Mortgage Weekly Update - Last Week in Review - Tolerance versus Patience
Foster Weeks does a
weekly mortgage update.
===================================
"So what's the Fed up to? Here is the key - Tolerance vs. Patience. The Fed will not tolerate inflation above 2%...even at the expense of the economy. However, they are trying to exercise patience, as they know that it takes time for the impact of their past rate hikes to filter through the economy and fight inflation, normally between 6-9 months. So the Fed has been patient since their last hike on June 29th, waiting for inflation to decline...but inflation has been stubbornly persistent, and the patience is wearing thin on some Fed members.
The Fed's favorite measure of inflation, the Personal Consumption Expenditure Index, hits first thing Monday, and will take special significance following this week's action. If inflation does not begin to move lower towards the Fed's target, expect more hikes. But this week's tame talk on the prospects of lower inflation and slower economic growth ahead gave Bonds a boost higher, and
home loan rates were unchanged to improved by .125%."...
read on.
- Foster Weeks=================================== In a related story,
MoneyNews reports:
Fed holds rates steady, maintains inflation warningWASHINGTON (MarketWatch) -- The Federal Reserve decided to remain on the sidelines Wednesday, keeping interest rates steady but leaving the door open for further increases if inflation does not behave.
The Federal Open Market Committee voted to hold overnight interest rates steady at 5.25%.
It was the third straight meeting with no change in monetary policy. It follows rate hikes at an unprecedented 17 consecutive policy-setting meetings that brought overnight rates from a decades-low of 1% to 5.25%.
The wording of the announcement from the FOMC was little changed from the September statement. The committee added a forward-looking phrase and took out language suggesting that high energy and commodity prices had the potential to add to inflationary pressures.
"Economic growth has slowed over the course of the year, partly reflecting a cooling of the housing market," the statement said. "Going forward, the economy seems likely to expand at a moderate pace."
Read the full statement.
Read the rest of the article
here.
- MarketWatch
San Francisco Real Estate Market Update for 10/16 - 10/22/06
Avram Goldman, President and COO of Coldwell Banker, San Francisco Bay Area said in his latest weekly report: "Finally, the diet is kicking in----inventories are shrinking. Forty percent of our offices reported diminishing inventories and only eighteen percent reported inventories increasing. The rest were steady. Those sellers that do not have a pressing need to sell are either staying put or leasing their homes.
"San Francisco and the Peninsula overall have seen a boost in sales. Twelve of fifteen offices reported having multiple offers. Some as high as 50%. We are noticing a modest fall surge. This also includes Sonoma County which has come to life. Sellers have become more accustomed to what it takes to sell. Pricing and preparation are keys. Two-thirds of our offices experienced multiple offers over the past week. In the Ingleside district of San Francisco a listing priced at $549,000 had 20 offers and went well over asking. The East Bay still remains a bit sluggish, as well as the Monterey Peninsula.
"Buyers are out in force. An open home in Ladera had over 100 groups. Buyers are still not making quick decisions, but they seem more poised to make offers. Transactions take longer to put together and require more work to keep together. Patience is a virtue to creating a sale. The upper end appears to be warming up. We had a $5 million sale in our Menlo Park Santa Cruz office.
"Have we stabilized? Has the market found equilibrium? Only time will tell. The last two months of 2005 slowed. If the next two months exceed open sales from last year there may be a marked shift. Keep tuned.
"The numbers for the week are as follows: 5 offices showed increasing inventories, 14 steady and 12 decreasing---sales activity looked like this 6 offices increasing, 18 steady and 7 decreasing."
- Avram Goldman* For an e-mail alert when this report is updated, send a note to info@SFResidence.com with "weekly market report" in the subject line.
Focus on San Francisco Neighborhoods - The Castro
The Castro as described on the
SFResidence neighborhood guide:
"
The Castro district, the haven of the gay and lesbian community has the landmark Castro Theater where viewers line up to see such drag queen specials as "Sound of Music" sing alongs. After the World War II many of the dishonorable discharged soldiers due to their sexual orientation remained in San Francisco known for its' tolerance and diversity since the Gold Rush days rather than return to mid-western homes known for their intolerance of gays, blacks, etc. The gentrification of this working class district began in the 60's and 70's when well-educated middle-class white gay men were drawn to the Victorian architecture of the Castro and 18th Street area of Eureka Valley. Check out the "Crusin the Castro" walking tour written by Trevor Hailey if you wish to learn about the colorful history. Or just walk along the Castro and experience the trendy shops, mainstream restaurants, leather bars and clubs side-by-side, etc. filled with alternative lifestyle individuals."
The
San Francisco Chronicle says:
"If only the Mexican land barons and European homesteaders who built the Castro district could see it -- and the price of its real estate -- today. What was once dairy farms and dirt roads is now one of the city's most vibrant and cohesive communities, saturated with stylish shops and bars so popular that patrons spill out onto the street. Irish, German, and Scandinavian immigrants came to the outskirts of San Francisco in search of cheap land, which became bona fide suburbs after 1887 when the Market Street Cable Railway linked Eureka Valley, as it was then called, with the rest of the city. Thanks to these homesteaders, who built large, handsome Victorian houses for their large families, today's residents have someplace to pour their money, and the vast majority of the neighborhood's classic homes have been lovingly and artfully restored..."
Read the rest of the article
here.
Other highlights on this page include:
- Best time to go
- Sights & Culture
- Food & Drink
- Shopping
- Nightlife
- San Francisco ChronicleFor more information on other neighborhoods and street maps visit our
website.
- Mick OrtonPrevious Neighborhoods:Castro - Cow Hollow - Diamond Heights - Golden Gate Park - Lake Street - Laurel Heights - The Marina - Nob Hill - Noe Valley - Outer Richmond - Pacific Heights - Russian Hill - Sacramento Street - St. Francis Wood - Sea Cliff - Telegraph Hill
OUR APLOGIES!
Hello,
I just found unmoderated comments to postings on our blog all the way back in September. We
apologize to those of you who took the time to write comments to our posts and thought we were ignoring you.
We are supposed to get e-mail alerts when comments are submitted, but apparently there is a KINK in the system. We are looking into this problem and promise we will do our best to not let it happen again!
In closing, all comments (except those that were mortgage advertisements) were approved and should appear shortly.
- Mick Orton
IT'S OFFICIAL! San Francisco Association of Realtors Ceasing Operation of SFARMLS' Public Web Site
As we reported earlier, the San Francisco Association of Realtors plans to discontinue the public side of its website. However, you will always be able to search available listings
FREE from the
SFResidence website.
