol Region standout with sales up 57%, although the median has declined 6.6%. Sales have also increased in Carmichael, Davis, El Dorado Hills, Loomis, Truckee and some areas of Citrus Heights, Roseville and Sacramento proper. Sales are steady in Antelope, Granite Bay and parts of Rocklin and Sacramento; overall, sales are level or better in 18 of the region’s zipcodes, out of 58 with 10 or more sales for July.
Interest Rates*:
The financial community was waiting for the Federal Reserve to cut the Federal funds rate, the most fundamental rate over which it has influence. Instead, the Fed left the funds rate at 5.25%, where it’s been for a long time, cut the (slightly higher) discount rate instead, but then said to the lenders, “C’mon, guys, save yourselves a little money by borrowing directly from us instead of from each other.” This self-promoting behavior from a famously conservative organization is mildly weird, and the upshot is, the funds rate is still at 5.25%, prime is still at 8.25%, and the Fed seems to be protesting deep concern while really not changing very much.
News Media:
Seemingly preoccupied with a single issue – even though subprime lending represented only a sliver of the national assets. Our advice to you is: read, analyze and form opinions.
Overall Assessment:
Not, perhaps, one that you would find elsewhere. We assess this as a market that, although diminished in size, retains some advantages. Since mortgages are now more difficult to qualify for, buyers who walk in ready to arrange loans will be financially solid. Solid buyers, in turn, will appreciate the wide selection that can be made. Remember that the reshaping of this market may have broader implications for potential sellers than for potential buyers. This is a time when care in preparation can make a crucial difference; a fixed-up house will sell more easily than a fixer-upper, staging is more worthwhile than ever and curb appeal is paramount. Discerning buyers are looking for standouts. Buyers and Sellers will all find that success is in the details…because successful details add up!
*Area interest rates are reported to be as follows:
Sacramento/Tahoe, San Francisco Bay Area and Silicon Valley regions: Princeton Capital reports that as of September 4, 2007, the 30-year fixed with one point is 7.125%, the 15-year fixed with one point is 6.875% and the 5/1 ARM with one point is 6.625%, on non-conforming loans of $500,000.
The Northern California real estate market continues to hold steady. Overall, median home prices remain strong and inventory remains plentiful in most areas. Many home buyers and sellers are realizing that in order to successfully buy or sell a home, they have to meet at middle ground. This market has its advantages for home buyers and sellers. Read on.
Statistics:
Statewide:
The median resale price of a single-family detached home in California for July was $586,030, an increase of 3.2% over July 2006, but down from the previous month. Unsold resale inventory represented a 10.7 month supply, compared to 7.3 months for the same period a year ago. Median number of days until sale was 52 in July, up from 48 for July 2006.
Bay Area:
Note: Please Click on the table for a larger image
Many parts of California seem to be leading a charmed life. Of the 13 regions we now track – and incidentally, hello this month to Alameda and Contra Costa Counties – eight have improved year-over-year medians, from Santa Cruz County’s almost 1% to the Bay Area’s almost 7%. Strong prices are concentrated in the most affluent and most developed areas; Northern California as a whole is down almost 10%, which means the rural counties (including the ones we don’t track separately) have to be taking the brunt of the decline. What’s happening is a readjustment in the banking and lending industries, not a recession.
Sacramento/Capitol Region:
Pollock Pines is this month’s Capitol Region standout with sales up 57%, although the median has declined 6.6%. Sales have also increased in Carmichael, Davis, El Dorado Hills, Loomis, Truckee and some areas of Citrus Heights, Roseville and Sacramento proper. Sales are steady in Antelope, Granite Bay and parts of Rocklin and Sacramento; overall, sales are level or better in 18 of the region’s zipcodes, out of 58 with 10 or more sales for July.
Interest Rates*:
The financial community was waiting for the Federal Reserve to cut the Federal funds rate, the most fundamental rate over which it has influence. Instead, the Fed left the funds rate at 5.25%, where it’s been for a long time, cut the (slightly higher) discount rate instead, but then said to the lenders, “C’mon, guys, save yourselves a little money by borrowing directly from us instead of from each other.” This self-promoting behavior from a famously conservative organization is mildly weird, and the upshot is, the funds rate is still at 5.25%, prime is still at 8.25%, and the Fed seems to be protesting deep concern while really not changing very much.
News Media:
Seemingly preoccupied with a single issue – even though subprime lending represented only a sliver of the national assets. Our advice to you is: read, analyze and form opinions.
Overall Assessment:
Not, perhaps, one that you would find elsewhere. We assess this as a market that, although diminished in size, retains some advantages. Since mortgages are now more difficult to qualify for, buyers who walk in ready to arrange loans will be financially solid. Solid buyers, in turn, will appreciate the wide selection that can be made. Remember that the reshaping of this market may have broader implications for potential sellers than for potential buyers. This is a time when care in preparation can make a crucial difference; a fixed-up house will sell more easily than a fixer-upper, staging is more worthwhile than ever and curb appeal is paramount. Discerning buyers are looking for standouts. Buyers and Sellers will all find that success is in the details…because successful details add up!
*Area interest rates are reported to be as follows:
Sacramento/Tahoe, San Francisco Bay Area and Silicon Valley regions: Princeton Capital reports that as of September 4, 2007, the 30-year fixed with one point is 7.125%, the 15-year fixed with one point is 6.875% and the 5/1 ARM with one point is 6.625%, on non-conforming loans of $500,000.
Tuesday, August 07, 2007
AUGUST MARKET FLASH
HOLDING STEADY
Intro: The Northern California housing market continues to see median prices rise as sales decline, a sure sign that the top end of the market is keeping itself healthy with cash. The fact that medians are holding steady or increasing year-to-date is proof of the strong desire to live, work and play in the region. Read on.
Statistics:
Statewide: The median resale price of a single-family detached home in California for June was $594,260, an increase of about 3% over June 2006 and essentially flat for the month. Unsold resale inventory represented a 10.1 month supply, compared to 6.1 months for the same period a year ago. Median number of days till sale was 52 in June, up from 46 for June 2006.
Bay Area: June median price, at $842,600, is down a little over 1% for the month but still up over 5% for the year; sales are basically flat for the month and down about 21% for the year. San Francisco County median is a remarkable $930,000, almost 5% shy of last month’s record; sales are down 21% year-over-year. Santa Clara County median of $865,000 is flat for the month and up almost 6% for the year; sales are down 1.5% for the month and 18% for the year. Santa Cruz County sales activity rebounded 10% since May, the best showing this month, but is down 22% year-over-year and medians are essentially flat. Monterey Country and region medians are respectable, a little better than level, for both the month and year; sales activity is down 29% for the region and 36% for the County. Sonoma County’s median is 2.4% lower than last year’s, with sales down about 21%. Finally, San Benito County’s median is holding steady while sales are down over 30% for the month and over 60% for the year.
Sacramento/Capitol Region: Sales have increased in some areas of Sacramento proper and parts of Woodland, as well as Davis, Pollock Pines, El Macero and Fair Oaks. Median prices have increased in Rio Linda, Sloughhouse, Lincoln, Loomis, Galt and parts of Sacramento and Roseville. Regionally, year-over-year medians have declined 8.5% while sales have lost 26.5% since June 2006.
