Here is a summary of market, by the numbers:

• Average Selling Price:  $1,769,436 (up 4.8%)
• New Listings:  386 (down 12.3% from 440 in 2010)
• Homes Sold:  309 (down 7.5% from 334 in 2010)
• Average Days on Market:  40 (down 12.3% from 53 in 2010)

Commentary: The most important statistic is that the average sales price for new, single-family homes was up 4.8% for the year. Honestly, if not for several homes that are more like townhouses sold in the $900K-1.1M range, I think that figure would be a lot higher.  That figure is going to continue to increase in 2012 as sales in December were very strong and the year ended with substantially depleted inventory.  Buyers in Q4 had almost as hard a time finding homes as those in the Spring.  The Los Altos market was up 1.9% in 2010 and with the current shortage of inventory, 2012 is likely to be the third year of increases.

The biggest factor driving Los Altos home prices is inventory, specifically a lack of it.  There are not enough homes to meet buyer demand and that was exacerbated last year.  New listings were down over 12%, even with a slight reduction in homes sold, that’s still a nearly 5% gap in demand.  When you look at how many homes had sales prices over the asking price, it’s roughly the same number.

The number of days on the market tells the demand story. The days on market statistic is down to 40 which is among the lowest of any town in the area.  Given that most homes go on the market by Thursday, have tour on Friday, open house on the weekend, and offers the following Tuesday, the average home is actually selling in 5 days with 35 days for financing.  What’s interesting about that is more and more homes are selling for cash.  That’s getting more closings down to 21 days or less, which is bring this number even lower.  Buyers in 2012 can expect this trend to continue.

This report does not include a price per square foot figure, because it is a much more detailed number than just the generic figure for all homes sold.  I break down the sales by size and age of home which gives an accurate view of that  calculation.  That analysis will appear in a separate article.  If you want the details before that is published, call me.  I think that statistic has some value in negotiating during the following year but only as a guideline.

Author

Bryan Robertson, Broker Associate
ePro, Realtor, Developer
Sereno Group Real Estate

Few would dispute that Fred takes it on himself to be one of the leaders in fighting and lobbying for a more ethical mortgage and real estate industries.

A seasoned mortgage and real estate professional he manages a commanding position in the industry and has been on CNBC, NPR and has been quoted in numerous publications, voicing his views at the White House and Congress to see positive change in the industry and push out the unethical brokers who have shady practices.

He recently with others helped bring forth HARP 2. A mortgage loan where homeowners that are underwater who could not refinance before will benefit.

JL: With HARP 2 now in place what developments do you see ahead in the housing industry?
FG: With people’s ability to refinance homes instead of having them go to foreclosure, people will stay in their neighborhood, spend money locally and make their communities better so prices can stabilize or go up.

JL: Analysts and Regulators are saying they expect 1 million more refinances then would have closed under HARP, with an average loan balance of $150,00 to $175,00 do you agree with this?
FG: Hard to say but if properly marketed, that could be a good number

JL : Does the consumer need to worry about deadlines to refinance under HARP 2 ?
FG Yes. They must do it by the end of 2012. Rates are ridiculously low now so why wait. Also, I am sure people are paying very high rates that will be eligible for these loans because they have to have been originated before May 2009.

JL: Lenders have been fond of adding fees to HARP loans called by Fannie and Freddie “loan level price adjustments” which where averaging 2%. I hear under HARP 2 the fees are reduced to 0% on loans 20 years or fewer, and 0.75% for mortgages for more than 20 years and for ARMs
FG: That is correct. That makes the rates not too high.

JL: Daily Properties readers have probably read one of many of the stories reporting on mortgage brokers and mortgage companies’ fraudulently adding extra fees to loans, how a consumer can tell if the fees added to their loan are fair and not illegal.
FG: In the beginning of their transaction, there is a good faith estimate. Brokers and lenders are locked into those fees.

JL: What if a loan is not owned by Freddie or Fannie?
FG: As of right now, there are no programs but the President has just announced generically, a program he wants to start. Details will follow. But, if you have an FHA loan, you can possibly get what is called a streamline loan to lower your rate.

