Curious about local real estate? So are we! Every month we review trends in our real estate market and consider the number of homes on the market in each price tier, the amount of time particular homes have been listed for sale, specific neighborhood trends, the median price and square footage of each home sold and so much more. We’d love to invite you to do the same!
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As you may hear, the Real Estate Market has been picked up quickly after the initial impact of COVID-19. We got many questions from buyers – Is it going to continue the current trend? What is the best time to buy? Should I wait?
Here I have brought you the most recent January 2021 Real Estate market report for you. Feel free to contact me if you have any questions, or if you have any personal scenarios that you would like to share.
▷Click image to view the video
You’ll learn about what’s happening to the real estate market here in Silicon Valley
Sophie Shen | Bay Area Real Estate | Silicon Valley Real Estate | San Jose Santa Clara Sunnyvale Cupertino Mountain View Palo Alto| Top 1% Real Estate Agent | Top Real Estate Agent in Santa Clara Silicon Valley
If you want to achieve and maintain a good credit score so you can get a favorable interest rate when buying a home, here are four key tips to remember:
1. Pay your bills on time. If you miss a bill, don’t panic—just pay it as soon as you can, call the person responsible for the invoice, and ask them not to report it to the credit bureau. If it’s your first late payment, they’ll oftentimes give you that courtesy. Most companies will give you a 15- or 30-day grace period anyway, so you have plenty of time to make up a payment.
2. Don’t open any new accounts when applying for a loan. If you open a new account and ask for a new credit card, it can adversely affect your credit score. For this same reason, you shouldn’t close any accounts you have either. Credit depth—or an account with good history—has a positive impact on your credit score.
“If you miss a bill, don’t panic—just pay it as soon as you can."
3. Don’t max out your credit cards. If you need to spend a lot of money, try spreading that cost across different cards, and keep the expenses below 50% of the limit.
4. Remove any collection items from your credit report. If you miss a payment and it ends up in collection, take action right away and see if you can withdraw this debt. After it gets paid, your credit score will improve.
If you’d like to know if there’s anything wrong with your credit report, all three major credit bureaus (Equifax, TransUnion, Experian) allow one free credit check per year on annualcreditreport.com. By checking your credit report now, you’ll have time to resolve any issues before applying for a mortgage loan.
If you’d like to know more about maintaining good credit or have any other real estate questions, feel free to call or email me anytime. I’m happy to help.
When you’re extending an offer to buy a home, how do you know what the optimal down payment should be? There are four main factors to consider to find that answer:
The first is your monthly housing expense. Lenders will calculate your debt-to-income ratio, which is a pre-tax calculation that uses your gross income. You want to calculate how much of a monthly mortgage payment you’re comfortable managing each month. This isn’t just a mortgage payment; it also includes your property tax and insurance payment. Your property tax is usually about 1.25% of your purchase price, and the average insurance payment is about $80 per month. If you’re buying a condo or townhouse, don’t forget to add the HOA fee.
Adding these numbers up and dividing that total by your monthly income is how a lender calculates your debt-to-income ratio. If this ratio is too high (usually, they prefer it to be less than 43%), you won’t be able to get that much of a loan anyway.
“If some of your funds can be put to better use elsewhere, then I don’t recommend putting all of your eggs in one basket."
The second factor is your cash flow. A lender will advise you on what monthly payments you can manage based on their professional perspective, but after putting aside your 401(k) and paying other expenses, how much cash is left? Compare that remaining amount with your housing payment to see whether you’re comfortable with it.
Next, consider the funds you’re willing to put toward your down payment. If you have lots of funds to work with, does it make sense to put all of them toward your down payment or withhold some for a rainy day? Perhaps you have other potential investments that offer a better return? Right now, interest rates are very low (3% or lower), so every additional $100,000 in mortgage costs equates to about $420 more per month. If some of your funds can be put to better use elsewhere, then I don’t recommend putting all of your eggs in one basket, so to speak.
The last factor to consider is whether you’ll be facing competition when making your offer. The higher the down payment you can make, the more comfortable the seller will feel.
As always, if you have questions about this or any real estate topic or are thinking of buying or selling a home soon, don’t hesitate to reach out to me. I’m happy to help.
