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Q3 2014 San Francisco Real Estate Update

by PU
Q3 2014
Pacific Union
Quarterly Real Estate Report Q3 2014
Agent Photo
Ken Gendemann
Realtor
Properties for Sale  |   Neighborhood Data  |   Pacific Union Blog
San Francisco: Q3 Results
The number of homes sold in Pacific Union's San Francisco region was down somewhat in the third quarter year over year, but the average sales price was appreciably higher, reflecting substantial confidence in the local real estate market and the overall economy. Inventory remained tight, as owners held off putting their homes on the market despite the remarkable run-up in prices over the past two years. One reason for this is that once sellers become move-up buyers, they face the same problem as other home shoppers across the Bay Area: lack of inventory.

Noe Valley was particularly popular with buyers, and condominiums sold well across the entire city. The most active price point was for homes priced up to $2 million. Multiple offers remained standard for almost all fairly priced properties, although the number of offers and the intensity of bidding has waned over the past year.

Looking Forward: San Francisco's robust economy and high-paying jobs combined with historically low interest rates gives us confidence that real estate activity will remain strong throughout the fourth quarter. The winter months will see a typical seasonal slowdown, which presents an opportunity for both buyers and sellers to get a jump on the competition.
Median Sales Price
The median sales price represents the midpoint in the range of all prices paid. It indicates that half the prices paid were higher than this number, and half were lower. It is not the same measure as “average” sales price.
Single-Family Homes – Median Sales Price
Click to view larger chart
Condominiums – Median Sales Price
Click to view larger chart
Months’ Supply of Inventory
The months’ supply of inventory is a measure of how quickly the current supply of homes would be sold at the current sales rate, assuming no more homes came on the market. In general, an MSI below 4 is considered a seller’s market; between 4 and 6 is a balanced market; and above 6 is a buyer’s market.
Single-Family Homes – Months’ Supply of Inventory
Click to view larger chart
Condominiums – Months’ Supply of Inventory
Click to view larger chart
Average Days on the Market
Average days on the market is a measure that indicates the pace of sales activity. It tracks, on average, the number of days a listing is active until it reaches “pending” status, meaning all contingencies have been removed and both parties are just waiting to close.
Single-Family Homes – Average Days on the Market
Click to view larger chart
Condominiums – Average Days on the Market
Click to view larger chart
Percentage of Properties Under Contract
Percentage of properties under contract is a forward-looking indicator of sales activity. It tracks expected home sales before the paperwork is completed and the sale actually closes.
Single-Family Homes – Percentage of Properties Under Contract
Click to view larger chart
Condominiums – Percentage of Properties Under Contract
Click to view larger chart
Sales Price as a Percentage of Original Price
Measuring the sales price as a percentage of the final list price, which may include price reductions from the original list price, determines the success of a seller in receiving the hoped-for sales amount. It also indicates the level of sales activity in a region.
Single-Family Homes – Sales Price as a Percentage of Original Price
Click to view larger chart
Condominiums – Sales Price as a Percentage of Original Price
Click to view larger chart
Delving into San Francisco’s Districts
Click to view larger chart
Click to view larger chart
Click to view larger chart
Click to view larger chart
Pacific Union and John Burns Real Estate Consulting Team Up
to Deliver Exclusive 2017 Outlook
We are asked almost daily to predict the future of real estate and to answer the question “When is the best time to invest in the market?”

While Pacific Union’s regional and local market knowledge is significant and our decision-support tools are comprehensive and informative, we are not qualified as economists to provide substantive, forward-looking advice beyond a season or a few quarters.

That’s why we are pleased to announce that Pacific Union has formed an exclusive partnership with John Burns Real Estate Consulting (JBREC) to publish the first San Francisco Bay Area Real Estate Outlook 2017.
 
JBREC is the leading national source of independent housing research, advice, and consulting, with the goal of helping investors make informed housing-industry decisions. JBREC backs its research with detailed data, proprietary tools, and experienced professionals who hold doctorate degrees.