JL: Will people who defaulted on their mortgage be able to get help under HARP 2?
FG: No. You must be perfect in your payment for the last 6 months and have had no more than one 30-day late in the last 6 months.

JL: Is there any other information consumer should know about HARP 2?
FG: You do not need to go back to your current servicer. If your loan is with Wells Fargo, Bank of America, Chase, Citibank, etc., you are not required to go to them. As a matter of fact, it might be harder since they have call centers with registered but not licensed people handling your loan.

To ask Fred Glick further questions on Harp 2 please email him at Fred(AT)FredGlickDOTcom

Besides making accusations that home listings which get posted on  sites  such as the sites listed above make their way to Craigslist and cause crimes to be committed and that other Real Estate Agents get access to their listings, a real estate broker from the fore mentioned firm makes the argument for “dual agency”  without calling it such.

By purposely avoiding to publicizing listings to potential home buyers who otherwise would have seen them will only hurt sellers because they will likely lose out on getting top dollar,  multiple bids,  open house traffic, or having their homes on the market  longer than it should.

Home buyers do rely on the internet to research homes for sale and use sites such as MLS, Trulia, Zillow and Realtor.com to find listing. Home sellers must also understand dual agency increases the complication of any real estate transaction. Lawsuits involving dual agencies have become more and more common. Any real estate firm desiring to serve as dual agents have to be informed and get written consent from all parties, PRIOR to the start of the representation. Real estate firms should also review their listings and representation agreements to make sure they disclose possible dual agency situations that can arise from representing multiple sellers or multiple buyers to avoid litigation.

Real estate brokers and agents should give serious thought to all potential consequences before entering into a dual agency situation and sellers should beware of what they lose before picking a broker who isn’t publicizing their listings to full potential.

Please watch the video and let us know your thoughts.

“I explained to him that when people with such low credit ratings get these loans and default, the government will have to raise my taxes to pay for any losses over and above what is in the MIP fund. I will not sign up to sell such loans because of how irresponsible it is on so many levels to the tax payers who are responsible with their money.”

These are the type of mortgage brokers that have ethics and should be praised in choosing their ethics over making a quick dollar. We should not blame this type of broker for the housing crisis and current foreclosure problem.

Moreover, these are the mortgage brokers we should trust when seeking a loan because they are doing their job properly and as a result, looking out for and protecting everyone: our collective assets, collective futures.

Watching and analyzing the housing industry for years, I have learned to tell the snake oil housing professionals from the ethical, morally responsible ones.

My advise is just look for the blunt speaker who doesn’t always tell you what you want to hear. Brokers like these will tell you the truth about the affordability of the home you want to purchase and they will not let you sign for a loan if you don’t truly understand the terms.

They can also rub people the wrong way because they tell people what they might not want to hear while speaking the truth without sugarcoating reality or leading you to believe you can purchase something that will only put you in a bad spot in the future.

Keep up the good work!
Mortgage brokers that refuse to sell loans that they know will get the economy and individuals in trouble are housing ethical gods. And yes, they did exist in pre-crisis. Housing professionals like these will bring back the housing market.

A Group Effort
Is all the responsibility to keep the housing industry strong on the mortgage brokers shoulders? Not at all. It is a group effort.

This was just one example of one link in a chain of people who picked ethics over greed. All of us need to play a part in improving housing market situation. Potential home buyers must not have bigger eyes than their wallets when looking to purchase a home.

Real estate agents must not let prospective buyers purchase a bigger house than they can afford, mortgage brokers must not sell loans that will have a high rate of defaulting, mortgage wholesalers must not push loans that people can easily default on.

Banks and government must work together to promote programs and strategies that encourage healthy and responsible spending.

What are your thoughts? Please comment below.

Here are some important questions you should ask yourself:

Am I likely to want to own it long term?

The most important thing to ask yourself before buying any property is whether you are likely to own it for a long time, such as 5 years or more. People buy property in hopes of increasing wealth and five years is about the break-even point for earning appreciation in value above the buying and selling transaction costs. Considering the uncertainty of the short term direction of homes values, if you don’t plan on holding the property for “at least” 3 years and you aren’t purchasing it to become a rental property, it probably isn’t worth considering.  Buying and selling a home quickly will often leave you worse off financially than if you just held off on becoming a homeowner and rented instead.