Interest Rates*: Thirty-year fixed at 6.87%, 15-year fixed at 6.51% and 5/1 ARM at 6.09%. Now, just as a year ago, the question is one of keeping the economy warm, but not letting it overheat and slip into inflation. The New York Times recently commented, almost wistfully, that at a time like this the famously opaque Mr. Greenspan would have been juggling rates to stimulate the economy, but the oddly laconic Mr. Bernanke may hold the line and let market forces do their best – or worst. After such a long period of a steady Fed funds rate, even a cut from 5.25% to 5% might have symbolic value far beyond its actual impact.
Inventory: In most areas, inventory is not an issue – although there are pockets throughout the Greater Bay Area – San Francisco and Peninsula communities included – that could always enjoy more supply.
Overall Assessment: Seize the day! Sellers should paint, polish and stage to their hearts content; Buyers may have these choices only once in a decade. Mortgages are more expensive and (alas) more difficult to get than we wish they were; but a clear shot at your dream house may be worth the bother of a refi down the line. Northern California is one of the world’s best places to live and not much could change that.
*Area interest rates are reported to be as follows:
Sacramento/Tahoe, San Francisco Bay Area and Silicon Valley regions: Princeton Capital reports that as of August 1, 2007, the 30-year fixed with one point is 6.750%, the 15-year fixed with one point is 6.500% and the 5/1 ARM with one point is 6.250%, on non-conforming loans of $500,000.
Intro: The Northern California housing market continues to see median prices rise as sales decline, a sure sign that the top end of the market is keeping itself healthy with cash. The fact that medians are holding steady or increasing year-to-date is proof of the strong desire to live, work and play in the region. Read on.
Statistics:
Statewide: The median resale price of a single-family detached home in California for June was $594,260, an increase of about 3% over June 2006 and essentially flat for the month. Unsold resale inventory represented a 10.1 month supply, compared to 6.1 months for the same period a year ago. Median number of days till sale was 52 in June, up from 46 for June 2006.
Bay Area: June median price, at $842,600, is down a little over 1% for the month but still up over 5% for the year; sales are basically flat for the month and down about 21% for the year. San Francisco County median is a remarkable $930,000, almost 5% shy of last month’s record; sales are down 21% year-over-year. Santa Clara County median of $865,000 is flat for the month and up almost 6% for the year; sales are down 1.5% for the month and 18% for the year. Santa Cruz County sales activity rebounded 10% since May, the best showing this month, but is down 22% year-over-year and medians are essentially flat. Monterey Country and region medians are respectable, a little better than level, for both the month and year; sales activity is down 29% for the region and 36% for the County. Sonoma County’s median is 2.4% lower than last year’s, with sales down about 21%. Finally, San Benito County’s median is holding steady while sales are down over 30% for the month and over 60% for the year.
Sacramento/Capitol Region: Sales have increased in some areas of Sacramento proper and parts of Woodland, as well as Davis, Pollock Pines, El Macero and Fair Oaks. Median prices have increased in Rio Linda, Sloughhouse, Lincoln, Loomis, Galt and parts of Sacramento and Roseville. Regionally, year-over-year medians have declined 8.5% while sales have lost 26.5% since June 2006.
Interest Rates*: Thirty-year fixed at 6.87%, 15-year fixed at 6.51% and 5/1 ARM at 6.09%. Now, just as a year ago, the question is one of keeping the economy warm, but not letting it overheat and slip into inflation. The New York Times recently commented, almost wistfully, that at a time like this the famously opaque Mr. Greenspan would have been juggling rates to stimulate the economy, but the oddly laconic Mr. Bernanke may hold the line and let market forces do their best – or worst. After such a long period of a steady Fed funds rate, even a cut from 5.25% to 5% might have symbolic value far beyond its actual impact.
Inventory: In most areas, inventory is not an issue – although there are pockets throughout the Greater Bay Area – San Francisco and Peninsula communities included – that could always enjoy more supply.
Overall Assessment: Seize the day! Sellers should paint, polish and stage to their hearts content; Buyers may have these choices only once in a decade. Mortgages are more expensive and (alas) more difficult to get than we wish they were; but a clear shot at your dream house may be worth the bother of a refi down the line. Northern California is one of the world’s best places to live and not much could change that.
*Area interest rates are reported to be as follows:
Sacramento/Tahoe, San Francisco Bay Area and Silicon Valley regions: Princeton Capital reports that as of August 1, 2007, the 30-year fixed with one point is 6.750%, the 15-year fixed with one point is 6.500% and the 5/1 ARM with one point is 6.250%, on non-conforming loans of $500,000.
Tuesday, July 31, 2007
Tuesday, July 10, 2007
JULY MARKET FLASH
SUMMERTIME HEAT WAVE?
Intro: While many housing markets across the nation continue to experience a slowdown in activity, Northern California seems to be picking up here and there, in little sparks and spots. And with summer here, it might bring the year’s best season for sales. Read on.
Statistics:
Statewide: The median resale price of a single-family detached home in California for May was $591,180, an increase of almost 5% over May 2006. Unsold resale inventory represented a 10.7 month supply, compared to 5.9 months for the same period a year ago. Median number of days till sale was 52 in May, up from 44 for May 2006.
Bay Area: May median price, at $853,910, has shot up by 8.7% from May 2006 and by just over 1% for the month; sales are up by over 14% for the month (part of a pattern of April-to-May gains throughout Northern California) but down by almost 13% compared to a year earlier. The Santa Clara County median price of $858,000, this month’s high for the region, is up over 7% for the year; sales are down less than 10%, also one of this month’s better numbers...Santa Cruz and Sonoma Counties have also held their medians, but sales are down 23% and 17% respectively, from a year ago. San Benito County sales are flat and median is down about 5% year-over-year. Monterey County and region have robust medians, but the region’s sales are down just under, and the County sales just over, 30% for the year. As a nice surprise, however, sales activity for Northern California as a whole has climbed almost 7% compared to May 2006.
Sacramento/Capitol Region: Median for the month has eased as sales activity shows a gratifying jump of almost 10% since April, but sales are down by almost a third compared to May 2006. Nine communities and areas showed sales growth in May, including Davis, El Macero, Folsom, Lincoln, Newcastle, Pollock Pines and parts of Auburn, Roseville and Sacramento proper. Medians are up in several zips in Sacramento and, outside that, Fair Oaks, Granite Bay, Newcastle, Shingle Springs, South Lake Tahoe, Truckee and parts of Rocklin and Woodland.
Interest Rates*: Thirty-year fixed, take your pick, HSH.com says 6.81%, Bankrate.com says 6.29%. Fifteen-year fixed, HSH.com says 6.50%, Bankrate.com says 5.99%. They agree on 5/1 ARM at 5.95%. Some of this is traditional climb in rates before peak selling season, some reflects the disappearance of cheap loans – but these rates are still lower than they were last year at this time. We said then, “We anticipate some psychological resistance to borrowing as soon as 30-year fixed crosses 7%,” and you notice it never did? With the Fed bound and determined to keep the funds rate at 5.25%, and subprime and Alt-A loans vanishing like the smoke they were, lenders are walking a tightrope to keep rates attractive. But prime, which was 8% a year ago, is 8.25% now, so we repeat our mantra: “A fixed mortgage, even at 7%, is some of the least expensive and therefore most effective money you can borrow.”