John Burns, CEO of his namesake consulting firm, will leverage his 20-plus years of national real estate consulting experience – as well as his MBA from UCLA and bachelor’s degree in economics from Stanford University – to provide a lens into San Francisco Bay Area real estate through 2017.
 
On Wednesday, Nov. 5 at 5 p.m., John and I will proudly introduce the exclusive report at the SFJAZZ Center in San Francisco. We will deliver a content-rich hour of key macro- and microeconomic attributes, risks, and variables that drive our residential real estate markets, including population growth; job growth and quality; mortgage rates; and new supply of housing units.

The presentation will include a thorough overview of the Bay Area, plus a detailed examination of the nine regions Pacific Union serves: Contra Costa County, the East Bay, Marin County, Napa County, San Francisco, Silicon Valley, Sonoma County, Sonoma Valley, and Tahoe/Truckee.

While our industry has multiple indexes that reflect the previous quarter’s results – what we call “trailing perspective” – this exclusive presentation and report will offer our real estate professionals and their clients a look into the future of Bay Area real estate.

Look for details from your Pacific Union real estate professional regarding the November event, which will be open to 350 attendees on a first-come, first-served basis. We will also stream the presentation via a live simulcast in both English and Mandarin.

Once again, Pacific Union strives to innovate and provide thoughtful market intelligence to our clients, and our partnership with JBREC is the next step in fulfilling that goal.

Sincerely,
Mark A. McLaughlin, CEO, Pacific Union
Bay Area 10-Year Overview
Here’s a look at home sales in the Bay Area’s real estate markets in the third quarter of 2014, with a glance back at the 10 preceding third quarters.
10 Year Chart
Click here to see specific 10-year data on key cities in the Bay Area.
Neighborhood Data Properties for Sale
Pacific Union Blog Christie's Real Estate
Joint Ventures
Pacific Union has partnered with the joint ventures of Mortgage Services Professionals (MSP), ProInsurance, and Pacific Union Property Management (PUPM) to provide a comprehensive selection of products to service our clients throughout the entire purchasing cycle and beyond.
Mortgage Services Professionals ProInsurance Pacific Union Property Management
Agent Photo
Ken Gendemann
Realtor
415-828-4063
gendemann@pacunion.com
www.gendemann.com
One Letterman Drive, Building C, Suite 500
San Francisco, CA 94129
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© Pacific Union, Inc. 2014. License # 01866771

 

San Francisco Gets High Marks for Job Market

by

 

A financial information website this week ranked San Francisco the third-best city for job seekers, which bodes well for the city’s housing market. Here’s the story: http://bit.ly/12crW6i

 

San Francisco: Q4 Results

by Pac Union

 

The year 2012 was one of the strongest in recent memory for real estate, and the frenzied pace continued through the fourth quarter, even accounting for a brief lull during the holidays. Pent-up buyer demand and an exceptionally tight supply of properties on the market meant that many homes sold quickly and with multiple offers.

A balanced real estate market typically has a six-month supply of inventory, but the supply of single-family homes and condominiums in San Francisco hovered near record lows in the fourth quarter. Homes sold well across the city, and the condominium market, which had slowed in 2010 and 2011, came roaring back.

San Francisco’s rebounding economy, particularly (but not exclusively) the growth in tech-sector jobs, brought many new buyers into the market, helping drive up home prices by double digits.

Looking Forward: Job growth is a reliable indicator of real estate activity, and that factor alone promises a good year ahead for the San Francisco housing market. Interest rates are expected to remain near record lows through much of 2013, making the outlook even brighter. After a likely cyclical slowdown in January, we expect to see additional homes come on the market and sales take off in February and March.
Median Sales Price
The median sales price represents the midpoint in the range of all prices paid. It indicates that half the prices paid were higher than this number, and half were lower. It is not the same measure as “average” sales price.
Single Family Homes – Median Sales Price
Click to view larger chart
 
