Santa Clara Valley REO » Market Commentary

Good Deal on Short Sales in San Jose

vbrasil — Tue, 02 Mar 2010 15:57:03 +0000

Recipe for a good deal:

Find a development that was completed 4 or 5 years ago. A majority of the properties in the development will be underwater, where values are below mortgages. You can expect that there will be defaults in some cases these complexes have higher rates of default than other complexes. This will cause the supply of listings or distressed properties to be higher and bring down prices futher.

One example of this is the Encanto development in San Jose, near the University of Santa Clara. Currently there are a number of properties available. Some of the properties are still owned by the developer and are close outs. Others like the 4 listed below are distrissed sales, and judging from the number of defaults in the complex there will likely be more coming on the market.

1392 DAHLIA LP

MLS Num: 81005323

Status: Active

City: San Jose

County: SANTA CLARA COUNTY

Zip: 95126

Bedrooms: 3

Bathrooms: 2.5

Square Feet: 1246

Lot Size: 0.040 acres

Year Built: 2006

List Date: 2/5/2010

Org. List Price: $595,000

List Price: $550,000

Sold Date: –

Sold Price: –

Public Remarks

Reduced from $595K. Now a short sale so will need lender’s approval. Close to HP Pavillion, Valley Fair Mall, Santana Row, San Jose Airport, Caltrain, freeways, and WALKING DISTANCE TO Santa Clara University. ? 1,246 SF SFR ? 3 BR/ 2.5 BA? Cathedral ceiling in living room. Attached 2 car garage? Encanto Tract built by Robson Homes, completed in 2007. Community Pool & Clubhouse for entertaining.

1317 DAHLIA LP

MLS Num: 81005801

Status: Active

City: San Jose

County: SANTA CLARA COUNTY

Zip: 95126

Bedrooms: 3

Bathrooms: 3

Square Feet: 1475

Lot Size: 0.044 acres

Year Built: 2005

List Date: 2/8/2010

Org. List Price: $585,000

List Price: $585,000

Sold Date: –

Sold Price: –

Public Remarks

Amazing home available now! Spacious corner single family home at Encante. Desirable neighborhood near Santa Clara University with Low HOA dues and spacious 3 bedrooms, 3 baths and 2 car garage. Spanish style and open spacious floorplan. LOCATION! Don’t miss out!Shows like a model!

1190 CAMPBELL AVE

MLS Num: 81003183

Status: Active

City: San Jose

County: SANTA CLARA COUNTY

Zip: 95126

Bedrooms: 3

Bathrooms: 2.5

Square Feet: 1977

Lot Size: 0.051 acres

Year Built: 2006

List Date: 1/21/2010

Org. List Price: $725,000

List Price: $654,312

Sold Date: –

Sold Price: –

Public Remarks

This beautiful 3 Bedroom, 2.5 Bathroom home is located near Santa Clara University. With close to 2000 sq. ft. of living space and 2 one car garages you will not want to miss this rare opportunity.

1082 ARBOL WAY

MLS Num: 81009027

Status: Active

City: San Jose

County: SANTA CLARA COUNTY

Zip: 95126

Bedrooms: 3

Bathrooms: 2.5

Square Feet: 1371

Lot Size: 0.050 acres

Year Built: 2008

List Date: 2/25/2010

Org. List Price: $688,000

List Price: $688,000

Sold Date: –

Sold Price: –

Public Remarks

Almost new corner lot bungalow w/resort-like clubhouse & pool, within walking distance to SC Univ.Door opens into living,dining&kitchen, beaming with natural sunlight&refreshing view of orange trees.Unload groceries easily from 2-car garage.Private backyard, right off living room makes outdoor entertaining a breeze.3 BR together upstairs with walk-in closet & 2 separate vanity basins in master BR

Economic Stimulus and Tax Credit

vbrasil — Fri, 27 Feb 2009 06:02:23 +0000

Tax Credit for Homebuyers

First-time homebuyers who purchase homes from the start of the year until the end of November 2009 may be eligible for the lower of an $8,000 or 10% of the value of the home tax credit. Remember a tax credit is very different than a tax deduction – a tax credit is equivalent to money in your hand, as opposed to a tax deduction which only reduces your taxable income.

The tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000. Buyers will have to repay the credit if they sell their homes within three years.

Tax Credit Versus Tax Deduction

It’s important to remember that the $8,000 tax credit is just that… a tax credit. The benefit of a tax credit is that it’s a dollar-for-dollar tax reduction, rather than a reduction in a tax liability that would only save you $1,000 to $1,500 when all was said and done. So, if a homebuyer were to owe $8,000 in income taxes and would qualify for the $8,000 tax credit, they would owe nothing.

Better still, the tax credit is refundable, which means the homebuyer can receive a check for the credit if he or she has little income tax liability. For example, if a homebuyer is liable for $4,000 in income tax, he can offset that $4,000 with half of the tax credit… and still receive a check for the remaining $4,000!

Phaseout Examples

According to the plan, the tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000.

To break down what this phaseout means to homebuyers who are over those amounts, the National Association of Homebuilders (NAHB) offers the following examples:

Example 1: Assume that a married couple has a modified adjusted gross income of $160,000. The applicable phaseout to qualify for the tax credit is $150,000, and the couple is $10,000 over this amount. Dividing $10,000 by $20,000 yields 0.5. When you subtract 0.5 from 1.0, the result is 0.5. To determine the amount of the partial first-time homebuyer tax credit that is available to this couple, multiply $8,000 by 0.5. The result is $4,000.