When the market is very competitive, sellers will often receive multiple offers on their property. This is quite common here in Silicon Valley, so how can you help your offer stand out? Here are the four important things to keep in mind:
1. Understand the true role of pricing. Price is obviously important, but it’s not everything. From time to time, we see sellers accept offers based on a lot of other items besides price, so it’s not true to say that the highest price alone wins the home. You want the seller to have full confidence that your offer will close without any issue. A very high-priced offer that’s unable to close on time may present a bumpy road to the closing table and will not be welcomed by the seller. Do everything in your power to give the seller assurance that yours is a truly smooth offer.
2. Make offers without contingencies. An offer without strings attached will always be more appealing to sellers than a contingent offer. Do your homework beforehand so that you can confidently present an offer free of contingencies (or the least amount of contingencies possible). What contingencies can you eliminate?
“You want the seller to have full confidence that your offer will close without any issue."
3. Recognize the seller’s wants and needs. For example, a seller may like to have an extended rent-back period, or perhaps they need a little longer escrow time for whatever reason. In this case, a very thorough communication with the listing agent beforehand is important; if your competition fails to incorporate the seller’s preferences into their offers but your offer is reflective of those preferences, you’ll likely win out.
4. Connect with the seller emotionally. Remember: It’s not just a house, it’s where the seller has spent a lot of time and has made a lot of memories. From a seller’s perspective, it can be hard to let go of a home. You need to communicate that, as the new owner, you would love and cherish the property. Write a letter to the seller detailing how their home would be the perfect fit for you and your family’s needs, and be sure to thank them for giving you the opportunity to see it. When it comes time to consider all of the offers they’ve received, they’ll remember the warm feeling your offer gave them.
If you are writing an offer, I would be happy to answer any of your questions. Review these points with your agent and make sure you’ve covered all the details. As always, reach out via phone or email with your real estate questions, concerns, or comments. I look forward to hearing from you.
What is a contingency and how does it impact your offer on a home? Contingencies mean conditions. When making an offer, you can indicate whether it will have contingencies. If you write an offer with contingencies, it means your offer will only go through if these conditions are met.
Common types of contingencies:
“For buyers, contingencies work as protections."
You can put any number of contingencies into an offer—all or none, it’s up to you. When the seller reviews the offer, they not only compare pricing but the terms too. One of the crucial terms to compare are contingencies. Contingencies will impact a seller’s decision.
For buyers, contingencies work as protections. You need to weigh whether you want maximum protection or a better chance of the seller accepting your offer. There’s a delicate balance between the two. Do your homework to ensure you can provide a strong offer with few contingencies. In general, a seller will have a harder time accepting an offer if it has many contingencies.
If you have any questions about how to write a strong offer with contingencies or concerning real estate in general, please call or email us. We would be glad to help you.
Think about the following scenario: You buy a house you like and settle in with your family happily. Then, about a month later, the air conditioning unit suddenly stops working. Once you call in a technician, you learn that it’s going to take a few thousand dollars to repair or replace it.
This situation can be avoided if, during the home buying process, you negotiate with the seller to cover your home warranty costs for at least the first year of ownership after you close.
Home warranties usually cover the systems of your house like the A/C, heating, plumbing, and appliances. Appliance manufacturers only provide a very limited type of warranty, but if the appliance that breaks isn’t brand-new and you have a home warranty, the warranty will cover it. If the technician cannot fix the issue, they’ll often be able to replace it for you. If you like the home warranty, you can always renew it after the first year.
“Home insurance is not interchangeable with a home warranty.”
Home insurance, on the other hand, usually covers different aspects of the home, such as damage from unforeseeable events—fires, storms, falling trees, etc.
Home insurance is not interchangeable with a home warranty, and that’s why we always do our best to negotiate for home warranty coverage when representing our buyers.
If you have any further questions about home warranties, don’t hesitate to reach out to me. I would be happy to help you and point you toward a few home warranty companies we know and trust. Until then, happy home hunting!
Our government has provided programs to help people manage financial hardship due to the pandemic, including forbearance options on mortgages. So, if you are having difficulties paying your mortgage due to the health crisis, you can ask your lender to grant you a delay of payment for up to six months. If you’re still struggling after six months, you can ask for an extension. However, one thing I especially want to emphasize is that forbearance is not forgiveness. To learn everything you need to know about forbearance, watch my latest video above.