Inventory: Unsold inventory, having doubled between May 2005 and May 2006, has almost doubled again in the last year. Improved selection will be the single best factor to emphasize when you are marketing properties.
News Media: Local real estate news is emphasizing the fact that the current market has peaks and valleys, and that sales in desirable neighborhoods are reviving. National news continues to focus on ways that the cooling of the housing market may, or may not, have a moderating influence on the broader economy.
Overall Assessment: We are calling this a holding action. At the very top end, cash customers are keeping the market hot – as indicated by the fact that Atherton had 10 sales in May. Middle-income buyers and move-up buyers may be tempted by the tremendous selection that is available, while terms of loans are still reasonable. Summer is here, prices are low, interest rates are not high and inventory is terrific.
*Area interest rates are reported to be as follows:
Sacramento/Tahoe, San Francisco Bay Area and Silicon Valley regions: Princeton Capital reports that as of July 2, 2007, the 30-year fixed with one point is 6.500%, the 15-year fixed with one point is 6.125% and the 5/1 ARM with one point is 6.250%, on non-conforming loans of $500,000.
Intro: While many housing markets across the nation continue to experience a slowdown in activity, Northern California seems to be picking up here and there, in little sparks and spots. And with summer here, it might bring the year’s best season for sales. Read on.
Statistics:
Statewide: The median resale price of a single-family detached home in California for May was $591,180, an increase of almost 5% over May 2006. Unsold resale inventory represented a 10.7 month supply, compared to 5.9 months for the same period a year ago. Median number of days till sale was 52 in May, up from 44 for May 2006.
Bay Area: May median price, at $853,910, has shot up by 8.7% from May 2006 and by just over 1% for the month; sales are up by over 14% for the month (part of a pattern of April-to-May gains throughout Northern California) but down by almost 13% compared to a year earlier. The Santa Clara County median price of $858,000, this month’s high for the region, is up over 7% for the year; sales are down less than 10%, also one of this month’s better numbers...Santa Cruz and Sonoma Counties have also held their medians, but sales are down 23% and 17% respectively, from a year ago. San Benito County sales are flat and median is down about 5% year-over-year. Monterey County and region have robust medians, but the region’s sales are down just under, and the County sales just over, 30% for the year. As a nice surprise, however, sales activity for Northern California as a whole has climbed almost 7% compared to May 2006.
Sacramento/Capitol Region: Median for the month has eased as sales activity shows a gratifying jump of almost 10% since April, but sales are down by almost a third compared to May 2006. Nine communities and areas showed sales growth in May, including Davis, El Macero, Folsom, Lincoln, Newcastle, Pollock Pines and parts of Auburn, Roseville and Sacramento proper. Medians are up in several zips in Sacramento and, outside that, Fair Oaks, Granite Bay, Newcastle, Shingle Springs, South Lake Tahoe, Truckee and parts of Rocklin and Woodland.
Interest Rates*: Thirty-year fixed, take your pick, HSH.com says 6.81%, Bankrate.com says 6.29%. Fifteen-year fixed, HSH.com says 6.50%, Bankrate.com says 5.99%. They agree on 5/1 ARM at 5.95%. Some of this is traditional climb in rates before peak selling season, some reflects the disappearance of cheap loans – but these rates are still lower than they were last year at this time. We said then, “We anticipate some psychological resistance to borrowing as soon as 30-year fixed crosses 7%,” and you notice it never did? With the Fed bound and determined to keep the funds rate at 5.25%, and subprime and Alt-A loans vanishing like the smoke they were, lenders are walking a tightrope to keep rates attractive. But prime, which was 8% a year ago, is 8.25% now, so we repeat our mantra: “A fixed mortgage, even at 7%, is some of the least expensive and therefore most effective money you can borrow.”
Inventory: Unsold inventory, having doubled between May 2005 and May 2006, has almost doubled again in the last year. Improved selection will be the single best factor to emphasize when you are marketing properties.
News Media: Local real estate news is emphasizing the fact that the current market has peaks and valleys, and that sales in desirable neighborhoods are reviving. National news continues to focus on ways that the cooling of the housing market may, or may not, have a moderating influence on the broader economy.
Overall Assessment: We are calling this a holding action. At the very top end, cash customers are keeping the market hot – as indicated by the fact that Atherton had 10 sales in May. Middle-income buyers and move-up buyers may be tempted by the tremendous selection that is available, while terms of loans are still reasonable. Summer is here, prices are low, interest rates are not high and inventory is terrific.
*Area interest rates are reported to be as follows:
Sacramento/Tahoe, San Francisco Bay Area and Silicon Valley regions: Princeton Capital reports that as of July 2, 2007, the 30-year fixed with one point is 6.500%, the 15-year fixed with one point is 6.125% and the 5/1 ARM with one point is 6.250%, on non-conforming loans of $500,000.
Saturday, June 02, 2007
Market Flash
JUNE MARKET FLASH
ONE MARKET, MANY CHARACTERISTICS
Intro:
Summer days are just around the corner and as the weather warms up, so does the Northern California real estate market…in certain ways at least. While sales have slowed in comparison to last year, median prices continue to rise – making home investments even more valuable – and most areas are enjoying an abundant supply of available homes for sale. One aspect of the market that is certainly heating up is the million-dollar plus home category where sales are swift. This is one market with many different characteristics. Read on.
Statistics:
Statewide:
The median resale price of a single-family detached home in California for April was $597,640, an increase of 6.2% over April 2006 and 2.1% from last month; but sales activity has declined almost 28% year-over-year. Unsold resale inventory represented a 10-month supply, compared to 5.7 months (CAR’s revision) for the same period a year ago. Median number of days till sale was 53 in April, up from 42 for April 2006.
Bay Area:
April median price, at $843,710, is improved by 7.4% for the month and over 9% from April 2006; sales are down by almost 8% for the month and 19% compared to a year earlier.
The Santa Clara County median price of $868,410 is up 4.6% for the month and a strong 12.1% for the year; sales are down by a hair for the month and 17% from April 2006.
Santa Cruz County, at $744,000, is up 3.5% for the month, 4.5% for the year; sales are down a bit for the month, but almost 25% for the year.
San Benito County median of $587,000 is down slightly over 4% for the month.
And we are adding! – Sonoma County with a current median of $515,000, down slightly for the month but a little over 9% for the year. Sales have decreased almost 17% for the month and almost 24% year-over-year.
Monterey County and region median prices are quite strong with increases of 12% to 13% year-over-year; activity is down for both, with the County at a 36% drop from last year. Perhaps even more than in other regions, rising medians and falling activity mean that entry-level and midrange buyers are constrained by availability of financing, while the million-plus level is doing fine.
Sacramento/Capitol Region:
Led by an 80% sales increase for El Macero, 14 communities and areas showed sales growth in April, including Carmichael, Fair Oaks, Folsom, Lincoln, Pollock Pines, Rio Linda, Truckee, and parts of Roseville and Sacramento. In terms of medians Davis, Elk Grove, Rancho Cordova, Rio Linda and parts of Auburn and Sacramento showed a tiny increase. DataQuick reports meanwhile that regional escrow closings in April were the lowest since 1995. Median prices for new and existing homes ranged from $288,500 in Yuba County to a high of $458,500 in Nevada County, reflecting an overall decline in medians of 3.3% – about the same as 3.4% for Northern California as a whole.