- Mick Orton===================================
With REALTOR® members' interests in mind and after thoughtful consideration, the board of directors of the San Francisco Association of REALTORS® (SFAR) has voted to remove public access to MLS listing information on the Association-operated website, www.sfarmls.com. The action is being taken to drive traffic now received by sfarmls.com to broker websites in an effort to establish REALTORS® as the first point of contact for consumers looking for real property in San Francisco and the Northern Peninsula. The action will become effective on January 1, 2007.
In the past several years there has been an alarming movement of consumers from broker websites to the public MLS site. To make the site less appealing to consumers but to preserve its usefulness as a source of listing information, the Association attempted to delay posting new listings to the site by one week. Unfortunately, Rapattoni Corporation, operator of the site, could not accommodate the request.
Leading firms in the city have reported that in surveys of buyers they have represented, an overwhelming majority found the property they ultimately purchased not on the firm's website but on sfarmls.com.
Today, under the Association's IDX (internet data exchange) policy, it is possible for any broker participating in SFARMLS to duplicate the listing information currently found on sfarmls.com on his or her own website. The policy is set forth in SFARMLS' Rules and Regulations at Section 12.16.
The Association has approved several vendors that can set up an IDX site for any broker participating in SFARMLS. The cost is not significant. But if having a website with MLS information does not appeal to a broker, realtor.com, the site operated by the National Association of REALTORS®, will continue to display listing information from San Francisco and the Northern Peninsula, as well as other areas around the United States.
Set forth below are a set of questions and answers that members may find useful in understanding how the discontinuance of public access to sfarmls.com will affect them.
* * * * *
Q: When did SFAR begin operating a public MLS website?
A: When SFAR launched Rapattoni MLS in July of 2002, a public MLS website was included in the package. Although many of the brokers in SFARMLS were already displaying MLS listing information on their websites under the Association's IDX policy, many were not so the Association agreed to maintain a public site until there were a greater number of broker websites with listing information. Now that nearly all brokers in SFARMLS have their own IDX sites, there is no longer a need to provide this service.
Q: What is IDX?
A: IDX stands for Internet Data Exchange, and is a standard developed by NAR for brokers (and MLSs) to display listing information on their websites to the public. IDX is intended to be an advertising vehicle for brokers. IDX information includes only publicly-viewable fields, and does not include any "agent-only" information such as agent remarks, showing information, such as lockbox codes, days on market, or contact information. Not all listings in the MLS are available in IDX feeds.
Q: Why don't we just keep the public MLS website up? My clients really like it!
A: There are two main reasons for discontinuing public access to sfarmls.com: First, there is the reason stated above. Second, there is the recognition that the listing information belongs to the broker, not to SFARMLS, and that many (if not most) brokers feel that the public site detracts from their efforts to attract consumers to their own sites. Every broker who uses IDX has the EXACT SAME INFORMATION on their site as SFARMLS currently has on its public site.
Q: I like the idea of a trusted, neutral source of information for the consumer. Where do I send my clients now?
A: There are strict rules preventing brokers from indiscriminately removing individual listings from the IDX feed they get for their websites. Familiarize yourself with the rules governing IDX display of listing information, and you can easily educate your clients. Your clients can receive all of the listings they have come to expect from your broker website. Alternatively, listing information is available at
www.realtor.com.
Q: Where do my clients go now to see all of the listings in the MLS?
A: It is a common misconception that the public side of www.sfarmls.com contains all of the listings in SFARMLS. Your clients have never had access to all of the listings on SFARMLS' publicly accessible website.
Some brokers have internet applications for their clients where, after logging onto a portal, the client has access to all of the listings. These applications are available from third-party vendors for brokers and agents who have not developed the internet applications themselves. To use these applications to access the full listing inventory, the consumer needs to have a relationship with the broker or agent using the application. Taking down the public access to www.sfarmls.com will not change this policy.
Q: I have the Rapattoni search framed on my broker or agent website. Will this be turned off, too?
A: No. The only thing that will change is the elimination of public access to
www.sfarmls.com. The same search window will continue to be available as a framed solution for both brokers and agents.
Q: I'm a broker without a company website. What are my options for getting a site that displays IDX listing information?
A: See the
attached list for the names of vendors who can provide brokers with a basic website that displays IDX listing information.
Q: What are some of the benefits of removing the public MLS site?
A: First, as mentioned above, the goal is to drive traffic that currently is going to www.sfarmls.com back to broker and agent websites. This will result in many more eyeballs on broker and agent brands and more exposure for them and the services they offer. SFARMLS' public MLS site really does not do anything to serve brokers and agents other than to provide free access to the listing information that brokers and agents have worked so hard to procure.Second, the MLS (and the display of listing information) was not designed for the public. The purpose of the MLS is clearly stated in the MLS rules: "...a facility for the orderly correlation and dissemination of listing information among the participants so that they may better serve their clients, customers, and the public." The connection with the public should come from broker and agent websites, which are designed to display the information in a consumer-friendly format. Remember, this is the same information that is currently available at sfarmls.com. There are no fewer listings on a broker's site than there are currently on the public SFARMLS site.
Q: But the public site gave my listings additional exposure, no?
A: The public will continue to seek listing information on the internet, and the consumer will still find a broker and agent's listings no matter what broker or agent site they look at, provided they have marked “yes" in the IDX field when uploading the listing to SFARMLS.
Q: What do I tell my clients? Where can they search the MLS?
A: Just send them to your broker or agent website. And, if your broker site does not currently contain IDX listing information, contact (or have your broker contact, if you are an agent) one of the vendors already approved by the Association. Having IDX information on your site is not only a chance to connect with your clients, but a chance to build your brand by reminding your clients of the services you provide.
Q: When will the public MLS site be taken down?
A: By motion of the SFAR Board of Directors, the public site will come down on January 1, 2007.
Q: What will happen when a visitor clicks on www.sfarmls.com after January 1, 2007?
A: The user will see the following message:
"Technologies surrounding the management of listing information have made public access to the information through the Association obsolete. The information is now available on many of the websites operated by broker participants of SFARMLS.
"To find a site that suits your needs, go to
www.sfrealtors.com and use the 'Find a REALTOR®' tool."Please accept our apologies for any inconvenience that you may encounter in transitioning to these websites."
- San Francisco Association of Realtors
MoneyNews says the worst is over in real estate!
Though it never got that bad here, Alan Greenspan reported yesterday in MoneyNews that housing woes are probably behind us. In the same issue was a report that home prices have plunged almost 10%, the most it 35 years! Fortunately, San Francisco seemed to be insulated from this drop. Though we have admittedly noticed a slowdown, prices seem to have held relatively well. Here are the articles:
- Mick Orton===================================
Home Prices Plunge by Most in 35 Years The median price of a new home plunged 9.7 percent in September from a year ago, the largest drop in more than 35 years, reports the Commerce Department.