Do I truly love the home I want to buy?

It’s extremely important to consider whether you truly love the property you’re considering.  Real Estate should typically be held for the long term and your enjoyment of a property should perpetuate a happy and enduring ownership period. So don’t buy a property on impulse. Make sure that you truly do love it. Don’t buy a home just for the “sake” of “buying” because you’re envious of others who own a home or others who tell you it’s a good idea. Buy what you want and after careful consideration, when you are truly ready, buy a home that you will feel proud to own for many years to come.

Can I really afford it?

The cost of owning/maintaining a home is typically more than anyone anticipates going into it. You should to make sure that you’re comfortable with the mortgage payments, even if your lender tells you that you qualify for the given loan and purchase price. Lenders don’t take into account many day-today expenses like health care, child care, expensive lifestyles and habits, etc. Make sure that you can comfortably afford your home payments, still pay your other bills and expenses, and also still have a little left to save for retirement. Also, if you’re unsure of your long term employment situation for any reason, wait until your job situation is stable.

Is the home in good condition?

Be aware that fixer homes often don’t sell at enough of a discount to compensate for all the work that needs to be done. The cost of good quality construction and rehabilitation work can be astronomical and unless you are yourself a contractor, it typically will cost much more than you anticipate. You might want to leave the “needs TLC” or “fixer-uppers” property listings for the contractors out there and instead buy something in at least “Average” and “Livable” condition in order to avoid getting swept up in a disastrous rehab project.

How much do you know about the neighborhood?

Make sure that you do adequate research, look at enough properties, get a feel for the neighborhoods, and learn about property ownership with your Realtor before you made an offer. If you recently moved into town or don’t know the particular area, it might be a good idea to rent for a while and seek out the community that would be the most perfect for you within your financial means. This will be the biggest investment you ever make. You need to educate yourself in order to minimize the risk of the investment going wrong.

While there‘s no such thing as “risk-free” real estate, it would be wise to consider the questions above. Careful consideration of these key questions will increase your chances of experiencing a joyous, long-term property ownership experience. 

George Sudol  is the Broker/Owner of Bay Area Realty Services, a successful San Francisco Bay Area residential Real Estate firm. He also owns and operates Bay Area Mortgage Alliance, a California residential mortgage lending brokerage. See more at www.ba-realtyservices.com , Email george@ba-realtyservices.com, or Call 650-242-4079

The Avg 30-Yr Fixed Conforming loan with 0 Pts is currently at 3.75% and the Avg 30-Yr fixed High Balance Conforming loan with 0 Pts is at 4.125%

Turning to the latest Real Estate trends, we finished up 2011 with another month of sales outpacing listings and inventory going down (for the 7th straight month) throughout most of the SF Bay Area. Overall, there was a net drop of ~40% of residential property inventory year-over-year from Dec 2010 to Dec 2011. Despite the trending of inventory reduction, SF Bay Area property values were flat through 2011 and we haven’t seen any appreciable gains in value since we hit the bottom of our current real estate cycle in the Winter of 2009.

The median price paid for all new and resale houses and condos sold in the SF Bay Area in November was $363,500. That was up 3.9% from $350,000 in October, but down 4.3% from $380,000 in November 2010. The median has declined on a year-over-year basis for the last 14 months. The low point of the current real estate cycle was $290,000 in March 2009. The peak was $665,000 in June/July 2007.

The median price of a SF Bay Area Single Family home was down 8.5% from Nov 2010 to Nov 2011 (from $511,140 to $467,680). San Mateo & Napa were the only SF Bay Area counties with a year-over-year “gain” for November (5.6% gain for San Mateo, 1.4% for Napa).

Just as in 2011, many will be trying to figure out where housing is headed for 2012.