Interest Rates*:
Thirty-year fixed at 6.41%, 15-year fixed at 6.06%, 5/1 ARM at 5.81%. (These may seem high, but we have switched sources for these figures, because many readers felt that the rates we reported were unrealistically low.)
Rates are still attractive although they have gone materially higher in the last couple of months; 6% fixed rates, which not long ago were regarded as a “psychological barrier” are now firmly established and may actually have a slight chilling effect on the market.
Inventory:
There are homes for sale in nearly every neighborhood, at nearly every price point, throughout Northern California. That said, by far the hottest market is million-plus, where the most desirable properties may visit the market for 14 days or even fewer. For the most part, buyers at entry level, in the midrange or in the “ordinary luxury” market, should have an adequate supply of homes to consider.
Overall Assessment:
A situation so complicated that experts are saying, with almost complete unity, “This is not one market; it is a whole bunch of tiny local markets each with its own characteristics, and you have to approach it that way.”
*Area interest rates are reported to be as follows:
Sacramento/Tahoe, San Francisco Bay Area and Silicon Valley regions: Princeton Capital reports that as of May 29, 2007, the 30-year fixed with one point is 6.25%, the 15-year fixed with one point is 6.00% and the 5/1 ARM with one point is 6.125%, on non-conforming loans of $500,000.
ONE MARKET, MANY CHARACTERISTICS
Intro:
Summer days are just around the corner and as the weather warms up, so does the Northern California real estate market…in certain ways at least. While sales have slowed in comparison to last year, median prices continue to rise – making home investments even more valuable – and most areas are enjoying an abundant supply of available homes for sale. One aspect of the market that is certainly heating up is the million-dollar plus home category where sales are swift. This is one market with many different characteristics. Read on.
Statistics:
Statewide:
The median resale price of a single-family detached home in California for April was $597,640, an increase of 6.2% over April 2006 and 2.1% from last month; but sales activity has declined almost 28% year-over-year. Unsold resale inventory represented a 10-month supply, compared to 5.7 months (CAR’s revision) for the same period a year ago. Median number of days till sale was 53 in April, up from 42 for April 2006.
Bay Area:
April median price, at $843,710, is improved by 7.4% for the month and over 9% from April 2006; sales are down by almost 8% for the month and 19% compared to a year earlier.
The Santa Clara County median price of $868,410 is up 4.6% for the month and a strong 12.1% for the year; sales are down by a hair for the month and 17% from April 2006.
Santa Cruz County, at $744,000, is up 3.5% for the month, 4.5% for the year; sales are down a bit for the month, but almost 25% for the year.
San Benito County median of $587,000 is down slightly over 4% for the month.
And we are adding! – Sonoma County with a current median of $515,000, down slightly for the month but a little over 9% for the year. Sales have decreased almost 17% for the month and almost 24% year-over-year.
Monterey County and region median prices are quite strong with increases of 12% to 13% year-over-year; activity is down for both, with the County at a 36% drop from last year. Perhaps even more than in other regions, rising medians and falling activity mean that entry-level and midrange buyers are constrained by availability of financing, while the million-plus level is doing fine.
Sacramento/Capitol Region:
Led by an 80% sales increase for El Macero, 14 communities and areas showed sales growth in April, including Carmichael, Fair Oaks, Folsom, Lincoln, Pollock Pines, Rio Linda, Truckee, and parts of Roseville and Sacramento. In terms of medians Davis, Elk Grove, Rancho Cordova, Rio Linda and parts of Auburn and Sacramento showed a tiny increase. DataQuick reports meanwhile that regional escrow closings in April were the lowest since 1995. Median prices for new and existing homes ranged from $288,500 in Yuba County to a high of $458,500 in Nevada County, reflecting an overall decline in medians of 3.3% – about the same as 3.4% for Northern California as a whole.
Interest Rates*:
Thirty-year fixed at 6.41%, 15-year fixed at 6.06%, 5/1 ARM at 5.81%. (These may seem high, but we have switched sources for these figures, because many readers felt that the rates we reported were unrealistically low.)
Rates are still attractive although they have gone materially higher in the last couple of months; 6% fixed rates, which not long ago were regarded as a “psychological barrier” are now firmly established and may actually have a slight chilling effect on the market.
Inventory:
There are homes for sale in nearly every neighborhood, at nearly every price point, throughout Northern California. That said, by far the hottest market is million-plus, where the most desirable properties may visit the market for 14 days or even fewer. For the most part, buyers at entry level, in the midrange or in the “ordinary luxury” market, should have an adequate supply of homes to consider.
Overall Assessment:
A situation so complicated that experts are saying, with almost complete unity, “This is not one market; it is a whole bunch of tiny local markets each with its own characteristics, and you have to approach it that way.”
*Area interest rates are reported to be as follows:
Sacramento/Tahoe, San Francisco Bay Area and Silicon Valley regions: Princeton Capital reports that as of May 29, 2007, the 30-year fixed with one point is 6.25%, the 15-year fixed with one point is 6.00% and the 5/1 ARM with one point is 6.125%, on non-conforming loans of $500,000.
Bay Area Home Sales - April 2007
As we head into the summer period and schools are beginning to wind down for the year, we are seeing the usual increase in inventory. Expect further increase in early summer, as is typical of our cyclical market. There is still no real indicator of a trend happening that is extremely dynamic.
We are part of an area where jobs are very strong and the ability to buy a house is high. The housing affordability index is now at 25% for California (up from 14% no so long ago). This is greatly due to prices decreasing in outlying, less desirable areas of the state. More particular to our local areas would be folks who are deciding that it is time to invest their fortunes in real estate. When one gets a roof over his/her head, stability, and a tax write-off, sooner or later one realizes the excellent investment that real estate is.
A common pattern across all counties in the report, Bay Area Homes Sales, is days on market decreasing. Last year was a slower year and homes tended to take more time to actually sell. This market has been stronger than last year's market. Inventory that sat around from last year should now all be absorbed. Look for the number of days on market to decrease even further.
San Mateo County boasts the highest percentage of list price received at 101.18% average! Santa Clara County is now averaging 100.36%. In all areas reported, since last month, single family home prices have increased, with exception of San Benito County. The average price of condos has decreased in all counties reported, with exception of Santa Clara County
We are part of an area where jobs are very strong and the ability to buy a house is high. The housing affordability index is now at 25% for California (up from 14% no so long ago). This is greatly due to prices decreasing in outlying, less desirable areas of the state. More particular to our local areas would be folks who are deciding that it is time to invest their fortunes in real estate. When one gets a roof over his/her head, stability, and a tax write-off, sooner or later one realizes the excellent investment that real estate is.
A common pattern across all counties in the report, Bay Area Homes Sales, is days on market decreasing. Last year was a slower year and homes tended to take more time to actually sell. This market has been stronger than last year's market. Inventory that sat around from last year should now all be absorbed. Look for the number of days on market to decrease even further.