The median home price dropped to $217,000 in September from $239,300 in August. That was the lowest median price since September 2004. The 9.7 percent plunge was the sharpest year-over-year decline since December 1970.
The plunge in new home prices follows a record plunge in existing home prices. As MoneyNews told readers yesterday, the 2.5 percent year-over-year decline in existing home prices was the biggest in the National Association of Realtor’s nearly 40-year record.
Clearly home prices across the board are in the midst of a serious correction, one which our sister publication, Financial Intelligence Report, told readers about months ago. Both
Sir John Templeton and Yale Professor and real estate expert
Robert Shiller told FIR readers that they expected the housing market correction to result in prices plunging up to 40 percent. And, unfortunately, it looks like their predictions will be spot on.
Read more.
- NewsMax===================================
Greenspan Says Housing Woes ‘Probably Behind Us’Former Federal Reserve Chairman Alan Greenspan, the chief architect of the housing bubble, said Thursday that the housing market isn’t in dire straits.
"Most of the negatives in housing are probably behind us," Greenspan told a conference sponsored by the Commercial Finance Association. "The fourth quarter should be reasonably good, certainly better than the third quarter."
Greenspan retired as Fed Chairman in February of this year. Greenspan slashed interest rates from 6 percent in January 2001 to 1 percent in June 2003 to avoid a recession following the bursting tech bubble. In that low interest rate environment, the housing sector surged.
"There are early signs of stabilization (in housing)," Greenspan tells his audience. But hedged his prediction by saying of the housing slump, "It’s not over."
Read more.
- NewsMax
Focus on San Francisco Neighborhoods - Diamond Heights
Diamond Heights as described on the
SFResidence neighborhood guide:
The Diamond Heights area offers sunshine and total panoramic views from the north and southeast of downtown, the East Bay and west the Pacific Ocean . It is an affordable area of San Francisco for young families, students, artists and professionals with its modest single-family homes, apartments and condos. The nearby Noe Valley and Diamond Heights Shopping Center provides the residents an array of shops and restaurants to patronize.
For more information on other neighborhoods and street maps visit our
website.
- Mick OrtonPrevious Neighborhoods:Castro - Cow Hollow - Diamond Heights - Golden Gate Park - Lake Street - Laurel Heights - The Marina - Nob Hill - Noe Valley - Outer Richmond - Pacific Heights - Russian Hill - Sacramento Street - St. Francis Wood - Sea Cliff - Telegraph Hill
How to make an offer on a San Francisco Home
A reader asks:How do I know how much to offer on a house that I want to buy?
Our reply: Your real estate agent should be the key to that question. They are not suppose to tell you exactly what to offer but to give you information on what properties have sold for in the neighborhood and what makes the home you like worth more or less than the "comparable sales". Another factor in knowing what to offer is the motivation of the seller and the experience of the seller's agent.
Your agent can often obtain information from the listing agent as to why the seller is selling, how long the property has been on the market and if they have had any offers. The answers to these and other questions can be extremely valuable information for an experienced agent to use in advising you as to how to structure your offer to make your offer desirable to the seller. Sometimes the terms that you offer a seller can be more important than the price.
For instance I have had a buyer offer to let a seller occupy the property after the close of escrow at no cost to the seller, and even though they did not offer the highest price the seller accepted their offer over the others. It gave the seller peace of mind that they had time to find a new place to live, yet knew that their house had really sold so they had the money in their hands before they packed up and moved.
- Janis Stone
Mortgage Weekly Update - Last Week in Review - Inflation could signal higher interest rates
Foster Weeks does a
weekly mortgage update.
===================================
"...the Dow cracked another historic high, closing above 12,000 last week...and believe it or not, did so on the anniversary of "Black Monday" in 1987, when the Dow plunged by 508 points and suffered it's second largest loss in history. The strong stock gains sure seem to indicate that investors continue to feel good about the US economy...which perhaps has achieved that rare feat of a "soft landing", slowing down without actually stalling out.
"The economic reports of last week were mixed, but underscored a continuous message - that the US economy is still cooking along with some strength, and certainly exceeding most analysts' expectations. And most all the recent reports cover the bases in bearing this out -
housing numbers remain better than expected, employment is still reasonably strong, the stock market is roaring away...and as a result, inflation continues to be hotter than anticipated...""...
read on.
- Foster Weeks
Tenants are still occupying unit for sale in San Francisco TIC
A reader asks:I am looking into buying a TIC unit in San Francisco. The unit is tenant occupied and the tenants are month to month. I would like the unit to be vacant if I purchase the property. What are my options? Can I write an offer requesting the unit to be delivered vacant?
Answer:Your options in San Francisco are very limited since we have rent control. First of all if you are in contract to buy a property in San Francisco that is tenant occupied you should contact an attorney who specializes in the rent control law in San Francisco. The rent control law changes often and new rulings make old assumptions false!! And it is a very complicated law. That is the only advice you should rely upon.
But generally speaking you cannot ask an owner to deliver the unit vacant if the tenant in the unit is in good standing-- pays rent on time, etc.
There are very few ways to evict a tenant. So if you want a unit to be vacant when you purchase it you should find a unit that is already vacant to buy. But if you want to buy a unit that is tenant occupied and the tenant does not have "protected" status then you have the right to give 30 day notice to vacate if you intend upon occupying the unit as your primary residence and there is no other unit in the building that has had an OMI (owner move in) eviction. But you should use an attorney for this process so that it is done properly.
Please check our blog for past articles on
tenancy in common and
rent control.
- Janis Stone
Private Annuity Trusts may provide enormous financial benefits - Part 6
This article is part 5 of a series provided by our friends at
Quantum Advisors.
- Mick OrtonIf you own highly appreciated real estate, we know that you may be reluctant to sell because of the large tax bill you think you’ll face. This hesitancy may be especially true if you own investment real estate, because you may have to pay both capital gain taxes and depreciation recapture taxes associated with the sale. We know that the thought of selling real estate, and paying 20%, or even 30% of the sale price in taxes to the government has stopped many real estate investors from selling their properties.
We think there may be a solution you’d like to investigate:
The Private Annuity Trust.
You may have heard that as of Wednesday the 18th of October, 2006, the US Treasury department announced changes planned for allowability of the PAT as we know it. The bottom line is that PAT's will still be available, but the Treasury Department wants to eliminate the tax deferral benefit. This means that we will not use the PAT structure for tax deferral any longer. That of course is the bad news. The good news is that we still have the following tax deferral options available for clients. Over the next few weeks we will discuss in detail options that these new changes bring.
1031TIC - 100% tax deferral and the client can own a percentage of an institutional grade investment property.