 
Condominiums – Median Sales Price
Click to view larger chart
Months’ Supply of Inventory
The months’ supply of inventory is a measure of how quickly the current supply of homes would be sold at the current sales rate, assuming no more homes came on the market. In general, an MSI below 4 is considered a seller’s market; between 4 and 6 is a balanced market; and above 6 is a buyer’s market.
Single Family Homes – Months’ Supply of Inventory
Click to view larger chart
 
 
Condominiums – Months’ Supply of Inventory
Click to view larger chart
Average Days on the Market
Average days on the market is a measure that indicates the pace of sales activity. It tracks, on average, the number of days a listing is active until it reaches close of escrow.
Single Family Homes – Average Days on the Market
Click to view larger chart
 
 
Condominiums – Average Days on the Market
Click to view larger chart
Percentage of Properties Under Contract
Percentage of properties under contract is a forward-looking indicator of sales activity. It tracks expected home sales before the paperwork is completed and the sale actually closes.
Single Family Homes – Percentage of Properties Under Contract
Click to view larger chart
 
 
Condominiums – Percentage of Properties Under Contract
Click to view larger chart
Sales Price as a Percentage of Original Price
Measuring the final sales price as a percentage of the original list price, without price adjustments, determines the success of a seller in receiving the hoped-for sales amount, but it also indicates the level of sales activity in a region.
Single Family Homes – Sales Price as a Percentage of Original Price
Click to view larger chart
 
 
Condominiums – Sales Price as a Percentage of Original Price
Click to view larger chart
Delving into San Francisco’s Districts
San Francisco is defined by 10 separate districts, each of which encompasses several neighborhoods.
District 1: Inner Richmond, Central Richmond, Outer Richmond, Jordan Park/Laurel Heights, Lake, Lone Mountain, Sea Cliff.
District 2: Outer Sunset, Central Sunset, Inner Sunset, Outer Parkside, Parkside, Inner Parkside, Golden Gate Heights.
District 3: Pine Lake Park, Merced Manor, Lake Shore, Lakeside, Stonestown, Merced Heights, Ingleside, Ingleside Heights, Oceanview.
District 4: Balboa Terrace, Diamond Heights, Forest Hill, Forest Hill Extension, Forest Knolls, Ingleside Terrace, Midtown Terrace, Miraloma Park, Monterey Heights, Mount Davidson Manor, Sherwood Forest, St. Francis Wood, Sunnyside, West Portal, Westwood Highlands, Westwood Park.
District 5: Buena Vista/Ashbury Heights, Clarendon Heights, Cole Valley/Parnassus Heights, Corona Heights, Duboce Triangle, Eureka Valley/Dolores Heights, Glen Park, Haight-Ashbury, Mission Dolores, Noe Valley, Twin Peaks.
District 6: Alamo Square, Anza Vista, Hayes Valley, Lower Pacific Heights, North Panhandle, Western Addition.
District 7: Cow Hollow, Marina, Pacific Heights, Presidio Heights.
District 8: Downtown, Financial District/Barbary Coast, Nob Hill, North Beach, North Waterfront, Russian Hill, Telegraph Hill, Tenderloin, Van Ness/Civic Center.
District 9: Bernal Heights, Central Waterfront/Dogpatch, Inner Mission, Mission Bay, Potrero Hill, South Beach, South of Market, Yerba Buena.
District 10: Bayview, Bayview Heights, Candlestick Point, Crocker Amazon, Excelsior, Hunters Point, Little Hollywood, Outer Mission, Mission Terrace, Portola, Silver Terrace, Visitacion Valley.
 
 
 
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2012 Set Records — Here's to 2013!
 
2012 was a blistering year for San Francisco Bay Area residential real estate, as most of our regions tallied their highest number of home sales since 2005. Back in Q2 we said jobs would drive our housing markets, and we hit the nail on the head. Exceptional job growth in San Mateo, San Francisco, and Marin counties spurred home-buying demand at a pace not seen in other U.S. markets.

Due to a limited inventory of homes for sale, we also got the most interesting dynamic of our record-setting year: the return of “bidding wars”, or multiple offers, in most markets at price points up to $1.5 million.