San Mateo County boasts the highest percentage of list price received at 101.18% average! Santa Clara County is now averaging 100.36%. In all areas reported, since last month, single family home prices have increased, with exception of San Benito County. The average price of condos has decreased in all counties reported, with exception of Santa Clara County
Wednesday, February 07, 2007
Market Flash
A LITTLE SUNNY WEATHER
Medians are just about holding and the whole situation with the residential market feels more moderate than it did last summer. It will be interesting to see what happens when spring comes, but over a lot of Northern California, the sun is shining even now. Read on.
Statewide: The median resale price of a single-family detached home in California for December was $567,690, up 2.2% for the month and 3.7% over December 2005. Unsold resale inventory represented a 6.8-month supply, compared to 3.6 months for the same period a year ago. Median number of days till sale was 73 in December, up from 43 for the month a year earlier.
Bay Area: December median price, at $725,900, is about 2% below last month and 2% higher than the December 2005 figure. The Santa Clara County median price of $734,950 is almost 5% lower than last month but roughly level with last December’s figure. Santa Cruz County’s median is down a bit for the month. Monterey County’s year-over-year median shows about a 5% decline, but the region is more resilient at a little over 1% down. San Benito County median was $579,000, up 1.5% from a month earlier but down 11% from December 2005.
Sales activity is generally down, with the Bay Area off almost 14% from last year’s high. Santa Cruz is the only County actually posting an increase, of almost 9% for the year. Santa Clara County is down 14.9% and Monterey County is down 16.6% for the year. Sacramento region, compared to December 2005, shows a decline in activity at 25.6%…but that is much better than what the region was doing over the summer.
Sacramento/Capitol Region: Sacramento median price, at $362,660, is down 4.3% from this time last year. Davis, El Macero, Folsom, Pollock Pines, Shingle Springs, Sloughhouse and parts of Rocklin, Roseville and Woodland are up.
Interest Rates*: After climbing jaggedly for almost two months, 30-year fixed rates at 5.85% are easing slightly, but they are still 20 basis points higher than they were at the beginning of December. Fifteen-year fixed and 5/1 ARM are identical at 5.61%. Thirty-year jumbo fixed, at 6.08%, is now unequivocally above six; when that will also be true of conforming loans is a very good question we cannot answer (yet). Many loans that can be written today are still at five-something, and historically, that is a great deal.
Inventory: While inventory is more plentiful than in years past, there is still a limited supply in areas throughout the Bay Area and even Silicon Valley. Expect inventories to pick up as the traditionally hot spring market approaches.
Overall Assessment: Consider the strategic side of home purchase – the potential impact on quality of life, the savings as affordability improves and the excitement of a selection of homes to look at. If you consider every side of the question, it is obvious that this could be a really advantageous time to buy.
*Area interest rates are reported to be as follows:
Sacramento/Tahoe, San Francisco Bay Area and Silicon Valley regions: Princeton Capital reports that as of February 5, 2007, the 30-year fixed with one point is 6.125%, the 15-year fixed with one point is 5.75% and the 5/1 ARM with one point is 5.875%, on non-conforming loans of $500,000.
Medians are just about holding and the whole situation with the residential market feels more moderate than it did last summer. It will be interesting to see what happens when spring comes, but over a lot of Northern California, the sun is shining even now. Read on.
Statewide: The median resale price of a single-family detached home in California for December was $567,690, up 2.2% for the month and 3.7% over December 2005. Unsold resale inventory represented a 6.8-month supply, compared to 3.6 months for the same period a year ago. Median number of days till sale was 73 in December, up from 43 for the month a year earlier.
Bay Area: December median price, at $725,900, is about 2% below last month and 2% higher than the December 2005 figure. The Santa Clara County median price of $734,950 is almost 5% lower than last month but roughly level with last December’s figure. Santa Cruz County’s median is down a bit for the month. Monterey County’s year-over-year median shows about a 5% decline, but the region is more resilient at a little over 1% down. San Benito County median was $579,000, up 1.5% from a month earlier but down 11% from December 2005.
Sales activity is generally down, with the Bay Area off almost 14% from last year’s high. Santa Cruz is the only County actually posting an increase, of almost 9% for the year. Santa Clara County is down 14.9% and Monterey County is down 16.6% for the year. Sacramento region, compared to December 2005, shows a decline in activity at 25.6%…but that is much better than what the region was doing over the summer.
Sacramento/Capitol Region: Sacramento median price, at $362,660, is down 4.3% from this time last year. Davis, El Macero, Folsom, Pollock Pines, Shingle Springs, Sloughhouse and parts of Rocklin, Roseville and Woodland are up.
Interest Rates*: After climbing jaggedly for almost two months, 30-year fixed rates at 5.85% are easing slightly, but they are still 20 basis points higher than they were at the beginning of December. Fifteen-year fixed and 5/1 ARM are identical at 5.61%. Thirty-year jumbo fixed, at 6.08%, is now unequivocally above six; when that will also be true of conforming loans is a very good question we cannot answer (yet). Many loans that can be written today are still at five-something, and historically, that is a great deal.
Inventory: While inventory is more plentiful than in years past, there is still a limited supply in areas throughout the Bay Area and even Silicon Valley. Expect inventories to pick up as the traditionally hot spring market approaches.
Overall Assessment: Consider the strategic side of home purchase – the potential impact on quality of life, the savings as affordability improves and the excitement of a selection of homes to look at. If you consider every side of the question, it is obvious that this could be a really advantageous time to buy.
*Area interest rates are reported to be as follows:
Sacramento/Tahoe, San Francisco Bay Area and Silicon Valley regions: Princeton Capital reports that as of February 5, 2007, the 30-year fixed with one point is 6.125%, the 15-year fixed with one point is 5.75% and the 5/1 ARM with one point is 5.875%, on non-conforming loans of $500,000.
Tuesday, January 30, 2007
Wednesday, January 17, 2007
Mortgage industry pegs 30-year rate at 6.5% by year-end
The Mortgage Bankers Association expects the interest rate on a 30-year fixed-rate mortgage to jump from 6.2 percent to 6.5 percent by the end of the third quarter, as investors lose hope that the Federal Reserve will slash short-term rates any time soon.
In a long-term forecast released this week, MBA Chief Economist Doug Duncan predicted existing-home sales will decline by about 7 percent this year compared to 2006, and that sales of new homes will decline by about 8 percent. Sales in both categories are projected to rebound in 2008 by about 3 percent and 1 percent, respectively, in 2009.
Duncan expects existing-home price appreciation to slow "significantly" over the next three years, and that median prices should remain relatively flat for new and existing homes. Price gains for both types of housing are expected to be limited to about 2 percent in 2008 and 2009.
With interest rates up and home sales down, total residential mortgage production in 2007 is projected to be $2.39 trillion, a 5 percent decline from an estimated $2.51 trillion in 2006. The Mortgage Bankers Association projects total mortgage originations will decline an additional 4 percent to $2.29 trillion in 2008 and drop another 6 percent to $2.15 trillion in 2009.
Residential mortgage originations for purchase loans could reach $1.33 trillion in 2007 and remain flat in 2008 before edging up slightly in 2009. Residential refinance loans are projected to total $1.06 trillion in 2007 before declining to $957 billion in 2008 and hitting $800 billion in 2009.
Duncan sees the unemployment rate increasing from 4.5 percent to 4.9 percent by the end of the year, but envisions real GDP growth will pick up to an average of 3 percent in 2007, 3.3 percent in 2008 and 3.4 percent in 2009.