While the housing market didn’t worsen in 2011, it didn’t stabilize either. This year, the story will be about local markets. While many housing markets rose and fell together, they’re recovering at difference paces. The key factors to effect the pace of recovery will be Confidence and Jobs, the Rental market, Mortgage Credit and Rates, and Foreclosures.

Housing is more affordable than it has been in decades and most SF Bay Area residents believe that this is a good time to buy, but some would-be buyers are worried about the short term direction of home values, some are worried about their job stability, and still others can’t qualify for a mortgage because of damaged credit and/or today’s tighter mortgage standards. However, if low mortgage rates aren’t enough to give urgency to would-be buyers, recent rent hikes could accelerate buyers’ decisions to take the plunge.

I believe the greatest degree of home value recovery will come out of significant reductions in distress sales. SF Bay Area foreclosure reslaes peaked at 52% in Feb 2009. In recent months, foreclosure resales have been accounting for ~25% of resales. However, short sales are as popular as ever, still accounting for ~21% of all resales, up from ~16% 2 years ago. Also, banks and other mortgage investors own around 440,000 foreclosed properties nationwide, but there’s another estimated 3.4 million loans in foreclosure or serious delinquency.

In the mean time, we enter 2012 on a positive note for the SF Bay Area housing market with low mortgage interest rates, a high level of housing affordability, and inventory trending down. February is typically the start of the biggest selling season here & we will know by April whether there are enough buyers lined up to keep pace with the many homes coming on the market in the new year.

To speak directly with George Sudol about SF Bay Area Real Estate Market please visit www.ba-realtyservices.com

So do you think the Realtor told the seller the mail box and Raiders sign is a selling point?

Was the Realtor scared to ask the raiders fans to take down their classy banner? Or did the Realtor feel if the focus is on the postbox people will miss the Raiders banner? Maybe he wanted to point out the class of the neighborhood, show potential buyers it is such a safe neighborhood they get mail to a non-locked mailbox. We will never know what the Realtor was thinking, but at least we got a laugh.

Tell us in the comment section your thoughts on the photo and where the Realtor was going with his artistic view.

My kind, trusting husband who thinks people only have good intentions, as often I think they do until I see red flags, proudly made a deal with the new tenants. They came up with a great idea, as they are price conscious, good folks! Or so we thought! They said they can paint the house, get new carpets, and a new washer, saving us the 60 minute drive from Orange County several times as we were going to do it ourselves.

My husband was constantly raving how great the new rental tenants are. He said they are hard working, they have good credit, a new baby and are religious, which would make them honest people (if the world was ideal). He was proud of who moved in, telling me how the wife sends all these friendly emails, asking about our wedding, my health and explaining their plans for the place that sounded like she was just as kind as my husband was, a win-win situation for both, right?

Well…two months went by and then he told me that the rental tenants are sending more and more receipts over. Finally, he got all the receipts scanned in an email from the tenants. With smiles, he showed me the receipts. My jaw dropped! I have rented several places from low-end to high-end and renovated many rental homes for landlords or my own and was completely shocked how he was taken advantage of. Now we have lost three almost four months of rental income because of the expenses they felt were justified and my husband didn’t know how to be a mean landlord fearing he would start off on the wrong foot with the new tenants.

Below are some examples of their expenses. Now mind you, there were about 20 receipts. When I started questioning them, my blood began to boil. That is when my husband said he better not show me the rest. The little that I did see was enough.

Shower head $49.00
– A $10 shower head is adequate even in a high-end rental. In my opinion, if a tenant wants something better, they can pay for it out of their pocket. She never asked us to replace the old one or explained why it had to be replaced. Even Irvine Rental Company in Orange County, which are high-end rental units, uses an $8 shower head from Home Depot that they probably buy for $5 wholesale.

Gas Logs for the Fireplace $170.00
- What was wrong with the last ones? She never said she was going to replace these and we never agreed to have her replace them.

Washer $570
- Our washer in our home is only $175. It was miserable to use; however, the washer in the rental property only needed new knobs to run correctly. My last home, I bought a high-end washer and dryer for $270 each from Sears Outlet. You can get a brand new washer and dryer from Home Depot for $325. My own wedding dress was $5000 originally but got it on sale for $250.00 and shoes for the wedding were once $160.00 but got them on discount for $4.25, but yet she didn’t feel bad to buy a $570 washer and stiff us with the bill.

