Has the South Bay housing market bottomed out?
Friday, May 8, 2009
Has the housing market in the South Bay bottomed out? From the activities in the market and from my personal experience, it certainly “feels’ that way. Since March of this year we had several buyers contacting us about buying foreclosure properties. Plus the existing investors that we had been working with from last year, it seems that all-of-sudden buyers are coming out of woodworks looking to buy. We took them out to see single family homes in Evergreen, Blossom Valley, and Cambrian Areas. Yes, there are a lot of homes for sales. Yes, the price is very, very low. But the homes in nice neighborhood and in decent conditions are selling, often with multiple offers. For the homes that my clients are interested in, there were often competitions and we had to raise our offer price to get the house. For those of you who don’t closely watch foreclosure market, this could be a surprise.
Let me show you one area that we recently looked at as an example. Currently, in the Blossom Valley area (zip code 95123), there are 64 homes for sales and 91 pending sales. The average home price for sales is $476,664 and the average price for pending sale properties is $440,574. For the properties sold since 1/1/2009, there are 76 solids. What is very interesting is that the average listing price is $442,641 and the average sold price is $444,325. This is because there are number of homes that have multiple offers and sold above the asking price. The active-to-pending ratio is 64 versus 91. This is interesting because without knowing anything else, you could almost certain this is a normal, healthy real estate market. The only thing that will tip you off is if you knew the same homes were selling at price range between $650,000 to $700,000 just two years ago.
One can argue that the market is still depressed in certain areas, such as downtown San Jose and East San Jose (Zip code 95121, 95122, 95116 and 95111). In these areas the market is clogged with bank owned or short-sales properties. However, even that may change quickly. Federal and State government has come up with new rules to prevent lenders from putting properties in foreclosures. There are many new (for Northern California at least) Federal Housing Administration loan program to encourage buyers to buy. Fannie Mae has come up a new program called REFI PLUS to help up-side-down home owners to refinance their homes so they don’t have to sell if they don’t want to. All these efforts will decrease the inventory and help stabilize the housing price. I do not have a crystal ball but if there is anything that I learned after being in the business for over 20 years, it is never believe everything you read in the paper. The South Bay market has bottomed out. ARE THERE ANY GOOD DEALS OUT THERE STILL? That will be one of the topics of my future blogs.