Example 2: Assume that an individual homebuyer has a modified adjusted gross income of $88,000. The buyer’s income exceeds $75,000 by $13,000. Dividing $13,000 by $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $8,000 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,800.

Remember, these are general examples. You should always consult your tax advisor for information relating to your specific circumstances.

Homes that Qualify

The tax credit is applicable to any home that will be used as a principle residence. Based on that guideline, qualifying homes include single-family detached homes, as well as attached homes such as townhouses and condominiums. In addition, manufactured or homes and houseboats used for principle residence also qualify.

Take the Credit This year

It is our understanding that you even if you bought in 2009, you can claim this on your 2008 returns. If you’ve already filed your 2008 returns, you can amend them to claim the credit (please check with your tax professional).

Higher Loan Amounts

More good news – there is an extension on the additional tier of conforming loan amounts which had been first established in 2008. This tier of home loans are those greater than $417,000, and with a maximum that depends on the area, but is not greater than $729,750. These loans will again be eligible for rates that are slightly higher than conforming loan rates, but less expensive than the standard “jumbo” loan rates.

Additional Housing-Related Provisions

Tax Incentives to Spur Energy Savings and Green Jobs — This provision is designed to help promote energy-efficient investments in homes by extending and expanding tax credits through 2010 for purchases such as new furnaces, energy-efficient windows and doors, or insulation.

Landmark Energy Savings — This provision provides $5 Billion for energy efficient improvements for more than one million modest-income homes through weatherization. According to some estimates, this can help modest-income families save an average of $350 a year on heating and air conditioning bills.

Repairing Public Housing and Making Key Energy Efficiency Retrofits To HUD-Assisted Housing—This provision provides a total of $6.3 Billion for increasing energy efficiency in federally supported housing programs.Specifically, it establishes a new program to upgrade HUD-sponsored low-income housing (for elderly, disabled, and Section to increase energy efficiency, including new insulation, windows, and frames.

Expanding Housing Assistance—This provision increases support for several critical housing programs. It includes $2 Billion for the Neighborhood Stabilization Program to help communities purchase and rehabilitate foreclosed, vacant properties.

More Help for Homeowners in the Future
Another thing to keep an eye on in the coming weeks is President Obama’s plan to help struggling borrowers before they are faced with a default on their mortgage.

According to reports, the Obama administration is discussing plans to help borrowers who are struggling to stay afloat, but who have not yet fallen behind on their payments. At this point, details are scarce; however, reports indicate that President Obama is looking to spend approximately $50 Billion to directly help homeowners before they face foreclosure and financial disaster.

While this is good news for individual homeowners, it will likely be good for the housing industry as a whole. That’s because, assisting struggling borrowers before they default should help stop the wave of foreclosures, which are estimated to top two million this year. That, in turn, will help stabilize home prices.

Experience in Buying an REO in Santa Clara & San Jose

vbrasil — Fri, 06 Feb 2009 15:18:12 +0000

This week I submitted two offers for REO properties for two separate clients. One was a single family 3 bedroom 2 bath home in Santa Clara that was listed at $400,000. The home was in poor condition but the price reflected it. My experience with REOs (bank owned properties) is that they are seldom i good condition, so a little extra work was no big deal for my client.

We submitted an offer at $407,000 and there were 4 other offers at that time. In this Santa Clara neighborhood alone there were 3 other bank owned properties on the market, the next lowest in price was $461,000 and needed just about the same amount of work.

The response from the seller was a highest and best counter in the form of an email. For those of you who are unfamiliar with this strategy, the seller comes back to all the interested parties and asks them to submit their highest and best offer. We responded knowing that this home was under priced and offered $420,000 as our highest and best. That was 3 days ago and are still waiting for a response from the bank.

The other property was in the San Jose East Valley. A 3 bedroom two bath home listed at $225,000. There are a number of REOs (bank owned homes) in this part of San Jose. Most need quite a bit of repair and have unpermitted additions, converted garages and all sorts of code violations. A unique characteristic about this San Jose REO is that it only had a garage conversion that could easily be converted back. Other than the garage conversion the home was very close to move in ready and was certainly the best home in that area of San Jose for the price.

This San Jose REO received a total of12 offers. We are currently awaiting response from the bank. This experience is very common as active buyers in Santa Clara County that are targeting these REO deals have slim pickings for homes that do not require too much repair. As a result, they often get quite a bit of interest when priced low and will often sell at market prices. This is not to discourage you from trying, rather to set your expectations on pursuing REOs.

Pending Sales Santa Clara County – Real Estate Market Indicator

vbrasil — Sat, 17 Jan 2009 17:02:28 +0000

I always review the Santa Clara County home sales at the end of the week by checking the pending sales. This is a good way of checking the strength of the market in terms of buying activity. I usually compare from the previous year’s figures to gauge performance. It appears that 2009 has started out very positively, well at least better than 2008.

Santa Clara sales for the week are up 50%, Cupertino also higher, Sunnyvale as well with over 50%, Mountain View also an increase. When we view the higher end Markets of Los Gatos, Saratoga, and Los Altos, they experienced decreases this year. Part of that I think we can attribute to price gains that these areas experienced in 2008 and have just recently felt the slow down. Price adjustments may have to be made in these high cost areas in order for sales to increase.

The next item to keep an eye out for will be inventory. The combination of housing (supply) and sales (demand) will determine really market performance for the valley. As inventory starts to increase we will see increased sales, whether or not those increased sales will keep up with the pace of inventory will determine price performance, and that’s everyone big question this year, how will prices perform. If you are curious about market performance there is no better way than to subscribe to my Altos Reports for your specific Zip Code. You can do so on the side bar. These reports and show you indicators on where the market is heading.