Jim Guido's Blog

The Real Estate Market is heating up in our area with multiple offers and over the asking price offers  are not uncommon today. Check out the article below from the National Association of Realtors:

Home buyers are unexpectedly finding more competition this spring in landing their dream home. Bidding wars are increasingly being reported in markets across the country, from California to Florida, The Wall Street Journal reports.

“It’s a little surprising because we thought bidding wars were done with,” Andy Aley, a home shopper in Seattle, told The Wall Street Journal. Aley says he was outbid on a home earlier this year, even though he offered to pay $23,000 above the listing price and also waive inspections and other closing conditions.

Home buyers are frustrated and caught off-guard about the bidding wars re-emerging, real estate professionals report.

“We’re writing a record number of offers, but we’re not seeing a record number of closings and that’s because it’s so competitive,” Glenn Kelman, chief executive of Redfin Corp., told The Wall Street Journal.

Why are things getting so competitive? Many housing markets are seeing a drastic decrease in the number of homes listed for-sale, leaving home buyers with fewer options and more bidding on the same house. Housing analysts say the shortage in supply is from sellers unwilling to take much less for their home than what they originally paid for it and pulling their homes off the market. Also, a surge in investors has made the market more competitive, as investors snatch up homes in bulk in all-cash deals.

“The bidding wars caused by tight inventory provide the latest evidence that housing demand is starting to pick up after a six-year-long slump,” The Wall Street Journal reports.

Indeed, the National Association of REALOTRS® reported late last week that pending home sales in March reached their highest level in nearly two years and are up 12.8 percent from a year ago

The median sales price for homes in ZIP code 95125 for Jan 12 to Mar 12 was $560,000. This represents an increase of 1.8%, or $10,000, compared to the prior quarter and a decrease of 5.2% compared to the prior year. Sales prices have depreciated 26.6% over the last 5 years in 95125, San Jose. The median sales price of $560,000 for 95125 is 45.08% higher than the median sales price for San Jose CA. Average listing price for homes on Trulia in ZIP code 95125 was $775,460 for the week ending Apr 18, which represents an increase of 1.9%, or $14,131 compared to the prior week and an increase of 2.8%, or $21,287, compared to the week ending Mar 28. Average price per square foot for homes in 95125 was $361 in the most recent quarter, which is 26.67% higher than the average price per square foot for homes in San Jose

95125, San Jose Recently Sold Homes

95125, San Jose Homes For Sale

The National Association of Realtors is reporting that pending home sales increased in March and are well above a year ago, another signal the housing market is recovering.

The Pending Home Sales Index,*which is a forward-looking indicator based on contract signings, rose 4.1 percent to 101.4 in March from an upwardly revised 97.4 in February and is 12.8 percent above March 2011 when it was 89.9.  This reported data reflects contracts but not closed sales.

The index is now at the highest level since April 2010 when it reached 111.3.

The report is showing that 2012 could be a year of recovery for housing.  First quarter sales closings were the highest first quarter sales in five years.  This latest news regarding contract signing activity suggests that the second quarter will be equally good.

The PHSI in the Northeast slipped 0.8 percent to 78.2 in March but is 21.1 percent above March 2011.  In the Midwest the index declined 0.9 percent to 93.3 but is 16.9 percent higher than a year ago.  Pending home sales in the South rose 5.9 percent to an index of 114.1 in March and are 10.6 percent above March 2011.  In the West the index increased 8.7 percent in March to 108.0 and is 9.0 percent above a year ago.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.

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*The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.

The index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales.  In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity parallels the level of closed existing-home sales in the following two months.

An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined as well as the first of five consecutive record years for existing-home sales; it coincides with a level that is historically healthy.

The CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.), of which I am a proud member, applauds the announcement by the Federal Housing Finance Agency (FHFA) to streamline the short sale process to help more homeowners avoid foreclosure.  The move calls for Fannie Mae and Freddie Mac to develop enhanced and aligned strategies for facilitating short sales, deeds-in-lieu, and deeds-for-lease.

“C.A.R. applauds the FHFA for taking this important step to streamline the short sale process so that the housing market can begin a full recovery,” said C.A.R. President LeFrancis Arnold.  “We have long called for similar improvements to help ensure successful short sales and look forward to hearing about additional enhancements to further reform the process.”

The FHFA’s directive calls for servicers to:

• review and respond to requests for short sales within 30 calendar days from receipt of a short sale offer and a complete borrower response package;
• provide weekly status updates to the borrower if the short sale offer is still under review after 30 calendar days;
• make and communicate final decisions to the borrower within 60 calendar days of receipt of the offer and complete borrower response package

By the end of this year, Fannie Mae and Freddie Mac will announce additional enhancements that address borrower eligibility and evaluation, documentation simplification, property valuation, fraud mitigation, payments to subordinate lien holders, and mortgage insurance.