Custom TIC - 100% tax deferral and the client can own up to 100% of an institutional grade investment property.
Structured Installment Sale - This is the PAT replacement. 100% tax deferral with the payments guaranteed by a very large US insurance company.
We actually are confident that 4X more clients will opt for the Structured Installment Sale. We were already planning to bring the Structured Installment Sale out as an additional option for tax deferral. Anyone who is interested in tax deferral will be offered the above 3 options which should work for almost everyone.
We are in the process of re-creating our website, our marketing materials, our seminar presentations, etc. to offer a truly comprehensive platform of solutions for your clients – we are always here to provide solutions – whatever works best for the client – and we have multiple choices to offer that will help them solve the problem of selling their highly appreciated real estate without worries about losing a third to taxes.
For more information, or for a FREE, 10 page Tax Savings Analysis on your property, contact Gary Katz at QFN – 800-224-1053 – or email
Gary@QAplan.com.
- Betsy Hartwell - Quantum Advisors*This is the sixth in a series of articles - to be continued...Part 1 may be read
here.
Part 2 may be read
here.
Part 3 may be read
here.
Part 4 may be read
here.
Part 5 may be read
here.
California Association of Realtors Corporate Legal Services Addresses Issues Involved in "Churning" Listings
We talked about this "churning" issue in our September 23
post. As stated previously, articles have appeared on other blogs such as
SocketSite from people who are disgruntled at Realtors for manipulating statistics by withdrawing properties and relisting at a lower listing price to avoid the "reduced" stigma. From the Realtor's point of view, this does the best service for their clients who want to get the property sold for the best price. Using this technique gives the property "new" exposure to the real estate community and does not give the impression that "there is something wrong" with it. After all, isn't this the Realtors' job? They are in the business of selling properties, not generating statistics!
Now the
California Association of Realtors is addressing these issues by presenting a Q&A on their website. They say:
"With the changing market, real estate practitioners representing sellers face new challenges marketing their listings. Some have engaged in the practice of relisting or “churning” a listing. The following legal article addresses this subject and some of the related problems and issues."
Read more...
- Copyright© 2006 CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.). Permission is granted to C.A.R. members only to reprint and use this material for non-commercial purposes provided credit is given to the C.A.R. Legal Department. Other reproduction or use is strictly prohibited without the express written permission of the C.A.R. Legal Department. All rights reserved.
Pending Home Sales Index Shows Market Stabilizing says NAR
This was published last week from the
National Association of Realtors:
The housing market will continue to stabilize in the months ahead, according to NAR's most recent Pending Homes Sales Index (PHSI). In August, the PHSI stood at 110.1, up 4.3 percent from the previous month and down 14.1 percent from August 2005. The index gauges home sales activity for upcoming months based on the number of transactions that have signed contracts but are not yet closed. A PHSI of 100 or more generally indicates a high level of homes sales activity.
"Our sense is that home sales may have reached a low in August -- the Pending Home Sales Index shows home sales should be fairly stable over the next two months, although a minor decline is possible," said NAR Chief Economist David Lereah. "With fewer new listings coming on the market, we should be able to draw down the inventory supply early next year to the point where home prices will rise, but at a slower pace than historic norms."
The PHSI declined across the nation in August compared with the readings a year ago. On a regional basis, the PHSI was highest in the South, where it declined 9.4 percent to 126.8. In the West, the index fell 16.9 percent to 112.7. The PHSI also declined in the Northeast and Midwest regions, falling to 95.4 and 93.8, respectively.
Read more.
- National Association of Realtors
Displaying the American Flag
Adams & Kessler are attorneys who deal with real estate law in California. Their website is
Davis-Stirling.
===================================
On July 24, 2006, President Bush signed
HR42, the "Freedom to Display the American Flag Act of 2005" which prohibits restrictions on displaying the U.S. flag on a member’s unit, lot or exclusive use common area. Under the Act, community associations:
...may not adopt or enforce any policy, or enter into any agreement, that would restrict or prevent a member of the association from displaying the flag of the United States on residential property within the association with respect to which such member has a separate ownership interest or a right to exclusive possession or use.
The law allows community associations to establish reasonable time, place, or manner restrictions necessary to protect a substantial interest of the association. This is similar to California's
Civ.Code §1353.5 adopted in 2002, which allows owners to display the United States flag on their separate property or exclusive use common area, regardless of any association restrictions to the contrary.
- Adrian J. Adams, Esq.
Mortgage Weekly Update - Last Week in Review - Home loans unchanged
Foster Weeks does a
weekly mortgage update.
===================================
"...the last Fed meeting gave the indication that inflation was under control, as the official word following the meeting was that the Fed again elected to pause in the rate hike cycle...the inside story spun a bit of a different tale. Last Wednesday, the 'Meeting Minutes' from the last Federal Open Market Committee policy-setting meeting were released, giving the details of the dialogue amongst the attending members, including those who did not vote in the last meeting. As it turns out, the comments reeked of continued concerns about inflation in the economy. And because inflation erodes the value of a fixed-return Bond, it's bad news for Bonds - and therefore home loan rates, which are based on Bonds. On all this news, home loan rates were unchanged to slightly worse, about .125% higher over the course of the week"...
read on.
- Foster Weeks
Private Annuity Trusts may provide enormous financial benefits - Part 5
This article is part 5 of a series provided by our friends at
Quantum Advisors.
- Mick OrtonMore questions and answers about Private Annuity Trusts:Q. What happens if I live longer or less than life expectancy?
A. Your payments from the trust continue for as long as you live, regardless of how long you live. The payments can also be based on the joint life expectancy of you and your spouse. The IRS table is used to calculate exactly what you will receive from your trust. If you live 15 years past your life expectancy, your trust payments will continue on for 15 years past your life expectancy. If you die 15 years prior to your life expectancy, your trust payments will terminate then. Life expectancy is just the number used to calculate the size of the payments. After your death, the private annuity payments terminate and all remaining assets are passed to your beneficiaries free of estate taxes and gift taxes.
Q. Can the trust buy property at a later date?
A. Yes, the investments of the trust are extremely flexible. The main focus of the trust is to be able to make payments as agreed to you. You can even borrow from the trust. Investment strategies for the trust are handled by our company as your registered investment advisor.
Q. Is there any flexibility in the annuity payment stream?
A. You can start taking payment immediately, or you can defer payments up until age 70 1/2. The trust may issue more than one annuity contract to you at the outset, providing tremendous flexibility in income flow and timing. Once payments commence, the same payments must be made to you for as long as you live.
Q. What happens if capital gains tax rates are lowered after I set up the private annuity?
A. Politicians frequently advocate lowering capital gains rates, so this could happen. In that case, you would get the benefit of the lowered rate on the capital gains portion of your annuity payments from the time the tax rates are lowered going forward.