The MBA's top economist expects the Fed to hold the short-term federal funds interest rate at 5.25 percent. With financial markets lowering their expectations of an easing in the federal funds rate in the first half of this year, long-term interest rates are on the rise, he said.
Duncan warned that the housing sector could deteriorate more than projected, with sharper declines in single-family housing starts and home sales. If the core inflation remains high, the Fed might be reluctant to bring the federal funds rate down, increasing the risk of recession.
Continued deterioration of the housing sector "could lead to a marked slowdown in consumer spending growth and threaten an economic expansion," Duncan said in a prepared statement. "If so, the Fed could start easing to prevent a recession. However, if core inflation remains elevated or even edges higher, the Fed would likely remain on the sideline, increasing recession risks. We believe the probability for this scenario to be small."
In a long-term forecast released this week, MBA Chief Economist Doug Duncan predicted existing-home sales will decline by about 7 percent this year compared to 2006, and that sales of new homes will decline by about 8 percent. Sales in both categories are projected to rebound in 2008 by about 3 percent and 1 percent, respectively, in 2009.
Duncan expects existing-home price appreciation to slow "significantly" over the next three years, and that median prices should remain relatively flat for new and existing homes. Price gains for both types of housing are expected to be limited to about 2 percent in 2008 and 2009.
With interest rates up and home sales down, total residential mortgage production in 2007 is projected to be $2.39 trillion, a 5 percent decline from an estimated $2.51 trillion in 2006. The Mortgage Bankers Association projects total mortgage originations will decline an additional 4 percent to $2.29 trillion in 2008 and drop another 6 percent to $2.15 trillion in 2009.
Residential mortgage originations for purchase loans could reach $1.33 trillion in 2007 and remain flat in 2008 before edging up slightly in 2009. Residential refinance loans are projected to total $1.06 trillion in 2007 before declining to $957 billion in 2008 and hitting $800 billion in 2009.
Duncan sees the unemployment rate increasing from 4.5 percent to 4.9 percent by the end of the year, but envisions real GDP growth will pick up to an average of 3 percent in 2007, 3.3 percent in 2008 and 3.4 percent in 2009.
The MBA's top economist expects the Fed to hold the short-term federal funds interest rate at 5.25 percent. With financial markets lowering their expectations of an easing in the federal funds rate in the first half of this year, long-term interest rates are on the rise, he said.
Duncan warned that the housing sector could deteriorate more than projected, with sharper declines in single-family housing starts and home sales. If the core inflation remains high, the Fed might be reluctant to bring the federal funds rate down, increasing the risk of recession.
Continued deterioration of the housing sector "could lead to a marked slowdown in consumer spending growth and threaten an economic expansion," Duncan said in a prepared statement. "If so, the Fed could start easing to prevent a recession. However, if core inflation remains elevated or even edges higher, the Fed would likely remain on the sideline, increasing recession risks. We believe the probability for this scenario to be small."
Friday, January 12, 2007
How not to run out of hot water
By Paul Bianchina
Inman News
Running out of hot water before you finish your morning shower is one of life's little irritants. If you have an electric water heater, the answer may be as simple as adjusting a thermostat or replacing a heating element.
Your first task is to check the settings on the thermostats, of which there are two on most water heaters. First, check your electrical panel and locate and shut the circuit breaker that controls the water heater – you're dealing with 240 volts as soon as you open up the water heater, so DON'T TRY AND DO THIS WITH THE POWER ON. There is, however, no need to shut off the water for this first step.
Remove the two access panel covers on the front of the water heater, which are held in place by one or two screws each. Set the panel covers and screws aside and, if present, remove the small insulation blankets inside the access areas. This will expose the thermostats, which are simply two small dials marked in degrees Fahrenheit, with a small adjustable pointer.
First, check to see what number the pointers indicate, and that both pointers are set the same. For the typical residential water heater supplying hot water for bathing, laundry and a dishwasher, the thermostats should be set between 130 and 150 degrees, depending on how much hot water you use and what your personal preferences are. At settings much below 130, you'll have a hard time maintaining a large flow of hot water, and this may be below the minimum temperature recommended by your dishwasher manufacturer. On the other hand, settings above 150 will waste electricity and increase the risk of scalding, especially for small children.
To set the thermostats, simply use a screwdriver to move the pointers until they point directly at the desired temperature. Be sure that both thermostats are set to the same temperature.
To change a water heater element, you first need to drain the water out of the tank. After shutting the power, close the water inlet valve, which is typically located above the water heater on the cold water side (the lines are marked with C and H where they enter the tank). Connect a garden hose to the drain valve on the bottom of the water heater, and route the hose to a convenient location before opening the valve. To help the flow of water coming out of the hose, open a hot water faucet near the water heater, or loosen one of the flexible water lines where it enters the water heater.
When the tank is drained, close the drain valve and remove the access panel covers as described above. Near each thermostat, you will see a fitting that resembles a large bolt head with wires attached to it. Make a note of how the wires are attached, then disconnect them. Using a special water heater element wrench, which looks somewhat like a socket wrench, unscrew the fitting and remove the element. Element wrenches are available wherever the elements are sold.
Water heater elements are rated by their wattage, and are sized to specific tanks. Your best bet is to take the old element to a home center or plumbing supply retailer and have them match you up with a new one. For best results and longest life, it's best to replace both elements at the same time.
To replace the elements, simply reverse the above procedure. Be sure that any gaskets or washers are in place, then screw the element into the tank and tighten it securely. Reconnect the wires in the same configuration as before, then replace the access covers. Make sure the drain valve is shut and that you've retightened any pipes you loosened, then open the inlet valve to refill the tank. Leave a hot water faucet open near the water heater to allow air to purge out of the tank as it fills. Once the tank is full and water is coming out of the faucet, turn the power back on. NEVER turn the power on when the tank is empty or only partially full – that's a sure way to burn out the elements.
Remember, if you're uncomfortable with any of the plumbing or electrical connections, contact a qualified, licensed plumber or electrician.
Inman News
Running out of hot water before you finish your morning shower is one of life's little irritants. If you have an electric water heater, the answer may be as simple as adjusting a thermostat or replacing a heating element.
Your first task is to check the settings on the thermostats, of which there are two on most water heaters. First, check your electrical panel and locate and shut the circuit breaker that controls the water heater – you're dealing with 240 volts as soon as you open up the water heater, so DON'T TRY AND DO THIS WITH THE POWER ON. There is, however, no need to shut off the water for this first step.
Remove the two access panel covers on the front of the water heater, which are held in place by one or two screws each. Set the panel covers and screws aside and, if present, remove the small insulation blankets inside the access areas. This will expose the thermostats, which are simply two small dials marked in degrees Fahrenheit, with a small adjustable pointer.
First, check to see what number the pointers indicate, and that both pointers are set the same. For the typical residential water heater supplying hot water for bathing, laundry and a dishwasher, the thermostats should be set between 130 and 150 degrees, depending on how much hot water you use and what your personal preferences are. At settings much below 130, you'll have a hard time maintaining a large flow of hot water, and this may be below the minimum temperature recommended by your dishwasher manufacturer. On the other hand, settings above 150 will waste electricity and increase the risk of scalding, especially for small children.