In 2013 we predict more robust demand, as job growth expands into other Bay Area counties. Continuing constrained inventory will create price appreciation for the first time since 2007. And if the appreciation continues through summer '13, we will see “move-up buyers” re-enter the hunt for higher-end housing (over $1.5 million) in late August and early September.

These buyers, who have been waiting patiently for their home values to rise so they can trade up to larger residences or better neighborhoods, will contribute to additional inventory in the mid-tier markets and improved demand in the higher end.

Overall, we have a very positive outlook for Bay Area residential real estate in 2013. Whether you're looking to buy or sell, remember that real estate is hyperlocal — and your best ally is a real estate professional who can provide you with exceptional local insight, knowledge, advice, and decision support.

Happy New Year!
 
Luxury Home Buyers Changing Their Ways
Goodbye, bling. Hello, quality and value.

That’s the new approach luxury home buyers are adopting in the San Francisco Bay Area, according to Alf Nucifora, chairman and founder of the Luxury Marketing Council of San Francisco.

He says lessons learned from the recession, baby-boom buyers eyeing legacy purchases, and young tech turks who value function over form are fueling the trend.
 
“The recession taught us that we can live without unnecessary extravagances,” says Nucifora. “And that has led to a systematic shift in the way people buy. We are less concerned with showing it on the outside but more concerned with enjoying it on the inside.”

In addition, so-called baby boomers (born 1946 through 1964) now make up a significant portion of the luxury-buyer market, and they are shifting from making to preserving wealth.

“We (boomers) played and we made and we splurged, but we don’t need the fancy cars, the watches, or the showplace home anymore,” he says. “Now it’s the notion of bespoke, of things crafted with an eye to enduring value. We have kids and grandkids and want a legacy to be handed off to them.”

The young dot-com and IPO millionaires might not be thinking about their future family bequests, but many also eschew frippery for functionality. They choose jeans and T-shirts over Brioni suits and sink their money instead into elite experiences and artisanal comfort. They may not have the biggest house on the block, but there’s a La Cornue range in the kitchen and a custom Jacuzzi in the backyard.

What this all translates to is a shift away from showy excess and toward a search for quality, value, and connoisseurship, especially in the $2 to $10 million range, says Nucifora. It’s the consumption of wealth on a quiet, introspective basis, as opposed to ostentatious display.
 
“Buyers are now more focused on the view, the privacy, how good the kitchen really is -- things that go into the enjoyment of the family experience as opposed to letting me show my neighbors how big and wealthy I am,” he says.

While luxury buyers still spend plenty of money, it’s now more often on things like interior remodels, home theaters, expensive custom cabinetry, or top-of-the-line appliances – items that create a high-end quality of life experience but are invisible to anyone on the outside.
 
And even the most well-heeled buyers are looking for bargains.

“They can easily afford to pay above listing price, but they want to get a deal because it affirms their sense of self, their smartness,” says Nucifora.

What does this mean for 2013? Expect to see these trends continue, he says. Sellers in these price ranges would be smart to invest in staging, because today’s value-savvy luxury buyers are willing to shell out for the right experience – and a luxury residence with empty rooms or dated furnishings doesn’t fit that bill.

“In buying real estate, it’s that visceral reaction when I walk in,” Nucifora says. And, he adds, bad presentation is obvious: “When you walk into some of them it’s like entering an abattoir.”

Pie-in-the-sky pricing schemes will also be a thing of the past, even as home values rebound; buyers in the high-end market will continue to look for deals and choose substance over show-off style. The cachet of spending piles of money on a pile of bricks has worn somewhat thin, he says.

“The recession taught us all that we can live without unnecessary extravagances, that we should look for quality, and really ask ourselves whether that purchase is absolutely necessary,” he says. “And most of us found out we can live without it.”
 
Bay Area 10-Year Overview
Here’s a look at home sales in the Bay Area’s real estate markets in the fourth quarter of 2012, with a glance back at the 10 preceding fourth quarters.
Click here to see specific 10-year data on key cities in the Bay Area.