Q. When I sell the property, may I keep some of the cash from the sale?
A. Yes, in that case you would pay taxes only on the portion of assets that you kept out of the trust. One possible superior alternative would be to have all the assets go into the trust and then borrow out the funds you needed. This way you will not pay tax on the amount you need in a lump sum and you will be paying interest on the loan back to yourself.
Q. How can I have my tax advisor or attorney analyze the private annuity idea?
A. QFN will gladly provide your tax advisor with the technical legal information s/he needs to properly advise you. For a quick answer, have your tax advisor review: IRS Revenue Rulings 55-119 and 69-74, plus the IRS’ GCM39503 of 5/19/86 and Treasury Decision TD-8754 issued in 1998, and the Ninth Circuit U.S. Court of Appeals decision “LaFargue v. Commissioner, 689 F. 2d 845 (1982)”.
Q. I’m interested in having one of these plans put together, what should I do next?
A. Your next step is to contact QFN directly at 800-224-1053. We will communicate with your tax advisors if necessary. We will also provide an illustration of your annuity payments. To get the program put together we will help you fill out an application. Then our attorney, who is an expert on Private Annuity Trusts, will review the information and put the documentation together. We’ll assist you with implementation; it’s very simple, since we handle all the steps of the process.
For more information, or for a FREE, 10 page Tax Savings Analysis on your property, contact Gary Katz at QFN – 800-224-1053 – or email
Gary@QAplan.com.
- Betsy Hartwell - Quantum Advisors*This is the fifth in a series of articles - to be continued...Part 1 may be read
here.
Part 2 may be read
here.
Part 3 may be read
here.
Part 4 may be read
here.
Public link to San Francisco Multiple Listing Service going away
A reader asks:I heard from a friend of mine that the San Francisco Board of Realtors has decided to discontinue the public side of their website for those of us who are not licensed agents. Is this true?
Our reply:To some degree, you are correct. Several weeks ago that announcement was made by an agent in our office who is a member of the board. Though some Realtors objected, the board voted to take down the public side of the
MLS. No date was given as to when the change was taking place.
You will, however, still be able to access the site through links from individual Realtors' websites. For example, you may access the MLS through
SFResidence by going to this
link to do your own property search.
- Mick Orton
San Francisco Real Estate Market Update for 10/2 - 10/8/06
Avram Goldman, President and COO of Coldwell Banker, San Francisco Bay Area said in his latest weekly report:"Something must be afoot. Eleven offices reported increasing sales activity---a number we haven’t seen in many a moon. Most offices (20) saw steady activity and only one showed decreasing activity.
"Are buyers beginning to sense that it is time to move with no guarantees that interest rates will remain low and that well priced and merchandised properties will not sit on the market? Or are sellers becoming more realistic in their pricing? We are seeing a number of price reductions. Are sellers becoming more flexible in their negotiation? I think it is probably all of the aforementioned. This is a good sign for both buyers and sellers.
"More listed properties are expiring and not being re-listed allowing inventories to modulate. There has been a pick up of the number of offices (65%) reporting multiple offers---most of these transactions receiving 2-4 offers and sometimes selling at full price and in some cases a little below listed price. It is still important that sellers realize that pricing and merchandising are essential to attract offers and most significant that offers are going to take some time to negotiate.
"An interesting phenomenon is that the highest end of the market is moving. We had a $19 mil. sale on the Peninsula and two $10 mil transactions in San Francisco---reaffirming that those with significant resources are still bullish on real estate.
"Open house activity is steady. Still seeing the best activity on those homes opened for the first time. Buyers are still being deliberate in their decision making process---making sure they feel confident that the properties they are writing on have long term value.
"Here are the numbers for the week: Twelve offices reported increasing listing inventories, 15 steady and 5 decreasing---11 offices saw increasing sales activity, 20 steady and 1 decreasing."
- Avram Goldman* For an e-mail alert when this report is updated, send a note to info@SFResidence.com with "weekly market report" in the subject line. For last month's San Francisco market figures go to our website.
More about TIC loans
A reader asks:When a TIC is purchased with individual loans are buyers able to close on a unit separately or does it have to be at the same time as the other buyers?
Our reply:Initially when considering selling a whole property as separate TIC interests the building will usually have only one loan secured by the property with the original owner. So when the first TIC is sold, and if the goal is to have individual financing, then each TIC owner must get a new loan on their unit's interest. After that when one parties' interest is sold that unit's loan is the only one that needs to be refianced.
- Janis Stone
North of Lake in San Francisco - Where's the lake?
A reader asks:I have been hearing about "North of Lake" for some time, but wonder... where's the lake? I finally figured out that they meant north of Lake Street. But how did the street get its name?
Our reply:I don't know where Lake street got its name but there is a lake north of
Lake Street and a park. The park is
Mt. Lake Park and it is a very popular park that has a lake with swans and ducks, a children's playground, tennis courts and a walking path. They have several seating areas with benches and grassy areas for picnics or games. It is a dog friendly park and goes from 7th Avenue to Funston. Properties North of Lake -- even on the north side of Lake street-- are typically more valuable than South of Lake.
I have a new property listing coming on next week that is on 7th Avenue and has direct access from their garden right on to Mt. Lake Park; it is a very unique setting. This area is especially popular with families.
- Janis Stone
Issues with TIC resales in San Francisco
A reader asks:I heard that resale financing is the largest risk when purchasing a TIC. Can you explain why this is true?
Our reply:Until recently any TIC building was secured by one loan on the entire property. When one person wanted to sell their interest, the whole property would have to either be refinanced in order to liquidate any equity that might have built up, or the person selling would have to carry the secondary financing or a personal note in order to make up the difference between the existing financing, the down payment and the purchase price.
For example: Let's assume a 3 unit building was purchased 5 years ago for $900,000 (that's $300,000 per unit) and an 80% loan was obtained - $720,000 ($240,000 per unit). If the property appreciated 5% per year the current value would be approximately $1,150,000 (($383,000 each). So if a unit's owner wanted to sell their interest for $383,000 and there is only a loan value of $240,000 (would actually be less if principle had been paid off in the 5 years!).
In this case the new buyer would either have to come up with $143,000 as a down payment (the difference between the new value of $383,000 and the loan value of $240,000) or the whole building would need to refianced for a higher loan amount. The latter is a costly proposition for everyone involved, especially if interest rates are higher than they were on the original loan. Additionlly there would be appraisal fees, points, title insurance fees, etc. adding to the cost of selling an individual interest. There could also be problems with assumability of the first loan.
The alternative is to have the seller agree to carry secondary financing, however, the buyer may not want to do this because they cannot easily refinance to pay off a balloon payment. So as you can see there are problems with selling a TIC interest.
