Articles:

• Market Watch: Mid-Peninsula welcomes Mid-Summer with an increasingly healthy market...
• Article: Median home prices up in San Jose, San Francisco areas, most U.S. cities
• Article: Short sales soar in California, U.S.

MARKET WATCH :
The Mid-Peninsula welcomes Mid-Summer with an increasingly healthy market......

The slow but steady recovery of the real estate market continues apace even as we hit the traditionally slower mid-summer period. Inventory remains low, which is keeping prices at a good level (See article below). Homes are selling within 30 days on average – and many are selling at or higher than list price.

The chart below comparing July 2009 to July 2010 shows that the market continues to improve with lower days on the market, higher average sale prices and higher percentages comparing list price to sold price.

Lending practices are becoming more reasonable, making financing easier to get.Lenders over-corrected after the bubble burst and made it difficult for many qualified buyers to obtain the financing they needed. But the pendulum is swinging back and underwriting guidelines are becoming less stringent for all loans.

The latest sign of a return to favorable practices is the decision to once more include retirement funds in the calculation of the reserve balance required at the close of escrow. For some loans, that can mean the difference of needing only 6 months reserves compared to 18+ months previously.

Appraisals are starting to become challenging as the market improves. Appraisals are based on the sale price of comparable homes (“comps”) in the area, but prices have been creeping higher. That means that comps based on sales in the last 3 – 6 months may not reflect the true market value of the home today, resulting in low appraisals that may affect financing.

With both appraisers and lenders being more conservative, the once routine appraisal process now requires greater vigilance. Until the situation self-corrects as prices rise, we have made it our standard practice to meet the appraiser at the home to provide our own comps and analysis to try to help out in the process.

The slow pace of the economic recovery is raising false expectations about a further drop in home prices. A lot of conflicting data is out there and some of the concern is the result of over-heated political rhetoric in advance of the November elections. But prices continue to rise and nothing on the horizon is going to make them drop.

Among the key indicators for housing prices are interest rates, which are historically low and will remain so for a while. We're also seeing an increase in the number of short sales, which means that more distressed properties are being taken off the market. (See article below.)

Our advice for buyers: More listings will come on the market after Labor Day, giving you more choices. But that will also bring out more buyers, making it more likely you'll have to act fast for the right home. Be prepared and do your homework early.

Our advice for sellers: Now is the time to get your house ready to put on the market for the fall season. Don't wait too long; the Holidays are only 3 short months away!

Our local real estate market is complex and rapidly changing, and you need an experienced Realtor on your side. Call us for a no obligation consultation...we hope you're all enjoying your summer!

Market statistics comparing July 2009 to July 2010

ARTICLES:

Median home prices up in San Jose, San Francisco areas, most U.S. cities

Home prices rose in nearly two-thirds of U.S. cities – including the San Jose and San Francisco areas – this spring as buyers took advantage of tax incentives that gave the struggling housing market a temporary jolt.

Short sales soar in California, U.S.

Real estate deals in which lenders agree to take less for a property than the balance on the mortgage have tripled since 2008, a report says.

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