 

SoMa Offers a Mix of Upscale and Funky

by Pacunion

San Francisco’s popular South of Market, or SoMa, neighborhood offers an eclectic mix of hip eateries and clubs, swanky condominiums, and funky reminders of its past life as an industrial area. Check it out at http://bit.ly/13bxNb6.

Originally published on pacunion.com

Here’s a look at news this week of interest to homebuyers, home sellers, and the home-curious:

BAY AREA NO. 1 FOR HOME PRICE GAINS
The Bay Area leads the nation in rising home prices over the past three-and-a-half years, according to statistics the Wall Street Journal compiled from the monthly S&P/Case-Shiller Home Price Index.

Home prices in the San Francisco metropolitan area were up 9.6 percent in July compared with January 2009. That’s far better than the national average over the same time period, during which home prices fell 3.7 percent among the nation’s 20 largest metro areas.

The Journal chose the odd time frame of three-and-a-half years in an effort to answer the politically charged question of whether the U.S. housing market is in better shape after nearly four years with Barack Obama as president.

The Journal noted that home prices are up from one year ago but remain narrowly below the recent peak set in May 2010, when tax credits fueled a brief burst of sales.

Trailing San Francisco in rising home prices were Washington, D.C. (8.4 percent) and Denver (4.6 percent). The biggest declines were in Las Vegas (24.7 percent), Atlanta (18.5 percent), and Tampa (12.1 percent).

The San Francisco metro area includes Alameda, Contra Costa, Marin, San Francisco, and San Mateo counties.

PRICES CLIMB 5.3% IN ONE YEAR
Speaking of the Case-Shiller Home Price Index, the Bay Area housing market continues to pick up momentum, with the latest proof coming from the aforementioned monthly index.

Home prices in the San Francisco metropolitan area rose 0.5 percent in August from the previous month and 5.3 percent from August 2011, Case-Shiller reported on Tuesday. Only five other metro areas topped San Francisco in year-over-year sales gains: Phoenix (18.8 percent), Detroit (7.6 percent), Minneapolis (7.4 percent), Miami (6.7 percent), and Denver (5.5 percent).

On average, August marked the fifth straight month of rising home prices across the nation.

The Case-Shiller index lags two months behind the current statistics, but it remains one of the most closely watched gauges of housing market health – one of several gauges that have turned upbeat in recent months. New and existing home sales have gained strength, inventory of homes for sales have fallen, and developers have stepped up building activity.

HOME OWNERSHIP RATE REMAINS LOW
Americans remain wary of home ownership as the nation slowly recovers from the housing market collapse, according to the U.S. Census Bureau.

The agency reported Tuesday that the nation’s home ownership rate was 65.5 percent in the third quarter, down from 66.3 percent a year earlier. But the rate was unchanged from the previous quarter, a sign that the drop in ownership may have hit bottom, as record-low mortgage rates lure consumers back into the housing market.

Today’s ownership rate is well below rates near 70 percent reported during the housing boom.

NEARLY $2 TRILLION IN EQUITY LOST
Foreclosures have drained nearly $2 trillion in home equity from surrounding neighborhoods across the country, according to a report from the Center for Responsible Lending.

The report determined that residents who live close to foreclosed properties have lost $1.95 trillion in property value. The cost does not include the total loss in home equity resulting from the foreclosure crisis, estimated at $7 trillion, and also does not take into account the equity lost by families who are actually foreclosed on.

African-American and Latino communities are seeing the greatest share of the $2 trillion loss, where the average spillover cost per family is estimated at $37,000 in household wealth.

 

SFJAZZ Center Sneak Peek

by George Calys

 

 

 

All reports to the contrary, jazz is alive and thriving in San Francisco. The heart of jazz is beating so hard that SFJAZZ, the organization that has promoted jazz in the Bay Area for thirty years, is nearing completion of a state-of-the-art performance facility in Hayes Valley.