Recently some banks have been willing to do individual financing on TIC's interests, but those loans are more expensive-- higher interest rates and higher loan to value ratios. Regardless, these should help make TICs more saleable in the future.
- Janis Stone
Assembly Bill 2962 potentially good news for San Francisco real estate sellers
Previously, the seller of a property of a property in California was required to have 3.33% of the sales price withheld for income tax purposes. As you can imagine, with average home prices creeping toward the $1M mark, this involves a lot of money. In the past most sellers would swallow hard, pay the tax, then have their accountant get most of the money back at the end of the year when they file their taxes. Meanwhile the state government gets to use that money interest free!
With the passage of
Assembly Bill 2962, the seller may elect to pay an alternative withholding which is calculated only on the capital gain. Here's what the California Association of Realtors is saying:
"Effective January 1, 2007, a seller required to have 3.33% of the sales price withheld for income tax purposes may elect an alternative withholding. The alternative withholding is an estimate of the seller's tax liability calculated by multiplying the recognized capital gain by the highest state tax rate for individual taxpayers (or the corporate tax rate for corporations), regardless of the taxpayer's actual tax bracket. Under existing California law, a buyer must withhold 3.33% of the sales price from the seller's proceeds unless an exemption applies, such as when the property is the seller's principal residence, the property is in a 1031 exchange, or the seller will not realize any capital gains. The new law applies to non-exempt sellers who may now elect to have less than 3.33% withheld. A seller opting for this tax alternative withholding must certify the amount to be withheld in writing under penalty of perjury. C.A.R.'s Standard Forms Advisory Committee is considering the impact this new rule will have, if any, on the 'Seller's Affidavit of Non-foreign Status and/or California Withholding Exemption' (Form AS). "
Assembly Bill No. 2962 may be read here in PDF format.
- Mick Orton
Mortgage Weekly Update - Last Week in Review - Home loan rates continue to get better
Foster Weeks does a
weekly mortgage update.
===================================
"...So after the Jobs Report, how does the economic news lineup look for this week? A few noteworthy items are on deck, including the highly anticipated Fed Minutes from the September 20th meeting. Why all the excitement around the Minutes being released on Wednesday? Last month, Richmond Fed President Lacker was again a dissenter on the vote to pause in the rate hike cycle - he actually felt there was still enough inflation in the economy to warrant another hike. So the Minutes will be dissected for clues, wondering why Lacker isn't on board with the rest of the team. The recent reports seem to indicate that the economy is cooling and inflation is controlled - which is the Fed's biggest concern - and the Minutes will give some inside scoop as to what the Fed members all have on their minds...
read on.
- Foster Weeks
Private Annuity Trusts may provide enormous financial benefits - Part 4
This article is part 4 of a series provided by our friends at
Quantum Advisors.
- Mick OrtonAssets That Can Be Sold In A Private Annuity Trust
Many assets can be sold in a Private Annuity Trust including:
- Assets held less than 12 months that are subject to ordinary income taxation
- Personal residences
- 2nd homes
- Residential rentals
- Commercial buildings
- Industrial properties
- Raw land
- Developed land
- Multi-unit properties
- Businesses
- Stocks
- Artwork
- Collectibles
- Other appreciated assets
Frequently asked questions:
Q. How can I know the amount of my payments?
A. With just the following data, we’ll produce a comprehensive illustration of your income payments:
- Your age(s)
- Selling price of the property
- Mortgages on the property
- Fees or commissions that must be paid on the sale
- The length of deferral, if any, until payments begin
- Basis in the property
There is no charge or obligation for an illustration of your private annuity interest.
For more information, or for a FREE, 10 page Tax Savings Analysis on your property, contact Gary Katz at QFN – 800-224-1053 – or email Gary@QAplan.com.
- Betsy Hartwell - Quantum Advisors
*This is the fourth in a series of articles - to be continued...
Part 1 may be read here.
Part 2 may be read here.
Part 3 may be read here.
San Francisco Real Estate Market Update for 9/25 - 10/1/06
Avram Goldman, President and COO of Coldwell Banker, San Francisco Bay Area said in his latest weekly report:"Fall is in the air. Maybe the sales bump we have been looking for may be coming. This is the first week since the spring that we had more offices increasing in sales activity than declining. This could bode well for the remainder of the year. Over half of our offices had multiple offer transactions, however the percentage of multiple offers to single offers have fallen off. The strongest multiple offer markets are in San Francisco and a few spots on the Peninsula. It gives further substantiation that we are in a balanced market for most of our locations.
"Buyers are still singing that song 'Time is on My Side', being cautious and deliberate before considering writing offers. Although for those properties that are priced competitively and fully prepared for the market, the buyers are singing a different song 'How Sweet it Is', as it was for the Palo Alto home listed just under $1M garnering 9 offers and going well over list price. We are also seeing that those sellers who readjust pricing are receiving positive results as they did in Fremont were a seller in the $600,000 price range reduced their price by $30,000 and entertained 3 offers and sold at the previous list price. Buyers are particularly price sensitive.
"Open home activity is still active, especially for those homes open for the first time. Offers are taking longer to put together as buyers and sellers are negotiating over longer periods of time. It is important for sellers to continue dialogues with buyers as those that do are more successful of getting their homes into escrow. Interest rates continue to drop creating more opportunity for buyers. There are no guarantees that these rates will stay at these levels in the future. This should be a motivator for buyers as they want to take advantage of these rates.
"Here are the numbers for the week: 9 offices reported increasing listing inventories, 16 steady and 3 decreasing---9 offices showed increasing sales inventory, 14 steady and 5 decreasing."
- Avram Goldman* For an e-mail alert when this report is updated, send a note to info@SFResidence.com with "weekly market report" in the subject line.
San Francisco home sales "smarter than the average bear!" market
This week, the
National Association of Realtors made the following observations:
"Home sales and home price growth forecasts have been lowered measurably. The past couple of months of housing data have been much lower than anticipated. Take a look at some of the recent figures:
July existing-home sales were down 11 percent from a year ago July pending home sales were 16 percent lower from a year ago July new home sales were down 22 percent from a year ago June and July single-family housing starts were down 14 percent and 17 percent, respectively June and July single-family permits were down 17 percent and 23 percent, respectively..." Read the rest of the article here.
Despite this report, look at July's
San Francisco real estate
market numbers compared to those above:
- It's true July number of existing-home sales were almost 21% lower from a year ago HOWEVER, the average sales price was almost 3% higher than a year ago!
There's no question that we are in a market slow down. Listings are taking longer to sell. Buyers are doing more negotiating and making offers under the list price. But the economy is doing well. Unemployment is the lowest it has been in years (though the press has spun this as "not as good as expected"). And mortgage rates are still historically low. It's only a matter of time before people realize it!