To set the thermostats, simply use a screwdriver to move the pointers until they point directly at the desired temperature. Be sure that both thermostats are set to the same temperature.
To change a water heater element, you first need to drain the water out of the tank. After shutting the power, close the water inlet valve, which is typically located above the water heater on the cold water side (the lines are marked with C and H where they enter the tank). Connect a garden hose to the drain valve on the bottom of the water heater, and route the hose to a convenient location before opening the valve. To help the flow of water coming out of the hose, open a hot water faucet near the water heater, or loosen one of the flexible water lines where it enters the water heater.
When the tank is drained, close the drain valve and remove the access panel covers as described above. Near each thermostat, you will see a fitting that resembles a large bolt head with wires attached to it. Make a note of how the wires are attached, then disconnect them. Using a special water heater element wrench, which looks somewhat like a socket wrench, unscrew the fitting and remove the element. Element wrenches are available wherever the elements are sold.
Water heater elements are rated by their wattage, and are sized to specific tanks. Your best bet is to take the old element to a home center or plumbing supply retailer and have them match you up with a new one. For best results and longest life, it's best to replace both elements at the same time.
To replace the elements, simply reverse the above procedure. Be sure that any gaskets or washers are in place, then screw the element into the tank and tighten it securely. Reconnect the wires in the same configuration as before, then replace the access covers. Make sure the drain valve is shut and that you've retightened any pipes you loosened, then open the inlet valve to refill the tank. Leave a hot water faucet open near the water heater to allow air to purge out of the tank as it fills. Once the tank is full and water is coming out of the faucet, turn the power back on. NEVER turn the power on when the tank is empty or only partially full – that's a sure way to burn out the elements.
Remember, if you're uncomfortable with any of the plumbing or electrical connections, contact a qualified, licensed plumber or electrician.
Thursday, January 11, 2007
January Market Flash
LOOKS LIKE UP TO ME
Intro: If you compare the market realities of today with what they were last fall and last summer, you will see that what matters is motion, fluidity, interaction and inter-reaction. What the numbers are saying and what the trends are implying may be very different. Read on.
Statistics:
Statewide: The median resale price of a single-family detached home in California for November was $555,290, an increase of 0.7% from October and 1.4% over November 2005. Unsold resale inventory in November was sufficient for 7.4 months, up from 3.6 months (says CAR) a year earlier; median number of days till sale was 70, an increase from last year’s 39.
Bay Area: November median price, at $738,900, is up half a percent for the month and 2.2% from the November 2005 figure; a decline in activity of 11% for the month and 18% for the year – but remember those figures are relative to the unusually strong November of last year. The Santa Clara County median price of $775,000 is flat for the month and up 4% for the year. Santa Cruz County at $719,000 is down almost 5% for the month and about 9% for the year. San Benito County, with a $555,000 median, has declined 7% for the year. Monterey County and region’s medians have declined 3% for the year, which is within the scope of seasonal correction.
Sales activity is a story with some bright spots. Santa Cruz County is up 18% for the month and 9% for the year, so improved affordability has certainly counted for something. Monterey region year-over-year is down 12% in November, but it was down 24% in October and 48% in September, so do not let the general fact of a decline obscure a relative improvement in the situation. Monterey County year-over-year is down 26%, but that is only half the decline of September’s 52%. Northern California as a whole is down 9% in November compared to 14% in October, 26% in September, 31% in August. Most other Northern California regions are holding roughly steady. The numbers and the trends are telling...not opposite stories, but an equivocal story.
Sacramento/Capitol Region: Warming perceptibly. The market in resale properties, which seemed impaired last summer, is mending slowly. Looking at the list of communities and neighborhoods in the region, we find more than 25 whose medians have improved over last year. This market will take some time to bounce back, but we are betting it will not take long. Sacramento has lots of reasons to grow.
Interest Rates*: Last year we wrote “Core rates have been managed in masterly fashion for the last year and a half to two years…Most rates will probably bounce between high fives and low sixes for a while, but adjustable rates are now almost identical to the lower fixed rates – which speaks to a lack of elasticity in the system.” Situation today is much the same, except that rates are paddling around in the high fives, with only non-conforming 30-year fixed barely poking above six. 5/1 ARM is at 5.55% compared to conforming 30-year fixed at 5.72%. So far as rates are concerned, the bedrock conforming 30-year fixed can still be called “substantially under 6%” and that is cause for applause. Conforming 15-year fixed at 5.48% is an increasing favorite with baby boomers who want to pay off their houses while they have earned income to do it. Overall, rates are edging up slowly – we are sensing the complex interaction of a whole bunch of contradictory pressures – but they remain broadly attractive. If the Fed cuts rates in January or February, as many experts foresee, mortgage rates could stop inching up and start inching down.
Inventory: Mean time till sale is at 70 days and what more do you really need to know? You will have an incredible selection of compelling properties. We cannot imagine worrying about inventory at all.
News Media: Overall, reporting seems to be fair and highlighting reasons for optimism, such as normal seasonal adjustments, increasing sales and plentiful inventory for home buyers. The consensus seems to be that after the tremendous surge of increased home prices and sales a few years back, the market is now balancing out. For 2006 as a whole, the news media was surprisingly evenhanded in their take on real estate and seemed to avoid their once typical “gloom and doom” and the “bubble is about to burst” stories of recent years. The news media are grasping the fact that perceptive reporting on the market can even help to direct it.
Overall Assessment: A prospect’s attitude toward this market will depend on circumstance, but for many people, this might be the best time to buy in a decade. Long inventory means generous selection. Almost any mortgage you might want is still under 6%. Affordability is recovering as sellers price to sell. As buyers discover the interlocking advantages of this market, and if – that is, when – more buyers with more dollars chase fewer properties, the balance will tip slowly toward the seller. The message: The sooner you buy, the more chance you will give this market to work in your favor.
Intro: If you compare the market realities of today with what they were last fall and last summer, you will see that what matters is motion, fluidity, interaction and inter-reaction. What the numbers are saying and what the trends are implying may be very different. Read on.
Statistics:
Statewide: The median resale price of a single-family detached home in California for November was $555,290, an increase of 0.7% from October and 1.4% over November 2005. Unsold resale inventory in November was sufficient for 7.4 months, up from 3.6 months (says CAR) a year earlier; median number of days till sale was 70, an increase from last year’s 39.
Bay Area: November median price, at $738,900, is up half a percent for the month and 2.2% from the November 2005 figure; a decline in activity of 11% for the month and 18% for the year – but remember those figures are relative to the unusually strong November of last year. The Santa Clara County median price of $775,000 is flat for the month and up 4% for the year. Santa Cruz County at $719,000 is down almost 5% for the month and about 9% for the year. San Benito County, with a $555,000 median, has declined 7% for the year. Monterey County and region’s medians have declined 3% for the year, which is within the scope of seasonal correction.
Sales activity is a story with some bright spots. Santa Cruz County is up 18% for the month and 9% for the year, so improved affordability has certainly counted for something. Monterey region year-over-year is down 12% in November, but it was down 24% in October and 48% in September, so do not let the general fact of a decline obscure a relative improvement in the situation. Monterey County year-over-year is down 26%, but that is only half the decline of September’s 52%. Northern California as a whole is down 9% in November compared to 14% in October, 26% in September, 31% in August. Most other Northern California regions are holding roughly steady. The numbers and the trends are telling...not opposite stories, but an equivocal story.