 

Progress is visible in October at SFJAZZ Center's new buildingSFJAZZ Center in Mid-October nearing completion. Photo: George Calys

 

Randall Kline, founder and executive director of SFJAZZ, has led the effort to fund and build one of the few dedicated jazz performance spaces in decades. During a recent construction tour, it was obvious that this facility will rival New York’s Jazz at Lincoln Center, both in quality of the space and in the musicians that it will attract. Tapping Mark Cavagnero Associates, SFJAZZ selected one of the Bay Area’s most gifted architects to design the Center. Cavagnero’s recent cultural buildings include the renovation of the Oakland Museum and the ODC Dance Theater’s permanent home in the Mission district.

 

Artist's rendering of SFJAZZ Center exteriorArtist's rendering of SFJAZZ Center exterior

 

On a tight urban site in the Hayes Valley district near the San Francisco Ballet, Symphony, and Opera venues, Cavagnero has inserted a transparent jewel box of glass and concrete. The predominantly glass facades along both Fell and Franklin Streets allow pedestrians and drivers multiple views inside the building. At one vantage point, passersby will be able to see from the street clear through to the performance stage—a view that Kline said “is reminiscent of peering through the right field fence at AT&T Park.”

 

Artist rendering of Robert N. Miner AuditoriumArtist rendering of Robert N. Miner Auditorium

 

The centerpiece of the facility is the Robert N. Miner Auditorium. Assisted by acoustician Sam Berkow and theater designer Len Auerbach, the architect has crafted a multi-configuration music hall whose stage can be adjusted from quartet-size to large enough for an orchestra. Similarly, the seating configuration can be altered in three steps:  350, 550, and 700 seats. The facility will also include an 80 seat ensemble room, rehearsal spaces, digital learning lab, café, ground floor lobby, retail shop, box office and administrative offices. 

 

Robert N. Miner Auditorium under construction, Oct. 2012Robert N. Miner Auditorium under construction, Oct. 2012 Photo: SFJAZZ

 

Constructor Hathaway Dinwiddie is working feverishly to complete the $53 million center in time for a January 21, 2013 ribbon cutting and an opening night concert and gala on January 23.  By any estimation, the SF Jazz Center will be an architectural, musical, and educational gem in the Bay Area cultural scene.

Go ahead, New York. Be envious.

 

 


Photo of a home under construction

Homebuilders are bullish on the prospects of a busy year ahead, according to a new report.

Here’s a look at news this week of interest to homebuyers, home sellers, and the home-curious:

NEW-HOME CONSTRUCTION REBOUNDING

U.S. builders started construction of new homes and apartment units at a blistering pace in September – up 15 percent from the month before and 35 percent from a year earlier, for the highest level of housing starts in more than four years, according to numbers the Census Bureau and U.S. Department of Housing and Urban Development released Wednesday.

In a separate report showing renewed vigor in home construction, the National Association of Home Builders said Tuesday that builder confidence in the market for single-family homes rose for a sixth consecutive month in October to its strongest level in more than six years.

SAN FRANCISCO IS NO. 1 IN 2013 FORECAST

A highly respected economic forecast puts San Francisco first in the nation for real estate investment, development, and housing in the coming year.

The Emerging Trends in Real Estate 2013 report from the Urban Land Institute and PricewaterhouseCoopers deals mostly with commercial real estate and investment but also includes data on the housing industry. An executive summary of the report, released Wednesday, had this to say about San Francisco:

“The market is driven by growth and a strong jobs outlook, led by technology and a structural change away from suburban and toward downtown. Continued infill interest is supported by providing one of the best transit systems in the country and a city center with walkability that is number two only to New York City.”

The report bookends our own Bay Area forecast for 2013, published Tuesday.

TIGHT SUPPLY HOLDING BACK HOME SALES

The tight supply of available homes lowered California home sales in September, while the median price reached its highest level in more than four years, the California Association of Realtors reported on Monday.

Statewide, September home sales were down 1.2 percent from a year earlier, while median prices for single-family homes and condominiums rose more than 19 percent.