- Mick Orton
Fleet Week comes to San Francisco
One of the many perks we get from living in the
San Francisco Bay Area is that we get to participate in
Fleet Week every year about this time.
You can stand on the Golden Gate Bridge and watch the ships come in to dock. And there will be an air show by the
Blue Angels Saturday and Sunday. Go to their
website for the schedule of events.
Radio station,
KSFO 560 AM also does a live broadcast. So be sure to tune in today and tomorrow for this exciting spectacle!
- Mick Orton
Benefits of buying a home in a cooling market
While this may not be the best time to sell, there are benefits to buying a home when the market is cooling. Please take the time to read this July 25, 2006 article from
MarketWatch. It gives a positive look at one side of this transaction.
- Mick Orton
TRI Coldwell Banker San Francisco real estate statistics - 3 weeks in review
Our office at TRI Coldwell Banker on Van Ness in San Francisco is one of the premier offices in the City. We have some of the top agents selling real estate in the San Francisco Bay Area. As a result, our office posts some impressive numbers. If people think the real estate market in San Francisco is "soft" take a look at the numbers from the last 3 office meetings.
9/21/0614 new listings - median listing price $2,124,500
15 ratified sales (pending)
6 closed sales (sold)
9/27/06
15 new listings - median listing price $1,542,500
13 ratified sales (pending)
4 closed sales (sold)
10/4/065 new listings - median listing price $6,537,500
14 ratified sales (pending)
20 closed sales (sold)
A great real estate e-mail newsletter
Today we are featuring a great source of information from the radio show,
The Money Pit. The e-mail newsletter comes about once a week and includes articles like how to save on energy costs or how to get pickle stains off a travertine marble floor. If you would like to receive FREE home improvement newsletters go to the
Money Pit website and sign up.
- Mick Orton
Election time is coming!
If you are interested in electing people who care about property rights, please take the time to revisit our
August 29th article sent to us by the San Francisco Board of Realtors. Please take the time to do your own research about what each candidate has to offer, but the ones who specifically support property rights have been highlighted.
- Mick Orton
Renting versus buying San Francisco real estate
A reader asks:I saw a letter to the editor in last Sunday's San Francisco Chronicle making the claim that renting makes more sense than buying right now because of the state of the market and think that Realtors who say otherwise are doing their clients a disservice. What is your opinion on this?
Our reply:
We saw that letter on
SFGate, discussed it and do not see the wisdom of this approach. The person who submitted the letter ran the numbers through the rent-versus-buy calculator and it showed that, "in the Bay Area at least, one can build up equity more quickly by renting and disciplined saving than from buying." We want to know how that happens?
Think about it. First of all, who do you know that is aggressively saving? And why? And what is the current interest rate on savings or money market accounts? Practically nothing! So you are saving dollars almost one to one. No equity building there. If you invest in the market you can do a little better, but the stock market can be risky unless invested in mutual funds which have a much lower return.
And what happens to that money you are spending on rent? Is there any benefit to you? NO! It's paying the landlord's mortgage.
So in our opinion, to suggest that renting is a better way to build equity than buying (if you can afford do do so), is just irresponsible.
- Mick Orton* We have posted several articles on the wisdom of long-term investing in real estate by typing the word "investing" in the search window above as well as the June 16th article.
Pending-home sales rise 4.3% in August
Oh really? We have been saying all along that these reports of gloom and doom in the housing market are probably overstated. Now that August numbers are in, reports are that it's not looking so bad afterall. Here's the October 2
MarketWatch report from Dow Jones.
- Mick Orton===================================
Pending sales of U.S. existing homes rose by 4.3% in August, indicating the housing market may be stabilizing, the National Association of Realtors said Monday.
Pending-home sales are down 14.1% in the past year, the real estate industry group said.
"Our sense is that home sales may have reached a low in August," said David Lereah, chief economist for the NAR in a statement.
Read the full report.
"With fewer new listings coming on the market, we should be able to draw down the inventory supply early next year to the point where home prices will rise, but at a slower pace than historic norms," Lereah said.
"The gain was not enough to suggest that the downtrend has ended," said Maury Harris, economist for UBS, based on the recent declines in mortgage applications.
The pending-sales index rose 9.2% in the West, 4% in the South and 3.6% in the Northeast. The index was flat in the Midwest.
Sales are recorded as "pending" when a sales contract is signed; they are recorded as "sold" when the sale closes, usually one or two months later... Read more
here.
- MarketWatch
Mortgage Weekly Update - Last Week in Review - Mixed Week
Foster Weeks does a
weekly mortgage update.
===================================
...While the great thing about the economic markets is that they are never permanently set, they are often mixed up. And last week was one of those times, on a huge batch of interesting and sometimes conflicting news and headlines. Let's take a closer look at the mix of the week, and how it impacted home loan rates.
New and Existing Home Sales arrived with a conflicting read - Existing Sales a bit worse than expected, New Sales a bit better than expected - overall showing a moderate cooling in the housing sector, but no "bubble bursting". Prices appear to have flattened over the past 12 months, with some areas showing very modest increases and others showing very slight price declines...
...What a mix indeed...Bond prices and home loan rates bobbed around midweek on the news, but ended up almost exactly where they began.
And that wasn't all - let's look at the inflation front, since it is the key driver of home loan rates...as well as being the largest determining factor on whether the Fed will decide to keep the Fed Funds Rate in a paused position, continue to hike, or revert to cuts in the near future...
read on.
- Foster Weeks
Private Annuity Trusts may provide enormous financial benefits - Part 3
This article is provided by our friends at
Quantum Advisors.
- Mick OrtonA Private Annuity Trust Can Be A Home Seller’s Best FriendWhen you sell a personal residence, as long as you meet certain requirements including living in the house as your primary residence in at least 2 out of the previous 5 years, you don’t have to pay tax on gain up to 250,000 as a single taxpayer, or $500,000 as a married couple filing jointly. Any gains above these tax-free exclusion amounts will be taxed. A Private Annuity Trust will allow you to decrease your taxes when you sell your personal residence even in the following situations:
- Many people now have taxable gains in the personal residence that exceed these amounts.
- If you do not occupy the property as your primary residence for at least 24 months, the entire gain will be taxed at capital gain tax rates (if you’ve held the asset for at least 12 months.)
- If you “Flip” the property, selling it in less than 12 months, you will be faced with paying tax on the entire gain at ordinary income tax rates.
- The law requires that if you do move into a property that was previously a rental property and was obtained in a 1031 tax-free exchange, you can’t use the tax-free home gain exclusion unless you have held the new property for 5 years.