New Blinds $1000
- What was wrong with the old blinds? Trust me, they were fine. To save money for our wedding, I went from one discount store to another to find curtains for $7.25 to cover 15 plus windows in our house because we couldn’t afford blinds due to expenses of the rental property turn over, medical bills and our wedding. Ironically, had the curtains but couldn’t afford to buy curtain rods because of the tenant’s greed so we will have no window coverings for awhile. A great way for my husband to learn where our money went every time he complains he can’t watch his favorite show because there is sun shining on the television.

New Carpet and painting $4000.00
- New carpet and paint are justified; however, when I a pregnant woman with health complications and a friend paint our 2000 square foot house from top to bottom because we didn’t have the money to hire someone and our carpets badly need to be replaced but we now have to wait 6 months to year to get new carpets from tenant over spending. Our rental, 1200 sq foot townhouse, could have been painted and carpeted for less if when I got our house quoted it was only $2,300 (price includes materials) to paint the entire place with a high ceiling by a professional painter and only $300 to paint it myself.

Who is at fault
Now I am not faulting one party more than the other. This is both parties’ fault. My husband, the landlord, for not making better rules and understanding how much can be expensed now feels scared to make the tenant unhappy by putting his foot down and saying he will not pay for unexpected expenses that the rental tenants turned in saying he fears looking like a slumlord.

The rental tenant who comes from the entitlement generation which felt they could push the limits with lack of guilt but yet stands behind the Bible saying she is a good moral person and did not feel it was wrong to purchasing items that most other landlords would never have approved of in the first place? They never got approval to do, knowing my husband’s kindness and knowing it can be taken advantage of while knowing we are under a lot of stress with a wedding, medical bills and medial issues. Maybe in rental tenants mind, they think we are millionaires but maybe even millionaires don’t care to be taken advantage of.

My way to not fume and have my blood boil over how the rental tenant handled the situation and my husband the landlord lacks of strong foot is what I now call anyone who is greedy a $49 Shower Head Renter. Yes, it is a stupid joke that I might only get, but it says a lot when you know the story behind the phrase.

• A company tries to pressure you to sign over the deed to your home or sign any paperwork that you haven’t had a chance to read, and/or that you don’t fully understand. Never sign any documents without reading them first. Many homeowners think that they are signing documents for a loan modification or for a new loan to pay off the mortgage they are behind on. Later, they discover that they actually transferred ownership of their home to someone who is now trying to evict them. A legitimate housing counselor would never pressure you to sign a document before you had a chance to read and/or understand it.
• A company/person you don’t know asks you to release personal financial information online or over the phone. You should only give this type of information to companies that you know and trust, like your mortgage lender or an approved HUD counseling agency.
• A company/person asks for a fee in advance to work with your lender to modify, refinance or reinstate your mortgage. This fee might be called a processing fee or an administrative fee. However, once you pay the fee, you probably will never hear from this person or company again. When you try calling them, you will never get in contact with them and you certainly will not get your phone calls returned. They may pocket your money, keeping the money for themselves, and do little or nothing to help you save your home from foreclosure.
• A company/person guarantees they can stop a foreclosure or get your loan modified. Nobody can make this guarantee to stop foreclosure or modify your loan. Legitimate, trustworthy HUD-approved counseling agencies will only promise they will try their very best to help you.
• A company/person advises you to stop paying your mortgage company and pay them instead. Despite what a defrauder will tell you, you should never send a mortgage payment to anyone other than your mortgage lender. The minute you have trouble making your monthly payment, it is in your best interest to contact your mortgage lender.
• A company claims to offer “government-approved” or “official government” loan modifications. They may be scam artists posing as legitimate organizations approved by, or affiliated with, the government. The scammer’s company name and website may sound like a real government agency, but the website may end with .com or .net instead of .gov. You may also see terms like “federal,” “HAMP,” “MHA,” “HARP” or other words related to official U.S. government programs. Contact your mortgage lender first. Your lender can tell you whether you qualify for any government programs to prevent foreclosure or modify your current loan. And, remember, you do not have to pay any organization or company to benefit from government backed loan modification programs.