Today I’m updating you about the recent changes in lending guidelines. If you got a pre-approval a couple of months ago, you’re looking for a home here in Silicon Valley, and you have a jumbo loan, you especially need to pay attention to the recent changes. First, down payment requirements have increased. Remember, a jumbo is any loan over $510,000. Before, you could put down 10% to 15% for a jumbo loan, but now the minimum down payment requirement is 20%. To learn what else has changed in the lending world, watch my latest video above.
According to research published by Zillow on April 22, they’re seeing a rise in web traffic to go along with growing consumer interest. Zillow’s pageviews fell as much as 19% in mid-March, but since March 11, traffic to listings on the portal have rebounded sharply to levels that are slightly higher than a year ago. Overall, web traffic on Zillow was up 13% year over year for the seven-day period ending on April 13. Client requests through the Zillow Premier Agent program are now higher than they were a year ago as well.
According to Redfin, requests for agent-led video chat tours soared 350% as of April 19 from the same period a month ago. Video chat tours represent about ⅓ of Redfin’s home tour demand. 3D virtual walk-throughs on Redfin have also increased by nearly 300% since the beginning of March.
In the meantime, home sellers are staying firm on their prices. Nearly 75% of Realtors reported that their sellers have not lowered their prices to attract buyers during this time, according to a new survey conducted by the National Association of Realtors. This suggests home sellers are avoiding “panic selling” during the COVID-19 pandemic.
Additionally, Lawrence Yun, the NAR’s Chief Economist, stated the following on April 24:
There’s no oversupply of houses, unlike the situation in 2008
Home prices will be held steady; no panic from home sellers
As the economy recovers, most people will be able to go back to work
Home sale volume in 2020 will be down, but prices will hold steady
Mortgage forbearance is helping to prevent foreclosures
Real estate remains a great hedge against inflation, especially with interest rates where they are right now
Once the economy opens back up, we will have a surge of buyers and sellers
How is real estate adapting to this crisis? Although it has been deemed an essential business by the Department of Homeland Security, Realtors around the country are taking steps to keep themselves and their clients safe during this time. Showings should be done virtually if possible, and open houses remain off the table. If a serious, potential buyer decides that they absolutely must see a home in person, only one agent and two visitors from the same household can be in the home at one time. Realtors will be required to wear gloves and disinfect any door knobs, keys, and locks they touch, and warn clients to touch as few surfaces as possible.
In just the last week, mortgage applications have jumped significantly. On April 29, the volume of mortgage applications for purchases jumped 12% compared to the previous week, according to the Mortgage Bankers Association. That’s the highest weekly increase in almost a month. Digital mortgage lender Better.com also reported a 36% increase in year-over-year purchase applications in April. The top state was California, which made up 14% of the month’s total purchasing volume.
Another thing to know about mortgages is that some lender guidelines have changed. Buyers should check with lenders again, even if they have already been issued a pre-approval. Jumbo loans of less than 20% are gone and no new loans are being issued for those who have asked for mortgage forbearance.
For now, home prices in California are remaining stable despite deep retrenchments in inventory and home sales related to COVID-19. Prices on a per-square-foot basis last week were down by just 3.6% or less in the Bay Area, Southern California, and the Central Valley. A recent survey shows that buyers are expecting significant discounts on pricing, but sellers are more likely to remove their homes from the market than discount their price. Discounting remains stuck at roughly pre-crisis levels.
What’s going on in Santa Clara County? Although last month we saw 116 withdrawn listings and 129 canceled listings between March 17 and March 31, during that same stretch in April, we only had 37 withdrawn listings and 54 canceled listings. Combine that with the fact that new listings are up from 370 to 506, and you can see that our market is rebounding, and the panic we saw in March is less present today. The total number of listings that fell through was down as well, from 167 in March to 113 in April.
We have 95,051 total single-family homes in Santa Clara County. In April, 25 of them were sold. Only six of those sold for less than the listing price. The other 19 sold well above listing price. For example, the home at 2218 Francis Avenue listed at $1.288 million, received five offers and sold at $1.35 million. This is just one of many examples that show we’re still in a strong seller’s market.
In summary, our market remains stable. We have had fewer listings cancel, fewer listings withdrawn, and fewer home sales fall through. Houses are being gradually put on the market in higher numbers, and the good homes are still receiving multiple offers and selling over the listing price.
If you have questions for me about anything I discussed in this blog, or other real estate topics, don’t hesitate to reach out via phone or email today. I look forward to hearing from you soon.