Real Life Example:
Barb, age 60, wants to sell her home and buy a condo. She lives alone and does not want to take care of her big house any longer. In addition, she would like more monthly income because most of her net worth is tied up in the equity in her home. Her children agree that it would be a great idea to sell the house and buy a nice condo for $500,000. Barb purchased her home 30 years ago for $50,000, has made $150,000 in capital improvements, and now wants to sell it for $1.5 million.
Barb went to her CPA to find out the tax implications of selling her home. He explained that as a single individual, she could exclude $250,000 of taxable gain from the sale of her home, but that she would still have to pay $255,150 in taxes calculated as follows:
Taxed Sale Calculation:
- Original Purchase Price - $ 50,000
- Plus Improvements - ($150,000)
- Cost Basis - $200,000
- Sales Price - $1,500,000
- Less Net Cost Basis - ($200,000)
- Equals Gross Taxable Gain - $1,300,000
- Less Tax Free Exclusion - ($250,000)
- Equals Taxable Gain - $1,050,000
- Federal Taxes Due - $157,500
- State Taxes Due - $97,650
- Total Taxes Due - $255,150
Barb was stunned when she heard that she would have to pay $255,150 in taxes if she sold her home. She told her CPA that she would not pay this ridiculous amount of taxes because it was five times more than she paid for the home when she originally bought it!
The Answer To Barb’s Problems -- $255,150 In Current Taxes Can Be Avoided!
The great news is that Barb can sell her home and buy the new smaller condo and avoid paying the $255,150 in taxes this year! If Barb places her home into a Private Annuity Trust before she sells it, she will not have to recognize the $1,050,000 in taxable gain this year. The Private Annuity Trust structure will allow her to pay tax on the $1,050,000 gain over her entire lifetime as follows:
Private Annuity Trust Transaction:
- Sales Price - $1,500,000
- Current Taxable Gain - $0
- Current Taxes Due - $0
- Annual PAT Payments - $93,750 - New Income for Barb!
- Tax-Free - $18,000
- Capital Gain - $42,000
- Ordinary Income - $33,750
- Annual Taxable Capital Gain - $42,000
- Paid Over Life Expectancy - Years X 25
- Total Gain To Pay Tax On - $1,050,000
While it is true that $1,050,000 of current gain will be avoided, Barb will pay tax on $1,050,000, over 25 years. Each year for the next 25 years, Barb will pay tax on just $42,000 of capital gain - much better than paying the tax on $1,050,000 of capital gain this year!
Now Barb Needs To Buy Her Condo
Barb will receive $7,812 in monthly payments from the Private Annuity Trust. If she takes out a 100% loan for $500,000 to buy her condo, her monthly payment will be approximately $3,200. She will easily qualify for this loan even her Trust income is her only source of income. By making payments on her condo, Barb will receive income tax deductions for the mortgage interest as well as her real estate taxes. Her mortgage interest and real estate tax deduction will be $36,000, which is more than enough to offset 100% of the ordinary income portion of her Private Annuity Trust payments!
This means that after Barb makes a condo payment of $3,200 and after she pays the taxes on her Trust income, she will have $4,000 more to spend every month than she has now.
Eventual Wealth Transfer to the Kids
If the Private Annuity Trust assets earn a net annual return rate of 8%, and if Barb receives her $93,750 of annual income for 25 years, then passes away in 25 years at her life expectancy, the assets in the Private Annuity Trust would be valued at $3,598,803. This value is AFTER Barb has received her 25 years of payments. The $3,598,803 passes to her beneficiaries free of estate taxes.
For more information, or for a FREE, 10 page Tax Savings Analysis on your property, contact Gary Katz at QFN – 800-224-1053 – or email Gary@QAplan.com.
- Betsy Hartwell - Quantum Advisors
*This is the third in a series of articles - to be continued...
Part 1 may be read here.
Part 2 may be read here.
San Francisco Real Estate Market Update for 9/18 - 9/24/06
Avram Goldman, President and COO of Coldwell Banker, San Francisco Bay Area said in his latest weekly report:"It is a Leopard’s Market. Meaning the market is spotty. A good number of markets have slowed and some are increasing with the majority holding steady. Open home activity continues to reflect the last several months with “just listed” opens having the most active attendance---two new listings in Millbrae and Redwood City each attracting over 100 groups.
"We are still seeing multiple offers. During this period two-thirds of the offices had at least one multiple offer. Four offices had more than 50% of their transactions involved in multiple offers. A multiple offer on the Eastside of Millbrae listed at $599,000 (3bdr/1bath 900 sq.ft.) garnered 42 offers last week. No we are not back in 2005. This home was aggressively priced. What it does indicate is that in desirable marketplaces with limited inventories, buyers are ready to buy quickly. Multiple offers in our current market for the most part are not going over list price by astronomical numbers as they did during the over-heated markets of 2004-2005. Some are even selling a little below or at list price. Yes, there are still a few going over by 10% or more, but they are few and far between.
"Although marketing times have expanded with rising inventories, they are still within very reasonable time periods. In most marketplaces it is still well under 60 days. That would appear surprising. Since sales activity is down from last year in the Bay Area by approximately 21%. What it suggests is that those homes that are priced aggressively or at least at the levels of the most current sales and that are fully prepared for the market (staged and all deferred maintenance work completed) will sell in the shortest amount of time. Conversely, those that are not priced correctly and are not prepared will linger and can become stigmatized in the eyes of perspective buyers. One of the first questions that many buyers ask an agent when viewing a listing is 'how long has it been on the market'. Buyers feel the longer the time on the market the more negotiable the price and terms.
"We are in the midst of the fall market. Normally we see a spike in sales. Currently we are seeing it in some markets and not in others. What we are observing is there are still many buyers in the market. They are being more deliberate in their buying decisions and more demanding in their requests during the escrow period. We are noticing a trend among buyers to walk away from transactions if sellers are not more flexible in negotiating these requests.
"The media is continuing their negative slant on the market. Obviously they need to do this to do what they do best---sell papers. Our market today as compared to previous transitional markets is in far better shape as indicated by the number of multiple offers. In those previous markets of the early 80’s and 90’s we rarely ever saw multiple offers and inventories were significantly higher than they are today. Plus interest rates are far more attractive and the economy is in much better shape. One could historically classify today’s market as a healthy market were demand and supply are in balance as compared to either the go-go early part of this decade or the no-no market of the early 80’s or 90’s.
"Here are the office numbers for this period: 10 offices reported increasing inventories, 20 steady and 2 decreasing---4 offices showed increasing sales activity, 19 steady and 9 declining."
- Avram Goldman* For an e-mail alert when this report is updated, send a note to info@SFResidence.com with "weekly market report" in the subject line.