Home owners paying their monthly mortgage payment as agreed and maintaining their properties, should be rewarded. This would act as an incentive for good behavior, hopefully getting other delinquent borrowers to change their behavior.

Some people are in foreclosure due to legitimate reasons, such as death in families, medical bills or loss of jobs. They really tried making payments, but fell behind through no fault of their own. However in many other foreclosure cases I know of, there are people who are committing outright fraud by playing the system. Sometimes they receive help from friends in real estate or from attorneys.

I’ve also seen auctions postponed over and over for years because of bogus short sale offers. Sometimes the one getting foreclosed has a realtor buddy who puts in a fake offer on a short sale, just to slow the process down. Another trick involves tenants. And then there’s the lawyer tactic. Lawyers can postpone or remove the case from the books, simply by filing bankruptcy. This usually adds a year or more, before the foreclosure again gets put on the docket.

What kind of an example is this to the younger generation? Shouldn’t we be teaching them about responsibility?

It’s funny how they can’t pay their mortgage payments, but still have the large cable television packages of $100 or more, still have Internet, costly cell phones and are buying new cars. They live well, because they’re not meeting an obligation they agreed to when they signed their closing papers. We’re not talking about people with subprime loans, but those with low rate, prime mortgages with 30 year terms.

Buy and bail is one of the worst examples of greed. Home owners with good credit, paying their payments on time, but are underwater, have a new trick. They buy another house as a second home and then “bail” on the first house.

It appears the personality traits of these same people are that they can get out of anything, and still come out on top. Maybe if the penalties for losing your home in foreclosure, absent illness, job loss, etc, should be that you can’t buy another house for a minimum of ten years.

I have had readers complain about neighbors who are in foreclosure buying new Mercedes and BMW’s, but haven’t paid a dime in years on their mortgage. In September CNN wrote a story about the people playing the foreclosure system and people with disgusting honor proudly commented they were milking the system, such as the comment below.

“November will mark the 3rd anniversary since we made a mortgage payment and we are still in our house. We are living free. No mortgage, no insurance payments, no property taxes. What would have been mortgage payments is tucked away safely for OUR use in the future. The bank has done little to make us move. Every day we stay is money in our pocket. We realize the day will come when we have to move, but until then we are enjoying life.”

In another story by CNBC published in June, a lawyer gloated how he has several clients where he prolonged their foreclosure dates, stating several have lived three years without getting evicted and that client the story was based on was on their 6th year living for free in a house they defaulted on.

Whatever happened to pride and personal responsibility? When will people realize they are not entitled to everything, if they are not responsible? When will responsible people be recognized by their banks, government and legal system? When will those not paying on time get kicked out of their houses?

There must be a strong crack down on people and stop helping them. The Realtors putting in bogus offers should have their real-estate licenses revoked, fined or even have to go to jail for fraud. Lawyers using prolonging tactics for their clients that aren’t legitimate should lose their licenses as well.

People who are living in their homes without paying mortgages for four-to-six months should be kicked out after three months and/or have their assets garnished to compensate for their greed.

Some banks are finally coming around to these games and are now teaching people whom are milking the system. In some states and provinces, banks have been going after the foreclosed owner for the differences between what they owed on the home and what the home got sold for at auction or short sale. This is often a surprise to the original owner who felt they got away Scott free and end up declaring bankruptcy or are forced to pay the difference. Whether a bank goes after defunct lenders, filing decency judgments depends on many factors, including what state the borrower lives in and whether there’s a second mortgage or liens. A borrower often doesn’t realize once there is a judgment, there are no corners to hide and the banks/lenders are able get personal financial records, garnish wages and/or put people in jail.

Yes, the housing market might be hurt for a while, if drastic measures were taken such as kicking out foreclosed victims three to four months after they become delinquents, but in the end it would make people think twice before intentionally not paying their paymentst, which would put an end to the current practice.