The Bay Area did markedly better than the rest of the state, according to the C.A.R. report, with home sales up 6 percent in Marin County, 5.8 percent in Sonoma County, 5.6 percent in Contra Costa County, 4.8 percent in Napa County, and 0.4 percent in San Francisco. Only Alameda County recorded a drop-off, with sales down 4 percent.

2013 A STRONG YEAR FOR SHORT SALES

Rating agency DBRS expects foreclosure filings to keep falling in 2013 as short sales continue to rise.

Short sales have become the “primary loss mitigation tool to prevent delinquent loans from entering foreclosure,” DBRS said in a research note Monday. Foreclosure, it said, only adds expenses to a money-losing scenario.

CALIFORNIA LEADS IN LIST-PRICE INCREASES

The housing recovery continued to gain traction in September, with list prices rising in most California markets, according to data compiled by the website Realtor.com.

The San Francisco metro area came in third on a list of the top 10 markets in the United States with the greatest year-over-year list price increases (18.11 percent). Oakland was seventh (13.97 percent). Other California metro areas on the list were: Santa Barbara-Santa Maria-Lompoc (32.05 percent), San Jose (17.5 percent), Sacramento (14.23 percent), and Riverside-San Bernardino (12.56 percent).

Other stats: Oakland remained No. 1 in the nation for the shortest number of days that homes sit on the market – an average of just 21 days from listing to sale. Oakland has held that distinction since February, when Realtor.com began tracking days the metric.

(Home construction photo courtesy ArmchairBuilder.com, via Flickr.)

August Bay Area Home Sales Highest in 6 Years

by Pacific Union

 

 

Jumbo Loans More Popular — and Affordable

by Pacific Union

Illustration of a house on top of bundled hundred-dollar billsJumbo mortgages are making a comeback, signaling a healthy market for higher-priced homes and hope that credit markets are ready to open up.

Jumbo loan volume more than doubled in the first half of 2012 from a year earlier at Wells Fargo & Co., according to a recent Wall Street Journal report. And Bank of America reported that jumbo loans accounted for 15 percent of mortgage dollars distributed in the second quarter, up from 4 percent a year ago.

In the Bay Area, jumbo mortgages accounted for 38.5 percent of home loans in July, up from 33.4 percent a year ago, according to the research firm DataQuick.

Jumbo mortgages are large, private loans that aren’t guaranteed by government agencies such as Fannie Mae, Freddie Mac, and the Federal Housing Administration because they exceed federal loan limits. Guaranteed loans are capped at $417,000 across much of the country, although in higher-priced regions such as the Bay Area the maximum loan amount limits are higher.

Fannie Mae and Freddie Mac guarantee mortgages up to $625,000 in San Francisco, Alameda, Contra Costa, and Marin counties, and up to $592,250 in Napa County and $520,950 in Sonoma County. FHA loans have higher limits: $729,750 in San Francisco, Alameda, Contra Costa, Marin, and Napa counties, and $662,500 in Sonoma County.

Jumbo mortgages have higher interest rates than so-called conforming loans because issuing banks assume more risk without federal loan guarantees. But the difference between conforming and jumbo loans is shrinking, making jumbo loans more attractive.

Interest rates on 30-year jumbo loans recently averaged 4.22 percent, according to the mortgage data website HSH.com, half a percentage point above conforming loans. Four years ago, they were more than a full percentage point higher.

For more information on mortgages, or help with securing a mortgage, give Pacific Union’s partner, Mortgage Services Professionals, a call at (415) 345-3006.

(The illustration above is courtesy of 401(k) 2012, via Flickr.)

Home Sales, Prices Point to Solid Recovery

by Pacific Union

 

 

Displaying blog entries 1-10 of 14

Contact Information

Photo of Ken J. Gendemann Real Estate
Ken J. Gendemann
Pacific Union International
1699 Van Ness Avenue
San Francisco CA 94109
Cell: (415) 828-4063

Ken J. Gendemann, CPA
Pacific Union & Christie's International Real Estate
1699 Van Ness Avenue, San Francisco, CA 94109

Cell: 415-828-4063, Office: 415-345-3083
 License #: 01884446