Sacramento/Capitol Region: Warming perceptibly. The market in resale properties, which seemed impaired last summer, is mending slowly. Looking at the list of communities and neighborhoods in the region, we find more than 25 whose medians have improved over last year. This market will take some time to bounce back, but we are betting it will not take long. Sacramento has lots of reasons to grow.
Interest Rates*: Last year we wrote “Core rates have been managed in masterly fashion for the last year and a half to two years…Most rates will probably bounce between high fives and low sixes for a while, but adjustable rates are now almost identical to the lower fixed rates – which speaks to a lack of elasticity in the system.” Situation today is much the same, except that rates are paddling around in the high fives, with only non-conforming 30-year fixed barely poking above six. 5/1 ARM is at 5.55% compared to conforming 30-year fixed at 5.72%. So far as rates are concerned, the bedrock conforming 30-year fixed can still be called “substantially under 6%” and that is cause for applause. Conforming 15-year fixed at 5.48% is an increasing favorite with baby boomers who want to pay off their houses while they have earned income to do it. Overall, rates are edging up slowly – we are sensing the complex interaction of a whole bunch of contradictory pressures – but they remain broadly attractive. If the Fed cuts rates in January or February, as many experts foresee, mortgage rates could stop inching up and start inching down.
Inventory: Mean time till sale is at 70 days and what more do you really need to know? You will have an incredible selection of compelling properties. We cannot imagine worrying about inventory at all.
News Media: Overall, reporting seems to be fair and highlighting reasons for optimism, such as normal seasonal adjustments, increasing sales and plentiful inventory for home buyers. The consensus seems to be that after the tremendous surge of increased home prices and sales a few years back, the market is now balancing out. For 2006 as a whole, the news media was surprisingly evenhanded in their take on real estate and seemed to avoid their once typical “gloom and doom” and the “bubble is about to burst” stories of recent years. The news media are grasping the fact that perceptive reporting on the market can even help to direct it.
Overall Assessment: A prospect’s attitude toward this market will depend on circumstance, but for many people, this might be the best time to buy in a decade. Long inventory means generous selection. Almost any mortgage you might want is still under 6%. Affordability is recovering as sellers price to sell. As buyers discover the interlocking advantages of this market, and if – that is, when – more buyers with more dollars chase fewer properties, the balance will tip slowly toward the seller. The message: The sooner you buy, the more chance you will give this market to work in your favor.
Wednesday, January 10, 2007
Home Sales To Rise Gradually Into 2008
After bottoming in the fourth quarter of 2006, existing-home sales are forecast to gradually rise through 2007 and into 2008, while new-home sales should turn around by summer, according to the latest forecast by the NATIONAL ASSOCIATION OF REALTORS®.
Annual totals for existing-home sales in 2007 will be comparable to 2006, says David Lereah, NAR’s chief economist.
“Keep in mind that we were still in boom conditions during the first quarter of 2006 with a high sales volume and double-digit price appreciation,” Lereah said. “We are starting 2007 from a relatively low point, so even with a gradual improvement in sales it’ll be pretty much of a wash in terms of annual totals.”
The good news, he says, is that a steady improvement in sales will support price appreciation moving forward.
2006 Sales Third-Highest on Record
Existing-home sales for 2006 are expected to come in at 6.50 million, the third highest on record, with a total of 6.42 million seen in 2007. New-home sales in 2006 should tally 1.06 million, the fourth highest on record, with 957,000 projected this year.
Total housing starts for 2006 are likely to be 1.81 million units, with 1.51 million forecast in 2007, which would be the lowest level in a decade. Builders are pulling back on new construction to support prices of remaining inventory.
The 30-year fixed-rate mortgage will probably rise to 6.7 percent by the fourth quarter of 2007. Last week, Freddie Mac reported the 30-year fixed rate at 6.18 percent, far below earlier consensus forecasts.
“The current interest rate environment and housing inventory levels present a window of opportunity for potential buyers,” Lereah says.
The national median existing-home price for all of 2006 is expected to rise 1.1 percent to $222,100, and then gain 1.5 percent this year to $225,300. The median new-home price, after rising only 0.3 percent to $241,600 in 2006, is projected to grow 3.0 percent in 2007 to $248,900.
Soft Landing for Housing
“With all the wild projections by academics, Wall Street analysts, and others in the media, it appears that much of the housing sector is experiencing a soft landing,” Lereah says. “Despite the doomsayers, household wealth will not evaporate and the economy will not go into a recession. If you’re in it for the long haul, housing is a sound investment.”
The unemployment rate is likely to average 4.8 percent in 2007, following a rate of 4.6 percent in 2006. Inflation, as measured by the Consumer Price Index, is expected to be 2.2 percent 2007, down from 3.2 percent last year, while growth in the U.S. gross domestic product is seen at 2.5 percent in 2007, compared with 3.3 percent last year.
Inflation-adjusted disposable personal income should grow 3.4 percent this year, following a rise of 2.7 percent in 2006.
Annual totals for existing-home sales in 2007 will be comparable to 2006, says David Lereah, NAR’s chief economist.
“Keep in mind that we were still in boom conditions during the first quarter of 2006 with a high sales volume and double-digit price appreciation,” Lereah said. “We are starting 2007 from a relatively low point, so even with a gradual improvement in sales it’ll be pretty much of a wash in terms of annual totals.”
The good news, he says, is that a steady improvement in sales will support price appreciation moving forward.
2006 Sales Third-Highest on Record
Existing-home sales for 2006 are expected to come in at 6.50 million, the third highest on record, with a total of 6.42 million seen in 2007. New-home sales in 2006 should tally 1.06 million, the fourth highest on record, with 957,000 projected this year.
Total housing starts for 2006 are likely to be 1.81 million units, with 1.51 million forecast in 2007, which would be the lowest level in a decade. Builders are pulling back on new construction to support prices of remaining inventory.
The 30-year fixed-rate mortgage will probably rise to 6.7 percent by the fourth quarter of 2007. Last week, Freddie Mac reported the 30-year fixed rate at 6.18 percent, far below earlier consensus forecasts.
“The current interest rate environment and housing inventory levels present a window of opportunity for potential buyers,” Lereah says.
The national median existing-home price for all of 2006 is expected to rise 1.1 percent to $222,100, and then gain 1.5 percent this year to $225,300. The median new-home price, after rising only 0.3 percent to $241,600 in 2006, is projected to grow 3.0 percent in 2007 to $248,900.
Soft Landing for Housing
“With all the wild projections by academics, Wall Street analysts, and others in the media, it appears that much of the housing sector is experiencing a soft landing,” Lereah says. “Despite the doomsayers, household wealth will not evaporate and the economy will not go into a recession. If you’re in it for the long haul, housing is a sound investment.”
The unemployment rate is likely to average 4.8 percent in 2007, following a rate of 4.6 percent in 2006. Inflation, as measured by the Consumer Price Index, is expected to be 2.2 percent 2007, down from 3.2 percent last year, while growth in the U.S. gross domestic product is seen at 2.5 percent in 2007, compared with 3.3 percent last year.
Inflation-adjusted disposable personal income should grow 3.4 percent this year, following a rise of 2.7 percent in 2006.
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